As filed with the Securities and Exchange
Commission
May 10, 2012
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Registration Statement No. 333-164352
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO POST-EFFECTIVE
AMENDMENT NO. 2 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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2121
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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.
2 Liberty
Place
50 South 16
th
Street
34
th
Floor
Philadelphia,
PA 19102
Telephone
(215) 375-6646
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.
x
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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CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities to be
Registered
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Amount to be
Registered
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Proposed Maximum
Offering Price
per Unit(1)
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Proposed
Maximum Aggregate
Offering Price
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Amount of
Registration Fee
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Common Stock, par value $0.0001 per share
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45,757,572
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$
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1.37
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$
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62,687,873
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$
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4,469.65
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(2)
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(1)
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Estimated for the purpose of determining the registration fee pursuant to Rule 457(c), based on the
average of the bid and asked price as of January 7, 2010.
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(2)
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Paid in connection with the original filing of this registration statement.
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The Registrant hereby amends this registration
statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment
which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement shall become effective on such date as the Securities and Exchange
Commission, acting pursuant to said Section 8(a), may determine.
Explanatory Note
This Amendment No. 1 to Post-Effective
Amendment No. 2 on Form S-1 (this “Post-Effective Amendment”) relates solely to the sale by selling stockholders of
up to 47,757,572 shares of common stock issued to the selling stockholders, which resales were registered by the registrant on
the Registration Statement on Form S-1 (File No. 333-164352) declared effective by the Securities and Exchange Commission on or
about April 19, 2010 and as amended by Post-Effective Amendment No. 1 on Form S-1, declared effective on or about April 25, 2011.
This Post-Effective Amendment is being filed to include the financial statements for the year ended December 31, 2011. 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 May 10,
2012
PROSPECTUS
45,757,572 Shares of Common Stock
This prospectus relates
to the offer and sale of up 45,757,572 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 pursuant to a Securities
Purchase Agreement, dated December 18, 2009, between the selling stockholders and the Company and that may be offered and sold
from time to time by the selling stockholders.
Unless otherwise noted,
the terms “the Company,” “our Company,” “Axion,” “we,” “us” and “our”
refer to Axion Power International, Inc. and its subsidiaries.
The 45,757,572 shares
of common stock covered by this prospectus may be offered and sold from time to time by the selling stockholders or by their pledgees,
donees, transferees, assignees or other successors-in-interest that receive any of the shares as a gift, distribution, or other
non-sale related transfer.
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 negotiated transactions at prices acceptable to the selling
stockholders, or otherwise.
We will not receive any
proceeds from the sale of shares by the selling stockholders. 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 Over the Counter Bulletin Board under the symbol “AXPW.OB”. The closing sale price on the OTC Bulletin Board
on April 27, 2012, was $0.41 per share.
Investing in the common
stock offered by this prospectus is speculative and involves a high degree of risk. See “Risk Factors” beginning on
page 2.
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 May 10,
2012
TABLE OF CONTENTS
PROSPECTUS SUMMARY
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1
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RISK FACTORS
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2
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USE OF PROCEEDS
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8
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MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
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8
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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9
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BUSINESS
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17
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LEGAL PROCEEDINGS
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27
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MANAGEMENT
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27
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EXECUTIVE COMPENSATION
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32
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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39
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
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THE SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION
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40
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DESCRIPTION OF SECURITIES
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45
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LEGAL MATTERS
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48
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EXPERTS
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48
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WHERE YOU CAN FIND MORE INFORMATION
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48
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AXION POWER INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2011
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49
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PART II – INFORMATION NOT REQUIRED IN PROSPECTUS
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75
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SIGNATURES
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85
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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 2, and any supplements before making a decision to
invest in our common stock.
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
We are a development
stage company that was formed as Axion Power Corporation in September 2003 to acquire and develop certain innovative battery technology.
Since inception, Axion Power Corporation has been engaged in research and development of the new technology for the production
of lead-acid-carbon energy storage devices (technology) that we refer to as our PbC devices. As of December 31, 2003, Axion Power
Corporation engaged in a reverse acquisition with Tamboril Cigar Company, a public shell company. Tamboril was originally incorporated
in Delaware in January 1997, operated a wholesale cigar business until December 1998 and was an inactive public shell thereafter
until December 2003. The information presented herein relates to the operations of Axion Power Corporation, the accounting acquirer.
Tamboril, the legal acquirer, changed its name to Axion Power International, Inc. We formed a new corporation, Axion Power Battery
Manufacturing Inc., which purchased the foreclosed assets of a failed battery manufacturing plant. This operating entity now conducts
R&D and manufacturing activities and also manufactures lead-acid battery product for sale to distributors and end user customers.
Since inception, our
operations have been financed by a small group of individuals and entities with little to no revenue generated from operations.
As a result, trading in our common stock has been sporadic, volumes have been low, and the market price has been volatile. We believe
that a successful transition from R&D to manufacturing, and therefore marketing and selling our proprietary products, will
improve our cash balances and market profile and may result in a more active trading market for our stock. However, we can provide
no guarantees that our transition efforts will be successful.
Our Business
We are a development
stage company that has invested eight years and $60.6 million through December 31, 2011 to develop our patented energy storage
device that uses activated carbon electrode assemblies to replace the lead-based negative electrodes found in conventional lead-acid
batteries. Our PbC energy storage device is a hybrid battery-supercapacitor that combines the simplicity of lead-acid batteries
with the fast recharge rate and longer cycle life 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 ten 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 and 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 employ 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 used throughout the world for manufacturing conventional lead-acid batteries. PbC batteries
use significantly less lead than standard lead-acid batteries with a comparable footprint, and 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 99.1% of the time
(United States Environmental Protection Agency, Solid Waste and Energy Response [5306P]).
The Offering
Common stock offered by the selling stockholders:
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45,757,572 shares of our common stock, par value $0.0001 per share.
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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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113,211,091 shares as of April 23, 2012.
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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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Over the Counter Bulletin Board symbol:
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AXPW.OB
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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 2 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.
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 prospectus
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.
We are a development stage company,
and our business and prospects are extremely difficult to evaluate.
Since our inception
in September 2003, the majority of our resources have been dedicated to our R&D efforts, and we have only recently begun to
transition into the very early stages of commercial PbC prototype production. We do not have a stable operating history that you
can rely on in connection with your evaluation of our current business and our future business prospects. Our business and prospects
must be carefully considered in light of the limited history of PbC technology and the many business risks, uncertainties and difficulties
that are typically encountered by development stage companies that have minimal revenues and are committed to focusing on research,
development and product testing for an indeterminate period of time. Some of the principal risks and difficulties we have encountered
and expect to continue to encounter include, but are not limited to, our ability to:
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Maintain effective control over the cost
of our research, pace of progress, development and product testing activities;
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Develop cost effective manufacturing methods
for essential components of our proposed products;
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Improve the performance of our commercial
prototype batteries;
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Successfully transition from our laboratory
research and pilot production efforts to commercial manufacturing and sales of our prototype PbC battery technologies;
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Adapt and successfully execute our vision
and business plan;
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Implement and improve operational, information
technology, financial and management control systems and processes;
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License complementary technologies if necessary
and successfully defend our intellectual property rights against potential claims;
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Respond effectively to competitive developments
and changing market conditions;
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Continue to attract, retain and motivate
qualified personnel; and
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Manage each of the other risks set forth
below.
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Because of our limited
operating history and our relatively recent transition into the production of prototype PbC devices that we are relying on to become
our core revenue generating products, we have limited insight into trends and conditions that may exist or might emerge and affect
our business. There is no assurance that our business strategy will be successful or that we will successfully address the risks
identified in this report.
We have incurred net losses from
inception and do not expect to introduce our first commercial PbC products in quantity until during the 2012 fiscal year.
From our inception
we have incurred net losses and expect to incur substantial and possibly increasing losses for the foreseeable future as we increase
our spending to fund the development of production methods for our PbC devices and to build an infrastructure to support this business.
Our operating losses have had, and will continue to have, an adverse impact on our working capital, total assets and stockholders’
equity. For 2011, we had a net loss applicable to common shareholders of $8.3 million. In addition, we had cumulative losses
from inception (September 18, 2003) to December 31, 2011 of $76.0 million. We have not yet reached a point where we can manufacture
our proprietary PbC batteries and our proprietary activated carbon electrodes in commercial volumes and we will not be in a position
to commercialize such products until we complete the design development, manufacturing process development and pre-market testing
activities. There can be no assurance that our development and testing activities will be successful or that our proposed products
will achieve market acceptance or be sold in sufficient quantities and at prices necessary to make them commercially viable.
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 a primary 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 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. Currently, all of our key employees have employment contracts that include
non-compete provisions.
We will not begin automated production
of our PbC technology until 2012.
We will not be able
to begin full commercial production of our PbC energy storage devices until we complete our current testing operations, our planned
application evaluation, planned product development and until our second generation robotic PbC negative electrode production line
is fully commissioned. We believe our path to full automated production will, at a minimum, take us into the first half of 2012.
Even if our prototype development operations are successful, there can be no assurance that we will be able to establish and maintain
our facilities and relationships for the manufacturing, distribution and sale of our PbC batteries and other technologies or that
any future products will achieve market acceptance and be sold in sufficient quantities and at prices necessary to make them commercially
successful. Even if our proposed products are commercially successful, there can be no assurance that we will realize enough revenue
and gross margin from the sale of products to achieve profitability.
We have limited manufacturing experience
with respect to our PbC technology, which may translate into substantial cost overruns in manufacturing and marketing our products.
We do not have extensive
manufacturing experience with respect to production of our commercial PbC negative electrode prototypes 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.
As we transition into
the commercial production of our prototype devices, we may experience substantial cost overruns in manufacturing and marketing
our PbC technologies, and we may not have sufficient capital in the future to successfully complete such tasks. In addition, we
may not be able to manufacture or market our products because of industry conditions, general economic conditions, and/or competition
from potential manufacturers and distributors. Either of these inabilities could cause us to abandon our current business plan
and may cause our operations to eventually fail.
Risks related to our PbC Technology
We need to improve the performance
of our commercial prototypes before we commit to achieve large scale production.
Our commercial prototypes
do not satisfy all of our performance expectations, and we need to continue to improve various aspects of our PbC technology as
we move forward with larger scale production of our commercial prototypes. There is no assurance that we will be able to resolve
the known technical issues. Future testing of our prototypes may reveal additional technical issues that are not currently recognized
as obstacles. If we cannot improve the performance of our prototypes in a timely manner, we may be forced to redesign or delay
the large scale production of commercial prototypes or possibly cause us to abandon our product development efforts altogether.
We do not have any long-term vendor
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 prototypes 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 will be a small player in an intensely
competitive market and may be unable to compete.
The lead-acid battery
industry is large, intensely competitive and resistant to technological change. Even if our product development efforts are successful,
we will have 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.
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 strategy is likely to 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, in large measure, 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. Accordingly, if our patent applications are not approved
or, even if approved, if such patents are circumvented or not upheld in a court of law, our ability to competitively exploit our
patented products and technologies may be significantly reduced. Additionally, the coverage claimed in a patent application can
be significantly reduced before the patent is issued.
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 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 March 1, 2012,
we had 113,211,091 shares of common stock outstanding, and (a) we have warrants outstanding that, if fully exercised, would generate
proceeds of $10,152,447 and cause us to issue up to an additional 11,896,070 of common stock, with 1,085,714 of these warrants
classified as derivative liabilities, and (b) we have options outstanding to purchase common stock that, if fully exercised, would
generate proceeds of $6,960,718 and result in the issuance of an additional 3,629,850 shares of common stock.
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.
Our stock price may not stabilize
at current levels.
Our common stock is
quoted on the Over the Counter Bulletin Board. 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 March 1, 2012, the latest
practicable date, was $0.40 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.
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
At the start of the year
ended December 31, 2008, our common stock was trading on the OTC Pink Sheets under the symbol AXPW.PK. On July 3, 2008, our common
stock resumed trading on the Over the Counter Bulletin Board under the symbol “AXPW”. Trading in our common stock has
historically been sporadic, trading volumes have been low, and the market price has been volatile.
Our common stock trades
on the Over the Counter Bulletin Board under the symbol “AXPW”. Trading in our common stock has historically been sporadic,
trading volumes have been low, 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 on AOL Finance. The quotations reflect inter-dealer prices,
without retail markup, markdown or commission and may not represent actual transactions.
Period
|
|
High
|
|
|
Low
|
|
First Quarter 2010
|
|
$
|
1.60
|
|
|
$
|
1.12
|
|
Second Quarter 2010
|
|
$
|
1.20
|
|
|
$
|
0.66
|
|
Third Quarter 2010
|
|
$
|
0.72
|
|
|
$
|
0.46
|
|
Fourth Quarter 2010
|
|
$
|
0.80
|
|
|
$
|
0.51
|
|
First Quarter 2011
|
|
$
|
1.27
|
|
|
$
|
0.55
|
|
Second Quarter 2011
|
|
$
|
1.20
|
|
|
$
|
0.60
|
|
Third Quarter 2011
|
|
$
|
0.73
|
|
|
$
|
0.42
|
|
Fourth Quarter 2011
|
|
$
|
0.55
|
|
|
$
|
0.25
|
|
On April 27, 2012, the
latest practicable date, the sale price for our common stock as reported on the Over the Counter Bulletin Board was $0.41 per share.
Securities outstanding and holders of record
On April 23, 2012, the
latest practicable date, there were approximately 432 record holders of our common stock and
113,211,091
shares of our Common Stock issued and outstanding.
Dividend Policy
We have not paid and
do not expect to pay dividends on our common stock. Any future decision to pay dividends on our common stock will be at the discretion
of our board of directors and will depend upon, among other factors, our results of operations, financial condition, capital requirements
and contractual restrictions
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, 2011:
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 Incentive Stock Plan
|
|
|
0
|
|
|
$
|
0
|
|
|
|
2,000,000
|
|
2004 Directors’ Option Plan
|
|
|
438,972
|
|
|
$
|
1.57
|
|
|
|
561,028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation not approved by stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
Options held by officers, employees, and consultants
|
|
|
1,570,500
|
|
|
$
|
2.45
|
|
|
|
|
|
2010 Employees and Officers Stock Option Plan
|
|
|
1,620,378
|
|
|
|
1.50
|
|
|
|
379,622
|
|
Total equity awards
|
|
|
3,629,850
|
|
|
$
|
1.92
|
|
|
|
|
|
The Company
has two stockholder approved equity compensation plans, and on September 28, 2010, the board of directors amended the 2004 Director’s
Option Plan without stockholder approval. 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 following discussion should be read
in conjunction with the consolidated financial statements and the related notes that are set forth in our financial statements
elsewhere in this prospectus.
Overview
We are a development
stage company that was formed in September 2003 to acquire and develop certain innovative battery technology. Since inception we
have been engaged in research and development of new technology to manufacture carbon electrode assemblies for our energy storage
devices that we refer to as our PbC devices.
Since inception, we
have received $60.6 million in cash generated from financing activities of which $58.7 million was used to fund research and development
activities, capital expenditures, infrastructure, operations and working capital.
Key Performance Indicators, Material
Trends and Uncertainties
Because we are a development
stage company, typical investor financial measures are not particularly relevant or helpful in the assessment of company operations.
We utilize appropriate
non-financial measures to evaluate the performance of our R&D activities and demonstration projects. Our demonstration projects
entail extended periods of time to assess our energy devices over multiple charge and discharge cycles. Further, the results of
our demonstration projects do not lend themselves to simple measurement and presentation.
The single most significant
financial metric for us is the adequacy of working capital. Working capital is necessary to fund our capital expenditures, infrastructure
and processes required to progress from demonstration projects to commercial deployment of our proprietary carbon electrode assemblies
for our PbC devices.
We believe we need
to continue to characterize and perfect our products in house and through a limited number of demonstration projects before moving
into full commercial production. While the results of this work are moving toward that goal, we cannot provide assurances that
the products will be successful in their present design or that further R&D will not be needed. The successful completion of
present and future characterization and demonstration projects is critical to the development and acceptance of our technology.
We must devise methodologies
to manufacture carbon electrode assemblies for our energy storage devices in commercial quantities. While we have assembled an
engineering team that we believe can accomplish this goal, and are adding to it as we go forward, there is no assurance that we
will be able to successfully commercially produce our product.
Financing Activities
There were no financing activities during
2011. On February 3, 2012, the Company completed a registered direct common stock offering providing gross proceeds of approximately
$9.4 million and net proceeds were approximately $8.6 million after the expenses of the offering and placement fees. (See Note
11 Subsequent Events in Item 8 Financial Statements and Supplementary Data)
Award Activities: Grants and Contracts
On February 5, 2009,
we received two grants from the Advanced Lead-Acid Battery Consortium (the “ALABC”), the leading industry association
made up in part by the largest companies supplying the world’s battery market. The two grants total $388,000 and provided
support research into two key areas. The first grant sought to identify the mechanism by which the optimum specification of carbon,
when included in the negative active material of a valve-regulated lead-acid battery, provides protection against accumulation
of lead sulfate during high-rate partial-state-of-charge operation. The second grant sought to characterize our proprietary PbC
battery in hybrid electric vehicle (HEV) type duty-cycle testing. The grants were administered through the Durham, NC-based International
Lead Zinc Research Organization acting on behalf of the ALABC. The research work was completed during the first quarter of 2010.
On February 9, 2009,
we received notice that we were the recipient a grant from the Pennsylvania Alternative Fuels Incentive Grant program. The $800,000
initial grant was part of Pennsylvania’s overall effort to invest in businesses that are creating important and innovative
clean energy and bio-fuels technologies. The award proceeds were used to demonstrate the advantages our proprietary PbC battery
technologies provide in a variety of electric vehicle types including: HEVs, such as the popular Toyota Prius; “plug-ins”
(PHEVs) used in commuter, delivery and other vehicles; and in electric vehicles (EVs) and converted (from combustion
engine operation) EVs. The grant was initially billed against in the fourth quarter of 2009 and completed in July 2010.
On December 22, 2009,
we were awarded a $248,650 grant from the Pennsylvania Energy Development Authority, to assist in the development and deployment
of an Axion PowerCube™ battery energy storage system using the our PbC battery technology. The .5 MW PowerCube will be built
and installed at our New Castle facility and will be designed to enhance a Smart Grid electrical distribution system, that will
potentially include a future solar-powered electric vehicle charging station and a potential wind-powered energy system.
On May 11, 2010, we
were awarded a federal contract number N00014-10-C-0094 for the development of new lightweight, high-powered batteries for use
in vehicles operated by the U.S. Marine Corps. This final contract provides $1,004,747 to us for this project. Under the
contract, we worked with the U.S. Navy and Marine Corps to study the feasibility of utilizing one of our PbC ® products in
their assault and silent watch vehicles.
On June 16, 2010,
Axion Power Battery Manufacturing, Inc. received a $298,605 solar energy program grant from the Pennsylvania Department of Community
and Economic Development. This grant, along with proceeds from the December 22, 2009 Pennsylvania Energy Development Authority
provided funding for our development program with a total project cost of $1.0 million.
A summary of award
activities is listed as follows:
|
|
Total Award
Amount
|
|
|
Unbilled
AmountAward
Balance at
December 31,
2010
|
|
|
Unbilled
Award Balance
at December 31,
2011
|
|
DOD Office of Naval Research Contract
|
|
$
|
1,004,747
|
|
|
$
|
389,090
|
|
|
$
|
-
|
|
ALABC
|
|
|
388,000
|
|
|
|
|
|
|
|
-
|
|
PA Alternative Fuels Incentive Grant Program
|
|
|
763,404
|
|
|
|
|
|
|
|
-
|
|
Pennsylvania Energy Development Authority
|
|
|
248,650
|
|
|
|
140,389
|
|
|
|
|
|
Pennsylvania Department of Community and Economic Development
|
|
|
298,605
|
|
|
|
298,605
|
|
|
|
41,171
|
|
|
|
$
|
2,703,406
|
|
|
$
|
828,084
|
|
|
$
|
41,171
|
|
Results of Operations
Product manufacturing
in the third quarter of 2011 ramped up with production of PbC® prototype batteries, as well as meeting increased requirements
to fill existing purchase orders for traditional lead-acid batteries.
Our strategy for some
time has been to utilize traditional production to train our work force, test our systems and incorporate quality improvements
that we believe will ultimately benefit future PbC production. To this end, we have completed several capital projects in 2011:
including the modernization of our second lead-acid production line; the rebuild of five casting machines; addition of new welding
equipment; and a 35% expansion of our formation area.
Software improvements
and mechanical tweaking continue to improve thru-put on our automated robotic electrode production line. All stations currently
participate in the fabrication process as the line runs end to end. We are comfortable with the design modifications and will incorporate
them into our next planned electrode production line.
Norfolk Southern (“NS”)
has accepted delivery of large strings of PbC batteries to further their platform testing. These batteries are now installed in
the NS platform facility and undergoing testing. We are performing duplicate testing in New Castle, as well as comparison testing
with other battery technology. As part of our agreement with NS, Penn State University is also performing string testing on our
PbC batteries. To date the data from all battery system testing confirms PbC batteries are performing as anticipated. The success
of this testing is allowing us to expand the locomotive application to include other locomotive end users and locomotive integrators.
Expanding potential
customer base also applies to the emerging hybrid vehicle market. We have met with new OEM’s that are, or soon will be, producing
vehicles incorporating stop-start technology. The OEM’s interest has been fueled by our recent White Paper that highlights
the importance of “charge acceptance” in battery products designed for these markets. It also provides empirical evidence
on the deficiencies of existing products currently used in these markets. Our long-standing collaboration with both European and
US manufacturers continues as we share information and results from both bench and vehicle testing.
Our onsite PowerCube™
(“Cube”) is in the final stage of testing as we move toward tying into the grid. We are qualifying for dispatchable
power applications and will be proving out the Cube’s ability to provide power quality, back- up power, power smoothing,
and load leveling. This .5MW Cube can easily be scaled up or down from this building block size.
We continue to evaluate
the market for smaller Cubes for residential and community storage and larger Cubes for utilities, oil rigs and other larger applications
such as solar and wind. We anticipate establishing additional formal marketingagreements for some of these applications in 2012.
Overview
The following Management’s
Discussion and Analysis (“MD&A”) is written to help the reader understand our company. The MD&A is provided
as a supplement to, and should be read in conjunction with, our financial statements, the accompanying financial statement notes
appearing elsewhere in this propspectus and our Annual Report on Form 10-K for the year ended December 31, 2011.
|
·
|
Net sales are derived primarily from the
sale of lead acid batteries for specialty collector and racing cars, AGM batteries, and flooded batteries. Net sales also include
sales of product and services related to advanced battery applications for our PbC® technology.
|
|
·
|
Product costs include raw materials,
components, labor, and allocated manufacturing overhead required expenses to produce batteries sold to customers. Manufacturing
overhead expenses not assigned to product sales are included in research & development expenses. Product costs also include
provisions for inventory valuation and obsolescence reserves. Due to the development stage of our business, current product costs
may not be indicative of the future costs to produce batteries.
|
|
·
|
Research & development expenses (“R&D”)
includes activities to design, develop, and test advanced batteries and carbon electrode assemblies for our energy storage products
based on our patented lead carbon technology. Also included in R&D are the materials consumed in production of pilot products,
manufacturing costs not assigned to product sales and the reimbursement of R&D related to government grants.
|
|
·
|
Selling, general and administrative
expenses (“SG&A”) include employee compensation, selling and marketing expenses, legal, auditing and other costs
associated with being a public company.
|
Summarized selected Statement of Operations
data for the years ended December 31, 2011 and 2010.
|
|
2011
|
|
|
2010
|
|
Product sales
|
|
$
|
7,631,529
|
|
|
$
|
1,328,025
|
|
Service sales
|
|
|
459,645
|
|
|
|
820,081
|
|
Total sales
|
|
|
8,091,174
|
|
|
|
2,148,106
|
|
Product costs
|
|
|
6,799,302
|
|
|
|
893,681
|
|
Research & development expenses
|
|
|
5,060,036
|
|
|
|
5,432,230
|
|
Selling, general & administrative expenses
|
|
|
4,463,269
|
|
|
|
3,448,508
|
|
Impairment of assets
|
|
|
308,882
|
|
|
|
361,793
|
|
Derivative revaluations (income)
|
|
|
(238,618
|
)
|
|
|
(1,165,751
|
)
|
Loss before income tax
|
|
|
(8,311,890
|
)
|
|
|
(6,830,854
|
)
|
Reconciliation of net loss to EBITDA
|
|
2011
|
|
|
2010
|
|
GAAP loss before income taxes
|
|
$
|
(8,311,890
|
)
|
|
$
|
(6,830,854
|
)
|
Plus: Interest net
|
|
|
10,193
|
|
|
|
8,499
|
|
Depreciation
|
|
|
1,014,661
|
|
|
|
673,170
|
|
Share based compensation
|
|
|
453,770
|
|
|
|
444,986
|
|
Derivative revaluations (income)
|
|
|
(238,618
|
)
|
|
|
(1,165,751
|
)
|
Impairment of assets
|
|
|
308,882
|
|
|
|
361,793
|
|
EBITDA (1)
|
|
$
|
(6,763,002
|
)
|
|
$
|
(6,508,157
|
)
|
|
(1)
|
EBITDA, a non-GAAP financial measure, is defined as earnings before interest expense and interest
income, taxes, depreciation, amortization, share based compensation, derivative revaluations, and impairment of assets. EBITDA
is used by management to internally measure our operating and management performance and by investors as a supplemental financial
measure to evaluate the performance of our business that, when viewed with our GAAP results and the accompanying reconciliation,
we believe provides additional information that is useful to gain an understanding of the factors and trends affecting our business.
|
Summary of Consolidated Operating Results
for the Year Ended December 31, 2011 compared with the Year Ended December 31, 2010
Product Sales
Product sales
for
the year ended December 31, 2011 were $7.6 million compared to $1.3 million for the same period in 2010. We have one customer
that accounted for 84% of product sales in 2011 and two customers that accounted for 43% and 17% of product sales in 2010. The
increase in net product sales in 2011 compared to 2010 is due to a series of orders for the production and immediate delivery of
specialty flooded lead acid batteries with the purchaser financing the cost of inventory and providing the raw materials required
for production.
Service Sales
Service sales
for
the year ended December 31, 2011 were $0.5 million compared to $0.8 million for the same period in 2010. We have two customers
that accounted for all of the service sales during 2011 and three customers that accounted for the service sales during 2010.
Total Sales
Total sales
for
the year ended December 31, 2011 were $8.1 million compared to $2.1 million for the same period in 2010.
Product Cost
Product costs for
the year ended December 31, 2011 were $6.8 million compared to $0.9 million for the same period in 2010. The increase in product
costs resulted primarily from an increase in product sales.
Research & Development Expenses
Research and development
expenses for the year ended December 31, 2011 were $5.1 million compared to $5.4 million for the same period in 2010. R&D expenses
decreased by $0.3 million or 5% during 2011.
