UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event
reported): November 28, 2014 (November 28, 2014)
AXION INTERNATIONAL HOLDINGS, INC.
(Exact name of registrant as specified
in its charter)
Colorado
(State or other jurisdiction
of incorporation) |
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0-13111
(Commission File
Number) |
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84-0846389
(IRS Employer
Identification No.) |
4005 All American Way, Zanesville, Ohio |
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43701 |
(Address of principal executive offices) |
|
(Zip Code) |
Registrant’s telephone number,
including area code: (740) 452-2500
(Former name or former address, if changed
since last report)
Check the appropriate box below if the Form
8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions
(see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 8.01 Other Events
The Company is furnishing a letter made available to its shareholders
on November 28, 2014 (the “Letter to Shareholders”). The text of the Letter to Shareholders is attached as Exhibit
99.1 to this Current Report on Form 8-K and shall not be deemed to be "filed" for the purpose of Section 18 of the Exchange
Act or otherwise subject to the liabilities of that section. This disclosure of the Letter to Shareholders on this Current Report
on Form 8-K will not be deemed an admission as to the materiality of any information in this Current Report on Form 8-K that is
required to be disclosed by Regulation FD.
The Company does not have, and expressly disclaims, any obligation
to release publicly any updates or any changes in the Letter to Shareholders or its expectations or any change in events, conditions,
or circumstances on which any forward-looking statement is based.
The Letter to Shareholders is available on the Company's website
at: http://ir.stockpr.com/axionintl/overview/. The Company reserves the right to discontinue that availability at any time.
Item 9.01 Financial Statements and Exhibits.
Exhibit No. Description
| 99.1 | Letter to Shareholders made available to shareholders on November 28, 2014. |
SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: November 28, 2014 |
AXION INTERNATIONAL HOLDINGS, INC. |
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|
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By: |
/s/ Donald W. Fallon |
|
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Donald W. Fallon
Chief Financial Officer |
Exhibit Index
Exhibit No. |
Description |
99.1 |
Letter to Shareholders made available to shareholders on November 28, 2014. |
Exhibit 99.1
LETTER TO SHAREHOLDERS
November 2014
Dear AXION Shareholders:
I want to take the opportunity to introduce
myself and express the very great pleasure I have in joining and leading the AXION team. Having held senior leadership positions
in the advanced polymers and building materials industries for over 20 years, I feel very excited to be taking on the Chief Executive
Officer post here at AXION. I want to thank Steve Silverman for his time as CEO and his years of leadership, dedication and hard
work. We are thrilled that he has taken the position as Vice Chairman of the Board. Through his counsel, he will continue to impact
the Company as it enters this exciting growth phase.
I worked with AXION as a strategic and
technology advisor during all of 2013, joined the Company in January of this year as Chief Operating and Technology Officer, and
was officially appointed President and CEO on August 4, 2014. I joined AXION because I saw a great company with an excellent leadership
team, game-changing products for the transportation, construction and building materials markets, and extensive growth potential.
I have held several senior-level positions in operations, engineering, research and new business for Norton, Saint-Gobain, Alcoa
and Dow Chemical where I established operational and commercial strategies for various building products and managed materials
research, process refinement, product development, regulatory services, production engineering and commercialization. More recently,
I was President of Eovations, LLC, a new business venture that I spun out of Dow Chemical. During my time at Eovations, I managed
the development, production and commercialization of an innovative structural polymer technology. Given my broad background, operational
knowledge, and business experience, my appointment as CEO represents a natural evolution for AXION. This was a strategic move to
facilitate AXION’s manufacturing, organizational and business growth. I believe with my experience in the engineering, development,
commercialization and manufacturing of innovative building materials, coupled with my knowledge of early stage company funding
and leadership, we can take the Company to great heights.
