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Axion Power Reports 2009 Year-End Results

Sales for 2009 totaled $1.8 million compared to $679,559 in 2008, an increase of 157 percent, primarily from the sale of legacy lead-acid batteries and, for the first time, PbC test batteries sold to a strategic partner. The net loss for 2009 was $18.6 million, or a $0.67 loss per basic and diluted share, compared to the net loss of $10.6 million, or a $0.46 loss per basic and diluted share for 2008. Of that loss, $10.6M was attributable to non cash expense due to derivative revaluation and beneficial conversion features of the preferred stock. All preferred stock was converted in 2009 as part of the $26.2M equity raise, so the preferred stock has been retired and the associated dividends eliminated. With the exception of R&D expense, which the Company feels strongly about increasing to maintain its advantage in the industry, all other SG&A expenses decreased in 2009. The total reduction was approximately $1.3M or 12%. "Our core technology and our PbC batteries continue to demonstrate their capabilities in a variety of important applications," said Axion Power CEO Thomas Granville. "Our strategic partners include Exide Technologies, one of the largest battery suppliers in the world with a significant presence in transportation globally. But whether it's the micro or mild hybrid vehicle market, off-grid storage of renewable energy, grid balancing or buffering, remote power sourcing or military applications, we feel PbC will prove its value as a low-cost, fully recyclable energy storage technology. Today we are developing solar power storage systems, solar powered electrical charging stations and new products for 'Smart Grid' systems, all with potentially large, global markets and with important strategic partners.

"We made excellent progress in 2009 in a number of key areas and our entire team worked diligently to overcome the business and technical challenges we faced in achieving our goals. We are continuing to work with some very large potential customers in testing and pilot programs, and our goal is to be able to launch some noteworthy contracts this year," Granville concluded.

Company accomplishments in 2009 and the first few months of 2010 include:

    --  Award of a $300,000 Pennsylvania CFA state grant in February 2010, to
        develop a renewable solar energy storage system based on its proprietary
        PbC PowerCube battery technology to be used within a "Smart Grid"
        system.
    --  Completion of a $26 million common stock offering in late December 2009,
        which significantly strengthened the Company's balance sheet.  Proceeds
        of the offering will be used for additional electrode production lines,
        to add to the quality staff already in place and for working capital.
    --  Award of a $250,000 grant from the Pennsylvania Energy Development
        Authority in December 2009 to assist in development of a 500 kilowatt
        Axion PowerCube(TM) battery energy storage system using PbC battery
        technology.
    --  Completion in the 2009 third quarter of an initial phase in the
        Company's four-year global supply agreement with Exide Technologies. The
        two companies have jointly established specifications and test protocols
        for Axion batteries that will be manufactured for multiple markets
        including hybrid vehicles and industrial energy storage and renewable
        power.
    --  The announcement in August 2009 by the U.S. Department of Energy that it
        had awarded a $34.3 million stimulus award to Exide Technologies with
        Axion Power International for the development of lead carbon technology
        for micro-hybrid and mild-hybrid vehicle applications  as well as other
        potential storage applications.
    --  The award in January 2009 of an $800,000 first-year grant from the
        Pennsylvania Alternative Fuels Incentive Grant program as part of the
        State's overall effort to invest in businesses that are creating
        important and innovative clean energy and bio-fuels technologies.  Award
        proceeds will be used to demonstrate the advantages the Axion
        proprietary PbC(TM) battery technology provides in a variety of electric
        vehicle types including: hybrids (HEVs), such as the popular Toyota
        Prius; "plug-ins" (PHEVs) used in commuter, delivery and other vehicles;
        and in EV's and converted (from combustion engine operation) EV's.

As of December 31, 2009, Axion Power's balance sheet showed cash and equivalents of $23.3 million, up from $3.1 million at December 31, 2008. Current assets as of December 31, 2009 were $24.8 million, the current ratio was 15.9:1 and working capital was $23.2 million. Total assets were $29 million, there was less than $650,000 in long term debt and stockholders' equity was $24.3 million.

Conference Call / Webcast

Today at 11:00 am ET (8 a.m. Pacific) a conference call will be held to review the AXPW results. Interested parties should call 866-804-6922 (domestic) or 857-350-1668 (international), with passcode 26756887 to access the call. You may also access this call via the Internet at:

http://phx.corporate-ir.net/playerlink.zhtml?c=155732&s=wm&e=2976877

For those who are unavailable to listen to the live broadcast, a replay will be available for 90 days and can be accessed by dialing 888-286-8010 (domestic) and 617-801-6888 (international) and using passcode 87823892.

About Axion Power International, Inc.

Axion has developed and patented a next generation energy storage device that won the prestigious Frost & Sullivan Technology Award for North America in the field of lead-acid batteries. According to Frost & Sullivan, Axion's new PbC® batteries have "the potential to revitalize the lead-acid battery industry by breathing new life into an established technology that is not well suited to the requirements of important new applications like hybrid electric vehicles and renewable power."