Selling, General & Administrative
Expenses
Selling, general &
administrative expenses for the year ended December 31, 2011 were $4.5 million compared to $3.4 million for the same period in
2010. SG&A for 2010 included a reduction of legal expenses of $0.8 million resulting from the settlement of the Mercatus matter
as disclosed in the Company’s Annual Report on Form 10-K and Form 10-K/A for the year ended December 31, 2010. Excluding
this charge, SG&A increased $0.3 million or 7%.
Derivative Revaluation
Income from derivative
revaluation for the year ended December 31, 2011 was $0.2 compared to an income of $1.2 million for the same period in 2010. Income
from derivative revaluation results from a decrease in the fair value of derivative liabilities. Derivative revaluations are recognized
whenever the Company incurs a liability associated with the issuance of an equity-based instrument. The instrument is revalued
for each reporting period until the liability is settled.
Liquidity and Capital Resources
Historically, our
primary source of liquidity has been cash generated from issuances of our equity or debt securities. From inception through September
30, 2011, we have generated insignificant revenue from operations. The receipt of $24.9 million in proceeds from our December 2009
equity private placement and internally generated funds from product sales and grants provided the financial resources to fund
our operations, working capital, and capital expenditures in 2010 and 2011.
On February 3, 2012
we completed a registered direct common stock offering which provided net proceeds of $8.6 million which will be used for working
capital, capital expenditures and general corporate purposes. See Note 11 – Subsequent Events included in Item 8 Financial
Statements and Supplementary Data.
We believe that the
currently available funds at December 31, 2011, along with the receipt of $8.6 million in proceeds from our February 2012 registered
direct common stock offering and internally generated funds from product sales, will provide sufficient financial resources for
current development stage operations, working capital, and capital expenditures through the first quarter of 2013.
Subsequent financings
will be required to fund the Company’s ongoing operations, working capital, and capital expenditures beyond March 31, 2013.
No assurances can be given that the Company will be successful in arranging the further financing needed to continue the execution
of its business plan, which includes the development and commercialization of new products. Failure to obtain such financings 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.
The need to secure additional capital to
fund continued operations past the first quarter of 2013 is the result of various factors. In addition, although we have made very
significant progress with our PbC® technology, the adoption process, and the general path to commercial viability, has been
longer than we originally anticipated. In addition, we will need working capital to fund our anticipated continued growth
of sales in traditional batteries and PbC products.
Cash, Cash Equivalents, and Working
Capital
At December 31, 2011,
we had $2.0 million of cash and cash equivalents compared to $13.3 million at December 31, 2010. At December 31, 2011
working capital was $4.3 million compared to a working capital of $14.0 million at December 31, 2010. One customer accounted for
$1.3 million or 30% of working capital at December 31, 2011. Cash equivalents consist of short-term liquid investments with original
maturities of no more than six months and are readily convertible into cash.
Cash Flows from Operating Activities
Net cash used by operating
activities was $8.2 million for the year ended December 31, 2011 and $6.7 million for the same period in 2010. Our negative cash
flow is consistent with the development stage of our business.
Cash Flows from Investing Activities
Net cash used
by investing activities for year ended December 31, 2011 was $3.0 million compared to net cash used by investing activities of
$3.6 million for the same period in 2010. Investing activities in 2011 and 2010 were due primarily to purchases of property and
equipment.
Cash Flows from Financing Activities
Net cash used by financing
activities for the year ended December 31, 2011 was $0.1 million compared to net cash provided by financing activities of $0.3
million for the same period in 2010. In 2010 proceeds from the exercise of warrants were the primary source of financing activities.
Significant Financing Arrangements
On February 9, 2010,
April 19, 2010, July 12, 2010, and October 1, 2010 a total of 400,000 warrants (100,000 warrants from each transaction) were exercised
for a total of $228,000. In settlement of the Mercatus matter, during August 2010, 301,700 warrants issued were exercised
for $131,266 and in December 2010, 198,300 shares of our common stock were issued at for a total of $113,031.
The “Management’s
Discussion and Analysis of Financial Condition or Plan of Operation” section of this Annual Report discusses our financial
statements, which have been prepared in accordance with GAAP. To prepare these financial statements, we must make estimates and
assumptions that affect the reported amounts of assets and liabilities. These estimates also affect our reported revenues and expenses.
On an ongoing basis, management evaluates its estimates and judgment, including those related to revenue recognition, accrued expenses,
financing operations and contingencies and litigation. Management bases its estimates and judgment on historical experience and
on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making
judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions. The following represents a summary of our critical accounting
policies, defined as those policies that we believe are the most important to the portrayal of our financial condition and results
of operations and that require management’s most difficult, subjective or complex judgments, often as a result of the need
to make estimates about the effects of matters that are inherently uncertain.
Critical Accounting Policies, Judgments
and Estimates
Use of Estimates:
The
preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management
to make estimates, assumptions and judgments that affect reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from the estimates.
Principles of Consolidation:
The
consolidated financial statements include the accounts of the Company, and its wholly owned subsidiaries, Axion Power Battery Manufacturing,
Inc., APC and C&T. All significant inter-company balances and transactions have been eliminated in consolidation.
Derivative Financial
Instruments:
The Company’s objective in using derivative financial instruments is to obtain the lowest cash
cost-source of funds. Derivative liabilities are recognized in the consolidated balance sheets at fair value based on the criteria
specified in FASB ASC topic 815-40 "
Derivatives and Hedging – Contracts in Entity’s own Equity
".
The estimated fair value of derivative liabilities is calculated using the Black-Scholes-Merton method where applicable and such
estimates are revalued at each balance sheet date, with changes in value recorded as income or expense in the consolidated statement
of operations.
Inventory:
Inventory
is recorded at the lower of cost or market value, and adjusted as appropriate for changes in valuation and obsolescence. Adjustments
to the valuation and obsolescence reserves are made after analyzing market conditions, current and projected sales activity, inventory
costs and composition to determine appropriate reserve levels.
Revenue Recognition:
The
Company recognizes revenue when there is persuasive evidence of an agreement, delivery has occurred or services have been rendered,
the sales price to the buyer is fixed or determinable and collectability is reasonably assured. Evidence of an agreement and fixed
or determinable sales price is predominantly based on a customer purchase order or other form of written sales order or written
agreement. Sales on account are approved only for credit-worthy customers; otherwise payment is generally received prior to shipment.
Shipping terms are generally FOB shipping point and revenue is recognized when product is shipped to the customer. In limited cases,
if terms are FOB destination or contingent upon collection by a prime contractor, then in these cases, revenue is recognized when
the product is delivered to the customer’s delivery site or the conditions for collection have been fulfilled. The Company
records sales net of discounts and estimated customer allowances and returns. We offer a 90 day free replacement warranty on some
specialty collector car and motorsports products. Collector car products also carry a four year prorated warranty that begins at
the end of the 90 days. To date, our warranty exposure on these products has been minimal. Flooded battery sales do not have standard
warranty provisions and instead are sold at a discount in lieu of warranty. There are no other post shipment obligations that may
impact the timing of revenue recognition for the year ending December 31, 2011.
Grants
: We
recognize government grants when there is a reasonable assurance that we will comply with the conditions attached to the grant
arrangement and the grant will be received. For reimbursements of expenses, the government grants are recognized as reduction of
the related expense. For reimbursements of capital expenditures, the grants are recognized as a reduction of the basis of the asset.
The grant is recognized in profit or loss over the life of a depreciable asset as reduced depreciation expense.
Stock-Based
Compensation:
Prior to January 1, 2006, we accounted for stock option awards in accordance with the recognition and
measurement provisions of former authoritative literature APB 25 and related interpretations, as permitted by former authoritative
literature Statement of Financial Accounting Standard No. 123 (“SFAS 123”),
“Accounting for Stock-Based
Compensation”
. Under APB 25, compensation cost for stock options issued to employees was measured as the excess, if any,
of the fair value of our stock at the date of grant over the exercise price of the option granted. Compensation cost was recognized
for stock options, if any, ratably over the vesting period. As permitted by SFAS 123, we reported pro-forma disclosures presenting
results and earnings as if we had used the fair value recognition provisions of SFAS 123 in the Notes to the Consolidated Financial
Statements.
Effective January
1, 2006, we adopted the provisions of FASB ASC topic 718 using the modified prospective transition method. Stock-based compensation
related to employee and non-employees is recognized as compensation expense in the accompanying consolidated statements of operations
and is based on the fair value of the services received or the fair value of the equity instruments issued, whichever is more readily
determinable. Our accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services
follows the provisions of FASB ASC 505-50 “
Equity-Based Payments to Non-Employees”
(formerly EITF 96-18,
“Accounting
for Equity Instruments That are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services”
and
EITF 00-18,
“Accounting Recognition for Certain Transactions Involving Equity Instruments granted to Other Than Employees.”)
The
measurement date for the fair value of the equity instruments issued is determined at the earlier of (1) the date at which a commitment
for performance by the consultant or vendor is reached or (2) the date at which the consultant or vendor’s performance is
complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the
term of the consulting agreement.
Research and Development:
R&D
costs are recorded in accordance with FASB ASC topic 730,
“Accounting for Research and Development Costs,”
which
requires that costs incurred in R&D activities covering basic scientific research and the application of scientific advances
to the development of new and improved products and their uses be expensed as incurred. The policy of expensing the costs of R&D
activities relate to (1) in-house work conducted by us, (2) costs incurred in connection with contracts that outsource R&D
to third party developers and (3) costs incurred in connection with the acquisition of intellectual property that is properly classified
as in-process R&D. R&D includes the conceptual formulation, design and testing of product alternatives, construction of
prototypes, and operation of pilot plants.
Off Balance Sheet Arrangements
We do not have any
off-balance sheet arrangements.
BUSINESS
Axion Power International,
Inc. (the “Company”, Axion, “we”, “our”, or “us”) is a development stage company
whose primary mission is to engage in the development and production of new battery technologies. These are known as lead carbon
PbC® batteries and components. In addition we manufacture standard and specialty lead-acid batteries. Our new technologies,
primarily consisting of the use of activated carbon as an alternative to lead in the battery’s negative electrode, have application
in the production of batteries for virtually all energy system storage functions. It is the Company’s long term goal to become
a primary supply source of PbC negative electrodes to established battery manufacturers.
The Battery Industry
There are two principal
types of lead-acid batteries: flooded batteries and valve regulated lead-acid. The choice of battery depends mainly on the specific
application that the battery serves. Typical standby or stationary applications use valve regulated lead-acid batteries due to
their inherent advantages, including spill proof design, low maintenance, and compact form, low self-discharge and high performance.
On the other hand, applications like industrial equipment are better served by the flooded lead-acid battery types due to their
superior performance in continuous deep discharge applications and at high operating temperatures, among other features. Technology
within the lead-acid battery industry has remained relatively stable for the last 30 years, and an industry-wide lack of innovation
has generally restrained growth into new applications and emerging markets.
Alternative energy
applications like wind and solar power require an energy storage solution that combines low cost and long deep discharge cycle
life. Lead-acid batteries are currently one of the gold standards in large-scale power storage applications, but the low charge
acceptance and short cycle-life of lead-acid chemistry at deep discharge levels is a primary inhibitor to growth. Due primarily
to these limitations, a number of battery manufacturers are experimenting with alternative battery technologies that are far more
expensive to implement, but offer substantial cycle-life advantages.
The North American
lead-acid battery industry is mature with a few leading vendors that have a global presence and a larger number of smaller regional
and local vendors that cater to the needs of the North American market. The first tier companies that have a global presence include
EnerSys, Exide Technologies and Johnson Controls. The second tier companies that cater mainly to the North American
Markets include, among others, East Penn Manufacturing, GS Batteries, and Trojan Battery. The user segments that rely on lead-acid
batteries include internal combustion engine automotive applications, standby applications ranging from uninterruptible power supplies
to telecommunication applications, limited power storage for wind and solar systems and motive power for heavy-duty equipment and
railroad applications.
Our Corporate History
Axion Power Corporation,
our wholly owned subsidiary, was formed in September of 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 (“Tamboril”), a public shell company whereby Axion Power Corporation became a wholly owned subsidiary of Tamboril.
Tamboril was originally incorporated in Delaware in January 1997 and operated a wholesale cigar business until December 1998, after
which date it was an inactive public shell until the reverse acquisition and subsequent name change to Axion Power International,
Inc.
In February 2006,
we acquired use of our Clover Lane facility. We have utilized this space to manufacture our specialty lead-acid battery products
and to produce and test prototypes which incorporate our new technology. Our Clover Lane plant provides us the opportunity to manufacture
batteries for sale under the Axion brand name; to manufacture for third parties under a specific contract arrangement; or to manufacture
prototypes for our own use and testing, or for testing by our customers. Our facility has been fully tested and was found to be
in compliance with emission standards established by new federal guidelines in accordance with the Clean Air Act–Title III.
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 believe that a successful transition from R&D
to PbC manufacturing will improve our financial condition, cash flow and market profile.
Developments Since 2008
Since 2008, we have
devoted a significant portion of our time and financial resources to upgrading, and where necessary, replacing existing battery
manufacturing equipment as part of our long range business plan. Our business plan anticipated utilizing upgraded equipment to
manufacture our proprietary PbC lead carbon products. During 2009, we continued to make improvements to our production processes
through capital acquisitions and the early stage of quality control systems. We also installed and continued to engineer our first
prototype automated PbC negative electrode manufacturing line.
On December 22, 2009,
we sold 45,757,572 shares of our common stock at a price of $0.57 per share for total gross proceeds of $26,081,816 and net cash
proceeds of $24,928,323 after “breakup” fees and cash offering costs.
During 2010, we continued
to improve and utilize the new prototype line which, together with certain manual processes, allowed us to manufacture our PbC
negative electrodes for sale and for use in ongoing prototype testing. We then incorporated our knowledge and experience into the
design of a second generation automated robotic line. There were two main challenges we needed to address in order to be able to
ready our product for commercial production quantities – (i) implementation of improved quality control; and (ii) increase
in target quantity production levels. We began discussions with a major “design and equipment manufacture” firm early
in 2010 which, in the summer of 2010, led to a design and build contract for a robotic carbon electrode manufacturing line. The
complete new line was delivered to us in 2011 and was put in place at our Green Ridge Road facility in New Castle, PA. We anticipate
that the carbon electrode component of our PbC batteries for our various planned PowerCube
TM
projects, for our
hybrid locomotive Norfolk Southern project, for our automotive strategic partners and for testing on various other customer oriented
projects will all be manufactured with robotic precision on this second generation line. We also continue to identify further improvements
to the new line which will be incorporated into the next generation.
Our upgrade and replacement
of battery manufacturing equipment, begun in 2010, was completed in 2011 and included the installation of a new automatic paste
mixer and a fixed orifice pasting line that will improve the quality and dimensional tolerances of battery plates. In addition,
the assembly operation added an automatic stacker that will provide the precise wrap and alignment of absorbed glass matt separator
that is needed for the production of our premium PbC products. 2011 also saw us complete 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.
As a result of our
having invested in the reconfiguration of our manufacturing space and in the training of our workforce, we have been able to seize
an evolving opportunity to increase revenue and cash flow generated from specialty lead-acid batteries. On March 8, 2011, we announced
that we had received a series of purchase orders for the production and immediate delivery of specialty flooded lead-acid batteries.
The batteries will be branded by the purchaser. We anticipated, and saw, weekly shipments of these batteries and these shipments
generated $6.4 million in 2011 product sales. The flooded lead-acid batteries were built by us, with the purchaser carrying the
cost of inventory and providing the raw materials required. The battery order was well-suited to production on our newly renovated,
and under-utilized, manufacturing facilities at Clover Lane. This initiative, which will continue in 2012, is not a deviation from
our long-term strategy which is focused on PbC battery and component production. Rather, it provided us with an opportunity to
enhance that strategy by further training our factory personnel, while at the same time allowing us to make production and quality
improvements. A further benefit was the generation of cash flow to reduce our cash burn rate as we move forward toward the commercialization
of our PbC products.
The Company was recommended
by a Quality System Registrar (SRI) for certification under ISO 9001:2008 – ANSI/ISO/ASQ Q9001-2008 for its Quality Management
System. The scope of the ISO 9001:2008 registration is the “Design, manufacture, and distribution of advanced lead-acid batteries
and battery components”. Training, visual shop floor controls, and a strong commitment to quality resulted in us receiving
ISO certification in February, 2011.
In 2011, our automotive
work incorporated new OEM partners to the ongoing mix. As more and more empirical evidence is presented with respect to the lack
of merit, and/or practicality, of existing stop-start battery solutions, the potential of our PbC product gains more and more traction.
The clock is running for the US and European automotive manufacturers as they seek to comply with upcoming governmental regulations
and consumer expectations for increased miles per gallon. European OEM’s in particular have made commitments to fleet wide
adoption of hybridization for their future manufactured vehicles. This commitment was strongly influenced by European Union (EU)
legislation that requires reductions in CO2 emissions for all new passenger vehicle production in Europe beginning in 2012. In
the first year of the phased in requirement, 65% of the fleet (average) is required to reduce CO2 emissions to 130 grams per kilometer.
The percentage ratchets up to 75% in 2013, 80% in 2014 and a full 100% (average) in 2015. Beginning in 2012, failure to comply
with the regulation will result in a fine based on the number of grams of CO2 that were emitted above the 130 gram limit. The assessment
begins with 5 euros for the first gram; 15 euros for the second; 25 euros for the third; 95 euros for the fourth; and 95 euros
for every subsequent gram of CO2 over the 130 gram limit. This fine will be assessed against the entire new manufactured fleet
of an OEM. In real terms it means that if an OEM manufactured one million vehicles (and there are several that do) in 2015, and
that manufacturer was 5 grams of CO2 over the limit (at the 135 grams of CO2 per kilometer level), then that manufacturer would
be fined 235 million euros for the year 2015, and for every subsequent year of non-compliance (European Parliament regulation EC443/2009).
We and others believe
that the fastest, and least expensive, method of reducing CO2 emissions from an internal combustion engine vehicle is to equip
the vehicle with stop-start technology. Simply put, in stop-start, every time the vehicle comes to rest the engine shuts off. When
the operator takes their foot off the brake and re-engages, the engine comes back on. CO2 emission reductions, and the “hand
in hand” fuel savings, are directly proportional to the time the engine is at rest. But, while the engine is off, there is
still an ancillary load in the car that must be powered (headlights, heater/air conditioning, radio, power brakes, windshield wipers,
door locks, dash board lights, power windows, etc.). The car battery will have to power this load, and it will have to do so without
charge from the alternator, or integrated starter generator, because the engine is at rest. Several battery technologies can be
utilized - expensive lithium ion, nickel metal hydride, supercapacitors in various forms and combinations, but these solutions
all add 4 figures + to the cost when the necessary ancillary equipment, required by these chemistries, is included in the equation.
Prospective solutions in the form of conventional lead-acid batteries would cost a few hundred dollars but lead-acid batteries,
in flooded, VRLA or AGM constructs, do not allow the vehicle to fully function as required. This is true because the lead-acid
battery develops poor charge acceptance early in its life cycle resulting in extended charge time requirements between stop-start
events. The result is a charging event that takes minutes during which time the vehicle engine cannot shut off and therefore does
not reduce CO2 emissions, and increase mpg, in conformance with government regulations. 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 improving miles per gallon. We feel we have the best potential product for the emerging micro-hybrid
(stop-start) market and therefore we have devoted considerable time and money in working with our strategic partners and prospective
customers in this area.
A major focus in 2011
was our continued effort in the hybrid locomotive application. Similar to the hybrid vehicle market, battery charge acceptance
and ability to take advantage of opportunity charging are key elements in providing a product for the hybrid locomotive market.
If you add to the equation the hybrid locomotive’s need for a product that also has a “high cycle life” component,
you can easily see why we feel our PbC battery, with high charge acceptance, fast re-charge ability and high cycle life, has a
significant advantage in this market. Most of our work over the last two years has been with Norfolk Southern, with whom we forged
a partnership after the early battery technologies they chose to work with proved to be inadequate for the unique needs of that
hybrid technology. After initial testing confirmed that our PbC product demonstrated great potential for the hybrid locomotive
market, we entered into a 12 month service and supply agreement with Norfolk Southern, under which we initially provided engineering
expertise and small quantities of batteries for their in house testing. This arrangement evolved into the sale of much greater
quantities of batteries for their use in large string testing. That string testing (as well as electronic compatibility testing)
continues and is being mimicked by us and by Penn State University. We have also begun promising work with other manufacturers
in the hybrid locomotive field.
With the financial
assistance provided by the Pennsylvania Energy Development Authority and Commonwealth Financing Authority grants we were awarded,
we commissioned our first PowerCube™ product onsite at our Clover Lane facility. 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 (the
largest Regional Transmission Organization in the US). Basically through this arrangement, the PowerCube is network connected to
the PJM system and allows us to respond through Viridity to curtailment and demand response signals from PJM. Our strategic partnerships
with Viridity and PJM were formed partially in response to anticipated new rulings from the Federal Energy Regulatory Commission
(FERC). The new rulings took place in October of 2011 and basically allowed power sources, of 500kW down to 100kW, to be connected
to the grid. They also ruled that “pay for performance” provisions would be phased in during calendar year 2012. “Pay
for performance” translates into the faster you respond the higher rate the utility will pay on a per kilowatt basis. Our
PowerCube is rated at 500kW and we initially began to respond to PJM’s curtailment signals at a 100kW level, which will be
ramped up as we go forward. Since our PowerCube can respond to curtailment signals in 50 milliseconds, we are looking forward to
the implementation of “pay for performance” rates in 2012.
Since the PowerCube
can be scaled, we began a parallel path development of smaller PowerCube units (mini-cubes) in 2011. 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
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 have entered into a memorandum of understanding with a group that will take this product to market.
We completed our initial
work on a $1.0 million grant from the Office of Naval Research (ONR) in 2011. This project was aimed at developing a product for
the Navy and Marine Corps silent watch program and their assault vehicle program. This program provided us with valuable information
that we can utilize across the spectrum of our products. We have billed $1.0 million and collected all monies less a 1% service
fee as of December 31, 2011 and expect to collect the balance in the first half of 2012.
Work begun with Norfolk
Southern (“NS”) in 2010 continued to progress in 2011. In the third quarter of 2011, NS accepted delivery of large
strings of PbC batteries from Axion to further their platform testing. These batteries were installed in the NS platform facility
and are under test. We are performing duplicate testing in New Castle, as well as comparison testing with other battery technology.
As part of our agreement with NS, Penn State University is also performing string testing on our PbC batteries. To date the data
from all battery system testing confirms PbC batteries are performing as anticipated. The success of this testing is allowing us
to expand the locomotive application to include other locomotive end users and locomotive integrators.
Our public filings
in 2011, as well as some of our public statements, made clear our need for outside funding resources in order to continue our business
growth. We spoke with several investment banks and institutions throughout the second half of 2011. The financial markets were
difficult and at times somewhat unstable. Nonetheless, in an event subsequent to 2011, (February 7, 2012), we completed a registered
direct common stock offering at a per share price of $0.35 per share. This straight equity transaction, at a 10% discount to market
based on trailing average, 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.
Our Business and Products
We are a development
stage company. Since inception we have been engaged in research and development of new technology to manufacture carbon electrode
assemblies for our lead-acid-carbon energy storage devices that we refer to as our PbC devices. 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 ten 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 and 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 employ 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 used throughout the world for manufacturing conventional lead-acid batteries.
PbC batteries use significantly less lead than standard lead-acid batteries with a comparable footprint, and 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
99.1% 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 conventional lead-acid battery and the lead
acid battery industry as a whole. While we explore the various potential applications for our PbC technology, two facilities in
New Castle, Pennsylvania provide us with both an excellent R&D facility and a pilot 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 future PbC negative electrode customers that our product is suitable to immediate use in their factories.
The PbC battery production
is limited at this time by our inability to make the carbon electrodes in large numbers and with full automated quality control.
As part of our plan to transition from pilot production of PbC negative electrodes 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 prototype automated PbC negative electrode production line.
In addition, this transition will require that we:
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continue to refine our fabrication methods
for carbon sheeting, packet assembly and other key components of our carbon electrode assemblies;
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demonstrate the feasibility of manufacturing
our PbC device and our other technologies, using standard techniques and equipment;
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demonstrate that the proper quality control
can be achieved on our robotic PbC negative electrode manufacturing line;
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demonstrate and document the performance
of our products in key applications; and
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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 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 as other opportunities to manufacture traditional products present themselves.
Meanwhile, we plan
to develop our lead carbon technology for use in a variety of applications including:
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motive power applications;
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stationary power applications;
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hybrid electric vehicle applications;
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hybrid locomotive applications; 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:
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cost effectiveness: Due to an extended cycle
life and relatively low production costs;
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superior properties of our product: The PbC
battery has a much greater charge acceptance and has must faster recharge capabilities when compared to other standard and advanced
lead-acid batteries;
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ease of manufacturing integration: Our planned
carbon electrode assemblies will be designed to replace the standard lead negative electrodes in conventional lead-acid batteries.
In some applications that require fixed voltage operations, voltage conversion may be needed;
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superior flexibility: By changing the number,
geometry and arrangement of the PbC negative electrode assemblies, we expect to be able to configure our devices to favor either
maximum energy storage or maximum power delivery; and
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reduced lead content: Depending on the energy,
power and cycling requirements of a particular application, our fully recyclable device will use substantially less lead than conventional
lead-acid batteries in some applications.
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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 design and manufacture commercial
carbon electrode assemblies;
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our ability to establish and 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 retain key personnel.
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Our objective is to become an
industry leader in the development and production of components for low cost, high performance energy storage systems. We plan
to achieve this objective by pursuing the following core strategies:
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Platform technology business model. We
plan to implement 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.
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Leverage relationships with thought leaders.
We are engaged in discussions with industry consortia, research institutions, automotive OEM’s, rail 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 research, we believe the opportunities for government funding and consortia participation will expand and
improve our access to potential suppliers and customers.
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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.
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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.
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Focus on specific markets. Markets for
hybrid electric vehicles, hybrid locomotives and conventional utility applications are becoming increasingly attractive. We are
actively pursuing the use of our lead carbon technology products in these emerging markets.
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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.
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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 do not believe we will be able to make a credible entry into the battery
market until we have proven the advantages of our PbC device technology in demonstration projects with end users. Therefore, our
business plan contemplates two discrete phases: the development phase (including prototype and demonstration) and the commercialization
phase.
Development
Phase
. We are currently in the final stages of the development phase of our business plan. We are focusing on producing
quantities of commercial prototypes in our own manufacturing facilities. These commercial prototypes will serve as the foundation
for a series of paid demonstration projects with established end users. If these projects are successful and end user testing validates
the advantages of our PbC device technology under real-world operating conditions, we may be able to proceed more easily to the
full commercialization phase. In general, our development path in each identified target market will include the following:
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Prototype manufacturing
. We are finalizing
architecture and manufacturing methods for our commercial prototype PbC carbon electrodes. These PbC negative electrode assemblies
will be the key component in the onsite manufacturing of our PbC batteries. We are also working in house, and with third parties,
to develop methods of properly integrating electronics unique to various applications. We have integrated these electronics, for
example, into our onsite PowerCube. Our proprietary battery management system plays a key role in this development since it allows
us to remotely monitor, and in some cases manage the condition, of both individual batteries and battery strings.
