Axion Power (AXPW) Enters PbC Technology Licensing Deal for Greater China, North America
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Axion Power International, Inc. (OTC: AXPW) has entered into a Tri-Party Letter of Intent with Fengfan Co. Ltd. of Baoding, China (SH. 600482) and LCB International Inc. of BVI, regarding the sale of Axion's PbC® technology in China, Taiwan, Hong Kong and Macau to Fengfan and LCB, along with non-exclusive licensing rights in North America.
A culminating event after many months of negotiation, the Letter of Intent, jointly signed by all parties on October 31, 2016, calls for a $5 million cash infusion into Axion over a 24-month period. As a result of the signing of this Letter of Intent, Fengfan will make an initial cash down payment of $250,000 to Axion by December 1, 2016 upon receiving regulatory approvals.
It is expected that this non-dilutive cash infusion, along with Axion's successful cost cutting measures, will lay a strong foundation for the company's ability to complete other major licensing agreements currently in development internationally.
Concurrent with the signing of this Letter of Intent and the receipt of the $250,000, the three parties are targeting a definitive Tri-Party Agreement by the end of January 2017. Once finalized, quarterly payments to Axion are anticipated to begin in the First Quarter of 2017. Then, starting one year following achievement of agreed-upon PbC volume production goals, or agreed-to PbC battery performance and cost objectives, Axion will receive a royalty of two percent of Fengfan's net sales of PbC batteries in Greater China and North America, with a guaranteed annual minimum of $1 million.
Dr. WJ Gesang, principal of LCB, said, "LCB is glad to bring together Axion and Fengfan in this tri-party strategic partnership. The collaboration will fully leverage the complementary strengths of the three partners to achieve commercial scale applications of PbC technology through a global modular innovation approach – invented in the U.S., made in China and sold around the world."
The IP package includes the sale of Axion's five PbC patents in China; nonexclusive license to its 15 PbC patents in the United States; and will give Fengfan and LCB access to all of Axion's intellectual property rights to PbC technology for use in a wide variety of applications, from automotive to energy storage.
"Fengfan aspires to be the top lead-acid battery manufacturer in China as well as the global marketplace," said Mr. Zhen Zhijun, executive vice president of Fengfan. "The PbC technology will greatly expand Fengfan's product portfolio to address many emerging market needs of high power and high rate partial state of charge applications in automotive and utility energy storage. Fengfan will take the PbC technology, invented by Axion over the past decade, into volume production at China speed and cost."
This licensing agreement is a significant success resulting from the strategic direction laid out for Axion by CEO, Richard Bogan, in February 2016, and the collaborative effort among the parties which began in May 2016.
"We are off and running as we look to 2017 to be a landmark year for Axion," said Bogan. "This is our first major win since we re-focused Axion's strategic direction. We have been working heads-down and full speed ahead with Fengfan and LCB. These collaborative efforts with our new partners are bearing significant fruit in a short time. I could not be more pleased with these partners and look forward to the great commercial strides we will jointly make."
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