Here are a couple of finance and news related opinions that reminded me of ZBB, both from the former insider John Petersen, a prolific writer on Seeking Alpha in the Energy Storage area, and AXPW in particular:
1) Financing in small companies is typically an incremental process and the most common number is 12 to 24 months of operating funds. Anything more is a tough sale to investors and a tough sale to management teams that expect their stock price to improve with maturity. The limit of Rule 415 is an annual limit that replenishes itself 12 months after a funding and goes up or down in value with the stock price.
Discounts are common in PIPE transactions, but the word PIPE is an acronym for "private investment in public equity." Discounts are far less common in registered public offerings like the S-3 and when they arise they're typically modest.
Investors always assume that the bottom line has to turn positive for a company to have a decent market valuation and that's simply not the case. Maxwell, for example, carries a ±$450 million market cap based on $100 million of equity, $150 million of sales and a small TTM loss. Even Valence, which is underwater to the tune of $57 million, carries a $135 million market cap based on $50 million in sales and a $12 million annual loss. What Axion needs to do for now is continue a credible revenue ramp.
2) FWIW, I've never seen a small company stock make a large sustained advance based on news of an important business development. News has a very short half-life and can influence price for a month or two. Supply and demand dynamics, on the other hand, tend to cycle with each complete turnover of the outstanding stock, although even that number varies depending on the amount of short-term trading activity.
For its first six years as a public company there was no demand for Axion's stock because the company was operating in stealth mode. Total volume from 2004 through 2009 was 11.5 million shares. 2010 volume of 22 million shares was 2x that cumulative number. 2011 volume in the 75 million share range will once again be roughly 2x the cumulative number through the end of 2010. Axion is just now getting to a point where I'd call the market liquid and active. To put it in perspective most of the companies I track turn their floats two to five times a year.
The first turnover which is just now coming to an end is usually a deep down cycle because holders get impatient and push the stock price down. Once the stock is owned by people who bought at bargain prices are in control, the market price moves to meet their expectations. That means the second and third turnings are generally a good deal more positive.
I've seen the dynamic more times than I can recount. I've never been able to predict the when with precision, but sure as night follows day the price dynamic will change completely when the last of today's willing sellers runs out of stock