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Demonstration projects
. When we have
developed and bench tested our commercial prototype PbC devices for a particular target market, we will negotiate additional demonstration
projects for each of the intended applications. In some of the larger projects we may partner with a larger battery manufacturer
in order to provide the required quantity of PbC devices. Our goal is to document and validate the superior performance of
our products in real-world applications.
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Commercial production
. When we have
developed sufficient data to support a decision to commence full scale production of a product or product line, we intend to use
our Clover Lane facility until we reach our maximum capacity, after which we plan to pursue strategic relationships with other
battery manufacturers that are willing to manufacture co-branded commercial PbC products. Those products will contain our proprietary
PbC negative electrode assembly, which we will continue to manufacture at our Green Ridge Road facility and build our brand recognition.
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Our planned demonstration
projects are not expected to generate sufficient revenue and gross profit to offset our expected operating costs. Accordingly,
we do not expect to attain profitability during the development phase. If we enter into a commercialization relationship for a
specific product or product line, we believe our margins may improve based on efficiencies of scale. However, there is no assurance
that the commercialization of products for one or more market segments will generate sufficient revenue and gross profit to offset
our anticipated R&D and other operating expenses and yield a profit.
Commercialization
Phase
. During the commercialization phase, we intend to implement a platform technology business model where we will develop
and manufacture the PbC carbon electrode assemblies that are unique to our PbC batteries. In addition to using these assemblies
in our batteries, we eventually intend to sell our proprietary assemblies to other established battery manufacturers who 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, allowing us to focus on a narrow band of value-added activities that should minimize our investment and maximize
our profitability.
Until we complete
our planned demonstration projects, our negotiation position with respect to developing customer relationships with established
battery manufacturers may be impaired. Even if our planned demonstration projects are successful, we may be unable to negotiate
manufacturing relationships on terms acceptable to us.
We plan to initially
focus on high-value market segments where the total cost of ownership is the primary determining factor in product selection. We
believe our commercial PbC device will be most appealing where longer life, high performance, and low maintenance are fully valued.
Our Patents and Intellectual Property
We own ten 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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·
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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) - Modified activated carbon for carbon for capacitor electrodes and method of fabrication thereof; and
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U.S. Patent No. 7,881,041(expires March 2027)
– Activated Carbon Electrode with PTFE B
|
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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. 7,998,616(expires February
2028) – Negative Electrode for a Hybrid Energy Storage Device
|
Presently, we have
no duty 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 will 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, 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.
Our proposed products
are still in the development stage, and 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.
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 potentially competitive with technologies being developed by a number of new and established companies engaged in the manufacture
of storage devices or components for storage devices. In addition, many universities, research institutions and other companies
are developing advanced 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, 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,
however, that our PbC platform technology business model will succeed in the battery industry.
Raw Materials
During the research
stage, we used readily 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 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 adversely impact our results of operations.
Lead is the primary
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 have fluctuated dramatically over the last three years, similar to other industrial
grade commodity metals. Although our PbC battery does not require as much lead as a conventional lead-acid battery, lead is still
a major raw material component.
Environmental Protection
Lead is a toxic material
that is a primary 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
We engage in extensive
R&D activities for the purpose of improving our PbC technology and our proposed products. Our goal is to increase efficiency
and reduce costs in order to maximize our competitive advantage. Our R&D organization works closely with our engineering and
business development teams, our suppliers and potential customers to improve our product design and lower manufacturing costs.
During 2011 and 2010, we spent $5.1 million and $5.4 million, respectively, on R&D, and $28.9 million since inception, net
of grant reimbursements. While our limited financial resources and brief operating history makes it difficult for us to estimate
our future expenditures, we expect to incur R&D expenditures of consistent magnitude for the foreseeable future.
Our Employees
As of December 31,
2011 we employed a staff of 90, including a 16 member scientific and engineering team, and 51 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 28, 2010,
we renewed our lease for 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 term commenced on April 3, 2010 with
an initial term of three years.
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The renewal lease may be extended for
two successive five-year renewal options 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 2013. 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
Company is led by Thomas Granville, who has served as chief executive officer and chairman of the board since 2005. Our
board of directors is divided into three classes of directors that serve for staggered three-year terms. Two have been elected
to serve for terms that expire on the date of our 2012 Annual Meeting (and of those directors, one, Glenn Patterson, has notified
the board that he will not run for re-election at the 2012 Annual Meeting); two have been elected to serve for a term that expires
on the date of our 2013 Annual Meeting; and two of our current board members have been elected to serve for terms that expire on
the date of our 2014 Annual Meeting. The board has three standing committees – audit, compensation and technology. The
Audit Committee is comprised solely of independent directors, 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
|
Thomas Granville
|
|
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67
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Chief Executive Officer and Director
|
Howard K. Schmidt, Ph. D.
|
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53
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Director
|
Michael Kishinevsky
|
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46
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Director
|
Robert G. Averill
|
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72
|
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Director
|
D. Walker Wainwright
|
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61
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Director
|
Executive officers.
The following table
identifies our current non-director executive officers and their respective ages and positions with the Company.
Name
|
|
Age
|
|
Position
|
Philip S. Baker
Vani Kumar Dantam
|
|
64
53
|
|
Chief Operating Officer
Senior
Vice President-Business Development, Sales and Marketing
|
Charles R. Trego
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61
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Chief Financial Officer
|
The following paragraphs
provide summary biographical information furnished by our directors and non-director executive officers.
Directors
Robert G.
Averill
,
72
, has served on our board of directors since February 2004. Mr. Averill is retired and principally
involved in personal investments. He served as a director of Implex Corp., a New Jersey based developer and manufacturer of orthopedic
implants that he co-founded in 1991 and then sold to Zimmer Holdings, Inc. From 1978 to 1991, Mr. Averill held a variety of executive
positions with Osteonics Corp., a developer and manufacturer of orthopedic implants that he co-founded in 1978 and then sold to
Stryker Corporation. From 1971 to 1977, Mr. Averill served as a director and held a variety of executive positions with Meditech
Inc., a developer and manufacturer of orthopedic implants that he co-founded in 1971 and sold to 3M Corporation in 1975. Mr. Averill
holds 28 patents on a variety of orthopedic devices and materials, and he is the co-author of several publications in the field
of orthopedics. Mr. Averill holds two degrees from the Newark College of Engineering (BS-mechanical engineering, 1962 and MS-engineering
management, 1966). The Company has determined that Mr. Averill should serve as a director due to his extensive engineering and
manufacturing background.
Thomas Granville
,
67
,
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.
Michael
Kishinevsky
,
46
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., 53
, 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.
D. Walker Wainwright
,
61
,
is an independent director who was appointed to our board of directors in January 2007. 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. The Firm’s activities
include the identification and assessment of alternative investments, the monitoring of these investments and the creation of proprietary
portfolios. In this respect, the firm works with investment management firms, not-for-profit organizations and family offices as
an independent consultant to create client-specific solutions. Wainwright & Co. also researches and reviews private investments,
including private equity funds, to assist in determining their suitability for specific accounts or portfolios. Formerly a Managing
Director in investment banking at Smith Barney, Inc. and at Kidder, Peabody & Co., Mr. Wainwright has over 35 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
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.
Charles
R. Trego
joined the Company as Chief Financial Officer on April 1, 2010. 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 experience as a financial
officer of global middle businesses across several industries and include 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.
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 2011, 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
ethics and conduct, 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 four of our directors would meet the independence requirements of the NYSE AMEX if such
standards applied to the Company. In the judgment of the board of directors, Mr. Granville does 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.
Board Committees
The
board of directors currently has three standing committees: the audit committee, the compensation 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
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 would meet the independence requirements applicable to NYSE Amex listed companies
although such standards do not apply to our company. Our board of directors has also determined that based on work history none
of our current committee members meet 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 4 times during the year ended December 31, 2011. 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. Averill,
Patterson, Kishinevsky and Wainwright. Mr. Patterson serves as chairman of the compensation committee, and the compensation committee
will elect a replacement upon Mr. Patterson’s retirement from the board at the Annual Meeting. 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 compensation committee typically meets in separate sessions independently of board meetings.
The compensation committee typically schedules telephone meetings as necessary to fulfill its duties. 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 Amex listed companies although such standards do not apply to us.
The
compensation committee met 1 time during the year ended December 31, 2011. The compensation committee charter can be found on our
website under “
About Axion; Corporate Governance; Committees
,” at
www.axionpower.com.
Technology
Committee
– Our board of directors has created a technology committee that consists of Dr. Schmidt, Messrs. Averill,
Kishinevsky and Granville. The technology committee provides board-level oversight, guidance and direction to our R&D staff,
supervises evaluates 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 conducted 1 formal meeting during the year ended December 31, 2011 and met informally with our
former CTO and other members of the R&D and technical teams during the course of the year.
We
do not have a nominating committee – Given the relatively small size of our board of directors and the desire to involve
the entire board of directors in nominating decisions, we have elected not to have a separate nominating committee, and the entire
board of directors currently serves that function. With respect to director nominees, our board of directors 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 also do not have a specific process
for identifying and evaluating nominees for director, including nominees recommended by security holders. The board has not paid
fees to any third party to identify or evaluate potential board nominees.
EXECUTIVE
COMPENSATION
The
following table sets forth the compensation earned by or paid to our Named Executive Officers with respect to the year ended December
31, 2011. The Named Executive Officers are as shown. We did not have any non-equity incentive plans, pension plans or
deferred compensation plans during the year ended December 31, 2011.
SUMMARY
COMPENSATION TABLE
Name and
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
All Other
|
|
|
Total
|
|
Principal
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Awards
|
|
|
Compensation
|
|
|
Compensation
|
|
Position
|
|
Year
|
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)(4)
|
|
|
($)
|
|
Thomas Granville
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CEO and Director
|
|
|
2011
|
|
|
|
380,000
|
|
|
|
|
|
|
|
|
|
|
|
35,867
|
|
|
|
406,867
|
|
Thomas Granville
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CEO and Director
|
|
|
2010
|
|
|
|
350,708
|
|
|
|
270,000
|
|
|
|
113,112
|
|
|
|
33,653
|
|
|
|
767,473
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles R. Trego
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CFO
|
|
|
2011
|
|
|
|
225,000
|
|
|
|
|
|
|
|
|
|
|
|
34,666
|
|
|
|
259,666
|
|
Charles R. Trego
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CFO
|
|
|
2010
|
|
|
|
161,827
|
|
|
|
|
|
|
|
185,364
|
|
|
|
38,323
|
|
|
|
385,514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philip S. Baker
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COO
|
|
|
2011
|
|
|
|
199,800
|
|
|
|
|
|
|
|
|
|
|
|
30,617
|
|
|
|
230,417
|
|
Philip S. Baker
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COO
|
|
|
2010
|
|
|
|
143,702
|
|
|
|
|
|
|
|
160,884
|
|
|
|
76,743
|
|
|
|
381,329
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward Buiel (6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vice President and CTO
|
|
|
2010
|
|
|
|
80,308
|
|
|
|
|
|
|
|
|
|
|
|
454,262
|
|
|
|
534,570
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald Hillier
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CFO
(5)
|
|
|
2010
|
|
|
|
20,192
|
|
|
|
|
|
|
|
|
|
|
|
41,119
|
|
|
|
61,311
|
|
|
1.
|
Salaries are presented as the contractual amount paid during 2011 and 2010.
|
|
2.
|
Discretionary bonuses are not made pursuant to any specific bonus plan. Bonuses cited were
awarded and paid in 2010.
|
|
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, gross–ups on
stock awards, other earned compensation, as well as healthcare premiums paid under the group health plan.
|
|
5.
|
Mr. Hillier served as our chief financial officer throughout fiscal year 2009 and was terminated on
February 5, 2010.
|
|
6.
|
Dr. Edward Buiel.
On June 23, 2008, the Company entered into an Executive Employment Agreement
with Dr. Edward Buiel as Vice President and Chief Technology Officer, which terminated on May 31, 2010. Upon expiration of his
status as employee, 50,000 shares of restricted stock were forfeited pursuant to the terms of his 2008 employment agreement. On
June 7, 2010 the Company agreed to engage
Dr. Buiel as an interim independent contractor with compensation at $10,000
per week, plus travel expenses to and from all work sites, meals, administrative expenses, other travel related expenses, and health
care benefits through December 31, 2010. In 2011, Dr. Buiel earned $10,000 monthly in his capacity as a consultant.
There is no formal consulting agreement in place.
|
Employment Agreements
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 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 receives 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.
|
|
•
|
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.
Warrants
As
of April 10, 2012, we have 11,896,070 outstanding warrants that represent potential future cash proceeds to our company of $10,152,447.
The warrants are divided into seven classes that are presently exercisable and expire at various times through December 8, 2014.
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
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
2007 Bridge Warrants
|
|
|
183,755
|
|
|
|
2.35
|
|
|
|
431,824
|
|
|
December 31, 2012
|
2008Conversion-Warrants
|
|
|
580,940
|
|
|
|
2.60
|
|
|
|
1,510,444
|
|
|
June 29, 2013
|
2008 Quercus
|
|
|
10,000,000
|
|
|
|
0.75
|
|
|
|
7,500,000
|
|
|
June 29, 2013
|
2008 Derivatives
|
|
|
1,085,714
|
|
|
|
0.57
|
|
|
|
618,857
|
|
|
June 29, 2013
|
2009 Bridge Warrants
|
|
|
45,661
|
|
|
|
2.00
|
|
|
|
91,322
|
|
|
August 12, 2014
|
Total
|
|
|
11,896,070
|
|
|
|
|
|
|
$
|
10,152,477
|
|
|
|
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 April 10, 2012, we have 3,725,082 outstanding stock options that represent potential future cash proceeds to our company of
$ 6,935,066. The outstanding options include 2,579,571 options that are currently vested and exercisable, or 2,611,385 that
will become vested and exercisable within 60 days, and represent potential future cash proceeds to our company of $ 5,270,078
and $ 5,296,338, respectively. 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
|
|
|
Price
|
|
|
Proceeds
|
|
|
Shares
|
|
|
Price
|
|
|
Proceeds
|
|
2011 Employee &
officer plan options
|
|
|
970,117
|
|
|
$
|
1.50
|
|
|
$
|
1,455,175
|
|
|
|
891,493
|
|
|
$
|
1.50
|
|
|
$
|
1,337,240
|
|
Directors plan options
|
|
|
358,454
|
|
|
|
1.70
|
|
|
|
608,903
|
|
|
|
80,518
|
|
|
|
.99
|
|
|
|
79,998
|
|
Non-plan options to consultants and employees
|
|
|
1,251,000
|
|
|
|
2.56
|
|
|
|
3,206,000
|
|
|
|
314,500
|
|
|
|
.79
|
|
|
|
247,750
|
|
Total
|
|
|
2,579,571
|
|
|
$
|
2.08
|
|
|
$
|
5,270,078
|
|
|
|
1,286,511
|
|
|
$
|
1.58
|
|
|
$
|
1,664,987
|
|
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 2011 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
|
|
7,500
|
|
-
|
|
-
|
|
$
|
2.50
|
|
|
varies through
4/30/2012
|
|
|
|
|
|
|
|
|
|
Issued pursuant to April 2005 Executive Employment Agreement.
Options Expire 5 years after monthly vest date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granville, Tom
|
|
90,000
|
|
-
|
|
-
|
|
$
|
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
|
|
210,000
|
|
|
|
150,000
|
|
$
|
1.50
|
|
|
varies through 6/29/2018
|
|
|
|
|
|
|
|
|
|
Issued pursuant to June 2010 Executive Employment Agreement. Options
Expire 5 years after monthly vest date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buiel, Edward
|
|
50,000
|
|
-
|
|
-
|
|
$
|
4.00
|
|
|
varies through 8/31/2013
|
|
|
|
|
|
|
|
|
|
Issued pursuant to Sept 2005 Executive Employment Agreement. Options
expire 5 years after monthly vest date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buiel, Edward
|
|
50,000
|
|
-
|
|
-
|
|
$
|
3.75
|
|
|
12/29/2015
|
|
|
|
|
|
|
|
|
|
Options issued pursuant to Dec 2006 Executive Employment Agreement.
Lump sum vesting date - 12/29/2009
|
|
Buiel, Edward
|
|
50,000
|
|
-
|
|
-
|
|
|
3.75
|
|
|
5/30/2015
|
|
|
|
|
|
|
|
|
|
Options issued pursuant to Dec 2006 Executive Employment Agreement.
Lump sum vesting date - 5/31/10 upon expiration of employment contract
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buiel, Edward
|
|
100,000
|
|
-
|
|
-
|
|
|
2.50
|
|
|
5/30/2015
|
|
|
|
|
|
|
|
|
|
Issued pursuant to June 2008 Executive Employment Agreement. Lump
sum vesting date - 5/31/10 upon expiration of employment contract
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles Trego
|
|
181,000
|
|
84,000
|
|
-
|
|
$
|
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
|
|
158,000
|
|
72,000
|
|
-
|
|
$
|
1.50
|
|
|
varies through 3/30/2018
|
|
|
|
|
|
|
|
|
|
Issued pursuant to April 2010 Executive Employment Agreement. Options
Expire 5 years after monthly vest date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hillier, Don
|
|
95,000
|
|
0
|
|
0
|
|
|
2.50
|
|
|
varies through 01/15/15
|
|
|
|
|
|
|
|
|
|
Issued pursuant to June 2008 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, 2011.
|
|
Fees Earned or
|
|
Stock
|
|
|
|
|
|
|
Paid in Cash
|
|
Awards
|
|
|
|
|
Name
|
|
($)(1)
|
|
($)
|
|
|
Total ($)
|
|
Thomas Granville (2)
|
|
|
|
|
|
|
|
|
|
|
Robert G. Averill
|
|
43,760
|
|
|
|
|
|
|
43,760
|
|
Dr. Howard K. Schmidt
|
|
35,175
|
|
|
9,284
|
|
|
|
40,935
|
|
Michael Kishinevsky
|
|
30,260
|
|
|
8,830
|
|
|
|
35,750
|
|
Glenn Patterson
|
|
38,993
|
|
|
|
|
|
|
38,993
|
|
D. Walker Wainwright
|
|
37,220
|
|
|
9,698
|
|
|
|
43,250
|
|
David Anthony (4)
|
|
|
|
|
|
|
|
|
-
|
|
|
1.
|
Fees are presented based on the amount paid during 2011.
|
|
2.
|
Mr. Granville received no compensation during 2011 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 2011, see Summary Compensation Table above.
|
|
3.
|
One director was reelected to serve on the Board of Directors at the Annual Meeting held on June 9,
2010, receiving 77,922 five-year options with an exercise price of $0.77 per share, pursuant to the 2004 Outside Directors
Stock Option Plan. The options granted shall vest at the rate of 25,974 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. Another director received 8,000 five-year
options with an exercise price of $3.60 per share pursuant to terms of his 2007 appointment. The options are valued using the Black-Scholes-Merton
option pricing model.
|
|
4.
|
David Anthony was added to the Board as a condition of the Quercus Trust Amendment to Warrants and
Securities Purchase Agreement. David Anthony received no compensation for service in 2011, and he resigned on August 21, 2011.
|
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, 2011 through December 31, 2011:
|
•
|
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 that authorized the issuance of options to purchase $20,000 of our common stock
for each year of service as a director was amended on September 28, 2010 increasing the shares reserved for issuance under the
outside directors’ stock option plan from 500,000 to 1,000,000 by resolution of the Board of Directors.
For
2011, 2010, 2009, 2008, 2007, 2006 and 2005 and 2004, we issued 0, 85,922, 128,585, 179,555, 0, 60,000, 70,000 and 54,000, options
pursuant to our directors’ stock option plan, respectively. Of this total, no options were exercised during the year ended
December 31, 2011, 358,454 options are currently vested and exercisable at a weighted average price of $1.70 per share and 80,518
options are unvested and will be exercisable at a weighted average price of $0.99 per share.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
On
April 10, 2012, we had 113,211,091 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 April 10, 2012, for (i) each of our directors and executive officers;
(ii) all of our directors and executive officers as a group; and (iii) each person who we know beneficially owns more than 5% of
our common stock. Normally, the Company would rely on various ownership filings for our 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 10, 2012 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
|
|
Warrant &
Options (1)
|
|
|
Combined
Ownership
|
|
Percentage
|
|
Quercus Trust (2)
1835 Newport Blvd
A109 – PMB 467 Cosa Mesa, CA 92627
|
|
1,672,729
|
|
|
10,000,000
|
|
|
11,672,729
|
|
|
9.3
|
%
|
Manatuck Hill Partners, LLC (3)
1465 Post Road East
Westport, CT 06880
|
|
7,200,000
|
|
|
-
|
|
|
7,200,000
|
|
|
6.0
|
%
|
Hare & Co. (4)
Bank of New York Mellon,
One Wall Street, New York NY 10286
Attn Anthony V. Saviano, 3rd floor / Window A
|
|
6,100,000
|
|
|
|
|
|
6,100,000
|
|
|
5.1
|
%
|
Averill, Robert
|
|
3,774,059
|
|
|
77,474
|
|
|
3,851,533
|
|
|
3.2
|
%
|
Glenn Patterson
|
|
2,648,790
|
|
|
58,570
|
|
|
2,707,360
|
|
|
2.3
|
%
|
Granville, Tom
|
|
696,596
|
|
|
307,500
|
|
|
1,004,096
|
|
|
*
|
|
Trego, Charles
|
|
-
|
|
|
181,000
|
|
|
181,000
|
|
|
*
|
|
Baker, Phillip
|
|
-
|
|
|
158,000
|
|
|
158,000
|
|
|
*
|
|
Wainwright, Walker
|
|
26,966
|
|
|
42,125
|
|
|
69,111
|
|
|
*
|
|
Schmidt, Howard
|
|
25,860
|
|
|
53,500
|
|
|
79,360
|
|
|
*
|
|
Kishinevsky, Michael
|
|
24,554
|
|
|
53,500
|
|
|
78,054
|
|
|
*
|
|
Dantam, Vani Kumar
|
|
|
|
|
18,990
|
|
|
18,990
|
|
|
*
|
|
Directors and officers
as a group (15 persons)*
Less than 1%.
|
|
7,196,825
|
|
|
950,659
|
|
|
8,147,484
|
|
|
6.7
|
%
|
|
(1)
|
Represents shares of common stock issuable upon exercise of warrants and options held by the stockholder
that are presently exercisable or will become exercisable within 60 days.
|
|
(2)
|
The trustees of The Quercus Trust are Mr. David Gelbaum and Ms. Monica Chavez Gelbaum, each with shared
voting and dispositive power over the shares held by this trust.
|
|
(3)
|
Manatuck Hill Partners LLC is an investment adviser acting on behalf of its clients' accounts with
investments in Manatuck Hill Scout Fund, LP, Manatuck Hill Mariner Master Fund, LP, and Manatuck Hill Navigator Master Fund. Steve
Orlov & Broach serve as the legal representative for these accounts. Steve Orlov & Mark Broach share voting and dispositive
power over the shares. 7,200,000 shares were transferred to street name on 6-3-10. We do not have the benefit of further information.
|
|
(4)
|
Hare & Co. is an investment advisor operating in the U.K., with offices in New York. Blackrock
Investment Managers (UK) Ltd has voting and dispositive power over the shares.
|
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.
THE SELLING STOCKHOLDERS AND PLAN OF
DISTRIBUTION
This prospectus covers 45,757,572 shares of
common stock held by the selling stockholders pursuant to the registration obligations of the Securities Purchase Agreement in
order to permit the resale of these shares of common stock by the selling stockholders from time to time after the date of this
prospectus. The selling stockholders, which as used herein includes donees, pledgees, transferees or other successors-in-interest
selling shares of common stock or interests in shares of common stock received after the date of this prospectus from a selling
stockholder as a gift, pledge, partnership distribution or other transfer, may, from time to time, sell, transfer or otherwise
dispose of any or all of their shares of common stock or interests in shares of common stock on any stock exchange, market or trading
facility on which the shares are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market
prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale,
or at negotiated prices. Except as set forth below, none of the selling stockholders has held any position or office with us or
any of our subsidiaries within the past three years. All information below was provided in conjunction with the original
prospectus and the Company has not been able to obtain updated information. Reflects amounts to be offered as of date of original
registration of such shares.
|
|
Amount
beneficially
owned by Selling
Stockholder
|
|
|
Amount to be
offered to Selling
Stockholder's
Account
|
|
|
Amount to be
beneficially owned
following completion
of offering
|
|
|
Percent of class to be
beneficially owned
following completion
of the offering
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Westport New Energy Fund, LLC (1)(2)
|
|
|
877,193
|
|
|
|
877,193
|
|
|
|
-
|
|
|
|
|
Robert Averill (3)
|
|
|
3,772,059
|
|
|
|
300,620
|
|
|
|
3,471,439
|
|
|
|
4.1
|
%
|
Katherine F. Van der Mey
|
|
|
434,234
|
|
|
|
350,900
|
|
|
|
83,334
|
|
|
|
0.1
|
%
|
James E. Winner, Jr & Donna C Winner JT TEN
|
|
|
8,245,614
|
|
|
|
8,245,614
|
|
|
|
-
|
|
|
|
-
|
|
ACT Capital Partners LP (1)(4)
|
|
|
750,000
|
|
|
|
750,000
|
|
|
|
-
|
|
|
|
-
|
|
Cabernet Partners, LP (1)(5)
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
-
|
|
Chardonnay Partners, LP (1)(6)
|
|
|
75,000
|
|
|
|
75,000
|
|
|
|
-
|
|
|
|
-
|
|
David A. Houghton
|
|
|
75,000
|
|
|
|
75,000
|
|
|
|
-
|
|
|
|
-
|
|
-
-EDJ Limited (7)
|
|
|
350,000
|
|
|
|
350,000
|
|
|
|
-
|
|
|
|
-
|
|
-
Emerging Growth Equities, Ltd.
PSP dtd 9/1/99 FBO Gregory J. Berlacher, 401k
(1)
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
Emerging Growth Equities, Ltd.
