Completed Final Two Tranches of Financing during Quarter Raising $14 Million

NEW CASTLE, Pa., Aug. 7 /PRNewswire-FirstCall/ -- Axion Power International, Inc. (OTC Bulletin Board: AXPW), a leading developer of advanced lead-carbon 'PbC'(TM) batteries, today reported results for its second quarter and first six months ended June 30, 2008. Sales during the 2008 second quarter were $176,080, as compared to $133,078 during last year's second quarter. The Company reported a net loss for the second quarter of 2008 of $3.2 million, or $0.16 per share, as compared to a net loss of $3.4 million, or $0.21 per share, for the second quarter of 2007.

For the first six months of 2008, sales were $319,807, as compared to $297,591 for the prior year's first six months. Net loss for the first six months of 2008 was $6.1 million, or $0.32 per share, as compared to a net loss of $10.0 million, or $0.61 per share, for the first six months of 2007. All revenues for the first and second quarters of 2008 came from specialty lead-acid batteries that the Company has been manufacturing in limited quantities at its modernized plant in New Castle, Pennsylvania.

Chief Executive Officer Thomas Granville said the Company continues to make significant progress in its efforts to commercialize its promising, proprietary PbC technology. He added that Axion's PbC technology is very well suited for numerous applications, including energy storage, grid buffering and load leveling, military applications, and the burgeoning electric and hybrid automobile markets.

'We remain very excited not only by the progress we are making technologically, but by what we are seeing throughout the world,' Granville said. 'We are developing precisely what the market is looking for -- a significantly less expensive, more efficient, faster recharging and longer-lasting battery that is unlike anything else in the marketplace. Another very important factor, that makes our PbC battery unique, is the way it is easily integrated into existing lead acid battery lines. As a result, our proprietary product can be manufactured on any existing lead-acid battery production line anywhere in the world.'

Granville noted that at June 30, 2008, the Company's cash stood at $12.6 million, and that its current ratio was 3.31:1. Shareholders' equity stood at $11.5 million, and the Company had no long-term debt.

    Among the highlights of the second quarter were:
    -- The completion of the third and final tranche of its $18 million
       financing agreement with The Quercus Trust, which retired previous debt
       and provides the funding necessary to move into commercialization.
    -- Considerable progress toward increased production of its patented
       nanocarbon anode material.
    -- Completion of 800 PbC batteries for an 'online' utility grid contract
       funded by New York State Energy Research and Development Agency
       (NYSERDA).

    Other highlights, subsequent to the end of the second quarter, included:
    -- Testimony to the U.S. Senate Energy and Natural Resources Committee on
       the benefits of the Axion PbC technology provided by Axion's Chief
       Technical Officer Dr. Ed Buiel.
    -- The move of the trading of the Company's stock back to the OTCBB.

About Axion Power International, Inc.

Axion has developed and patented a next generation energy storage device that won the prestigious 2006 Frost & Sullivan Technology Innovation 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 was not well-suited to the requirements of important new applications like hybrid electric vehicles and renewable power.'

PbC(TM) batteries use sophisticated carbon electrode assemblies to replace the simple lead-based negative electrodes used by other lead-acid battery manufacturers. The resulting device offers energy storage approaching lead acid batteries, coupled with far longer cycle life and power output approaching super-capacitors. These low-cost devices recharge rapidly and are environmentally friendly because they use less lead. Axion has been producing prototype PbC batteries at its lead-acid battery plant in New Castle, Pennsylvania for more than a year using the same cases, positive electrodes, separators, electrolytes and manufacturing equipment that it uses in its other lead-acid battery products. The only notable manufacturing difference is the use of Axion's proprietary carbon electrode assemblies instead of lead-based negative electrodes.

Axion believes its PbC technology devices are the only class of advanced battery that can be assembled on existing lead-acid battery production lines 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 production methods that are commonly used in other industries. 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 the lead based negative electrodes used by all other lead acid battery manufacturers.

Axion's goal is to become the leading supplier of carbon electrode assemblies for the lead-acid battery industry.

'Safe Harbor' Statement Under the Private Securities Litigation Reform Act of 1995:

Certain statements in this Press Release are 'forward-looking statements' within the meaning of the Private Securities Litigation Act of 1995. These statements include, without limitation, statements concerning the effect of the staged investment by Quercus, the timing of the Company's future SEC reporting, the Company's belief that the funds from the completed investment would provide sufficient capital liquidity to complete its process development work, expand its manufacturing capabilities and bring its new PbC based battery products to market, the Company's belief that its completed products will be the only class of advance battery of its kind and that it will be a viable replacement for older generation lead-acid batteries. These forward-looking statements are based on our current expectations and beliefs and are subject to a number of risk factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Such risks and uncertainties include the risk that the funding received does not prove sufficient for the Company to complete its development work, as well as the risks inherent in commercializing a new product (including technology risks, market risks, financial risks and implementation risks, and other risks and uncertainties affecting the Company), as well as other risks that have been included in filings with the Securities and Exchange Commission, all of which are available at http://www.sec.gov. We disclaim any intention or obligation to revise any forward-looking statements, including, without limitation, financial estimates, whether as a result of new information, future events, or otherwise.

