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John Petersen

 
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  • Axion Power Concentrator 380: Nov. 11, 2014 [View instapost]
    Bazoooka> I've seen big stockholders behave badly and I've seen short sellers dog pile on weak stocks, but I've never seen active collusion among holders of a client's securities. The game is just too risky because the upside is usually modest and the downside is losing your license or something far worse.
    Nov 16, 2014. 07:31 PM | 5 Likes Like |Link to Comment
  • Axion Power Concentrator 381: Nov. 16, 2014 [View instapost]
    RuggedDC> Two points.

    1. There is no way to explain the share count at 7-Nov-14 unless some of the over allotment shares were sold. The section you highlighted does not say that no shares were sold. It merely says that all warrants were sold.

    2. The B Warrants have an unattractive price adjustment provision but that does not constitute a death spiral. You don't have a death spiral unless the holder can reload without cost or risk.
    Nov 16, 2014. 07:25 PM | 5 Likes Like |Link to Comment
  • Axion Power Concentrator 381: Nov. 16, 2014 [View instapost]
    While Bob Averill and I can argue back and forth about when Axion had a marketable product, I think he'd be the first to agree that Axion did not have a robust, reproducible, scalable and cost effective manufacturing process for PbC electrode assemblies until it commissioned the automated carbon sheeting process in March 2013.

    That's why Axion reported as a development stage enterprise until 2012 and changed its reporting status to a commercial enterprise in 2013.

    I've never been a fan of the secrecy, but I've understood the reasons for the secrecy. I've also understood that specifications change as you move from a prototype to a product and sometimes those changes are substantial. Axion was lucky because the current PbC is better than the prototypes. Most R&D companies are not that lucky and they sacrifice a lot of performance in the name of manufacturability.

    While many would like to see Axion dropping sample batteries from helicopters, I can't fault management for carefully vetting potential customers and their planned applications first. Hell, Cummins has spent 15 months deciding whether it wants to do business with ePower. The reason is simple. Cummins doesn't want to risk the potential reputation damage it might suffer if we were to fail.

    If you take a look at the stock chart the bulk of the suffering occurred before Axion had a product to sell.

    I generally refrain from criticism because I don't believe that I could have gotten a better outcome from the cards Axion was dealt.
    Nov 16, 2014. 06:24 PM | 8 Likes Like |Link to Comment
  • Axion Power Concentrator 381: Nov. 16, 2014 [View instapost]
    Actually, it would be the DOE's fault.

    AFAIK, Axion and Exide each submitted ARRA grant applications.

    AFAIK, they were not joint applicants on either application.

    For reasons I still can't explain, the DOE awarded $34.3 million to "Exide Technologies with Axion Power International." Granville was as shocked as I've ever seen him when I called with congratulations.

    The specific wording of the DOE's award made Exide the prime contractor because it was the only company with a balance sheet sufficient to support the matching funds requirement.

    While Exide's behavior was reprehensible, it was not illegal and from what I've been able to tell it didn't cause any great consternation at the DOE.

    The ARRA grants were AWARDED in August 2009. AFAIK Axion's first serious approach by an automaker was when BMW came a courting after Ed Buiel's poster presentation at the June 2009 AABC.

    The history is bloody enough. There's no reason to make it seem worse than it was for the sake of supporting an argument that management was foolish for even considering automotive as a potential market for a revolutionary battery.
    Nov 16, 2014. 06:01 PM | 11 Likes Like |Link to Comment
  • Axion Power Concentrator 381: Nov. 16, 2014 [View instapost]
    The ARRA Grant Program was a travesty. A quick summary follows. It's important to remember that the ARRA Grants required a 100% match from the awardees.

    $299.2 million to JCI-Saft. The partners got into a big fight when automotive demand didn't develop and JCI bought Saft's interest in the project for $145 million.

    $249.1 million to A123 – BANKRUPT

    $161 million to Dow Kokam. Dow sold it's stake to a private equity firm for an undisclosed amount.