PSP dtd 9/1/99 FBO Jay D. Seid, 401k (1)
|
|
|
65,000
|
|
|
|
65,000
|
|
|
|
-
|
|
|
|
-
|
|
Gregory J. Berlacher (1)
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
Insignia Partners, LP (1)(8)
|
|
|
500,000
|
|
|
|
500,000
|
|
|
|
-
|
|
|
|
-
|
|
Lancaster Investment Partners, LP (1)(9)
|
|
|
500,000
|
|
|
|
500,000
|
|
|
|
-
|
|
|
|
-
|
|
Manatuck Hill Partners, LLC (10)
|
|
|
5,778,000
|
|
|
|
5,778,000
|
|
|
|
-
|
|
|
|
-
|
|
Manatuck Hill Partners, LLC (10)
|
|
|
922,000
|
|
|
|
922,000
|
|
|
|
-
|
|
|
|
-
|
|
Manatuck Hill Partners, LLC (10)
|
|
|
500,000
|
|
|
|
500,000
|
|
|
|
-
|
|
|
|
-
|
|
Narragansett Strategic Master Fund (11)
|
|
|
1,700,000
|
|
|
|
1,700,000
|
|
|
|
-
|
|
|
|
-
|
|
NFS Custodian FBO Franz J Berlacher IRA(1)
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
-
|
|
NFS Custodian FBO Peter Stanley IRA (1)
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
-
|
|
NFS Custodian FBO Robert A Berlacher IRA(1)
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
-
|
|
Northwood Capital Partners, LP (1)(12)
|
|
|
1,300,000
|
|
|
|
1,300,000
|
|
|
|
-
|
|
|
|
-
|
|
Peter and Susan Stanley JTWROS (1)
|
|
|
200,000
|
|
|
|
200,000
|
|
|
|
-
|
|
|
|
-
|
|
Porter Partners, L.P. (13)
|
|
|
1,400,000
|
|
|
|
1,400,000
|
|
|
|
-
|
|
|
|
-
|
|
Amir L Ecker (1)
|
|
|
400,000
|
|
|
|
400,000
|
|
|
|
-
|
|
|
|
-
|
|
Anthony McDermott
|
|
|
500,000
|
|
|
|
500,000
|
|
|
|
-
|
|
|
|
-
|
|
Arnold G Bowles
|
|
|
135,000
|
|
|
|
135,000
|
|
|
|
-
|
|
|
|
-
|
|
Bee Publishing Company Inc. (14)
|
|
|
200,000
|
|
|
|
200,000
|
|
|
|
-
|
|
|
|
-
|
|
Bruce L. Evans Kathryn M. Evans TEN ENT
|
|
|
250,000
|
|
|
|
250,000
|
|
|
|
-
|
|
|
|
-
|
|
Carolyn Wittenbraker
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
-
|
|
Del Rey Management LP (15)
|
|
|
200,000
|
|
|
|
200,000
|
|
|
|
-
|
|
|
|
-
|
|
Dennis L. Adams
|
|
|
75,000
|
|
|
|
75,000
|
|
|
|
-
|
|
|
|
-
|
|
Frank J. Campbell III (1)
|
|
|
200,000
|
|
|
|
200,000
|
|
|
|
-
|
|
|
|
-
|
|
Gus Blass II
|
|
|
300,000
|
|
|
|
300,000
|
|
|
|
-
|
|
|
|
-
|
|
Gus Blass II IRA Rollover,
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
-
|
|
Judith Campbell (1)
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
-
|
|
McDermott Family Partnership II (16)
|
|
|
90,000
|
|
|
|
90,000
|
|
|
|
-
|
|
|
|
-
|
|
NFS/FMTC IRA FBO Amir L. Ecker (1)
|
|
|
750,000
|
|
|
|
750,000
|
|
|
|
-
|
|
|
|
-
|
|
NFS/FMTC IRA FBO Jerome J Skochin (1)
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
-
|
|
NFS/FMTC IRA FBO Maria T. Ecker
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
-
|
|
NFS/FMTC IRA-BDA
NSPS Carol Frankenfield (1)
|
|
|
30,000
|
|
|
|
30,000
|
|
|
|
-
|
|
|
|
-
|
|
Patricia McDermott
|
|
|
175,000
|
|
|
|
175,000
|
|
|
|
-
|
|
|
|
-
|
|
Richard A. Jacoby
|
|
|
400,000
|
|
|
|
400,000
|
|
|
|
-
|
|
|
|
-
|
|
Richard A. Jacoby Trust
Dated October 11, 2004,
David R. Glyn, Trustee (17)
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
Robert H. Jacobs (1)
|
|
|
85,000
|
|
|
|
85,000
|
|
|
|
-
|
|
|
|
-
|
|
Scudder Smith Family Association LLC (18)
|
|
|
200,000
|
|
|
|
200,000
|
|
|
|
-
|
|
|
|
-
|
|
Sean McDermott (1)
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
Robert A. Fisk (1)
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
The Ecker Family Partnership (1)(19)
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
-
|
|
William Scott & Karen Kaplan, Trustees for William Scott & Karen Kaplan Living Tr dtd 3/17/04 (20)
|
|
|
180,000
|
|
|
|
180,000
|
|
|
|
-
|
|
|
|
-
|
|
Hare and Co (21)
|
|
|
5,400,000
|
|
|
|
5,400,000
|
|
|
|
-
|
|
|
|
-
|
|
Hare and Co (21)
|
|
|
1,750,000
|
|
|
|
1,750,000
|
|
|
|
-
|
|
|
|
-
|
|
Earthrise Capital Fund, L.P. (22)
|
|
|
526,315
|
|
|
|
526,315
|
|
|
|
-
|
|
|
|
-
|
|
Special Situations Technology Fund II, L.P. (23)
|
|
|
4,903,509
|
|
|
|
4,903,509
|
|
|
|
-
|
|
|
|
-
|
|
Special Situations Technology Fund, L.P. (23)
|
|
|
798,246
|
|
|
|
798,246
|
|
|
|
-
|
|
|
|
-
|
|
Special Situations Private Equity Fund, L.P. (23)
|
|
|
1,315,789
|
|
|
|
1,315,789
|
|
|
|
-
|
|
|
|
-
|
|
Special Situations Cayman Fund, L.P. (23)
|
|
|
1,754,386
|
|
|
|
1,754,386
|
|
|
|
-
|
|
|
|
-
|
|
(1) The selling stockholder is
an affiliate of a broker dealer. Such selling stockholder has represented and warranted that the selling stockholder purchased
the shares being registered for resale in the ordinary course of business, and at the time of the purchase, the selling stockholder
had no agreements or understandings, directly or indirectly, with any persons to distribute the securities.
(2) Steven J. Knapp has voting and dispositive
control over the shares owned by this entity. The entity’s address is 257 Riverside Ave, Westport, CT 06880.
(3) Mr. Averill is a director of the registrant.
Mr. Averill owns 3,772,059 shares of common stock of registrant, and 1,249,183 warrants and options to purchase common stock of
registrant. He is restricted with respect to his ability to sell his shares under this registration statement by Company policy
which restricts the ability of officers and directors to sell shares of registrant’s stock only during periods in which trading
is permitted by management of the registrant.
(4) Amir Ecker has voting and dispositive
control over the shares owned by this entity. This entity’s address is 2 Radnor Corporate Center Suite 111 100 Matsonford
Road Radnor, PA 19087.
(5) Robert A. Berlacher has voting and dispositive
control over the shares owned by this entity. This entity’s address is 676 Church Road Villanova, PA 19085.
(6) Robert A. Berlacher has voting and dispositive
control over the shares owned by this entity. This entity’s address is 676 Church Road Villanova, PA 19085.
(7) Jeffrey Porter has voting and dispositive
control over the shares owned by this entity. This entity’s address is 300 Drakes Landing Road, Suite 175 Greenbrae, CA 94904.
(8) Robert A. Berlacher and Bruce Terker have
voting and dispositive control over the shares owned by this entity. This entity’s address is 1150 First Avenue, Suite 600
King of Prussia, PA 19406.
(9) Robert A. Berlacher has voting and dispositive
control over the shares owned by this entity. This entity’s address is1150 First Avenue, Suite 600, King of Prussia, PA 19406.
(10) Manatuck Hill Partners, LLC is an investment
adviser acting on behalf of its clients' accounts with investments in Manatuck Hill Scout Fund, LP, Manatuck Hill Mariner Master
Fund, LP, and Manatuck Hill Navigator Master Fund, LP. Seward & Kissel LLP serves as the legal representative for these accounts.
Steve Orlov & Mark Broach share voting and dispositive power over the shares. The entity’s address is 1465 Post Road
East Westport, CT 06880.
(11) Joseph L. Dowling III has voting
and dispositive control over the shares owned by this entity. This entity’s address is Metro Center 5th Floor North 1 Station
Place Stamford, CT 06902.
(12) Robert A. Berlacher has voting and dispositive
control over the shares owned by this entity. This entity’s address is 1150 First Avenue, Suite 600 King of Prussia, PA 19406.
(13) Jeffrey Porter has voting and dispositive
control over the shares owned by this entity. This entity’s address is 300 Drakes Landing Road, Suite 175 Greenbrae, CA 94904.
(14) Helen Smith has dispositive control over
the shares owned by this entity. This entity’s address is c/o Philadelphia Brokerage Corp.2 Radnor Corporate Center, Suite
111 Radnor, PA 19087.
(15) Gregory A. Bied has voting and dispositive
control over the shares owned by this entity. This entity’s address is 877 West Main Street #600, Boise, ID 83702, Attn:
Gregory A. Bied.
(16) Anthony McDermott has voting and dispositive
control over the shares owned by this entity. This entity’s address is c/o Philadelphia Brokerage Corp., 2 Radnor Corporate
Center, Suite 111 Radnor, PA 19087.
(17) David R. Glyn, as trustee, has voting
and dispositive control over the shares owned by this entity. This entity’s address is c/o 2490 White Horse Road, Berwyn,
PA 19312.
(18) Helen Smith has voting and dispositive
control over the shares owned by this entity. This entity’s address is c/o Philadelphia Brokerage Corp. 2 Radnor Corporate
Center, Suite 111 Radnor, PA 19087.
(19) Amir Ecker has voting and dispositive
control over the shares owned by this entity. This entity’s address is c/o Philadelphia Brokerage Corp., 2 Radnor Corporate
Center, Suite 111 Radnor, PA 19087.
(20) William Scott and Karen Kaplan share
voting and dispositive control over the shares owned by this entity. This entity’s address is c/o Philadelphia Brokerage
Corp., 2 Radnor Corporate Center, Suite 111, Radnor, PA 19087.
(21) Hare & Co. is an investment advisor
operating in the U.K., with offices in New York. Blackrock Investment Managers (UK) Ltd has voting and dispositive power over the
shares owned by this entity. The entity’s address is c/o Bank of New York Mellon One Wall Street, New York NY 10286 Attn
Anthony V. Saviano / 3rd floor / Window A.
(22) Ann Partlow and James P. LoGerfo, Managing
Members, Earthrise Capital Partners, LLC, the General Partner of Earthrise Capital Fund, LP, share voting and dispositive control
over the shares owned by this entity. This entity’s address is: 45 Rockefeller Plaza, 20th Floor New York, NY 10018.
(23) AWM Investment Company, Inc. (“AWM”)
the general partner of and investment adviser to the Special Situations Cayman Fund, L.P. AWM also serves as the investment adviser
to, Special Situations Private Equity Fund, L.P., Special Situations Technology Fund II, L.P. and Special Situations Technology
Fund, L.P. Austin W. Marxe and David M. Greenhouse are the principal owners of AWM. Through their control of AWM, Messrs. Marxe
and Greenhouse share voting and investment power over the portfolio securities of each of the funds. The entity’s address
is 527 Madison Avenue, Suite 2600 New York, NY 10022, ATTN: Marianne Kelly/Adam Stettner.
The selling stockholders
may use any one or more of the following methods when disposing of shares or interests therein:
|
-
|
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 effected after the date the registration
statement of which this prospectus is a part is declared effective by the Securities and Exchange Commission;
|
|
-
|
through the writing or settlement of options
or other hedging transactions, whether through an options exchange or otherwise;
|
|
-
|
broker-dealers may agree with the selling
stockholders to sell a specified number of such shares at a stipulated price per share; and
|
|
-
|
a combination of any such methods of sale.
|
The selling stockholders
may, from time to time, pledge or grant a security interest in some or all of the 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, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act amending 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 the shares of
common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus.
In connection with the
sale of our common stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers
or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions
they assume. The selling stockholders may also sell shares of our common stock short and deliver these securities to close out
their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling
stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation
of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares
offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus
(as supplemented or amended to reflect such transaction).
The aggregate proceeds
to the selling stockholders from the sale of the common stock offered by them will be the purchase price of the common stock less
discounts or commissions, if any. Each of the selling stockholders reserves the right to accept and, together with their agents
from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents.
We will not receive any
of the proceeds from this offering.
The selling stockholders
also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act of
1933, provided that they meet the criteria and conform to the requirements of that rule.
The selling stockholders
and any underwriters, broker-dealers or agents that participate in the sale of the common stock or interests therein may be “underwriters”
within the meaning of Section 2(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn on any resale
of the shares may be underwriting discounts and commissions under the Securities Act. Selling stockholders who are “underwriters”
within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities
Act.
To the extent required,
the shares of our common stock to be sold, the names of the selling stockholders, the respective purchase prices and public offering
prices, the names of any agents, dealer or underwriter, any applicable commissions or discounts with respect to a particular offer
will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement
that includes this prospectus.
In order to comply with
the securities laws of some states, if applicable, the common stock may be sold in these jurisdictions only through registered
or licensed brokers or dealers. In addition, in some states the common stock may not be sold unless it has been registered or qualified
for sale or an exemption from registration or qualification requirements is available and is complied with.
We have advised the selling
stockholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market
and to the activities of the selling stockholders and their affiliates. In addition, to the extent applicable we will make copies
of this prospectus (as it may be supplemented or amended from time to time) available to the selling stockholders for the purpose
of satisfying the prospectus delivery requirements of the Securities Act. The selling stockholders may indemnify any broker-dealer
that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under
the Securities Act.
We have agreed to indemnify
the selling stockholders against liabilities, including liabilities under the Securities Act and state securities laws, relating
to the registration of the shares offered by this prospectus.
We have agreed with the
selling stockholders to keep the registration statement of which this prospectus constitutes a part effective until the earlier
of (1) such time as all of the shares covered by this prospectus have been disposed of pursuant to and in accordance with the registration
statement or (2) the date on which the shares may be sold without restriction pursuant to Rule 144 of the Securities Act.
DESCRIPTION OF SECURITIES
General
Our amended and restated certificate of incorporation
authorizes the issuance of 200,000,000 shares of common stock and 12,500,000 shares of preferred stock. As of April 23, 2012, we
have
113,211,091
common shares. Outstanding warrants, vested options,
and convertible rights entitle the holders to purchase 15,525,920 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 April 10, 2012, we have 11,896,070 outstanding warrants that represent potential future cash proceeds to our company of $10,152,447.
The warrants are divided into seven classes that are presently exercisable and expire at various times through December 8, 2014.
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
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
2007 Bridge Warrants
|
|
|
183,755
|
|
|
|
2.35
|
|
|
|
431,824
|
|
|
December 31, 2012
|
2008Conversion-Warrants
|
|
|
580,940
|
|
|
|
2.60
|
|
|
|
1,510,444
|
|
|
June 29, 2013
|
2008 Quercus
|
|
|
10,000,000
|
|
|
|
0.75
|
|
|
|
7,500,000
|
|
|
June 29, 2013
|
2008 Derivatives
|
|
|
1,085,714
|
|
|
|
0.57
|
|
|
|
618,857
|
|
|
June 29, 2013
|
2009 Bridge Warrants
|
|
|
45,661
|
|
|
|
2.00
|
|
|
|
91,322
|
|
|
August 12, 2014
|
Total
|
|
|
11,896,070
|
|
|
|
|
|
|
$
|
10,152,477
|
|
|
|
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 April 10, 2012, we have 3,725,082 outstanding stock options that represent potential future cash proceeds to our company of
$ 6,935,066. The outstanding options include 2,579,571 options that are currently vested and exercisable, or 2,611,385 that
will become vested and exercisable within 60 days, and represent potential future cash proceeds to our company of $ 5,270,078
and $ 5,296,338, respectively. 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
|
|
|
Price
|
|
|
Proceeds
|
|
|
Shares
|
|
|
Price
|
|
|
Proceeds
|
|
2011 Employee &
officer plan options
|
|
|
970,117
|
|
|
$
|
1.50
|
|
|
$
|
1,455,175
|
|
|
|
891,493
|
|
|
$
|
1.50
|
|
|
$
|
1,337,240
|
|
Directors plan options
|
|
|
358,454
|
|
|
|
1.70
|
|
|
|
608,903
|
|
|
|
80,518
|
|
|
|
.99
|
|
|
|
79,998
|
|
Non-plan options to consultants and employees
|
|
|
1,251,000
|
|
|
|
2.56
|
|
|
|
3,206,000
|
|
|
|
314,500
|
|
|
|
.79
|
|
|
|
247,750
|
|
Total
|
|
|
2,579,571
|
|
|
$
|
2.08
|
|
|
$
|
5,270,078
|
|
|
|
1,286,511
|
|
|
$
|
1.58
|
|
|
$
|
1,664,987
|
|
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, 2011 and 2010 included 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.
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.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Axion Power International,
Inc.
We have audited the accompanying consolidated
balance sheets of Axion Power International, Inc. as of December 31, 2011 and 2010, and the related consolidated statements
of operations, stockholders’ equity (deficit) and cash flows for each of the years in the two-year period ended December
31, 2011 and for the period since inception (September 18, 2003) through December 31, 2011. Axion Power International, Inc.’s
management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The
company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our
audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control
over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the consolidated financial
statements referred to above present fairly, in all material respects, the financial position of Axion Power International, Inc.
as of December 31, 2011 and 2010, and the results of its operations and its cash flows for each of the years in the two-year period
ended December 31, 2011 and for the period since inception (September 18, 2003) through December 31, 2011 in conformity with accounting
principles generally accepted in the United States of America.
/s/ EFP Rotenberg, LLP
EFP Rotenberg, LLP
Rochester,
New York
March 30, 2012
AXION POWER INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(A Development Stage Company)
|
|
December
31, 2011
|
|
|
December
31, 2010
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,987,637
|
|
|
$
|
13,330,009
|
|
Accounts receivable
|
|
|
309,354
|
|
|
|
221,922
|
|
Other receivables
|
|
|
162,249
|
|
|
|
144,973
|
|
Prepaid expenses
|
|
|
145,442
|
|
|
|
82,060
|
|
Inventory, net
|
|
|
2,717,173
|
|
|
|
1,428,560
|
|
Total current assets
|
|
|
5,321,855
|
|
|
|
15,207,524
|
|
|
|
|
|
|
|
|
|
|
Property & equipment, net
|
|
|
8,417,163
|
|
|
|
6,738,575
|
|
Other receivables
|
|
|
53,000
|
|
|
|
65,000
|
|
TOTAL ASSETS
|
|
$
|
13,792,018
|
|
|
$
|
22,011,099
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
520,358
|
|
|
$
|
930,021
|
|
Other liabilities
|
|
|
429,432
|
|
|
|
225,804
|
|
Notes payable
|
|
|
104,777
|
|
|
|
101,684
|
|
Total current liabilities
|
|
|
1,054,567
|
|
|
|
1,257,509
|
|
|
|
|
|
|
|
|
|
|
Deferred revenue
|
|
|
1,573,962
|
|
|
|
1,385,185
|
|
Derivative liabilities
|
|
|
15,843
|
|
|
|
254,461
|
|
Notes payable
|
|
|
439,480
|
|
|
|
547,612
|
|
Total liabilities
|
|
|
3,083,852
|
|
|
|
3,444,767
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity
|
|
|
|
|
|
|
|
|
Convertible preferred stock-12,500,000 shares authorized
.
Series-A preferred – 2,000,000 shares designated 0 shares issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
Common stock – 200,000,000 shares authorized $0.0001
par value 85,531,114 issued & outstanding (85,453,302 in 2010)
|
|
|
8,552
|
|
|
|
8,545
|
|
Additional paid in capital
|
|
|
86,953,180
|
|
|
|
86,499,416
|
|
Deficit accumulated during development stage
|
|
|
(76,001,894
|
)
|
|
|
(67,690,004
|
)
|
Cumulative foreign currency translation adjustment
|
|
|
(251,672
|
)
|
|
|
(251,625
|
)
|
Total stockholders' equity
|
|
|
10,708,166
|
|
|
|
18,566, 332
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
13,792,018
|
|
|
$
|
22,011,099
|
|
The accompanying notes are an integral part of these consolidated financial statements
AXION POWER INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(A Development Stage Company)
|
|
Years Ended
|
|
|
Inception
|
|
|
|
December 31
|
|
|
9/18/2003 to
|
|
|
|
2011
|
|
|
2010
|
|
|
12/31/2011
|
|
Product
|
|
$
|
7,631,529
|
|
|
$
|
1,328,025
|
|
|
$
|
12,291,993
|
|
Service
|
|
|
459,645
|
|
|
|
820,081
|
|
|
|
1,279,726
|
|
Net sales
|
|
|
8,091,174
|
|
|
|
2,148,106
|
|
|
|
13,571,719
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Product costs
|
|
|
6,799,302
|
|
|
|
893,681
|
|
|
|
10,596,959
|
|
Research & development
|
|
|
5,060,036
|
|
|
|
5,432,230
|
|
|
|
28,870,892
|
|
Selling, general & administrative
|
|
|
4,463,269
|
|
|
|
3,448,508
|
|
|
|
29,764,684
|
|
Interest expense
|
|
|
18,042
|
|
|
|
21,143
|
|
|
|
2,377,171
|
|
Impairment of assets
|
|
|
308,882
|
|
|
|
361,793
|
|
|
|
2,062,160
|
|
Derivative revaluations (income)
|
|
|
(238,618
|
)
|
|
|
(1,165,751
|
)
|
|
|
(1,626,636
|
)
|
Mega C Trust share augmentation
|
|
|
-
|
|
|
|
-
|
|
|
|
400,000
|
|
Interest & other income
|
|
|
(7,849
|
)
|
|
|
(12,644
|
)
|
|
|
(569,286
|
)
|
Loss before income taxes
|
|
|
(8,311,890
|
)
|
|
|
(6,830,854
|
)
|
|
|
(58,305,225
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
4,300
|
|
Accumulated deficit
|
|
|
(8,311,890
|
)
|
|
|
(6,830,854
|
)
|
|
|
(58,308,525
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less preferred stock dividends and beneficial conversion feature
|
|
|
-
|
|
|
|
-
|
|
|
|
(17,693,369
|
)
|
Net loss applicable to common shareholders
|
|
$
|
(8,311,890
|
)
|
|
$
|
(6,830,854
|
)
|
|
$
|
(76,001,894
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per share
|
|
$
|
(0.10
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(2.25
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
85,488,150
|
|
|
|
83,711,708
|
|
|
|
33,812,173
|
|
The accompanying notes are an integral part of these consolidated financial statements
AXION POWER INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(A Development Stage Company)
|
|
Years Ended
|
|
|
Inception
|
|
|
|
December 31
|
|
|
9/18/2003 to
|
|
|
|
2011
|
|
|
2010
|
|
|
12/31/2011
|
|
Cash Flows from Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated deficit
|
|
$
|
(8,311,890
|
)
|
|
$
|
(6,830,854
|
)
|
|
$
|
(58,308,525
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile deficit accumulated for noncash items
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
1,014,661
|
|
|
|
673,170
|
|
|
|
2,672,122
|
|
Interest expense
|
|
|
-
|
|
|
|
-
|
|
|
|
1,970,251
|
|
Impairment of assets
|
|
|
308,882
|
|
|
|
361,793
|
|
|
|
2,062,161
|
|
Derivative revaluations (income)
|
|
|
(238,618
|
)
|
|
|
(1,165,751
|
)
|
|
|
(1,626,636
|
)
|
Mega C Trust share augmentation
|
|
|
-
|
|
|
|
-
|
|
|
|
400,000
|
|
Share based compensation expense
|
|
|
453,770
|
|
|
|
444,986
|
|
|
|
6,236,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in operating assets & liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(87,432
|
)
|
|
|
(27,607
|
)
|
|
|
(316,223
|
)
|
Other receivables
|
|
|
(17,276
|
)
|
|
|
63,206
|
|
|
|
(140,289
|
)
|
Prepaid expenses
|
|
|
(63,382
|
)
|
|
|
(2,073
|
)
|
|
|
(142,854
|
)
|
Inventory, net
|
|
|
(1,288,613
|
)
|
|
|
(420,468
|
)
|
|
|
(2,717,172
|
)
|
Accounts payable
|
|
|
(409,663
|
)
|
|
|
(445,271
|
)
|
|
|
2,175,002
|
|
Other liabilities
|
|
|
203,628
|
|
|
|
143,478
|
|
|
|
450,564
|
|
Liability to issue equity instruments
|
|
|
-
|
|
|
|
-
|
|
|
|
178,419
|
|
Deferred revenue and other
|
|
|
188,777
|
|
|
|
528,977
|
|
|
|
1,661,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used by operating activities
|
|
|
(8,247,156
|
)
|
|
|
(6,676,414
|
)
|
|
|
(45,445,463
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Other receivables
|
|
|
12,000
|
|
|
|
(30,399
|
)
|
|
|
(1,270,016
|
)
|
Purchases of property & equipment
|
|
|
(3,002,130
|
)
|
|
|
(3,557,458
|
)
|
|
|
(11,756,670
|
)
|
Investment in intangible assets
|
|
|
-
|
|
|
|
-
|
|
|
|
(167,888
|
)
|
Net cash used by investing activities
|
|
|
(2,990,130
|
)
|
|
|
(3,587,857
|
)
|
|
|
(13,194,574
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proceeds from related party debt
|
|
|
-
|
|
|
|
-
|
|
|
|
5,445,458
|
|
Repayment of notes payable
|
|
|
(105,039
|
)
|
|
|
(101,937
|
)
|
|
|
544,258
|
|
Net proceeds from sale of common stock
|
|
|
-
|
|
|
|
57,137
|
|
|
|
45,171,365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proceeds from exercise of warrants
|
|
|
-
|
|
|
|
359,266
|
|
|
|
2,014,766
|
|
Net proceeds from sale of preferred stock
|
|
|
-
|
|
|
|
-
|
|
|
|
7,472,181
|
|
Net cash (used) provided by financing activities
|
|
|
(105,039
|
)
|
|
|
314,466
|
|
|
|
60,648,028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
|
|
(11,342,325
|
)
|
|
|
(9,949,805
|
)
|
|
|
2,007,991
|
|
Effect of exchange rate on cash
|
|
|
(47
|
)
|
|
|
348
|
|
|
|
(20,354
|
)
|
Cash and cash equivalents - beginning
|
|
|
13,330,009
|
|
|
|
23,279,466
|
|
|
|
-
|
|
Cash and cash equivalents - ending
|
|
$
|
1,987,637
|
|
|
$
|
13,330,009
|
|
|
$
|
1,987,637
|
|
The accompanying notes are an integral part of these consolidated financial statements
Axion Power International, Inc.