This year is one of transformation and
growth. We vertically integrated the operations in our Texas and Ohio facilities to create efficiencies that will increase our
ability to produce more of our Structural Polymer Solutions, expand applications and increase margins. Last year, we brought in
record revenues of $6.6 million and so far in 2014, we have already bettered those results. We recently reported our financial
results for the three and nine month periods ending September 30, 2014, generating $12.0 million in revenues surpassing 2013 total
revenues by 82%. We also reported $3.1 million in revenue for the third quarter of 2014, representing a 145% increase over revenues
of $1.3 million for the same period from the prior year.
Our vision for AXION is simple: to continue
producing solutions of superior quality and value for the transportation, construction and building materials markets made from
recycled plastics and drive the expansion of our production capacity to meet the growing demand for innovative products in these
applications. We have gone from market adoption to market penetration and are now seeing solid traction through both domestic and
global sales we receive from our existing customers and newly formed relationships. It is an exciting time for the Company as we
are concentrating our efforts on new product developments, which involve the expansion of our STRUXURE® construction mats lines.
Our business model for growth has been fully and independently vetted, allowing for us to focus diligently on execution.
AXION Shareholder Letter
Page 2 of 5
Our objective is to generate more value
for our shareholders through increased profitability from the sales of our differentiated ECOTRAX® rail ties and STRUXURE®
building products, including construction mats, and through our reprocessed plastics business. All of us on the AXION team are
committed to positioning the Company as the market leader in sustainable structural polymer technologies based on recycled plastics.
With our vertically-integrated operations, in-house production capability, material supply streams, effective production systems
and commercial agility, we believe we have the capabilities to do so.
Increasing Demand for STRUXURE® Heavy Construction Mats
- High Margin Business
We recently introduced our STRUXURE®
Heavy Construction Mats, which are extremely strong, durable and highly resistant to degradation in service. These mats are used
at field construction sites, infrastructure expansion projects and in the oil and gas exploration industry to support heavy equipment
and to transport vehicles on unpaved, wet or soft surfaces. Our unique construction mats are experiencing a strong growth in demand,
enabling our next phase of production and product line expansion.
As we continue to commercialize our heavy
mats, we will be focused on expanding field installations, as well as the production and fabrication abilities of our mats. In
a recent 10-month trial comparing traditional wood mats and our mats, 100% of the STRUXURE® Heavy Construction Mats were intact
and ready for shipment to the next jobsite while 80% of the wood mats had to be discarded and landfilled. This illustrates how
AXION’s mats are superior to traditional mats and can be rapidly deployed to new construction sites, installed over
all types of ground conditions and support various construction vehicles. Our mats do not absorb fluids, are easier to transport
and minimize damage site access, protecting existing roads. They are ideal in wet or other demanding environments and are resistant
to abrasion and tread-wear, giving them a life cycle over five times longer than traditional wood mats.
Our products for the building and construction
markets, sold under our STRUXURE® line, have been generating exciting opportunities for AXION. Based on the success of our
construction mats in field performance testing, we have received a high level of interest from potential customers and distributors
for this application. Our new addition to the STRUXURE® construction mat product line, temporary road mats, offer some significant
additional sales opportunities for us with potential uses at construction sites, access roads, electrical transmission projects,
pipe installations and oil and gas drilling sites. Our line of STRUXURE® construction mats has distinct advantages over wood
mats in terms of longevity, fluid absorption, economic value, disposal costs, recyclability, durability, ability to be reconditioned,
job site safety on difficult terrains and lower logistics cost expense.
Our product development road map is straightforward:
develop valuable solutions for customers, test their value proposition across various criteria, and then commercialize the product
with well-coordinated sales, marketing and production efforts. Following the successful introduction of STRUXURE® construction
mats and the solidification of expanding ECOTRAX® rail tie opportunities, we are experiencing the need for faster transformation
of our production facilities to increase capacity. We have also diversified our technologies beyond the patented technologies developed
with Rutgers University and we are utilizing other structural polymer technologies in the development of construction mat lines
and other product extensions into infrastructure and transportation applications. With the success of these initial product lines,
we are now targeting boardwalk applications and transportation industries for new products based on our proprietary materials.