    $151.4 million to Compact Power. There have been a ton of stories about the employees playing monopoly because nobody wants the batteries.

    $118.5 million to EnerDel (Ener1). BANKRUPT

    $105.9 million to GM. Operational.

    $95.5 million to Saft America. Operational.

    $34.3 million to Exide. BANKRUPT

    $32.5 million to East Penn. A few demonstrations but no substantial commercial sales.
    Nov 16, 2014. 05:04 PM | 11 Likes Like |Link to Comment
  • Axion Power Concentrator 381: Nov. 16, 2014 [View instapost]
    It was worse than that Bob.

    East Penn got $32.5 million but Exide got $34.3 million.

    I remain convinced that Exide tried to engineer a takeover of Axion in 2009 and was thwarted at the 11th hour by the December 2009 financing, but that's all water under the bridge now as Exide joins a long list of ARRA Grant Recipients in the Bankruptcy Court.
    Nov 16, 2014. 04:47 PM | 11 Likes Like |Link to Comment
  • Axion Power Concentrator 381: Nov. 16, 2014 [View instapost]
    The disclosure in the Form 10-Q is poorly written but I can't think of an alternative explanation for 7,137,331 shares outstanding on 7-Nov-14.

    This all came up because I double-checked my market cap graph against the 10Q, something I do whenever a quarterly or annual report is filed.

    With 5,017,793 shares outstanding on 30-Sep-14 there should have been 6,892,793 shares after the sale of 1,875,000 units, a number that cross-foots to the prospectus (page 5).

    http://1.usa.gov/1yrnKwd

    There is no way I know of to legally issue stock within a month before or after a public offering unless that stock issuance is part of the offering and described in an effective prospectus.

    Since I can't find any disclosure of some "special" stock issuance, the only possible explanation is partial exercise of the over-allotment option to buy common stock.
    Nov 16, 2014. 04:33 PM | 7 Likes Like |Link to Comment
  • Axion Power Concentrator 381: Nov. 16, 2014 [View instapost]
    Just for your own peace of mind, why don't you call the marketing geniuses at Rosewater and ask what their total third party sales have been since inception.

    Then call East Penn and ask what their Ultrabattery sales to unaffiliated corporate customers have been.

    Be sure to drill down a bit so you can get a feel for sales to projects that were spending the government's money vs sales to projects that were spending corporate money.

    The most common illusion in this forum is that Axion's sales are faltering while all of its peers are raking in the cash.

    It ain't happening that way boys!

    When it comes to bona-fide sales to third parties who are spending their own money, Axion is near the front of the pack instead of bringing up the rear.
    Nov 16, 2014. 04:06 PM | 15 Likes Like |Link to Comment
  • Axion Power Concentrator 381: Nov. 16, 2014 [View instapost]
    The Facing Page of the 10Q said 7,137,331 shares were outstanding on 7-Nov-14, compared to 5,017,793 shares on 30-Sep-14.

    The only way to get there is to sell 1,875,000 UNITS in the principal offering plus 244,538 UNITS for the over-allotment.

    The 10Q language was murky. The share count on specific dates is crystal clear.
    Nov 16, 2014. 02:02 PM | 10 Likes Like |Link to Comment
  • Axion Power Concentrator 380: Nov. 11, 2014 [View instapost]
    It does happen Iindy, but it's nowhere near as pervasive as many imagine. More importantly, cooperation and collusion are irrelevant unless those in the know have enough combined muscle to push the market around.

    That takes ready access to millions of shares and a pain free ability to reload as the drama unwinds. The PIPErs had an automatic pain free reload. Holders of B Warrants don't.

    I simply don't see anything that supports a theory that a small but powerful secret cabal is out to get us.
    Nov 16, 2014. 11:42 AM | 6 Likes Like |Link to Comment
  • Axion Power Concentrator 380: Nov. 11, 2014 [View instapost]
    Markets can stay irrational for a long time. That doesn't make them any less irrational.
    Nov 16, 2014. 11:36 AM | 8 Likes Like |Link to Comment
  • Axion Power Concentrator 381: Nov. 16, 2014 [View instapost]
    Axion spent $100 million developing the PbC and it's one hell of a battery.