Consolidated Statement of Stockholders' Equity (Deficit)
For Periods Ended December 31, 2003 through 2011
(A Development Stage Company)
|
|
Preferred
|
|
|
Common
|
|
|
Deficit
Accumulated
During
|
|
|
Other
Comprehensive
Income
Cumulative
|
|
|
Total
Stockholders'
|
|
|
|
Shares
|
|
|
Senior
Preferred
|
|
|
Series-A
Preferred
|
|
|
Shares
|
|
|
Common
Stock Amount
|
|
|
Additional Paid-
In Capital
|
|
|
Subscriptions
Receivable
|
|
|
Development
Stage
|
|
|
Translation
Adjustments
|
|
|
Equity
(Deficit)
|
|
Inception September 18, 2003
|
|
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Shares to founders upon formulation of APC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,360,000
|
|
|
|
137
|
|
|
|
(137
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock based compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
170,000
|
|
|
|
17
|
|
|
|
48,936
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,953
|
|
Conversion of debt to equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,108,335
|
|
|
|
111
|
|
|
|
1,449,889
|
|
|
|
(350,000
|
)
|
|
|
|
|
|
|
|
|
|
|
1,100,001
|
|
Debt discount from convertible debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
86,402
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
86,402
|
|
Unamortized discount on convertible debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(77,188
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(77,188
|
)
|
Fair value of options issued as loan inducements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,574
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,574
|
|
Recapitalization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- shares issued to Mega-C trust
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,147,483
|
|
|
|
615
|
|
|
|
(615
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Equity acquired in recapitalization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,875,000
|
|
|
|
188
|
|
|
|
(188
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,097,030
|
)
|
|
|
|
|
|
|
(3,097,030
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(56,547
|
)
|
|
|
(56,547
|
)
|
Comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,153,577
|
)
|
Balance at December 31, 2003
|
|
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
10,660,818
|
|
|
$
|
1,067
|
|
|
$
|
1,522,674
|
|
|
$
|
(350,000
|
)
|
|
$
|
(3,097,030
|
)
|
|
$
|
(56,547
|
)
|
|
$
|
(1,979,836
|
)
|
Shares issued to founders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
445,000
|
|
|
|
45
|
|
|
|
(45
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Augmentation shares issued to Mega-C trust
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
180,000
|
|
|
|
18
|
|
|
|
(18
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
283,333
|
|
|
|
28
|
|
|
|
451,813
|
|
|
|
350,000
|
|
|
|
|
|
|
|
|
|
|
|
801,841
|
|
Warrants in consideration for technology purchased
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
563,872
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
563,872
|
|
Common stock offering proceeds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
823,800
|
|
|
|
81
|
|
|
|
1,607,053
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,607,134
|
|
Proceeds from exercise of warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
475,200
|
|
|
|
48
|
|
|
|
867,972
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
868,020
|
|
Liability converted as partial prepayment on options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
306,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
306,000
|
|
Stock based compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,000
|
|
|
|
5
|
|
|
|
191,738
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
191,742
|
|
Fraction Shares Issued Upon Reverse Spilt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,782
|
|
|
|
5
|
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,653,637
|
)
|
|
|
|
|
|
|
(3,653,637
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(74,245
|
)
|
|
|
(74,245
|
)
|
Comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,727,882
|
)
|
Balance at December 31, 2004
|
|
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
12,961,933
|
|
|
$
|
1,296
|
|
|
$
|
5,511,054
|
|
|
$
|
0
|
|
|
$
|
(6,750,667
|
)
|
|
$
|
(130,792
|
)
|
|
$
|
(1,369,109
|
)
|
Axion Power International, Inc.
Consolidated Statement of Stockholders' Equity (Deficit)
For Periods Ended December 31, 2003 through 2011
(A Development Stage Company)
Continued
|
|
Preferred
|
|
|
Common
|
|
|
Deficit
Accumulated
During
|
|
|
Other
Comprehensive
Income
Cumulative
|
|
|
Total
Stockholders'
|
|
|
|
Shares
|
|
|
Senior
Preferred
|
|
|
Series-A
Preferred
|
|
|
Shares
|
|
|
Common
Stock Amount
|
|
|
Additional Paid-
In Capital
|
|
|
Subscriptions
Receivable
|
|
|
Development
Stage
|
|
|
Translation
Adjustments
|
|
|
Equity
(Deficit)
|
|
Balance at December 31, 2004
|
|
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
12,961,933
|
|
|
$
|
1,296
|
|
|
$
|
5,511,054
|
|
|
$
|
0
|
|
|
$
|
(6,750,667
|
)
|
|
$
|
(130,792
|
)
|
|
$
|
(1,369,109
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from exercise of warrants & options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
853,665
|
|
|
|
85
|
|
|
|
1,283,395
|
|
|
|
(496,000
|
)
|
|
|
|
|
|
|
|
|
|
|
787,480
|
|
Common stock offering proceeds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
600,000
|
|
|
|
60
|
|
|
|
1,171,310
|
|
|
|
(200,000
|
)
|
|
|
|
|
|
|
|
|
|
|
971,370
|
|
Preferred stock offering proceeds
|
|
|
385,000
|
|
|
|
3,754,110
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(25,000
|
)
|
|
|
|
|
|
|
|
|
|
|
3,729,110
|
|
Conversion of preferred to common
|
|
|
(245,000
|
)
|
|
|
(2,475,407
|
)
|
|
|
|
|
|
|
1,470,000
|
|
|
|
147
|
|
|
|
2,475,260
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
|
|
|
50
|
|
|
|
1,524,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,525,000
|
|
Fair value of options for non-employee services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
237,568
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
237,568
|
|
Employee incentive share grants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
219,000
|
|
|
|
22
|
|
|
|
647,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
647,502
|
|
Impact of beneficial conversion feature
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,099,156
|
|
|
|
|
|
|
|
(3,099,156
|
)
|
|
|
|
|
|
|
|
|
Preferred stock dividends
|
|
|
|
|
|
|
176,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(176,194
|
)
|
|
|
|
|
|
|
|
|
Net Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,325,113
|
)
|
|
|
|
|
|
|
(6,325,113
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(24,780
|
)
|
|
|
(24,780
|
)
|
Comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,349,893
|
)
|
Balance at December 31, 2005
|
|
|
140,000
|
|
|
$
|
1,454,897
|
|
|
$
|
0
|
|
|
|
16,604,598
|
|
|
$
|
1,661
|
|
|
$
|
15,950,173
|
|
|
$
|
(721,000
|
)
|
|
$
|
(16,351,130
|
)
|
|
$
|
(155,572
|
)
|
|
$
|
179,028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred series-A proceeds
|
|
|
782,997
|
|
|
|
|
|
|
|
7,571,768
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,571,768
|
|
Preferred - dividends
|
|
|
|
|
|
|
119,092
|
|
|
|
103,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(222,193
|
)
|
|
|
|
|
|
|
|
|
Senior preferred Cancellation
|
|
|
(2,500
|
)
|
|
|
(25,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock offering proceeds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000
|
|
|
|
8
|
|
|
|
199,992
|
|
|
|
696,000
|
|
|
|
|
|
|
|
|
|
|
|
896,000
|
|
Proceeds from exercise of warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,700
|
|
|
|
6
|
|
|
|
113,394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
113,400
|
|
Employee incentive share grants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
|
1
|
|
|
|
23,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,000
|
|
Augmentation shares issued to Mega-C trust
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(500,000
|
)
|
|
|
(50
|
)
|
|
|
(1,124,950
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,125,000
|
)
|
Stock based compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,241,231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,241,231
|
|
Fair value of warrants with related party debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
885,126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
885,126
|
|
Modification of preexisting warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
392,811
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
392,811
|
|
Fair value warrants issued for services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
86,848
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
86,848
|
|
Beneficial conversion feature on related party debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95,752
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95,752
|
|
Beneficial conversion feature on preferred stock
|
|
|
|
|
|
|
|
|
|
|
(6,096,634
|
)
|
|
|
|
|
|
|
|
|
|
|
6,709,970
|
|
|
|
|
|
|
|
(613,336
|
)
|
|
|
|
|
|
|
|
|
Net Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,027,963
|
)
|
|
|
|
|
|
|
(7,027,963
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(95,387
|
)
|
|
|
(95,387
|
)
|
Comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,123,350
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2006
|
|
|
920,497
|
|
|
$
|
1,548,989
|
|
|
$
|
1,578,235
|
|
|
|
16,247,298
|
|
|
$
|
1,625
|
|
|
$
|
24,574,346
|
|
|
$
|
0
|
|
|
$
|
(24,214,622
|
)
|
|
$
|
(250,959
|
)
|
|
$
|
3,237,614
|
|
Axion Power International, Inc.
Consolidated Statement of Stockholders' Equity (Deficit)
For Periods Ended December 31, 2003 through 2011
(A Development Stage Company)
Continued
|
|
Preferred
|
|
|
Common
|
|
|
Deficit
Accumulated
During
|
|
|
Other
Comprehensive
Income Cumulative
|
|
|
Total
Stockholders'
|
|
|
|
Shares
|
|
|
Senior
Preferred
|
|
|
Series-A
Preferred
|
|
|
Shares
|
|
|
Common
Stock Amount
|
|
|
Additional Paid-
In Capital
|
|
|
Subscriptions
Receivable
|
|
|
Development
Stage
|
|
|
Translation
Adjustments
|
|
|
Equity
(Deficit)
|
|
Balance at December 31, 2006
|
|
|
920,497
|
|
|
$
|
1,548,989
|
|
|
$
|
1,578,235
|
|
|
|
16,247,298
|
|
|
$
|
1,625
|
|
|
$
|
24,574,346
|
|
|
$
|
-
|
|
|
$
|
(24,214,622
|
)
|
|
$
|
(250,959
|
)
|
|
$
|
3,237,614
|
|
Preferred series-A proceeds
|
|
|
40,000
|
|
|
|
|
|
|
|
337,270
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
337,270
|
|
Preferred stock dividends
|
|
|
|
|
|
|
130,566
|
|
|
|
1,790,755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,921,321
|
)
|
|
|
|
|
|
|
|
|
Employee incentive share grants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000
|
|
|
|
0
|
|
|
|
315,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
315,950
|
|
Stock based compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
215,393
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
215,393
|
|
Fair value of warrants with related party debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
98,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
98,463
|
|
Modification of preexisting warrants
|
|
|
|
|
|
|
(164,179
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
164,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial conversion feature on preferred stock
|
|
|
|
|
|
|
|
|
|
|
6,096,634
|
|
|
|
|
|
|
|
|
|
|
|
400,000
|
|
|
|
|
|
|
|
(6,496,634
|
)
|
|
|
|
|
|
|
|
|
Net Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,866,127
|
)
|
|
|
|
|
|
|
(5,866,127
|
)
|
Other Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,136
|
|
|
|
21,136
|
|
Comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,844,991
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2007
|
|
|
960,497
|
|
|
$
|
1,515,376
|
|
|
$
|
9,802,894
|
|
|
|
16,248,298
|
|
|
$
|
1,625
|
|
|
$
|
25,768,331
|
|
|
$
|
0
|
|
|
$
|
(38,498,704
|
)
|
|
$
|
(229,823
|
)
|
|
$
|
(1,640,301
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends
|
|
|
|
|
|
|
141,359
|
|
|
|
976,340
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,117,699
|
)
|
|
|
|
|
|
|
|
|
Preferred converted into common stock
|
|
|
(104,000
|
)
|
|
|
|
|
|
|
(1,338,875
|
)
|
|
|
1,071,099
|
|
|
|
107
|
|
|
|
1,338,768
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bridge loans converted into common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
514,611
|
|
|
|
51
|
|
|
|
1,080,633
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,080,684
|
|
Proceeds from Quercus Trust-net of costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,571,429
|
|
|
|
857
|
|
|
|
15,273,908
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,274,765
|
|
Employee incentive share grants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
|
1
|
|
|
|
435,725
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
435,726
|
|
Stock based compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
425,979
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
425,979
|
|
Fair value of warrants with related party debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
667,208
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
667,208
|
|
Fair value warrants issued for services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,193,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,193,735
|
|
Net Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,494,659
|
)
|
|
|
|
|
|
|
(9,494,659
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(19,446
|
)
|
|
|
(19,446
|
)
|
Comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,514,105
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008
|
|
|
856,497
|
|
|
$
|
1,656,735
|
|
|
$
|
9,440,359
|
|
|
|
26,417,437
|
|
|
$
|
2,641
|
|
|
$
|
46,184,287
|
|
|
$
|
0
|
|
|
$
|
(49,111,062
|
)
|
|
$
|
(249,269
|
)
|
|
$
|
7,923,691
|
|
Axion Power International, Inc.
Consolidated Statement of Stockholders' Equity (Deficit)
For Periods Ended December 31, 2003 through 2011
(A Development Stage Company)
Continued
|
|
Preferred
|
|
|
Common
|
|
|
Deficit
Accumulated
During
|
|
|
Other
Comprehensive
Income
Cumulative
|
|
|
Total
Stockholders'
|
|
|
|
Shares
|
|
|
Senior
Preferred
|
|
|
Series-A
Preferred
|
|
|
Shares
|
|
|
Common
Stock Amount
|
|
|
Additional Paid-
In Capital
|
|
|
Subscriptions
Receivable
|
|
|
Development
Stage
|
|
|
Translation
Adjustments
|
|
|
Equity
(Deficit)
|
|
Balance at December 31, 2008
|
|
|
856,497
|
|
|
$
|
1,656,735
|
|
|
$
|
9,440,359
|
|
|
|
26,417,437
|
|
|
$
|
2,641
|
|
|
$
|
46,184,287
|
|
|
$
|
0
|
|
|
$
|
(49,111,062
|
)
|
|
$
|
(249,269
|
)
|
|
$
|
7,923,691
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends
|
|
|
|
|
|
|
126,497
|
|
|
|
909,819
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,036,316
|
)
|
|
|
|
|
|
|
|
|
Preferred converted into common stock
|
|
|
(88,100
|
)
|
|
|
|
|
|
|
(1,280,308
|
)
|
|
|
1,149,201
|
|
|
|
114
|
|
|
|
1,280,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Preferred Converted into common
|
|
|
(137,500
|
)
|
|
|
(1,982,315
|
)
|
|
|
0
|
|
|
|
1,390,944
|
|
|
|
139
|
|
|
|
1,982,176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassify warrants to APIC upon conversion of senior preferred
|
|
|
|
|
|
|
164,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(164,179
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassify offering costs to APIC upon preferred conversion
into common
|
|
|
|
|
|
|
34,904
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(34,904
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bridge loans converted to common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
651,520
|
|
|
|
65
|
|
|
|
371,301
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
371,366
|
|
Proceeds from common stock offering-net of costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,825,716
|
|
|
|
4,583
|
|
|
|
24,923,740
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,928,323
|
|
Employee incentive share grants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
333,000
|
|
|
|
33
|
|
|
|
500,451
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,484
|
|
Stock based compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
441,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
441,120
|
|
Fair value of warrants with related party debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,002
|
|
Fair value warrants issued in lieu of liquidated damages
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,380
|
|
Cumulative adjustments from adoption of ASC 815 as of Jan 1, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,877,176
|
)
|
|
|
|
|
|
|
6,877,176
|
|
|
|
|
|
|
|
|
|
Reclassification of warrants to derivative liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,450,542
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,450,542
|
)
|
Extinguishment of derivative liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,126,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,126,155
|
|
Beneficial conversion feature on preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,010,517
|
|
|
|
|
|
|
|
(3,010,517
|
)
|
|
|
|
|
|
|
|
|
Net Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14,578,427
|
)
|
|
|
|
|
|
|
(14,578,427
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,704
|
)
|
|
|
(2,704
|
)
|
Comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14,581,131
|
)
|
Balance at December 31, 2009
|
|
|
630,897
|
|
|
$
|
(0
|
)
|
|
$
|
9,069,871
|
|
|
|
75,767,818
|
|
|
$
|
7,576
|
|
|
$
|
76,372,520
|
|
|
$
|
0
|
|
|
$
|
(60,859,150
|
)
|
|
$
|
(251,973
|
)
|
|
$
|
24,338,844
|
|
Stock issuance costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(55,894
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(55,894
|
)
|
Preferred converted into common stock
|
|
|
(630,897
|
)
|
|
|
-
|
|
|
|
(9,390,803
|
)
|
|
|
8,785,484
|
|
|
|
879
|
|
|
|
9,389,924
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassify offering costs to APIC on series-A conversion
|
|
|
|
|
|
|
|
|
|
|
320,932
|
|
|
|
|
|
|
|
|
|
|
|
(320,932
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
400,000
|
|
|
|
40
|
|
|
|
227,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
228,000
|
|
Mercatus settlement in shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
198,300
|
|
|
|
20
|
|
|
|
113,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
113,031
|
|
Mercatus warrant exercise
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
301,700
|
|
|
|
30
|
|
|
|
131,266
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
131,296
|
|
Incentive shares forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(46,993
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(46,993
|
)
|
Stock based comp.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
491,978
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
491,978
|
|
Extinguishment of derivative liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
196,576
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
196,576
|
|
Net Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,830,854
|
)
|
|
|
|
|
|
|
(6,830,854
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
348
|
|
|
|
348
|
|
Comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,830,506
|
)
|
Balance at December 31, 2010
|
|
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
85,453,302
|
|
|
$
|
8,545
|
|
|
$
|
86,499,416
|
|
|
$
|
0
|
|
|
$
|
(67,690,004
|
)
|
|
$
|
(251,625
|
)
|
|
$
|
18,566,332
|
|
Balance at December 31, 2010
|
|
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
85,453,302
|
|
|
$
|
8,545
|
|
|
$
|
86,499,416
|
|
|
$
|
0
|
|
|
$
|
(67,690,004
|
)
|
|
$
|
(251,625
|
)
|
|
$
|
18,566,332
|
|
Incentive shares granted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
5
|
|
|
|
14,129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,134
|
|
Stock based comp.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,812
|
|
|
|
2
|
|
|
|
439.635
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
439,637
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,311,890
|
)
|
|
|
|
|
|
|
(8,311,890
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(47
|
)
|
|
|
(47
|
)
|
Comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,311,890
|
)
|
Balance at December 31, 2011
|
|
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
85,531,114
|
|
|
$
|
8,552
|
|
|
$
|
86,953,180
|
|
|
$
|
0
|
|
|
$
|
(75,693,012
|
)
|
|
$
|
(251,672
|
)
|
|
$
|
10,708,166
|
|
The Accompanying Notes are an Integral Part of the Financial Statements
AXION POWER INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(A DEVELOPMENT STAGE COMPANY)
Note 1 — Organization and Operations
These consolidated financial statements
of Axion Power International, Inc., a Delaware corporation (API), include the operations of its wholly owned subsidiaries; Axion
Power Battery Manufacturing, Inc. (APB), Axion Power Corporation, a Canadian Federal corporation (“APC”), and C &
T Co. Inc., an Ontario corporation (“C&T”) (collectively, the “Company”).
We are a development stage company that
was formed in September 2003 to acquire and develop certain innovative battery technology. Since inception we have been engaged
in research and development of new technology to manufacture carbon electrode assemblies for our energy storage devices that we
refer to as our PbC devices
Note 2 — Accounting Policies
Use of Estimates
:
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires
management to make estimates, assumptions and judgments that affect reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from the estimates.
Principles of Consolidation:
The consolidated financial statements include the accounts of the Company, and its wholly owned subsidiaries, Axion
Power Battery Manufacturing, Inc., APC and C&T. All significant inter-company balances and transactions have been eliminated
in consolidation.
Basis of Presentation
:
The
financial statements have been presented in a “development stage” format in accordance with the provisions of Statement
of Financial Accounting Standards (FASB) ASC 915, “Development
Stage Entities”
. Since inception, the Company’s
primary activities have been raising capital to invest in the development and testing of Axion’s propriety energy storage
technology.
Segment Reporting:
Management
has determined that the Company is organized, managed and internally reported as one business segment.
Foreign Currency Translation:
The accounts of APC and C&T are measured using the Canadian dollar as the functional currency for all the periods
presented in the financial statements. The translation from Canadian dollars to U.S. dollars is performed for the balance sheet
accounts using current exchange rates in effect at each of the balance sheet dates, and for the revenue and expense accounts using
the average rate in effect during the periods. The resulting translation adjustments are recorded as a component of accumulated
other comprehensive income (loss) within stockholders’ equity. Gains or losses resulting from transactions denominated in
currencies other than the functional currency are included in the results of operations as incurred. The gains or losses arising
from the inter-company loan denominated in U.S. dollars are directly reflected in other comprehensive income, as the amounts are
not expected to be repaid in the foreseeable future.
Comprehensive Income:
The
Company follows FASB ASC 220, “
Comprehensive Income
.” Comprehensive income is the change in equity of a business
enterprise during a reporting period from transactions and other events and circumstances from non-owner sources. In addition
to the Company’s net loss, the change in equity components under comprehensive income include the foreign currency translation
adjustment.
Fair Value of Financial Instruments:
FASB ASC 825, “Financial
Instruments
," requires disclosure of fair value information about certain
financial instruments, including, but not limited to, cash and cash equivalents, accounts receivable, refundable tax credits,
prepaid expenses, accounts payable, accrued expenses, notes payable to related parties and convertible debt-related securities.
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management
as of December 31, 2011 and 2010. The carrying value of the balance sheet financial instruments included in the Company’s
consolidated financial statements approximated their fair values.
Cash and Cash Equivalents:
For financial statement presentation purposes, the Company considers those short-term, highly liquid investments
to be cash or cash equivalents. Our investment policy is that we only invest cash in U.S. Government Treasuries with original
maturities of six months or less. As of December 31, 2011, the company did not have any short-term investments.
Accounts Receivable and Concentration
of Credit Risk:
The Company records its accounts receivable net of an allowance for doubtful accounts. The Company manages
its credit risk exposure and establishes an allowance for doubtful accounts for accounts that are deemed at risk for collection.
When management determines that an account is uncollectible, it is written off against the related allowance.
Inventory:
Inventory is
recorded at the lower of cost or market value, and adjusted as appropriate for decreases in valuation and obsolescence. Adjustments
to the valuation and obsolescence reserves are made after analyzing market conditions, historical and current sales activity,
inventory costs and inventory composition to determine appropriate reserve levels. Cost is determined using the first-in first-out
(FIFO) method. Many components and raw materials we purchase have minimum order quantities.
A summary of inventory at December 31,
2011 and 2010 is as follows:
|
|
2011
|
|
|
2010
|
|
Raw materials
|
|
$
|
1,534,957
|
|
|
$
|
1,053,825
|
|
Work in process
|
|
|
1,070,901
|
|
|
|
470,219
|
|
Finished goods
|
|
|
359,540
|
|
|
|
123,516
|
|
Inventory reserves
|
|
|
(248,225
|
)
|
|
|
(219,000
|
)
|
|
|
$
|
2,717,173
|
|
|
$
|
1,428,560
|
|
Property and Equipment:
Property and equipment are recorded at cost. Depreciation is computed using the straight line method over the estimated
useful lives of the assets, ranging from 3 to 22 years. Expenditures for renewals and betterments are capitalized. Expenditures
for minor items are charged to repairs and maintenance expense. Gain or loss upon sale or retirement is reflected in operating
results in the period the event takes place.
A summary of property and equipment at
December 31, 2011 and 2010 is as follows:
|
|
Estimated useful life
|
|
|
2011
|
|
|
2010
|
|
Construction in progress
|
|
|
|
|
|
$
|
1,651,204
|
|
|
$
|
2,361,391
|
|
Leasehold improvements
|
|
|
Lesser of lease term or 10 years
|
|
|
|
371,948
|
|
|
|
154,650
|
|
Machinery & equipment
|
|
|
3-22 years
|
|
|
|
9,156,153
|
|
|
|
5,970,015
|
|
Less accumulated depreciation
|
|
|
|
|
|
|
(2,762,142
|
)
|
|
|
(1,747,481
|
)
|
Net
|
|
|
|
|
|
$
|
8,417,163
|
|
|
$
|
6,738,575
|
|
Depreciation expense was $1,014,661 and $673,170 for the years
ended December 31, 2011 and December 31, 2010 respectively.
Certain of our machinery and equipment
amounting to $1,582,111 are secured by the Pennsylvania Department of Community and Economic Development in relation to the Machinery
and Equipment Loan Fund financing. The initial loan proceeds in the amount of $776,244 were received by us on September 14, 2009. The
proceeds of the loan were used to defray part of the cost of equipment purchased for use at our Green Ridge Road facility. The
loan bears interest at the rate of 3% interest per annum and is payable in equal monthly installments of principal and interest
over a period of seven years, maturing on October 1, 2016.
Impairment or Disposal of Long-Lived
Assets:
The Company adopted the provisions of FASB ASC 360-10-15-3, “Impairment
or Disposal of Long-lived Assets
.”
This standard requires, among other things, that long-lived assets be reviewed for potential impairment whenever events or circumstances
indicate that the carrying amounts may not be recoverable. The assessment of possible impairment is based on the ability to recover
the carrying value of the asset from the expected future pre-tax cash flows (undiscounted and without interest charges) of the
related operations. If these expected cash flows are less than the carrying value of such asset, an impairment loss is recognized
for the difference between estimated fair value and carrying value. The primary measure of fair value is based on discounted cash
flows. The measurement of impairment requires management to make estimates of these cash flows related to long-lived assets, as
well as other fair value determinations. The Company recorded an impairment loss of $308,882 in 2011compared to an impairment
loss of $361,793 in 2010.
Derivative Financial Instruments
:
The Company’s objectives in using derivative financial instruments are to obtain the lowest cash cost-source of funds.
Derivative liabilities are recognized in the consolidated balance sheets at fair value based on the criteria specified in FASB
ASC topic 815-40 "
Derivatives and Hedging – Contracts in Entity’s own Equity
". The estimated fair
value of the derivative liabilities is calculated using the Black-Scholes-Merton method where applicable and such estimates are
revalued at each balance sheet date, with changes in value recorded as other income or expense in the consolidated statement of
operations. As a result of the Company’s adoption of ASC topic 815-40, effective January 1, 2009 some of the Company’s
warrants are now accounted for as derivatives.
On January 1, 2009, the Company adopted
ASC topic 815-40, and as a result the 10,000,000 outstanding warrants issued to the Quercus Trust and another 1,485,714 warrants
issued as payment of services related to this offering, both containing exercise price down round reset provisions that were previously
classified in equity, were reclassified to derivative liabilities. As of January 1, 2009, these warrants were no longer deemed
to be indexed to the Company’s own stock. The fair value of these derivative liabilities as of January 1, 2009 was $2,450,542
and was reclassified from additional paid-in capital. The significant assumptions used in the January 1, 2009 valuation were:
the exercise price of $2.60; the market value of the Company’s common stock on January 1, 2009, $1.15; expected volatility
of 49.44%; risk free interest rate of 1.28%; and a remaining contract term of 4.27 years.
On September 22, 2009, the exercise price
for 10,000,000 warrants issued to The Quercus Trust was reset from $2.60 to $0.75. On December 15, 2009 the 1,485,714
warrants issued in payment of services related to Quercus offering, were reset from $2.60 to $0.57.