     Contact:  Allen & Caron                Axion Power International, Inc.
               http://www.allencaron.com    http://www.axionpower.com
               Rudy Barrio (investors)      Kelly Gubish
               Brian Kennedy (media)        724 654 9300
               212 691 8087                 kgubish@axionpower.com
               r.barrio@allencaron.com
               brian@allencaron.com



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

                                                                   Inception
                      Three Months Ended      Six Months Ended    (9/18/2003)
                           June 30,               June 30,        to June 30,
                       2008      2007         2008      2007          2008

    Revenues        $176,080    $133,078    $391,807    $297,591   $1,201,095
    Cost of
     goods sold      253,498     197,205     647,733     426,095    2,336,601
    Gross loss       (77,418)    (64,127)   (255,926)   (128,504)  (1,135,506)

    Expenses
    Selling,
     general &
     admini-
     strative      1,466,031     857,362   3,179,196   1,736,824   16,348,388

    Research &
     development     559,959     357,883     941,976     678,257   10,085,209
    Impairment
     of assets             -      (7,108)          -           -    1,391,485
    Interest
     expense -
     related
     party           758,197      56,786   1,177,870      56,786    2,192,357
    Derivative
     revaluation           -       6,929      (2,844)      6,929      362,508
    Mega C Trust
     Share
     Augmentation
     (Return)              -           -           -           -      400,000
    Other, net        19,765     (23,975)      8,437     (46,518)    (468,491)
    Net loss
     before
     income taxes (2,881,370) (1,312,004) (5,560,561) (2,560,782) (31,446,962)

    Income Taxes           -           -           -           -       83,469
    Deficit
     accumulated
     during
     development
     stage        (2,881,370) (1,312,004) (5,560,561) (2,560,782) (31,446,962)

    Less
     preferred
     stock
     dividends
     and
     beneficial
     conversion
     feature        (284,871) (2,127,070)   (572,332) (7,410,162) (13,101,167)
    Net loss
     applicable
     to common
     share-
     holders     $(3,166,241)$(3,439,074)$(6,132,893)$(9,970,944)$(44,631,598)

    Basic and
     diluted net
     loss per
     share           $ (0.16)    $ (0.21)     $(0.32)     $(0.61)      $(3.07)

    Weighted
     average
     common
     shares
     outstanding  20,290,404  16,247,299  18,990,487  16,247,299   14,551,111



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

                                                   June 30,     December 31,
                                                     2008           2007
                                                 (Unaudited)
    ASSETS

    Current Assets:
    Cash & cash equivalents                      $12,620,125       $671,244
    Accounts receivable                              150,298        133,646
    Other receivables                                 72,718        341,801
    Inventory                                        909,700        375,635
    Prepaid expenses                                  87,661         82,102
    Total current assets                          13,840,502      1,604,428

    Property & equipment, net                      2,653,118      2,119,252
    TOTAL ASSETS                                 $16,493,620     $3,723,680

    LIABILITIES & STOCKHOLDERS' EQUITY
    Current Liabilities:
    Accounts payable                              $1,941,698     $1,573,436
    Other current liabilities                      1,008,042        583,591
    Notes payable to related parties               1,235,028      2,259,826
    Liability to issue equity instrument                   -        106,183
    Total current liabilities                      4,184,768      4,523,036

    Deferred revenue                                 794,420        840,945
    Total liabilities                              4,979,188      5,363,981


    Stockholders' Equity:
    Convertible preferred stock - 12,500,000
     shares authorized
      Senior preferred - 1,000,000 shares
       designated 137,500 issued and
       outstanding (137,500 in 2006)               1,584,671      1,515,376
      Series A preferred - 2,000,000 shares
       designated 772,997 shares issued and
       outstanding (822,997 in 2007)               9,670,244      9,802,894
    Common stock-50,000,000 shares authorized
     $0.0001 par value 25,873,850 issued &
     outstanding (16,248,298 in 2007)                  2,587          1,625
    Additional paid in capital                    45,120,619     25,768,331
    Deficit accumulated during development
     stage                                       (44,631,597)   (38,498,704)
    Cumulative foreign currency translation
     adjustment                                     (232,092)      (229,823)

    Total Stockholders' Equity                    11,514,432     (1,640,301)

    TOTAL LIABILITIES & STOCKHOLDERS' EQUITY     $16,493,620     $3,723,680

SOURCE Axion Power International, Inc.

Source: PR Newswire (August 7, 2008 - 7:31 AM EDT)

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