    At Friday's close Axion's market cap was $11.2 million and it had roughly $6 million in new cash on the balance sheet from the offering proceeds and the partial exercise of the underwriter's over-allotment option.

    That means a buyer at this price is paying 5¢ on the $1 for a very successful R&D project. While the price could fall further because of the fear factor, I prefer the other side of that wager.

    Since this is my first mention of the over-allotment option, it may be helpful to run the numbers from the 10Q.

    Shares outstanding at 30-Sep-14 – 5,017,793
    Shares outstanding at 7-Nov-14 – 7,137,331
    Net increase – 2,119,538

    Shares in base offering – 1,875,000
    Shares in over-allotment – 281,250
    Total potential issuance – 2,156,250

    There were 244,538 more shares outstanding on 7-Nov-14 than there would have been with no exercise of the over-allotment option. Since there is no disclosure of recent sales of unregistered securities in the 10Q, the only explanation I can offer is a partial exercise of the over-allotment option that resulted in the sale of 244,538 additional units for $794,748.50 in additional proceeds.

    The 30-Sep-14 share count comes from the balance sheet in the 10Q. The 7-Nov-14 share count comes from the facing page of the 10Q.

    The discussion of the over allotment option in the 10Q is clear as mud but the share counts add a ton of clarity.
    Nov 16, 2014. 10:41 AM | 9 Likes Like |Link to Comment
  • Axion Power Concentrator 380: Nov. 11, 2014 [View instapost]
    They'll only be problematic if (a) they all decide to act at the same time, and (b) they all bought with the idea of gaming the B Warrants instead of benefitting from the upside potential.

    The best stockholder base a company can have is broad and flat because no single investor has enough weight to disrupt the market for more than a day or two and the odds that significant numbers of individuals with similarly sized holdings will make the same decisions at the same time are remote.

    There are no whales in Axion's stock. If you want to predict the future, you must predict the behavior of thousands of minnows.
    Nov 16, 2014. 10:23 AM | 7 Likes Like |Link to Comment
  • Axion Power Concentrator 381: Nov. 16, 2014 [View instapost]
    In the last couple weeks we've seen several exhaustive analyses of what could happen upon cashless conversion of B Warrants in scenarios ranging from poor performance to an Armageddon scenario.

    Each of these analyses has focused exclusively on the B Warrants and ignored the fact that there is no market without two essential requirements – willing sellers AND willing buyers.

    In the 2013 transaction the PIPErs were insulated from buyer behavior because they got an estimated payment a month before the due date and a true-up payment on the due date. That gave them a risk free opportunity to sell first and then get their true-up if the market declined while they were selling.

    The B Warrants do not provide a similar backstop. Once the trigger is pulled all risk of loss on resale falls on the holder.

    When the PIPErs were selling, the market response was aggressive bottom feeding that pulled the price ever lower. If an Armageddon scenario arises I have to believe the buyers will flock to the sidelines.

    Our erstwhile commenters have analyzed half of the game – potential sell side behavior from B Warrantholders.

    Until somebody can offer a reasonable theory about where the buyers will come from I think the analyses is grossly inadequate.
    Nov 16, 2014. 10:03 AM | 10 Likes Like |Link to Comment
  • Axion Power Concentrator 380: Nov. 11, 2014 [View instapost]
    That theory only works if there are legions of willing buyers standing by to purchase the common shares you get from the cashless exercise of your B Warrants. Once you pull the trigger on your B Warrants, any further price decline is on you.

    In the armageddon situation you've assumed there will not be legions of willing buyers because the counterpart of your half-game is aggressive bottom feeding.
    Nov 16, 2014. 09:04 AM | 8 Likes Like |Link to Comment
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