On December 22, 2009 the derivative liability
relating to the 10,000,000 Quercus Trust warrants was extinguished, and the liability valued on that date of $7,126,155 was reclassified
back into equity. The significant assumptions used in the December 22, 2009 valuation were: exercise price of $0.75;
market value of the Company’s common stock of $1.30 on December 22, 2009, volatility of 61.5%; risk free interest rate of
1.22%; and a remaining contract term of 2.5 years.
On February 9, 2010, 100,000 warrants
valued at $78,213 were exercised at $0.57 per share.
On
April 19, 2010, 100,000 warrants valued at $66,053 were exercised at $0.57 per share.
On July 12, 2010, 100,000 warrants
valued at $26,379 were exercised at $0.57 per share. On October 1, 2010, 100,000 warrants valued at $25,931 were exercised at
$0.57 per share. The reduction in the fair value of the Company’s remaining 1,085,714 derivative liabilities were primarily
driven by the decrease in stock price from $1.56 per share on December 31, 2009 to $0.57 per share on December 31, 2010, yielding
a gain of $1,165,751 for the year ended December 31, 2010.
There were no warrants exercised during
year ended December, 31, 2011.
A summary of the assumptions used for
the derivative revaluations at December 31, 2011 and 2010 were as follows:
|
|
2011
|
|
|
2010
|
|
Exercise price
|
|
$0.57
|
|
|
$0.57
|
|
Risk-free interest rate
|
|
0.25%
|
|
|
0.61%
|
|
Dividend yield
|
|
$-
.
|
|
|
$-
|
|
Expected volatility
|
|
56.78%
|
|
|
71.14%
|
|
Expected term (in years)
|
|
1.27
|
|
|
2.27
|
|
Revenue Recognition
:
The Company recognizes revenue when there is persuasive evidence of an agreement, delivery has occurred or services have been
rendered, the sales price to the buyer is fixed or determinable and collectability is reasonably assured. Evidence of an agreement
and fixed or determinable sales price is predominantly based on a customer purchase order or other form of written sales order
or written agreement. Sales on account are approved only for credit-worthy customers; otherwise payment in full is received prior
to shipment. Shipping terms are generally FOB shipping point and revenue is recognized when product is shipped to the customer.
In limited cases, if terms are FOB destination or contingent upon collection by a prime contractor, then in these cases, revenue
is recognized when the product is delivered to the customer’s delivery site or the conditions for collection have been fulfilled.
The Company records sales net of discounts and estimated customer allowances and returns. We offer a 90 day free replacement warranty
on some specialty collector car and motorsports products. Collector car products also carry a four year prorated warranty that
begins at the end of the 90 days. To date, our warranty exposure on these products has been minimal. Flooded battery
sales do not have standard warranty provisions and instead are sold at a discount in lieu of warranty. There were no
other post shipment obligations that may impact the timing of revenue recognition for the year ending December 31, 2011.
Grants:
The Company recognizes government grants when there is reasonable assurance that the Company will comply with the conditions
attached to the grant arrangement and the grant will be received. Government grants are recognized in the consolidated statements
of operations on a systematic basis over the periods in which the Company recognizes the related costs for which the government
grant is intended to compensate. Specifically, when government grants are related to reimbursements for cost of revenues or operating
expenses, the government grants are recognized as a reduction of the related expense in the consolidated statements of operations.
For government grants related to reimbursements of capital expenditures, the government grants are recognized as a reduction of
the basis of the asset and recognized in the consolidated statements of operations over the estimated useful life of the depreciable
asset as a reduced depreciation expense. The Company records government grants receivable in the consolidated balance sheets in
other receivables.
Stock-Based Compensation:
Prior to January 1, 2006, we accounted for stock option awards in accordance with the recognition and measurement provisions
of former authoritative literature APB 25 and related interpretations, as permitted by former authoritative literature Statement
of Financial Accounting Standard No. 123, (“SFAS 123”)
“Accounting for Stock-Based Compensation”
. Under APB 25, compensation cost for stock options issued to employees was measured as the excess, if any, of the fair value
of our stock at the date of grant over the exercise price of the option granted. Compensation cost was recognized for stock options,
if any, ratably over the vesting period. As permitted by SFAS 123, we reported pro-forma disclosures presenting results and earnings
as if we had used the fair value recognition provisions of SFAS 123 in the Notes to the Consolidated Financial Statements.
Effective January 1, 2006, we adopted
the provisions of ASC topic 718 using the modified prospective transition method. Stock-based compensation related to employees
and non-employees is recognized as compensation expense in the accompanying consolidated statements of operations and is based
on the fair value of the services received or the fair value of the equity instruments issued, whichever is more readily determinable.
Our accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the
provisions of ASC 505-50 “
Equity-Based Payments to Non-Employees”
(formerly EITF 96-18,
“Accounting
for Equity Instruments That are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services”
and EITF 00-18,
“Accounting Recognition for Certain Transactions Involving Equity Instruments granted to Other Than
Employees”).
The measurement date for the fair value of the equity instruments issued is determined at the earlier
of (1) the date at which a commitment for performance by the consultant or vendor is reached or (2) the date at which the consultant
or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity
instrument is recognized over the term of the consulting agreement.
Research and Development:
R&D
costs are recorded in accordance with FASB ASC topic 730,
“Accounting for Research and Development Costs,”
which requires that costs incurred in R&D activities covering basic scientific research and the application of scientific
advances to the development of new and improved products and their uses be expensed as incurred. R&D includes the conceptual
formulation, design and testing of product alternatives, construction of prototypes, and operation of pilot plants.
Income Taxes:
Deferred
income taxes are recorded in accordance with FASB ASC 740, “
Income Taxes
”, and deferred tax assets and liabilities
are determined based on the differences between financial reporting and the tax basis of assets and liabilities using the tax
rates and laws in effect when the differences are expected to reverse. FASB ASC 740 provides for the recognition of deferred tax
assets if realization of such assets is more likely than not to occur. Realization of net deferred tax assets is dependent upon
generating sufficient taxable income in future years in appropriate tax jurisdictions to realize benefit from the reversal of
temporary differences and from net operating loss, or NOL, carry forwards. The Company has determined it is more likely than not
that the deferred tax asset resulting from these timing differences will not materialize and have provided a valuation allowance
against the entire net deferred tax asset. Management will continue to evaluate the realizability of the deferred tax asset and
its related valuation allowance. If the assessment of the deferred tax assets or the corresponding valuation allowance were to
change, the Company would record the related adjustment to income during the period in which the determination is made. The tax
rate may also vary based on actual results and the mix of income or loss in domestic and foreign tax jurisdictions in which operations
take place. The provision for taxes represents corporate-level franchise taxes which may be based on assets, equity, capital stock
or a variation thereof.
Recently Issued Accounting Pronouncements:
In May 2011, the
FASB issued Update No. 2011-04 related to fair value measurements and disclosures in the financial statements, which updates ASC
Topic 820 “Fair Value Measurement”. This guidance conforms the wording to describe many of the requirements
in U.S. GAAP to International Financial Reporting Standards to ensure the related standards are consistently applied. The
guidance also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3)
inputs. This new guidance is effective during interim and annual periods beginning after December 15, 2011 and is to be applied
prospectively. The adoption of this standard will not materially expand the Company’s consolidated financial statement footnote
disclosures.
In June 2011, the
FASB issued Update No. 2011-05 related to the presentation of comprehensive income in the financial statements, which updates
ASC Topic 220 “Comprehensive Income”. The Update eliminates the option to present the components of other
comprehensive income as part of the statement of shareholders’ equity. Under the new guidance, the Company has
the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive
income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. This
guidance will be effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The
adoption of this standard will not have an impact on the Company’s consolidated financial position, results of operations
or cash flows as it only requires a change in the format of the current presentation.
In December 2011,
the FASB issued ASU No. 2011-12,
Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation
of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU No. 2011-05,
which defers the effective
date pertaining to reclassification adjustments out of other accumulated comprehensive income in ASU 2011-05,
until
the FASB is able to reconsider those requirements. All other requirements of ASU 2011-05 are not affected by this update,
including the requirement to report comprehensive income either in a single continuous financial statement or in two separate
but consecutive financial statements. Public entities should apply these requirements for fiscal years, and interim periods within
those years, beginning after December 15, 2011, which coincide with the effective dates of the requirements in ASU 2011-05 amended
by this Update. The Company has evaluated the impact of this Update on its financial statements and determined that there will
be no change.
Note 3 —
Grant Income
Pertaining to Equipment
Grants from Commonwealth of Pennsylvania:
The Company records state grants received for equipment as deferred revenue based on qualifying equipment
purchases that are billed to the Commonwealth for reimbursement. Deferred revenue is amortized into income over the estimated
useful life of the related equipment. As of December 31, 2011, the liability for deferred revenue was $1,573,962 and other receivables
included $140,389 for equipment grants invoiced in 2011. During the year 2011, $238,918 of income was recorded for the amortization
of deferred revenue. As of December 31, 2010, the liability for deferred revenue from state equipment grants was $1,385,185, other
receivables relating to equipment grants included $108,261 for equipment grants invoiced in 2010, and $187,900 of income was recorded
for the amortization of deferred revenue.
Note 4 — Stockholders' Equity
Authorized Capitalization:
The Company’s authorized capitalization includes 200,000,000 shares of common stock and 12,500,000 shares of preferred stock.
The number of authorized common shares was increased by 75,000,000 pursuant to the Shareholder meeting vote on July 20, 2011.
Common Stock:
At
December 31, 2011, 85,531,114 shares of common stock were issued and outstanding. The holders of common stock 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 all of the directors. Holders of common stock are entitled to receive dividends when and if declared by the board out
of funds legally available. In the event of liquidation, dissolution or winding up, the 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 common stockholders have no conversion, preemptive
or other subscription rights and there are no redemption provisions applicable to the common stock. All of the outstanding shares
of common stock are fully paid and non-assessable.
Preferred Stock:
The
Company’s certificate of incorporation authorizes the issuance of 12,500,000 shares of blank check preferred stock. The
Company’s board of directors has the power to establish the designation, rights and preferences of any preferred stock.
Accordingly, the board of directors has the power, without stockholder approval, to 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.
At December 31, 2011 and 2010, no shares
of Series-A Convertible Preferred stock were issued and outstanding.
Equity Transactions –Year
ended December 31, 2010 and 2011
Series-A Preferred
: On January
26, 2010, a shareholder converted 100,000 shares of Series-A Convertible Preferred stock along with accrued dividends of $525,277
into 1,426,960 shares of the Company’s common stock, and the remaining 530,897 shares of Series-A Convertible Preferred
stock were converted into 7,358,524 shares of common stock pursuant to an amendment to the Series-A Certificate of Designation
filed with the Delaware Secretary of State on February 24, 2010.
There were no preferred stock transactions
in 2011.
Warrants
:
On
February 9, 2010, April 19, 2010, July 12, 2010, and October 1, 2010 a total of 400,000 warrants (100,000 warrants from each transaction)
were exercised for a total of $228,000.
During August 2010, 301,700 warrants issued were exercised for
$131,266,
in partial settlement of the Mercatus matter.
Common Stock Issuances
: The following table represents
per share issuances of common stock from inception through December 31, 2011, pursuant to FASB ASC 915, “Development
Stage Enterprises
”:
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
Description:
|
|
Date
|
|
|
Shares
|
|
|
Per share
valuation
|
|
|
Business reason:
|
|
Shares issued to founders
|
|
|
9/18/2003
|
|
|
|
1,360,000
|
|
|
$
|
0.00
|
|
|
Original capitalization-no contributed capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APC Founder
|
|
|
9/18/2003
|
|
|
|
170,000
|
|
|
$
|
0.29
|
|
|
Services rendered with respect to formation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Seed debt financing
|
|
|
12/31/2003
|
|
|
|
500,000
|
|
|
$
|
1.00
|
|
|
Conversion of debt plus interest to common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series I convertible debt
|
|
|
12/31/2003
|
|
|
|
533,334
|
|
|
$
|
1.50
|
|
|
Conversion of debt plus interest to common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series II convertible debt
|
|
|
12/31/2003
|
|
|
|
75,000
|
|
|
$
|
2.00
|
|
|
Conversion of debt plus interest to common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mega-C Trust
|
|
|
12/31/2003
|
|
|
|
6,147,484
|
|
|
$
|
0.00
|
|
|
In lieu of shares issuable to founders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tamboril shareholders
|
|
|
12/31/2003
|
|
|
|
1,875,000
|
|
|
$
|
0.00
|
|
|
Recapitalization at fair market value of Tamboril assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2003 Totals
|
|
|
|
|
|
|
10,660,818
|
|
|
$
|
0.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description:
|
|
|
Date
|
|
|
|
Shares
|
|
|
|
Per share
valuation
|
|
|
Business reason:
|
|
Shares issued to founders
|
|
|
1/9/2004
|
|
|
|
445,000
|
|
|
$
|
0.00
|
|
|
In lieu of shares issuable to founders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mega-C Trust
|
|
|
1/9/2004
|
|
|
|
180,000
|
|
|
$
|
0.00
|
|
|
Adjustment is shares issuable to founders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer
|
|
|
1/9/2004
|
|
|
|
45,000
|
|
|
$
|
1.60
|
|
|
Services rendered by former officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series I convertible debt-Igor Filipenko
|
|
|
1/9/2004
|
|
|
|
50,000
|
|
|
$
|
1.00
|
|
|
Conversion of debt plus interest to common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series II convertible debt-Turitella
|
|
|
1/9/2004
|
|
|
|
133,333
|
|
|
$
|
1.50
|
|
|
Conversion of debt plus interest to common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series III convertible debt-Turitella
|
|
|
1/9/2004
|
|
|
|
100,000
|
|
|
$
|
2.00
|
|
|
Conversion of debt plus interest to common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series II common stock offering
|
|
|
2/1/2004
|
|
|
|
175,000
|
|
|
$
|
2.00
|
|
|
Common stock & warrants issued for cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series III common stock offering
|
|
|
3/31/2004
|
|
|
|
288,100
|
|
|
$
|
3.00
|
|
|
Common stock & warrants issued for cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of Series I warrants
|
|
|
Various
|
|
|
|
316,700
|
|
|
$
|
1.50
|
|
|
Warrants exercised pursuant to original terms
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of Series II warrants
|
|
|
Various
|
|
|
|
125,000
|
|
|
$
|
2.28
|
|
|
Warrants exercised pursuant to original terms
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of Series II warrants
|
|
|
Various
|
|
|
|
33,500
|
|
|
$
|
3.23
|
|
|
Warrants exercised pursuant to original terms
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November emergency funding
|
|
|
11/1/2004
|
|
|
|
314,000
|
|
|
$
|
1.50
|
|
|
Common stock & warrants issued for cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December emergency funding
|
|
|
12/1/2004
|
|
|
|
46,700
|
|
|
$
|
1.50
|
|
|
Common stock & warrants issued for cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fractional shareholders
|
|
|
12/31/2004
|
|
|
|
48,782
|
|
|
$
|
0.00
|
|
|
Shares issued due to reverse split rounding formula
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004 Totals
|
|
|
|
|
|
|
2,301,115
|
|
|
$
|
1.37
|
|
|
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
Description:
|
|
Date
|
|
|
Shares
|
|
|
Per share
valuation
|
|
|
Business reason:
|
|
Mega-C Trust
|
|
|
2/28/2005
|
|
|
|
500,000
|
|
|
$
|
3.05
|
|
|
Trust augmentation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banca di Unionale
|
|
|
3/18/2005
|
|
|
|
30,000
|
|
|
$
|
2.00
|
|
|
Conversion of Preferred and accrued dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banca di Unionale
|
|
|
4/20/2005
|
|
|
|
20,000
|
|
|
$
|
2.00
|
|
|
Conversion of Preferred and accrued dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C&T employees
|
|
|
4/1/2005
|
|
|
|
219,000
|
|
|
$
|
2.50
|
|
|
Employee incentive share grants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7 individuals
|
|
|
6/10/2005
|
|
|
|
29,565
|
|
|
$
|
3.57
|
|
|
Exercise of Director options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 individuals
|
|
|
7/11/2005
|
|
|
|
190,000
|
|
|
$
|
1.58
|
|
|
Conversion of Preferred and accrued dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banca di Unionale
|
|
|
7/11/2005
|
|
|
|
10,000
|
|
|
$
|
1.60
|
|
|
Exercise of preferred warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 individuals
|
|
|
8/28/2005
|
|
|
|
150,000
|
|
|
$
|
1.67
|
|
|
Conversion of Preferred and accrued dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James Smith
|
|
|
9/7/2005
|
|
|
|
30,000
|
|
|
$
|
1.67
|
|
|
Conversion of Preferred and accrued dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2 individuals
|
|
|
9/28/2005
|
|
|
|
1,050,000
|
|
|
$
|
1.69
|
|
|
Conversion of Preferred and accrued dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2 individuals
|
|
|
Various
|
|
|
|
226,900
|
|
|
$
|
1.79
|
|
|
Exercise of Series I warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 individuals
|
|
|
Various
|
|
|
|
91,200
|
|
|
$
|
2.40
|
|
|
Exercise of Series III warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2 individuals
|
|
|
Various
|
|
|
|
25,000
|
|
|
$
|
1.60
|
|
|
Exercise of Preferred warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer
|
|
|
10/20/2005
|
|
|
|
446,000
|
|
|
$
|
1.00
|
|
|
Exercise of warrants and options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer
|
|
|
10/20/2005
|
|
|
|
25,000
|
|
|
$
|
2.00
|
|
|
Exercise of warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6 individuals
|
|
|
12/1/2005
|
|
|
|
600,000
|
|
|
$
|
2.00
|
|
|
Common stock and warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005 Totals
|
|
|
|
|
|
|
3,642,665
|
|
|
$
|
1.94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description:
|
|
|
Date
|
|
|
|
Shares
|
|
|
|
Per share
valuation
|
|
|
Business reason:
|
|
2 individuals
|
|
|
4/21/2006
|
|
|
|
80,000
|
|
|
$
|
2.50
|
|
|
Common stock and warrants issued for cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer
|
|
|
4/21/2006
|
|
|
|
56,700
|
|
|
$
|
2.00
|
|
|
Exercise of non-plan incentive option by CEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer
|
|
|
4/21/2006
|
|
|
|
6,000
|
|
|
$
|
4.00
|
|
|
Unrestricted share grant to CTO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mega-C Trust
|
|
|
11/28/2006
|
|
|
|
(500,000
|
)
|
|
$
|
2.25
|
|
|
Return of shares per settlement agreement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006 Totals
|
|
|
|
|
|
|
(357,300
|
)
|
|
$
|
2.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description:
|
|
|
Date
|
|
|
|
Shares
|
|
|
|
Per share
valuation
|
|
|
Business reason:
|
|
Officer
|
|
|
12/1/2007
|
|
|
|
1,000
|
|
|
$
|
2.30
|
|
|
Unrestricted share grant to VP Mfg Eng.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007 Totals
|
|
|
|
|
|
|
1,000
|
|
|
$
|
2.30
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
Description:
|
|
Date
|
|
|
Shares
|
|
|
Per share
valuation
|
|
|
Business reason:
|
|
The Quercus Trust
|
|
|
1/14/2008
|
|
|
|
1,904,762
|
|
|
$
|
2.10
|
|
|
Securities purchase agreement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 individual
|
|
|
3/31/2008
|
|
|
|
106,659
|
|
|
$
|
2.10
|
|
|
2007 Bridge Loan Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Quercus Trust
|
|
|
4/8/2008
|
|
|
|
1,904,762
|
|
|
$
|
2.10
|
|
|
Securities purchase agreement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 individuals
|
|
|
4/21/2008
|
|
|
|
25,000
|
|
|
$
|
2.10
|
|
|
2007 Bridge Loan Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lichtensteiniche Landsbank
|
|
|
5/6/2008
|
|
|
|
508,512
|
|
|
$
|
1.25
|
|
|
Series-A Preferred Conversions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
|
5/29/2008
|
|
|
|
2,000
|
|
|
$
|
2.10
|
|
|
2007 Bridge Loan Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Quercus Trust
|
|
|
6/30/2008
|
|
|
|
4,761,905
|
|
|
$
|
2.10
|
|
|
Securities purchase agreement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
|
6/30/2008
|
|
|
|
380,952
|
|
|
$
|
2.10
|
|
|
2007 Bridge Loan Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 individual
|
|
|
8/20/2008
|
|
|
|
520,787
|
|
|
$
|
1.25
|
|
|
Series-A Preferred Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 individual
|
|
|
9/11/2008
|
|
|
|
41,800
|
|
|
$
|
1.25
|
|
|
Series-A Preferred Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
V.P. Mfg Engineering
|
|
|
01/01/2008-12/01/2008
|
|
|
|
12,000
|
|
|
$
|
1.85
|
|
|
Unrestricted share Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 Totals
|
|
|
|
|
|
|
10,169,139
|
|
|
$
|
2.01
|
|
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
Description:
|
|
Date
|
|
|
Shares
|
|
|
Per share
valuation
|
|
|
Business reason:
|
|
V.P. Mfg Engineering
|
|
|
01/01/2009-12/01/2009
|
|
|
|
23,000
|
|
|
$
|
1.55
|
|
|
Unrestricted share Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CFO
|
|
|
6/16/2009
|
|
|
|
30,000
|
|
|
$
|
1.41
|
|
|
Unrestricted share Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New Energy Fund
|
|
|
7/21/2009
|
|
|
|
286,735
|
|
|
$
|
1.25
|
|
|
Series-A Preferred Conversions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fursa Global Event Driven Fund LP
|
|
|
11/4/2009
|
|
|
|
862,466
|
|
|
$
|
1.07
|
|
|
Series-A Preferred Conversions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
|
12/23/2009
|
|
|
|
252,912
|
|
|
$
|
1.43
|
|
|
Senior Preferred Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
|
12/23/2009
|
|
|
|
431,297
|
|
|
$
|
1.43
|
|
|
Senior Preferred Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8 individuals
|
|
|
12/23/2009
|
|
|
|
706,735
|
|
|
$
|
1.43
|
|
|
Senior Preferred Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11 individuals
|
|
|
12/23/2009
|
|
|
|
719,664
|
|
|
$
|
0.57
|
|
|
Common stock placement fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48 investors
|
|
|
12/22/2009
|
|
|
|
45,106,052
|
|
|
$
|
0.57
|
|
|
Securities purchase agreement, net of 2009 Bridge Loan conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
|
12/22/2009
|
|
|
|
300,620
|
|
|
$
|
0.57
|
|
|
2009 Bridge Loan conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 individual
|
|
|
12/22/2009
|
|
|
|
350,900
|
|
|
$
|
0.57
|
|
|
2009 Bridge Loan conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CTO
|
|
|
12/29/2009
|
|
|
|
280,000
|
|
|
$
|
1.50
|
|
|
Unrestricted share Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 Totals
|
|
|
|
|
|
|
49,350,381
|
|
|
$
|
0.61
|
|
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
Description:
|
|
Date
|
|
|
Shares
|
|
|
Per share
valuation
|
|
|
Business reason:
|
|
1 individual
|
|
|
1/26/2010
|
|
|
|
1,426,960
|
|
|
$
|
1.07
|
|
|
Series-A conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 individual
|
|
|
2/9/2010
|
|
|
|
100,000
|
|
|
$
|
0.57
|
|
|
Warrant Exercise
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18 individuals
|
|
|
2/24/2010
|
|
|
|
3,453,899
|
|
|
$
|
1.07
|
|
|
Series-A conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
|
2/24/2010
|
|
|
|
1,692,160
|
|
|
$
|
1.07
|
|
|
Series-A conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer
|
|
|
2/24/2010
|
|
|
|
275,296
|
|
|
$
|
1.07
|
|
|
Series-A conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
|
2/24/2010
|
|
|
|
1,937,169
|
|
|
$
|
1.07
|
|
|
Series-A conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 individual
|
|
|
4/19/2010
|
|
|
|
100,000
|
|
|
$
|
0.57
|
|
|
Warrant Exercise
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 individual
|
|
|
7/12/2010
|
|
|
|
100,000
|
|
|
$
|
0.57
|
|
|
Warrant Exercise
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 individual
|
|
|
7/28/2010
|
|
|
|
301,700
|
|
|
$
|
0.44
|
|
|
Mercatus Warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 individual
|
|
|
10/1/2010
|
|
|
|
100,000
|
|
|
$
|
0.57
|
|
|
Warrant Exercise
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2 individuals
|
|
|
12/15/2010
|
|
|
|
198,300
|
|
|
$
|
0.57
|
|
|
Settlement of accrued liabilities to selling shareholders in the Mercatus settlement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 Totals
|
|
|
|
|
|
|
9,685,484
|
|
|
$
|
1.02
|
|
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
Description:
|
|
Date
|
|
|
Shares
|
|
|
Per share
valuation
|
|
|
Business reason:
|
|
1 individual
|
|
|
6/15/2011
|
|
|
|
50,000
|
|
|
$
|
0.66
|
|
|
Employee exercised incentive options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director non-cash compensation
|
|
|
8/4/2011
|
|
|
|
12,837
|
|
|
$
|
0.65
|
|
|
Stock compensation in lieu of cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director non-cash compensation
|
|
|
10/26/2011
|
|
|
|
14,975
|
|
|
$
|
0.60
|
|
|
Stock compensation in lieu of cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,812
|
|
|
|
0.65
|
|
|
|
|
|
Warrants:
The following table
provides summary information on warrants outstanding as of December 31, 2011 and 2010, with summary information on the various
warrants issued by the Company in private placement transactions, warrants exercised to date, warrants that are presently exercisable
and the current exercise prices of such warrants.
|
|
|
|
|
2011
|
|
|
|
|
|
2010
|
|
|
|
Shares
|
|
|
Weighted Average
Exercise price
|
|
|
Shares
|
|
|
Weighted Average
Exercise price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants outstanding January 1
|
|
|
12,973,820
|
|
|
$
|
1.18
|
|
|
|
13,965,433
|
|
|
$
|
1.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted during year
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
(701,700
|
)
|
|
|
.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lapsed
|
|
|
(1,077,750
|
)
|
|
|
4.74
|
|
|
|
(289,913
|
)
|
|
|
6.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31
|
|
|
11,896,070
|
|
|
$
|
0.85
|
|
|
|
12,973,820
|
|
|
$
|
1.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average years remaining
|
|
|
1.3
|
|
|
|
|
|
|
|
2.2
|
|
|
|
|
|
On September 22, 2009, we entered
into an Amendment to Warrants and Securities Purchase Agreement with Quercus Trust, amending the January 14, 2008 Warrant and
Securities Purchase Agreement. The Amendment resets the exercise price for warrants previously issued to Quercus from $2.60
per share to $0.75 per share, and is reflected in this table by reducing the weighted average exercise price of warrants
outstanding as of January 1, 2009 from $2.94 to $1.44 per share. In Amendment No. 2 to the Securities
Purchase Agreement dated December 15, 2009, The Quercus Trust agreed to waive further anti-dilution rights on its warrants to
purchase our common stock below an exercise price of $0.75 per share. On December 22, 2009 the 1,485,714 warrants issued
in payment of services related to Quercus offering, were reset from $2.60 to $0.57 per share. The reset in the exercise price
of the Quercus related warrants decreased the weighted average exercise price for warrants outstanding at December 31, 2009
from $2.90 to $1.36 per share
As of December 31, 2011 and 2010,
1,085,714 warrants were classified as derivative liabilities. Each reporting period the warrants are re-valued and adjusted
through the caption “derivative revaluation” on the consolidated statements of operations.