In the months ahead, we anticipate new sales relationships regarding our existing lines and also significant developments with
respect to new product lines and applications.
www.axih.com |
4005 All American Way |
OTCQB: AXIH |
|
Zanesville, Ohio 43701 |
|
AXION Shareholder Letter
Page 3 of 5
Vertical Integration Strategy - Conversion
of Zanesville Facility to Increase Capacity for Engineered Products to Meet Growing Demand
The full vertical integration of our manufacturing
operations late in 2013 through the acquisition of a plastics reprocessor was a significant milestone for AXION that positioned
the Company for this next phase of growth. In August, we converted our extrusion equipment in our Zanesville, Ohio, facility (formerly
our Reprocessed Plastics Division) to be utilized in the production of our ECOTRAX® rail ties and STRUXURE® construction
mats and building products. The facility continues to process industrial and post-consumer recycled plastics for both internal
use and external sales. Moreover, the conversion of the pelletizing equipment to engineered product extrusion has clear market
and financial advantages, although it required the termination of existing reprocessing contracts and other disadvantaged reprocessing
sales. This realignment was critical for two major reasons: to support the growth of our construction mat product family and to
focus on strengthening margins through increased production capacity. This realignment was originally set to take place in late
2015. Because of the increasing demand for our structural polymer solutions, we expedited the realignment to increase our capacity.
Market demand for our STRUXURE® construction mats requires sufficient inventory to serve the current pipeline of customers
and other potential opportunities. We have also created better operational efficiencies with the increasing of our recycled plastics
reprocessing capacity to internally supply our engineered products business in our Zanesville facility and allow us to opportunistically
participate in the recycled plastics reprocessing market.
Our technology can be scaled to meet our
manufacturing requirements and we believe our two facilities can easily be augmented to support the current demand trajectory.
We are creating process improvements with a focus on high quality production and we continue to push advancements in our technologies
to create an even more compelling value proposition for our customers. We have gone from an outsourced manufacturing and narrowly
defined extrusion molded company to having the capabilities of continuous extrusion, fabrication, structural design and internal
materials processing. Now we have two facilities that can turn waste stream plastic into multiple engineered products from recycled
materials.
Continued Market Adoption of our Engineered
Products
AXION has built a strong and scalable operation
having an infrastructure to propel the business into this new and exciting phase. There are four core elements to our business
success: 1) product quality, 2) manufacturing depth, 3) value-added products, and 4) commercial effectiveness.
In order to consistently build the necessary
volume required by customers, we made investments in expanded manufacturing and quality systems. Two years ago, we were a spot
manufacturer. Today, we have extrusion capacity, molds and supporting equipment that will allow in excess of $30 million in annual
revenue. We now have full time directors of quality, manufacturing, engineering and materials sourcing. We have identified new
raw material streams that enable our technology to reach even higher mechanical properties for our products, opening new market
categories.
This past quarter, we diversified and notably
expanded our customer base and during the year saw continued growth in international business with multiple purchase orders for
ECOTRAX® rail ties. We completed our three-year rail tie supply agreement in the second quarter, resulting in 16% of sales
to this Class 1 railroad customer as compared to 66% from the second quarter last year. We are very excited about the rate of customer
adoption of our engineered products and our expansion into international markets. We have been fulfilling orders from all over
the world and they are from customers that have migrated from testing to purchase orders. These developments were the result of
our team’s tireless effort over the past several years.
www.axih.com |
4005 All
American Way |
OTCQB: AXIH |
|
Zanesville, Ohio 43701 |
|
AXION Shareholder Letter
Page 4 of 5
Our ECOTRAX® rail ties have been tested and proven globally
for years. ECOTRAX® rail ties have been shipped to Russia for installation in the second largest rail network in the world,
delivered to a major rail line in Australia and also installed at additional sites around the world. In addition, ECOTRAX®
rail ties are undergoing testing in many other countries around the world. The product development cycle for this segment of the
business involves extensive testing, refining, development and design that takes several years to complete. As a result, our rail
ties are recognized for their high standards, receiving strong repeat orders. We’ve been able to replicate a similar but
quicker product development cycle with our STRUXURE® construction mats that are receiving sales traction at a much faster pace,
resulting in higher adoption rates and higher margins. The biggest difference between our rail ties and mats is that once the rail
ties are installed, they stay there for a long period of time. The mats, on the other hand, are used at a construction site, then
retrieved and transported to another construction site for use again. Thus, customers investing in our mats realize a return on
their investment in a short period of time.