Axion Power International, Inc. is the industry leader in the field of lead-acid-carbon energy storage technologies. Axion believes this new battery technology is the only class of advanced battery that can be assembled on existing lead-acid battery production lines throughout the world without significant changes to production equipment and fabrication processes. It also believes it will be able to manufacture carbon electrode assemblies in volume at low cost using standard automated production methods that are commonly used in other industries. If and when its electrode manufacturing methods are fully developed, Axion believes it will be able to sell carbon electrode assemblies as virtual plug-and-play replacements for lead-based negative electrodes used by all other lead-acid battery manufacturers. Axion's future goal, after filling their plant's lead-carbon battery production capacity, is to become the leading supplier of carbon electrode assemblies for the global lead-acid battery industry.

For more information, visit www.axionpower.com

    Contacts

    Axion Power International
    Thomas Granville
    (724) 654 9300

    Allen & Caron Inc
    Rudy Barrio (Investors)
    r.barrio@allencaron.com
    (212) 691-8087

    Len Hall (Media)
    len@allencaron.com
    (949) 474-4300

                               -FINANCIAL TABLES FOLLOW-

                           AXION POWER INTERNATIONAL, INC.
                             CONSOLIDATED BALANCE SHEETS
                            (A Development Stage Company)

                                                 December 31,   December 31,
                                                      2009           2008
    ASSETS
    Current Assets:
    Cash and cash equivalents                      $23,279,466     $3,124,168
    Short-term investments                                   -      2,193,920
    Accounts receivable                                194,315        128,035
    Other receivables                                  208,179         64,456
    Prepaid expenses                                    79,987         78,989
    Inventory                                        1,008,092      1,269,515
    Total current assets                            24,770,039      6,859,083

    Property & equipment, net                        4,216,080      3,274,183
    Other receivables, non-current                      34,601         28,388
    TOTAL ASSETS                                   $29,020,720    $10,161,654
                                                   ===========    ===========

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current Liabilities:
    Accounts payable                                $1,375,292     $1,324,287
    Other current liabilities                           82,326        162,580
    Notes payable, current                             101,684              -
    Total current liabilities                        1,559,302      1,486,867

    Deferred revenue                                   856,237        751,096
    Derivative liabilities                           1,616,788              -
    Notes payable, long term                           649,549              -
    Total liabilities                                4,681,876      2,237,963

    Stockholders' Equity:
    Convertible preferred stock-12,500,000
     shares authorized
        Senior preferred - 1,000,000 shares
         designated 0 issued and outstanding
         (137,500 in 2008)                                   -      1,656,735
        Series A preferred - 2,000,000 shares
         designated 630,897 shares issued and
         outstanding (718,997 in 2008)               9,069,871      9,440,359
     Common stock-100,000,000 shares authorized
      $0.0001 par value  75,767,818 issued &
      outstanding (26,417,437 in 2008)
                                                         7,576          2,641
    Additional paid in capital                      76,372,520     46,184,287
    Deficit accumulated during development stage   (60,859,150)   (49,111,062)
    Cumulative foreign currency translation
     adjustment                                       (251,973)      (249,269)
    Total Stockholders' Equity                      24,338,844      7,923,691
    TOTAL LIABILITIES & STOCKHOLDERS' EQUITY       $29,020,720    $10,161,654
                                                   ===========    ===========

            The accompanying notes are an integral part of these condensed
                          consolidated financial statements

                             AXION POWER INTERNATIONAL, INC.
                          CONSOLIDATED STATEMENTS OF OPERATIONS
                              (A Development Stage Company)

                                         Years Ended            Inception
                                                  12/31/2009 (9/18/2003)  to
                                                  ========== ===============
                                            2009          2008     12/31/2009
                                            ----          ----     ----------

    Revenues                          $1,843,592      $679,559     $3,332,439
    Cost of goods sold                 1,693,714       368,922      2,903,976
    Gross profit (loss)                  149,878       310,637        428,463

    Expenses
    Research & development             4,426,956     3,960,909     18,378,626
    Selling, general &
     administrative                    3,837,526     4,846,189     21,852,907
    Interest expense -related
     party                               186,063     1,137,436      2,337,986
    Impairment of assets                       -             -      1,391,485
    Derivative revaluation             6,292,401        (2,844)      (222,267)
    Mega C Trust Share Augmentation
     (Return)                                  -             -        400,000
    Interest & other income, net         (14,641)      (57,224)      (548,793)
    Net loss before income taxes     (14,578,427)   (9,573,829)   (43,161,481)

    Income Taxes                               -       (79,170)         4,300
    Deficit accumulated during
     development stage               (14,578,427)   (9,494,659)   (43,165,781)

    Less preferred stock dividends
     and beneficial conversion
     feature                          (4,046,836)   (1,117,699)   (17,693,369)
    Net loss applicable to common
     shareholders                   $(18,625,263) $(10,612,358)  $(60,859,150)
                                    ============  ============   ============

    Basic and diluted net loss per
     share                                $(0.67)       $(0.46)        $(3.45)
                                          ======        ======         ======

    Weighted average common shares
     outstanding                      27,619,839    22,826,187     17,650,362
                                      ==========    ==========     ==========

             The accompanying notes are an integral part of these condensed
                            consolidated financial statements

SOURCE Axion Power International, Inc.