Note 5 – Equity Compensation
On August 4, 2011, Axion issued 12,837 shares of stock in lieu
of cash compensation to members of the Board of Directors.
Non- cash compensation expense recognized was $8,370.
On October 26, 2011, Axion issued 14,975 shares of common stock
in lieu of cash compensation to members of the Board of Directors. Non-cash compensation expense recognized was $8,910.
On January 30, 2012, subsequent to year end, Axion issued 27,844
shares of common stock in lieu of cash compensation to members of the Board of Directors. Non-cash compensation expense recognized
was $8,910.
The compensation expense that has been
recognized for options granted was $413,447 and $491,979 for the years ended December 31, 2011 and 2010 respectively. There was
no dilutive impact per share during 2011 compared to $0.01 for 2010. For stock options issued as non-qualified stock options, a
tax deduction is not allowed until the options are exercised. The amount of this deduction will be the difference between the fair
value of the Company’s common stock and the exercise price at the date of exercise. Accordingly, there is a deferred tax
asset recorded for the tax effect of the financial statement expense recorded. The tax effect of the income tax deduction in excess
of the financial statement expense will be recorded as an increase to additional paid-in capital. Due to the uncertainty of the
Company’s ability to generate sufficient taxable income in the future to utilize the tax benefits of the options granted,
the Company has recorded a valuation allowance to reduce gross deferred tax assets to zero. As a result, for the year ended December
31, 2011, there is no income tax expense impact from recording the fair value of options granted. There is no tax deduction allowed
by the Company for incentive stock options.
The Company has two stockholder approved
equity compensation plans. The following sections summarize the Company’s equity compensation arrangements.
Incentive Stock Plan
Approved
by Stockholders:
The Company’s stockholders have adopted an incentive stock plan for the benefit of its employees,
consultants and advisors. Under the terms of the original plan, the Company was authorized to grant incentive awards for up to
1,000,000 shares of common stock. At the Company’s 2005 annual meeting, its shareholders increased the authorization under
the incentive stock plan to 2,000,000 shares.
The incentive stock plan authorizes a variety
of awards including incentive stock options, non-qualified stock options, shares of restricted stock, and shares of phantom stock
and stock bonuses. In addition, the plan authorizes the payment of cash bonuses when a participant is required to recognize income
for federal income tax purposes because of the vesting of shares of restricted stock or the grant of a stock bonus.
The plan authorizes the grant of incentive
awards to full-time employees of the Company who are not eligible to receive awards under the terms of an employment contract or
another specialty plan. The plan also authorizes the grant of incentive awards to directors who are not eligible to participate
in the Company’s outside directors’ stock option plan, independent agents, consultants and advisors who have contributed
to the Company’s success.
The Compensation Committee administers
the plan. The Committee has absolute discretion to decide which employees, consultants and advisors will receive incentive awards,
the type of award to be granted and the number of shares covered by the award. The committee also determines the exercise prices,
expiration dates and other features of awards.
The exercise price of incentive stock options
must be equal to the fair market value of such shares on the date of the grant or, in the case of incentive stock options granted
to the holder of more than 10% of the Company’s common stock, at least 110% of the fair market value of such shares on the
date of the grant. The maximum exercise period for incentive stock options is ten years from the date of grant, or five years in
the case of an individual who owns more than 10% of the Company’s common stock. The aggregate fair market value determined
at the date of the option grant, of shares with respect to which incentive stock options are exercisable for the first time by
the holder of the option during any calendar year, shall not exceed $100,000.
There are no incentive stock options outstanding
at December 31, 2011.
Outside Directors' Stock Option Plan
Approved by Stockholders:
The Company’s stockholders have adopted an outside directors' stock option plan for the
benefit of its non-employee directors in order to encourage their continued service as directors. Under the terms of the original
plan, the Company was authorized to grant incentive awards for up to 125,000 shares of common stock. At the 2005 annual meeting,
the Company’s shareholders increased the authorization under the incentive stock plan to 500,000 shares.
Each eligible director who is, on or after
the effective date, appointed to fill a vacancy on the Board or elected to serve as a member of the Board may participate in the
plan. Each eligible director shall automatically be granted an option to purchase the maximum number of shares having an aggregate
fair market value on the date of grant of twenty thousand dollars ($20,000). The option price of the stock subject to each option
is required to be the fair market value of the stock on its date of grant. Options generally expire on the fifth anniversary of
the date of grant. Any option granted under the plan shall become exercisable in full on the first anniversary of the date of grant,
provided that the eligible director has not voluntarily resigned or been removed "for cause" as a member of the Board
of Directors on or prior to the first anniversary of the date of grant (qualified option). Any qualified option shall remain exercisable
after its first anniversary regardless of whether the optionee continues to serve as a member of the Board.
During 2010, the Company issued 77,922
five year options to one of its directors, vesting one third per year over the next three years. These options are exercisable
at a price of $0.77 per share, expiring five years from vest date and are valued at $34,860 utilizing the Black-Scholes-Merton
option pricing model, with $12,152 recorded as compensation in 2010, and the Company issued 8,000 four year options to one of its
directors, vesting immediately. These options are exercisable at a price of $3.60 per share, expiring June 25, 2014 and are valued
at $14,882 utilizing the Black-Scholes-Merton option pricing model, with $14,882 recorded as compensation expense in 2010.
There were no issuances in 2011.
Stock Options Held by Officers, Employees,
and Consultants Not Approved by Stockholders:
The Company uses the Black-Scholes-Merton
Option Pricing Model to estimate the fair value of awards on the measurement date using the weighted average assumptions noted
in the following table:
Year
|
|
Interest Rate %
|
|
|
Dividend Yield %
|
|
|
Expected Volatility %
|
|
|
Expected Life
|
|
2004
|
|
|
3.8
|
|
|
|
0.0
|
|
|
|
59.1
|
|
|
|
60 months
|
|
2005
|
|
|
4.0
|
|
|
|
0.0
|
|
|
|
52.0
|
|
|
|
100 months
|
|
2006
|
|
|
4.7
|
|
|
|
0.0
|
|
|
|
53.6
|
|
|
|
45 months
|
|
2007
|
|
|
3.9
|
|
|
|
0.0
|
|
|
|
54.4
|
|
|
|
62 months
|
|
2008
|
|
|
2.8
|
|
|
|
0.0
|
|
|
|
51.4
|
|
|
|
58 months
|
|
2009
|
|
|
2.0
|
|
|
|
0.0
|
|
|
|
53.0
|
|
|
|
80 months
|
|
2010
|
|
|
2.3
|
|
|
|
0.0
|
|
|
|
58.0
|
|
|
|
69 months
|
|
2011
|
|
|
1.4
|
|
|
|
0.0
|
|
|
|
59.4
|
|
|
|
76 months
|
|
Expected volatilities are calculated based
on the historical volatility of the Company’s stock since its listing on the public markets. Management has determined that
it cannot reasonably estimate a forfeiture rate given the insufficient amount of time and activity of share option exercise and
employee termination patterns. The expected life of options, representing the period of time that options granted are expected
to be outstanding, was determined using the contractual term. The risk-free interest rate for periods within the expected life
of the option is based on the interest rate for a similar time period of a U.S. Treasury note in effort on the date of the grant.
The following table provides consolidated
summary information on the Company’s stock option activity for the years ended December 31, 2004 through 2011.
|
|
|
|
|
2004
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
All Plan & Non-
Plan Compensatory Options
|
|
Number of
Options
|
|
|
Exercise
|
|
|
Fair Value
|
|
|
Remaining
Life (years)
|
|
|
Aggregate
Intrinsic
Value
|
|
Options outstanding at December 31, 2003
|
|
|
-
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
736,350
|
|
|
|
3.53
|
|
|
|
2.87
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
|
|
|
|
|
|
Forfeited or lapsed
|
|
|
-
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
|
|
|
|
|
|
Options outstanding at December 31, 2004
|
|
|
736,350
|
|
|
$
|
3.53
|
|
|
$
|
2.87
|
|
|
|
6.34
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
All Plan & Non-
Plan Compensatory Options
|
|
Number of
Options
|
|
|
Exercise
|
|
|
Fair Value
|
|
|
Remaining
Life (years)
|
|
|
Aggregate
Intrinsic
Value
|
|
Options outstanding at December 31, 2004
|
|
|
736,350
|
|
|
$
|
3.53
|
|
|
$
|
2.87
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
1,254,500
|
|
|
|
2.48
|
|
|
|
1.34
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(358,865
|
)
|
|
|
1.65
|
|
|
|
2.32
|
|
|
|
|
|
|
|
|
|
Forfeited or lapsed
|
|
|
(182,100
|
)
|
|
|
3.04
|
|
|
|
1.44
|
|
|
|
|
|
|
|
|
|
Options outstanding at December 31, 2005
|
|
|
1,449,885
|
|
|
$
|
3.12
|
|
|
$
|
1.86
|
|
|
|
7.73
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
|
|
|
|
Weighted Average
|
|
All Plan & Non-
Plan Compensatory Options
|
|
Number of Options
|
|
|
Exercise
|
|
|
Fair Value
|
|
|
Remaining
Life (years)
|
|
|
Aggregate Intrinsic Value
|
|
Options outstanding at December 31, 2005
|
|
|
1,449,885
|
|
|
$
|
3.12
|
|
|
$
|
1.86
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
1,191,000
|
|
|
|
5.42
|
|
|
|
0.82
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
|
|
|
|
|
|
Forfeited or lapsed
|
|
|
(894,000
|
)
|
|
|
3.24
|
|
|
|
1.94
|
|
|
|
|
|
|
|
|
|
Options outstanding at December 31, 2006
|
|
|
1,746,885
|
|
|
$
|
4.65
|
|
|
$
|
1.035
|
|
|
|
3.70
|
|
|
$
|
634,903
|
|
Options exercisable at December 31, 2006
|
|
|
1,192,385
|
|
|
$
|
5.11
|
|
|
$
|
0.97
|
|
|
|
2.90
|
|
|
$
|
254,903
|
|
|
|
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
All Plan & Non-Plan Compensatory
Options
|
|
Number of
Options
|
|
|
Exercise
|
|
|
Fair Value
|
|
|
Remaining
Life
(years)
|
|
|
Aggregate
Intrinsic
Value
|
|
Options outstanding at December 31, 2006
|
|
|
1,746,885
|
|
|
$
|
4.65
|
|
|
$
|
1.03
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
228,000
|
|
|
|
4.82
|
|
|
|
0.87
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
|
|
|
|
|
|
Forfeited or lapsed
|
|
|
(124,000
|
)
|
|
|
2.50
|
|
|
|
1.14
|
|
|
|
|
|
|
|
|
|
Options outstanding at December 31, 2007
|
|
|
1,850,885
|
|
|
$
|
4.81
|
|
|
$
|
1.00
|
|
|
|
1.5
|
|
|
$
|
18,000
|
|
Options exercisable at December 31, 2007
|
|
|
1,442,385
|
|
|
$
|
4.88
|
|
|
$
|
0.93
|
|
|
|
2.0
|
|
|
$
|
6,000
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
All Plan & Non-Plan Compensatory
Options
|
|
Number of
Options
|
|
|
Exercise
|
|
|
Fair Value
|
|
|
Remaining
Life
(years)
|
|
|
Aggregate
Intrinsic
Value
|
|
Options outstanding at December 31, 2007
|
|
|
1,850,885
|
|
|
$
|
4.81
|
|
|
$
|
1.00
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
969,055
|
|
|
|
2.38
|
|
|
|
0.73
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
|
|
|
|
|
|
Forfeited or lapsed
|
|
|
-
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
|
|
|
|
|
|
Options outstanding at December 31, 2008
|
|
|
2,819,940
|
|
|
$
|
3.98
|
|
|
$
|
0.91
|
|
|
|
3.1
|
|
|
$
|
0
|
|
Options exercisable at December 31, 2008
|
|
|
1,831,690
|
|
|
$
|
4.75
|
|
|
$
|
0.90
|
|
|
|
1.4
|
|
|
$
|
0
|
|
|
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
All Plan & Non-Plan Compensatory
Options
|
|
Number of
Options
|
|
|
Exercise
|
|
|
Fair Value
|
|
|
Remaining
Life
(years)
|
|
|
Aggregate
Intrinsic
Value
|
|
Options outstanding at December 31, 2008
|
|
|
2,819,940
|
|
|
$
|
3.98
|
|
|
$
|
0.91
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
164,565
|
|
|
|
1.64
|
|
|
|
0.70
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Forfeited or lapsed
|
|
|
(1,101,035
|
)
|
|
|
5.71
|
|
|
|
0.68
|
|
|
|
|
|
|
|
|
|
Options outstanding at December 31, 2009
|
|
|
1,883,470
|
|
|
$
|
2.77
|
|
|
$
|
1.02
|
|
|
|
4.1
|
|
|
$
|
51,890
|
|
Options exercisable at December 31, 2009
|
|
|
1,077,155
|
|
|
$
|
3.16
|
|
|
$
|
1.14
|
|
|
|
2.9
|
|
|
$
|
10,440
|
|
|
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
All Plan & Non-Plan Compensatory
Options
|
|
Number of
Options
|
|
|
Exercise
|
|
|
Fair Value
|
|
|
Remaining
Life
(years)
|
|
|
Aggregate
Intrinsic
Value
|
|
Options outstanding at December 31, 2009
|
|
|
1,883,470
|
|
|
$
|
2.77
|
|
|
$
|
1.02
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
2,074,970
|
|
|
|
1.47
|
|
|
|
0.49
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Forfeited or lapsed
|
|
|
(379,920
|
)
|
|
|
3.17
|
|
|
|
1.11
|
|
|
|
|
|
|
|
|
|
Options outstanding at December 31, 2010
|
|
|
3,578,520
|
|
|
$
|
1.97
|
|
|
$
|
0.70
|
|
|
|
4.7
|
|
|
$
|
-
|
|
Options exercisable at December 31, 2010
|
|
|
1,660,910
|
|
|
$
|
2.42
|
|
|
$
|
0.91
|
|
|
|
3.4
|
|
|
$
|
-
|
|
|
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
All Plan & Non-Plan Compensatory
Options
|
|
Number of
Options
|
|
|
Exercise
|
|
|
Fair Value
|
|
|
Remaining
Life
(years)
|
|
|
Aggregate
Intrinsic
Value
|
|
Options outstanding at December 31, 2010
|
|
|
3,578,520
|
|
|
$
|
1.97
|
|
|
$
|
0.70
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
300,104
|
|
|
|
1.50
|
|
|
|
0.30
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Forfeited or lapsed
|
|
|
(248,774
|
)
|
|
|
2.17
|
|
|
|
0.68
|
|
|
|
|
|
|
|
|
|
Options outstanding at December 31, 2011
|
|
|
3,629,850
|
|
|
$
|
1.92
|
|
|
$
|
0.67
|
|
|
|
4.0
|
|
|
$
|
-
|
|
Options exercisable at December 31, 2011
|
|
|
2,515,660
|
|
|
$
|
2.12
|
|
|
$
|
0.77
|
|
|
|
3.2
|
|
|
$
|
-
|
|
The following table summarizes the status of the Company’s
non-vested options:
All non-vested stock options as of December 31, 2011
|
|
Shares
|
|
|
Fair Value
|
|
Options subject to future vesting at December 31, 2010
|
|
|
1,917,610
|
|
|
$
|
0.52
|
|
Options granted
|
|
|
300,104
|
|
|
|
0.30
|
|
Options forfeited or lapsed
|
|
|
(127,774
|
)
|
|
|
0.21
|
|
Options vested
|
|
|
(975,750
|
)
|
|
|
0.56
|
|
Options subject to future vesting at December 31, 2011
|
|
|
1,114,190
|
|
|
$
|
0.45
|
|
As of December 31, 2011, there was $474,872
of unrecognized compensation related to non-vested options compared to $825,726 at December 31, 2010. The Company expects to recognize
the cost over a weighted average period of 0.9 years. The total fair value of options vested was $888,318 and $1,515,274 for 2011
and 2010, respectively.
Note 6 — Earnings/Loss Per Share
Basic earnings per share is computed by
dividing income available to common shareholders (the numerator) by the weighted-average number of common shares outstanding (the
denominator) for the period. Diluted earnings per share are computed by assuming that any dilutive convertible securities outstanding
were converted, with related preferred stock dividend requirements and outstanding common shares adjusted accordingly. It also
assumes that outstanding common shares were increased by shares issuable upon exercise of those stock options for which market
price exceeds the exercise price, less shares which could have been purchased by us with the related proceeds. In periods of losses,
diluted loss per share is computed on the same basis as basic loss per share as the inclusion of any other potential shares outstanding
would be anti-dilutive.
Had the Company recorded income applicable
to common shareholders for the periods ended December 31, 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, and 2011 weighted-average
number of common shares outstanding would have increased by 785,897, 1,386,612, 2,970,730, 2,135,938, 8,975,643, 9,566,738, 15,825,589,
1,519,892, and 161,219 respectively, for the fiscal years, reflecting no change to dilutive securities in the calculation of diluted
earnings per share. The increase in weighted average common shares for the cumulative period since inception (September 18, 2003)
to December 31, 2011 is 8,128,594 shares.
Note 7 — Income Taxes Expense (Benefit)
A summary of the components giving rise to the income tax expense
(benefit) for the periods ended December 31, 2011 and 2010 is as follows:
|
|
2011
|
|
|
2010
|
|
Current income tax expense:
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
-
|
|
|
$
|
-
|
|
State
|
|
|
-
|
|
|
|
-
|
|
Foreign
|
|
|
-
|
|
|
|
-
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax provision (benefit):
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
(2,857,000
|
)
|
|
$
|
(2,711,000
|
)
|
State
|
|
|
(555,000
|
)
|
|
|
(584,000
|
)
|
Foreign
|
|
|
48,000
|
|
|
|
(441,000
|
)
|
Total deferred tax
|
|
|
(3,364,000
|
)
|
|
|
(3,736,000
|
)
|
Less increase in allowance
|
|
|
3,364,000
|
|
|
|
3,736,000
|
|
Net deferred tax
|
|
$
|
.
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Total income tax expense (recovery)
|
|
$
|
-
|
|
|
$
|
-
|
|
Individual components giving rise to the deferred tax asset are as follows:
|
|
|
2011
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
Future tax benefit arising from net operating loss carry forwards
|
|
|
17,748,000
|
|
|
$
|
14,584,000
|
|
Future tax benefit arising from available tax credits
|
|
|
1,373,000
|
|
|
|
1,373,000
|
|
|
|
|
|
|
|
|
|
|
Future tax benefit arising from options/warrants issued for Services
|
|
|
1,029,000
|
|
|
|
845,000
|
|
Other
|
|
|
225,000
|
|
|
|
209,000
|
|
Total future tax benefit
|
|
|
20,375,000
|
|
|
|
17,011,000
|
|
Less valuation allowance
|
|
|
(20,375,000
|
)
|
|
|
(17,011,000
|
)
|
Net deferred tax
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
The components of pretax net loss are as follows:
|
|
|
2011
|
|
|
|
2010
|
|
United States
|
|
$
|
(8,309,197
|
)
|
|
$
|
(6,838,031
|
)
|
Foreign
|
|
|
(2,693
|
)
|
|
|
7,177
|
|
|
|
$
|
(8,311,890
|
)
|
|
$
|
(6,830,854
|
)
|
The Company has net operating loss carry
forwards of $39,900,000 and $2,800,000 available to reduce future income taxes in United States and Canada, respectively. The United
States carry forwards expire at various dates between 2024 and 2030. The Canadian carry forwards expire at various dates between
2012 and 2030. The Company also has generated Canadian tax credits related to research and development activities. The
credit, amounting to $734,000 U.S. Dollars, is available to offset future taxable income in Canada and expires at various dates
between 2024 and 2026. The Company has adopted FASB ASC 740, which provides for the recognition of a deferred tax asset based upon
the value certain items will have on future income taxes and management's estimate of the probability of the realization of these
tax benefits. The Company has determined it more likely than not that these timing differences will not materialize and have provided
a valuation allowance against the entire net deferred tax asset. The utilization of NOL and tax credit carry forwards from Tamboril
prior to the reorganization may be subject to a substantial annual limitation due to the ownership change limitations provided
by the Internal Revenue Code of 1986, as amended and similar state provisions. Accordingly, these amounts have not been included
in the gross deferred tax asset number above. In addition, due to equity transactions that have occurred subsequent to the reorganization
with Tamboril, the utilization of NOL carry forwards may be subject to further change in control limitations that generally restricts
the utilization of the NOL per year.
The reconciliation of the United States
statutory federal income rate and the effective income tax rate in the accompanying Consolidated Statements of Operations for the
periods ended December 31, 2011 and 2010 is as follows:
|
|
2011
|
|
|
2010
|
|
Statutory U.S. federal income tax rate
|
|
|
(34.0
|
)%
|
|
|
(34.0
|
)%
|
Prior period adjustments
|
|
|
0.00
|
%
|
|
|
(1.9
|
)%
|
State taxes, net
|
|
|
(6.7
|
)%
|
|
|
(8.5
|
)%
|
Foreign currency fluctuation
|
|
|
0.6
|
%
|
|
|
(2.3
|
)%
|
U.S. tax credits
|
|
|
0.0
|
%
|
|
|
(2.2
|
)%
|
Revaluation of Derivatives
|
|
|
(0.5
|
)%
|
|
|
(5.8
|
)%
|
Other
|
|
|
0.1
|
%
|
|
|
0.2
|
%
|
Change in valuation allowance
|
|
|
40.5
|
%
|
|
|
54.7
|
%
|
Effective income tax rate
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
The Company adopted the provisions of FASB
ASC 740-10 “Income Taxes” on January 1, 2008. As the result of the assessment, the Company recognized no
material adjustments to unrecognized tax benefits. At the adoption date of January 1, 2008 and as of December 31, 2011, the Company
has no unrecognized tax benefits. By statute, tax years ending December 31, 2008 through 2011 remain open to examination
by the major taxing jurisdictions to which the Company is subject.
Note 8 — Related Party Transactions
Trust for the Benefit of the Shareholders
of Mega-C Power Corp:
The Trustee for The Trust for the Benefit of the Shareholders of Mega-C Power Corp. served as an
officer of one of our consolidated companies in 2004. Effective December 22, 2009 with
the private placement, the percentage
beneficial ownership held by the Mega-C Trust fell below 5% and is no longer a Related Party.
Transactions with C&T:
A former board member of the Company, Dr. Igor Filipenko, was the former majority shareholder of C&T prior to the acquisition
by the Company. The Board of Directors on August 21, 2009 approved the issuance of warrants to purchase not more than 1,600,000
shares of common stock at an exercise price of $2.00 per share and a term of two years to the C&T Group. On January 11, 2010,
Dr. Igor Filipenko gave notice of his resignation as a director of the Company, effective immediately. On December 31, 2011 these
warrants have not yet been issued pending "mutual understanding" between the parties.
Related party notes payable:
During the year ending December 31, 2009, the Company borrowed certain amounts from related parties; certain of these borrowings
were extinguished through the issuance of the Company’s common stock during the fourth quarter of 2009. Refer to Note 5 “Related
Party Debt”.
Senior Preferred conversions:
On December 23, 2009, based on agreements received to convert shares using an October 30, 2009 conversion amount, two directors
and the wife of a director, converted 67,633 shares of their 8% Cumulative Convertible Senior Preferred stock into 684,209 common
shares.
Warrants:
On September 22,
2009, we entered into an Amendment to Warrants and Securities Purchase Agreement with The Quercus Trust, amending the January 14,
2008 Warrant and Securities Purchase Agreement. The Amendment resets the exercise price for warrants previously issued to Quercus
from $2.60 per share to $0.75 per share. On December 15, 2009, in Amendment No. 2 to the Securities Purchase Agreement, The
Quercus Trust agreed to waive further anti-dilution rights on its warrants to purchase our common stock below an exercise
price of $0.75 per share subject to the close of the Private Placement which occurred on December 22, 2009
Note 9 — Supplemental Cash
Flow Information
Cash payments for interest during the years ended December
31, 2011 and December 31, 2010 were $18,042 and $21,143 respectively. There were no payments of income taxes during the years ended
December 31, 2011 and 2010.
Note 10 — Commitments and Contingencies and Significant
Contracts
Facilities:
On March 28,
2010, we renewed our lease for existing space at our manufacturing plant, located at 3601 Clover Lane, in New Castle, Pennsylvania.
The salient terms of the Lease are as follows:
|
·
|
The term commenced on April 3, 2010 with an initial term of three
years.
|
|
|
|
|
·
|
The renewal lease may be extended for two successive five-year renewal
options with future rent to be negotiated at a commercially reasonable rate.
|
|
|
|
|
·
|
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.
|
|
|
|
|
·
|
The rental amount for the initial term is $17,200 per month, which
is fixed through 2013. 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.
|
|
|
|
|
·
|
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.
|
|
|
|
|
·
|
With the execution of the addendum we now lease 72,598 square feet for a monthly rent of $17,200.
|
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”). The salient terms of the Lease are as
follows:
|
·
|
The Lease term commenced on January 1,
2011 and the term expires on December 31, 2015.
|
|
|
|
|
·
|
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.
|
|
|
|
|
·
|
The rental amount for the initial term
is $19,297 per month and is on a “triple net” basis.
|
|
|
|
|
·
|
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
|
|
|
|
|
·
|
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.
|
|
|
|
|
·
|
The Lease contains market terms on standard
provisions such as defaults and maintenance.
|
Employment Agreements:
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 executives 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. The provisions of the individual agreements are set forth in the following table:
Name
|
|
Position
|
|
|
Date
|
|
|
Term
|
|
|
Salary
|
|
|
Options
|
|
|
Price
|
|
|
Vesting
|
|
|
Stock
|
|
Thomas Granville (1)
|
|
|
CEO
|
|
|
|
6/29/10
|
|
|
|
3-year
|
|
|
$
|
380,000
|
|
|
|
360,000
|
|
|
$
|
1.50
|
|
|
|
Monthly
|
|
|
|
0
|
|
Charles R. Trego (2)
|
|
|
CFO
|
|
|
|
4/01/10
|
|
|
|
3-year
|
|
|
$
|
225,000
|
|
|
|
265,000
|
|
|
$
|
1.50
|
|
|
|
Monthly
|
|
|
|
0
|
|
Philip S. Baker (3)
|
|
|
COO
|
|
|
|
4/01/10
|
|
|
|
3-year
|
|
|
$
|
199,800
|
|
|
|
230,000
|
|
|
$
|
1.50
|
|
|
|
Monthly
|
|
|
|
0
|
|
1.
|
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.
|
2.
|
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, Mr. Trego receives 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 contract.
|
3.
|
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, 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. 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 contract.
|
We have no retirement plans or other similar
arrangements for any directors, executive officers or employees, other than a noncontributory 401(k) plan.