Market adoption of our engineered products
is increasing. With each successful installation, our engineered products prove they are viable, durable alternatives to legacy
materials. We continue working with private and governmental organizations to enhance market adoption of our engineered product
lines. Completing successful lab, field and in-service testing significantly increases our chances to win long-term supply agreements.
Below are some highlights:
ECOTRAX® - Rail Applications
| · | Sold to major transit lines in the U.S.,
including new and repeat orders |
| · | Received multiple purchase orders from
Russian transit line |
| · | Received large purchase order from major
Australian rail network |
| · | Continued our collaboration with our European partner, Sicut Enterprises
Limited, and shipped additional orders to the region, continuing our sales penetration into that market |
| · | Exported 47 container order to a large
multi-national industrial company |
STRUXURE® - Building Products
| · | Sold heavy construction mats and temporary
road mats and other STRUXURE® products that are now in use by numerous oil and gas pipeline and drilling contractors in the
U.S. and Canada |
| · | Heavy mats have also been used on civil
construction projects to support heavy equipment at bridges, highway, marine (barges), tunnels, wind farms and other construction
sites. |
| · | Delivered building products for wetlands
walkway in Ohio |
| · | Established distribution agreement with
a major Canadian supplier to the oil and gas industry for constriction mats |
| · | Delivered truckload quantities of tongue
and groove bridge deck boards |
| · | Multiple installations in Canadian park
and recreation facilities, including wetlands walkways |
www.axih.com |
4005 All American Way |
OTCQB: AXIH |
|
Zanesville, Ohio 43701 |
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AXION Shareholder Letter
Page 5 of 5
Poised for Record Growth
Thus far, 2014 is our strongest year from
a revenue and production capability perspective, and we look to accelerate that momentum. We are building a world-class manufacturing
business for engineered products, serving the transportation, construction and building industries. We have a proprietary position
in our technology and products with over a decade of documented, proven durability. This technology has been developed with leading
scientists and engineers, and we continue to test and improve our engineered products to maintain our place as an industry leader
that promotes an environmentally responsible range of products. We are excited by the opportunities in our construction mat business,
receiving notable traction in the market with initial adoption progressing quickly from testing to sales.
We continue to grow our sales, diversify
and expand our customer base and develop engineered products for advanced applications. We have been gaining recognition domestically
and globally. Our customers value our products as evidenced by an increase in follow-on orders. Our facilities are operating at
full capacity and the Zanesville facility has been converted to support the growth demand for our engineered products. Vertical
integration gives us a significant competitive advantage, and we are prudently managing these operations to improve our margins
through effective controls, best manufacturing practices and higher quality standards.
I would like to thank our team of dedicated
managers and employees for their hard work, as well as our shareholders for their continued support. Together we believe we are
building something significant, and we are grateful to everyone who is making it possible.
We look forward to keeping you updated
on our continuing progress.
Sincerely, |
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/s/ Claude Brown, Jr. |
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Claude Brown, Jr. |
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President and Chief Executive Officer |
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AXION International Holdings |
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Forward-Looking Statements
This letter contains "forward-looking
statements" for purposes of the Securities and Exchange Commission's "safe harbor" provisions under the Private
Securities Litigation Reform Act of 1995 and Rule 3b-6 under the Securities Exchange Act of 1934. These forward-looking statements
are subject to various risks and uncertainties that could cause AXION’s actual results to differ materially from those currently
anticipated, including the availability of materials at favorable pricing, sufficient manufacturing capability and the risk factors
identified in AXION’s filings with the Securities and Exchange Commission.
www.axih.com |
4005 All
American Way |
OTCQB: AXIH |
|
Zanesville, Ohio 43701 |
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