Purchase Orders
On May 11, 2010, the Company was awarded
federal contract number N00014-10-C-0094. Under the terms of the agreement, Axion shall furnish personnel and facilities to conduct
the research effort for the development of new lightweight, high-powered batteries for use in vehicles operated by the U.S. Marine
Corps. This cost-plus-fixed-fee completion contract requires scientific or technical reports to be delivered, inspected and accepted
prior to reimbursement. Costs incurred during the performance period, will be reimbursed quarterly. The final report was delivered
in July, 2011. The contract, provided $1,004,747 to us in funding for this project, and is subject to a financial audit upon contract
completion which we anticipate will occur in 2012.
Selling price was determined by periodic
spending using the hourly labor, overhead, and G&A rates submitted with the proposal. The rates are subject to adjustment at
the end of contract, and secured by the unpaid fixed fee. Revenue based on the proportionate performance of the work performed
was recognized from inception to completion when collection of the reimbursement was reasonably assured. Recognition of the fixed
fee was postponed to contract completion. Fixed fee billings were recorded under deferred revenue. The contract contributed $387,645
to service revenue during 2011 and $535,105 in 2010.
Amendment No. 3 to Securities Purchase
Agreement, dated as of September 30, 2010
On September 28, 2010, both Stanley A.
Hirschman and Joseph Bartlett gave notice of their resignations as directors of the Company, effective immediately. In
connection with Mr. Bartlett’s resignation, Quercus has executed Amendment No. 3 to Securities Purchase Agreement, dated
as of September 30, 2010, pursuant to which it has waived its right to have three directors appointed to the Company’s Board
and instead will reserve the right to have one director appointed. These actions are consistent with the Company’s
overall goal of reducing the size of its Board.
Note 11 — Subsequent Events
On January
23, 2012, the Company announced that Vani Kumar Dantam joined Axion Power International, Inc in the newly appointed position of
Senior Vice President-Business Development, Sales and Marketing. From 2010 to 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 to 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.
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.
On February 3, 2012 the Company completed a registered direct
common stock offering providing gross proceeds of approximately $9.4 million. The shares sold, par value $0.0001 were priced
at $0.35, which was the volume-weighted average price of the shares over a 40-day trading period prior to the commencement of
the offering. The shares were sold pursuant to a shelf registration statement declared effective July 14, 2011. Net
proceeds were approximately $8.6 million after the expenses of the offering and placement fees, will be used for working capital,
capital expenditures and general corporate purposes.
45,757,572 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 (1)
|
|
$
|
53.86
|
|
Printing and engraving expenses
|
|
$
|
1,000.00
|
|
Legal fees and expenses
|
|
$
|
18,000.00
|
|
Accountant fees and expenses
|
|
$
|
5,000.00
|
|
Total
|
|
$
|
21,541.60
|
|
(1) Paid in connection with the original filing
of this registration statement.
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, 2007,
Axion has issued and sold the following securities in transactions exempt from registration under Section 4(2) of the Securities
Act of 1933:
Equity Transactions
- Year ended December 31, 2007:
During 2007, 40,000 shares
of Series A Preferred Stock were issued to two unaffiliated accredited investors at a purchased price of $10.00 per share for aggregate
proceeds to the Company of $400,000.
Restricted stock transactions
during the year ended December 31, 2007 are as follows:
|
·
|
The Company’s Vice President of Manufacturing
and Engineering received 36,000 restricted shares, valued at $82,800, pursuant to his 2007 employment contract. The shares will
vest at a rate of 1,000 shares per month. The expense related to these shares will be recognized over this three-year requisite
service period and the shares will be considered issued and outstanding upon vesting.
|
Equity Transactions – Year ended
December 31, 2008:
At the first Quercus
closing on January 14, 2008, we issued and sold 1,904,762 first closing units (a unit is one share of common stock, and a 5-year
warrant to purchase 1.5 additional shares of common stock at an exercise price of $2.60 per share) issuable to Quercus for an aggregate
purchase price of $4,000,000, or $2.10 per Unit.
On March 31, 2008, an
accredited investor under the terms of his 2007 Bridge Loan agreement, converted $223,984 of his Bridge Loan to purchase 106,659
first closing units under the same terms and conditions as was offered to Quercus, at $2.10 per Unit.
At the second Quercus
closing on April 8, 2008, we issued and sold 1,904,762 second closing units (a unit is one share of common stock, and a 5-year
warrant to purchase 1.25 additional shares of common stock at an exercise price of $2.60 per share) issuable to Quercus for an
aggregate purchase price of $4,000,000, or $2.10 per Unit.
On April 21, 2008, an
accredited investor under the terms of his 2007 Bridge Loan agreement, converted $52,500of their Bridge Loans to purchase 25,000
first closing units under the same terms and conditions as was offered to Quercus, at $2.10 per Unit.
On May 6, 2008, one accredited
investor under the terms of the 2006 Series A Preferred private placement offering, converted 50,000 preferred shares with a stated
value of $635,641 to purchase 508,512 shares of the Company’s common stock at the stated conversion price of $1.25 per share.
On May 29, 2008, a director
under the terms of his 2007 Bridge Loan agreement, converted $4,200 of his Bridge Loan to purchase 2,000 second closing units under
the same terms and conditions as was offered to Quercus, at $2.10 per Unit.
At the third and final
Quercus closing on June 30, 2008, we issued and sold 4,761,905 third closing units (a unit is one share of common stock, and a
5-year warrant to purchase 1 additional shares of common stock at an exercise price of $2.60 per share) issuable to Quercus for
an aggregate purchase price of $10,000,000, or $2.10 per Unit.
On June 30, 2008, a director
under the terms of his 2007 Bridge Loan agreement, converted $800,000 of his Bridge Loan to purchase 380,952 third closing units
under the same terms and conditions as was offered to Quercus, at $2.10 per Unit.
On August 20, 2008, one
accredited investor under the terms of the 2006 Series A Preferred private placement offering, converted 50,000 preferred shares
with a stated value of $650,984 to purchase 520,787 shares of the Company’s common stock at the stated conversion price of
$1.25 per share.
On September 11, 2008,
one accredited investor under the terms of the 2006 Series A Preferred private placement offering, converted 4,000 preferred shares
with a stated value of $52,250 to purchase 41,800 shares of the Company’s common stock at the stated conversion price of
$1.25 per share.
During 2008, an officer
vested in 12,000 shares of his 2007 restricted stock award.
Restricted stock transactions
during the year ended December 31, 2008 are as follows:
|
·
|
The Company’s chief financial officer
received 90,000 restricted shares, valued at $166,500, pursuant to his 2009 employment contract. The shares will vest in equal
30,000 share amounts on June 16 of each of 2009, 2010 and 2011. The expense related to these shares will be recognized over this
three-year requisite service period and the shares will be considered issued and outstanding upon vesting.
|
|
·
|
The Company’s chief technical officer
received 50,000 restricted shares, valued at $90,500 and an additional 30,000 restricted shares, valued at $51,000, pursuant to
his 2009 employment contract. The 50,000 shares will become fully vested on May 31, 2011. The expense related to these shares will
be recognized over this three-year requisite service period and the shares will be considered issued and outstanding upon vesting.
The 30,000 shares vest December 29, 2009. The expense related to these shares will be recognized over this eighteen month requisite
service period and the shares will be considered issued and outstanding upon vesting.
|
|
·
|
An employee received 50,000 restricted shares,
valued at $92,500, pursuant to his 2009 employment contract. The 50,000 shares will become fully vested on June 15, 2011. The expense
related to these shares will be recognized over this three-year requisite service period and the shares will be considered issued
and outstanding upon vesting.
|
Equity Transactions – Year ended
December 31, 2009:
During 2009, an officer
vested in 23,000 shares of his 2007 restricted stock award.
On June 16, 2009, an
officer vested in 30,000 shares of his 2008 restricted stock award.
On July 21, 2009 an accredited
investor under the terms of the 2006 Series A Preferred private placement offering, converted 25,000 preferred shares with a stated
value of $358,418 to purchase 286,735 shares of the Company’s common stock at the stated conversion price of $1.25 per share.
On November 4, 2009 an
accredited investor under the terms of the 2006 Series A Preferred private placement offering, converted 63,100 preferred shares
with a stated value of $921,890 to purchase 862,466 shares of the Company’s common stock at the stated conversion price of
$1.07 per share.
On December 22, 2009,
we issued and sold 45,106,052 of the Company’s common stock under a Securities purchase agreement for an aggregate purchase
price of $ 25,710,450, or $0.57 per share.
On December 22, 2009,
a director under the terms of his 2009 Bridge Loan agreement, converted $171,353 of his Bridge Loan to purchase 300,620 of the
Company’s common stock under the same terms and conditions offered to investors in the December 22,2009 Securities purchase
agreement at $0.57.
On December 22, 2009,
an accredited investor under the terms of his 2009 Bridge Loan agreement, converted $200,013 of his Bridge Loan to purchase 350,900
of the Company’s common stock under the same terms and conditions offered to investors in the December 22,2009 Securities
purchase agreement at $0.57.
On December 23, 2009
a director under the terms of the 2005 8% Convertible Senior Preferred private placement offering, converted 25,000 preferred shares
with a stated value of $360,440 to purchase 252,912 shares of the Company’s common stock at the stated conversion price of
$1.43 per share.
On December 23, 2009
a director and his wife under the terms of the 2005 8% Convertible Senior Preferred private placement offering, converted 42,633
preferred shares with a stated value of $614,665 to purchase 431,297 shares of the Company’s common stock at the stated conversion
price of $1.43 per share.
On December 23, 2009
eight individuals under the terms of the 2005 8% Convertible Senior Preferred private placement offering, converted 69,867 preferred
shares with a stated value of $1,007,210 to purchase 706,735 shares of the Company’s common stock at the stated conversion
price of $1.43 per share.
On December 23, 2009
eleven individuals under the terms of their Placement Agency Agreements received 719,664 shares of the Company’s common stock
as Placement fees for their assistance in the financing attributed to the December 22, 2009 Securities Purchase Agreement at a
price of $410,208, or $0.57 per share .
On December 29, 2009,
an officer vested in 280,000 shares of his 2006 and 2008 restricted stock awards.
2010 Transactions
Warrants
: On February 9, 2010,
April 19, 2010, July 12, 2010, and October 1, 2010 a total of 400,000 warrants (100,000 warrants from each transaction) were exercised
for a total of $228,000. During August 2010, 301,700 warrants issued were exercised for $131,266, in partial settlement of the
Mercatus matter.
Common Stock & Private Placements
:
In December 2010, 198,300 shares of our common stock were issued for a total of $113,031, in settlement of the Mercatus matter.
Common Stock Issuances:
The
following table represents per share issuances of common stock from May 1, 2005 through December 31, 2009.
2005
Description:
|
|
Date
|
|
Shares
|
|
|
Per share
Valuation
|
|
Business reason:
|
7 individuals
|
|
6/10/2005
|
|
|
29,565
|
|
|
$
|
3.57
|
|
Exercise of Director options
|
3 individuals
|
|
7/11/2005
|
|
|
190,000
|
|
|
$
|
1.58
|
|
Conversion of Preferred and accrued dividends
|
Banca di Unionale
|
|
7/11/2005
|
|
|
10,000
|
|
|
$
|
1.60
|
|
Exercise of preferred warrants
|
3 individuals
|
|
8/28/2005
|
|
|
150,000
|
|
|
$
|
1.67
|
|
Conversion of Preferred and accrued dividends
|
James Smith
|
|
9/7/2005
|
|
|
30,000
|
|
|
$
|
1.67
|
|
Conversion of Preferred and accrued dividends
|
2 individuals
|
|
9/28/2005
|
|
|
1,050,000
|
|
|
$
|
1.69
|
|
Conversion of Preferred and accrued dividends
|
2 individuals
|
|
various
|
|
|
226,900
|
|
|
$
|
1.79
|
|
Exercise of Series I warrants
|
3 individuals
|
|
various
|
|
|
91,200
|
|
|
$
|
2.40
|
|
Exercise of Series III warrants
|
2 individuals
|
|
various
|
|
|
25,000
|
|
|
$
|
1.60
|
|
Exercise of Preferred warrants
|
Officer
|
|
10/20/2005
|
|
|
446,000
|
|
|
$
|
1.00
|
|
Exercise of warrants and options
|
Officer
|
|
10/20/2005
|
|
|
25,000
|
|
|
$
|
2.00
|
|
Exercise of warrants
|
6 individuals
|
|
12/1/2005
|
|
|
600,000
|
|
|
$
|
2.00
|
|
Common stock and warrants
|
2005 Totals
|
|
|
|
|
3,642,665
|
|
|
$
|
1.94
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
2 individuals
|
|
4/21/06
|
|
|
80,000
|
|
|
|
2.50
|
|
Common stock and warrants issued for cash
|
Officer
|
|
4/21/06
|
|
|
56,700
|
|
|
|
2.00
|
|
Exercise of non-plan incentive option granted to CEO
|
Officer
|
|
4/21/06
|
|
|
6,000
|
|
|
|
4.00
|
|
Unrestricted share grant to CTO
|
Mega-C Trust
|
|
11/28/06
|
|
|
(500,000
|
)
|
|
|
2.25
|
|
Return of shares per settlement agreement
|
2006 Totals
|
|
|
|
|
(357,300
|
)
|
|
$
|
2.20
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Officer
|
|
12/01/07
|
|
|
1,000
|
|
|
|
2.30
|
|
Unrestricted share grant to VP Mfg Engineering
|
2007 Totals
|
|
|
|
|
1,000
|
|
|
$
|
2.30
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
The Quercus Trust
|
|
1/14/2008
|
|
|
1,904,762
|
|
|
|
2.10
|
|
Securities purchase agreement
|
1 individual
|
|
3/31/2008
|
|
|
106,659
|
|
|
|
2.10
|
|
2007 Bridge Loan Conversion
|
The Quercus Trust
|
|
4/08/2008
|
|
|
1,904,762
|
|
|
|
2.10
|
|
Securities purchase agreement
|
1 individuals
|
|
4/21/2008
|
|
|
25,000
|
|
|
|
2.10
|
|
2007 Bridge Loan Conversion
|
Lichtensteiniche Landsbank
|
|
5/06/2008
|
|
|
508,512
|
|
|
|
1.25
|
|
Series A Preferred Conversions
|
Director
|
|
5/29/2008
|
|
|
2,000
|
|
|
|
2.10
|
|
2007 Bridge Loan Conversion
|
The Quercus Trust
|
|
6/30/2008
|
|
|
4,761,905
|
|
|
|
2.10
|
|
Securities purchase agreement
|
Director
|
|
6/30/2008
|
|
|
380,952
|
|
|
|
2.10
|
|
2007 Bridge Loan Conversion
|
1 individual
|
|
8/20/2008
|
|
|
520,787
|
|
|
|
1.25
|
|
Series A Preferred Conversion
|
1 individual
|
|
9/11/2008
|
|
|
41,800
|
|
|
|
1.25
|
|
Series A Preferred Conversion
|
V.P. Mfg Engineering
|
|
01/01/2008-12/01/2008
|
|
|
12,000
|
|
|
|
1.85
|
|
Unrestricted share Grant
|
2008 Totals (as of December 31, 2008)
|
|
|
|
|
10,169,139
|
|
|
$
|
2.01
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
V.P. Mfg Engineering
|
|
01/01/2009-12/01/2009
|
|
|
23,000
|
|
|
|
1.55
|
|
Unrestricted share Grant
|
CFO
|
|
06/16/2009
|
|
|
30,000
|
|
|
|
1.41
|
|
Unrestricted share Grant
|
New Energy Fund
|
|
07/21/2009
|
|
|
286,735
|
|
|
|
1.25
|
|
Series A Preferred Conversions
|
Fursa Global Event Driven Fund LP
|
|
11/04/2009
|
|
|
862,466
|
|
|
|
1.07
|
|
Series A Preferred Conversions
|
Director
|
|
12/23/2009
|
|
|
252,912
|
|
|
|
1.43
|
|
Senior Preferred Conversion
|
Director
|
|
12/23/2009
|
|
|
431,297
|
|
|
|
1.43
|
|
Senior Preferred Conversion
|
8 individuals
|
|
12/23/2009
|
|
|
706,735
|
|
|
|
1.43
|
|
Senior Preferred Conversion
|
11 individuals
|
|
12/23/2009
|
|
|
719,664
|
|
|
|
0.57
|
|
Common stock placement fees
|
48 investors
|
|
12/22/2009
|
|
|
45,106,052
|
|
|
|
0.57
|
|
Securities purchase agreement, net of 2009 Bridge Loan conversion
|
Director
|
|
12/22/2009
|
|
|
300,620
|
|
|
|
0.57
|
|
2009 Bridge Loan conversion
|
1 individual
|
|
12/22/2009
|
|
|
350,900
|
|
|
|
0.57
|
|
2009 Bridge Loan conversion
|
CTO
|
|
12/29/2009
|
|
|
280,000
|
|
|
|
1.50
|
|
Unrestricted share Grant
|
2009 Totals (as of December 31, 2009)
|
|
|
|
|
49,350,381
|
|
|
$
|
0.61
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
Description:
|
|
Date
|
|
Shares
|
|
|
Per share
valuation
|
|
Business reason:
|
1 individual
|
|
1/26/2010
|
|
|
1,426,960
|
|
|
$
|
1.07
|
|
Series-A conversion
|
1 individual
|
|
2/9/2010
|
|
|
100,000
|
|
|
$
|
0.57
|
|
Warrant Exercise
|
18 individuals
|
|
2/24/2010
|
|
|
3,453,899
|
|
|
$
|
1.07
|
|
Series-A conversion
|
Director
|
|
2/24/2010
|
|
|
1,692,160
|
|
|
$
|
1.07
|
|
Series-A conversion
|
Officer
|
|
2/24/2010
|
|
|
275,296
|
|
|
$
|
1.07
|
|
Series-A conversion
|
Director
|
|
2/24/2010
|
|
|
1,937,169
|
|
|
$
|
1.07
|
|
Series-A conversion
|
1 individual
|
|
4/19/2010
|
|
|
100,000
|
|
|
$
|
0.57
|
|
Warrant Exercise
|
1 individual
|
|
7/12/2010
|
|
|
100,000
|
|
|
$
|
0.57
|
|
Warrant Exercise
|
1 individual
|
|
7/28/2010
|
|
|
301,700
|
|
|
$
|
0.44
|
|
Mercatus Warrants
|
1 individual
|
|
10/1/2010
|
|
|
100,000
|
|
|
$
|
0.57
|
|
Warrant Exercise
|
2 individuals
|
|
12/15/2010
|
|
|
198,300
|
|
|
$
|
0.57
|
|
Settlement of accrued liabilities to selling shareholders in the Mercatus settlement
|
2010 Totals
|
|
|
|
|
9,685,484
|
|
|
$
|
1.02
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
Description:
|
|
Date
|
|
|
Shares
|
|
|
Per share
valuation
|
|
|
Business reason:
|
|
1 individual
|
|
|
6/15/2011
|
|
|
|
50,000
|
|
|
$
|
0.66
|
|
|
Employee exercised incentive options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director non-cash compensation
|
|
|
8/4/2011
|
|
|
|
12,837
|
|
|
$
|
0.65
|
|
|
Stock compensation in lieu of cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director non-cash compensation
|
|
|
10/26/2011
|
|
|
|
14,975
|
|
|
$
|
0.60
|
|
|
Stock compensation in lieu of cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,812
|
|
|
|
0.65
|
|
|
|
|
|
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
|
Certificate of Amendment to the Certificate of Incorporation of Axion Power International, Inc., dated June 14, 2010.
|
(25)
|
3.7
|
Certificate of Amendment to the Certificate of Incorporation of Axion Power International, Inc., dated July 22, 2011.
|
|
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)
|
4.14
|
Certificate of Amendment to the Certificate of Powers, Designations, Preferences and Rights of the Series-A Convertible Preferred Stock, Par Value $.0001 Per Share, of Axion Power International, Inc. dated February 24, 2010.
|
(13)
|
5.1
|
Opinion of Jolie Kahn, Esq.
|
(31)
|
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 between the law firm of Fefer, Petersen & Cie and Tamboril Cigar Company dated January 2, 2004.
|
(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 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 dated January 31, 2006.
|
(14)
|
10.18
|
Security agreement between Axion Battery Products, Inc. as debtor and Robert Averill as secured party dated January 31, 2006.
|
(14)
|
10.19
|
Security agreement between Axion Power International, Inc. as debtor and Robert Averill as secured party dated January 31, 2006.
|
(14)
|
10.20
|
Promissory Note between Axion Battery Products, Inc. as maker and Robert Averill as payee dated February 14, 2006.
|
(14)
|
10.21
|
Form of Warrant Agreement between Axion Power International, Inc. and Robert Averill.
|
(14)
|
10.22
|
Commercial Lease Agreement between Axion Battery Products, Inc. as lessee and Steven F. Hoye and Steven C. Warner as lessors dated February 14, 2006.
|
(14)
|
10.23
|
Asset Purchase Agreement dated between Axion Battery Products, Inc. as buyer and National City Bank of Pennsylvania as seller February 10, 2006.
|
(14)
|
10.24
|
Escrow Agreement 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 dated February 14, 2006.
|
(14)
|
10.25
|
Executive Employment Agreement of Edward Buiel dated June 23, 2008.
|
(21)
|
10.26
|
Consulting Agreement, by and between Axion Power International, Inc. and Andrew Carr Conway, Jr. dated as of September 27, 2007.
|
(16)
|
10.27
|
Amendment No. 1 to Consulting Agreement by and between Axion Power International, Inc. and Andrew Carr Conway, Jr. dated as of October 31, 2007.
|
(16)
|
10.28
|
Securities Purchase Agreement by and between Axion Power International, Inc. and Quercus Trust dated as of January 14, 2008.
|
(17)
|
10.29
|
Common Stock Purchase Warrant executed by Axion Power International, Inc. dated January 14, 2008.
|
(17)
|
10.30
|
Executive Employment Agreement of Donald T. Hillier dated June 18, 2008.
|
(19)
|
10.31
|
Amendment to Warrants and Securities Purchase Agreement by and between Axion Power International, Inc. and Quercus Trust dated as of September 22, 2009.
|
(22)
|
10.32
|
Securities Purchase Agreement by and between Axion Power International, Inc. and the Investors named therein dated as of December 18, 2009.
|
(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 by and between Axion Power International, Inc. and Quercus Trust Agreement dated as of January 14, 2008.
|
(23)
|
10.35
|
Lock-Up Agreement executed by Quercus Trust and David Gelbaum and Monica Chavez Gelbaum.
|
(23)
|
10.36
|
Lease Agreement by and between Steven F. Hoye and Steven C. Warner, Lessor, and Axion Power Battery Manufacturing, Inc., Lessee dated March 28, 2010.
|
(6)
|
10.37
|
Executive Employment Agreement of Charles R. Trego dated April 1, 2010.
|
(24)
|
10.38
|
Executive Employment Agreement of Phillip S. Baker dated April 1, 2010.
|
(24)
|
10.39
|
Executive Employment Agreement of Thomas Granville dated June 29, 2010.
|
(26)
|
10.40
|
Amendment No. 3 to Securities Purchase Agreement by and between Axion Power International, Inc. and the Quercus Trust dated September 30, 2010.
|
(27)
|
10.41
|
Commercial Lease with Becan Development, LLC dated November 4, 2010.
|
(28)
|
10.42
|
Form of Subscription Agreement
|
(30)
|
10.43
|
Placement Agency Agreement, dated January 31, 2012
|
(30)
|
10.44
|
Employment Agreement with Vani Kumar Dantam, dated January 2012
|
(32)
|
14.1
|
Code of Business Conduct and Ethics
|
(6)
|
23.1
|
Opinion of Jolie Kahn, Esq. (Included in Exhibit 5.1)
|
(31)
|
23.2
|
Consent of EFP Rotenberg
|
|
|
(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 Current Report on Form 8-K dated April 6, 2010.
|
|
(25)
|
Incorporated by reference from our Current Report on Form 8-K dated June 15, 2010.
|
|
(26)
|
Incorporated by reference from our Current Report on Form 8-K dated July 6, 2010.
|
|
(27)
|
Incorporated by reference from our Current Report on Form 8-K dated October 4, 2010.
|
|
(28)
|
Incorporated by reference from our Current Report on Form 8-K dated November 10, 2010.
|
|
(29)
|
Incorporated by reference from our Current Report on Form 8-K dated July 22, 2011.
|
|
(30)
|
Incorporated by reference from our Current Report on Form 8-K dated January 31, 2012.
|
|
(31)
|
Incorporated by reference from our Registration Statement on Form S-1 filed on May 20, 2009.
|
|
(32)
|
Incorporated by reference from our
Post-Effective Amendment No. 2 to the Registration Statement on Form S-1, dated May 2, 2012.
|
|
(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 26, 2005.
|
|
(D)
|
Incorporated by reference from our Current Report on Form 8-K dated December 13, 2005.
|
The following materials
from the Company’s Quarterly Report on Form 10-K for the fiscal year ended December 31, 2011, formatted in eXtensible Business
Reporting Language: (i) the Condensed Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the
Consolidated Statements of Cash Flows and (v) the Notes to Condensed Financial Statements, as follows:
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
XBRL Extension Presentation Linkbase
|
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 10th day of May, 2012.
AXION POWER INTERNATIONAL, INC.
By: /s/ Thomas Granville
|
Thomas Granville, Chief Executive Officer (Principal Executive Officer)
|
Date: May 10, 2012
By: /s/ Charles Trego
|
|
Charles Trego, Chief Financial Officer (Principal Financial Officer and Principal
Accounting Officer)
|
Date: May 10, 2012
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
|
|
May 10, 2012
|
D. Walker Wainwright
|
|
|
|
|
|
|
|
|
|
/s/ Robert G. Averill
|
|
Director
|
|
May 10, 2012
|
Robert G. Averill
|
|
|
|
|
|
|
|
|
|
/s/ Glenn Patterson
|
|
Director
|
|
May 10, 2012
|
Glenn Patterson
|
|
|
|
|
|
|
|
|
|
/s/ Thomas Granville
|
|
Director and Chief Executive Officer
|
|
May 10, 2012
|
Thomas Granville
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Michael Kishinevsky
|
|
Director
|
|
May 10, 2012
|
Michael Kishinevsky
|
|
|
|
|
|
|
|
|
|
/s/ Howard K. Schmidt
|
|
Director
|
|
May 10, 2012
|
Howard K. Schmidt
|
|
|
|
|
|
|
|
|
|
/s/ Charles Trego
|
|
Chief Financial Officer
|
|
May 10, 2012
|
Charles Trego,
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
|
|
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