UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
AMENDMENT NO. 1 TO FORM 10-K
x ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2010
¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ until ___
Commission File Number 000-22573
AXION POWER INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 65-0774638 | |
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation organization) | Identification No.) | |
| 3601 Clover Lane | ||
| New Castle, Pennsylvania | 16105 | |
| (Address of principal executive offices) | (Zip Code) | |
| Registrant’s telephone number, including area code | (724) 654-9300 | |
Securities Registered under Section 12(b) of the Act
None
Securities Registered under Section 12(g) of the Act
Common Stock, par value $.0001 per share
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x
Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨ | Accelerated filer ¨ |
Non-accelerated filer ¨ | Smaller reporting company x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
The aggregate market value of the 43,139,476 shares of voting stock held by non-affiliates of the registrant based on the closing price on the Over the Counter Bulletin Board on June 30, 2010 was $30,197,633.
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
| Shares Outstanding | ||
| Title of Class | March 1, 2011 | |
| Common Stock | 85,453,302 |
DOCUMENTS INCORPORATED BY REFERENCE
None.
EXPLANATORY NOTE
This Amendment No. 1 to Form 10-K is being filed to include all Part III information for the Form 10-K, which will not be incorporated by reference from the Company’s Definitive Schedule 14A as the Company will not file its Definitive Schedule 14A by May 2, 2011, as is required under Form 10-K.
Our board of directors directs the management of the business and affairs of our company as provided in our certificate of incorporation, our by-laws and the General Corporation Law of Delaware. Members of our board of directors keep informed about our business through discussions with senior management, by reviewing analyses and reports sent to them, and by participating in board and committee meetings.
Board Leadership Structure and Risk Oversight; Diversity
Our Company is led by Thomas Granville, who has served as chief executive officer and chairman of the board since 2005. Our board of directors is divided into three classes of directors that serve for staggered three-year terms. Two of our current board members have been elected to serve for terms that expire on the date of our 2011 Annual Meeting; two have been elected to serve for terms that expire on the date of our 2012 Annual Meeting; two have been elected to serve for a term that expires on the date of our 2013 Annual Meeting; and one was elected by our board of directors in September 2009 to serve for a term that expires on September 21, 2012. The board has three standing committees – audit, compensation and technology. The Audit Committee is comprised solely of independent directors, and each committee has a separate chair. Our Audit Committee is responsible for overseeing risk management, and our full board receives periodic reports from management.
Our board leadership structure is used by other smaller public companies in the Unites States, and we believe that this leadership structure is effective for the Company. We believe that having a combined Chairman/CEO and chairs for each of our board committees is the correct form of leadership for our Company. We have a single leader for our Company and oversight of Company operations by experienced directors, three of whom are also committee chairs. We believe that our directors provide effective oversight of the risk management function, especially through the work of the Audit Committee and dialogue between the full board and our management.
The Company does not currently consider diversity in identifying nominees for director. Due to the small size of the Company, the priority has been in attracting qualified directors, and issues such as diversity have not yet been considered.
The following table identifies our current directors and specifies their respective ages and positions with our Company.
| Name | Age | Position | |||
| Thomas Granville | 66 | Chief Executive Officer and Director | |||
| Howard K. Schmidt, Ph. D. | 52 | Director | |||
| Michael Kishinevsky | 45 | Director | |||
| Glenn Patterson | 57 | Director | |||
| Robert G. Averill | 70 | Director | |||
| D. Walker Wainwright | 60 | Director | |||
| David Anthony | 50 | Director | |||
Executive officers.
The following table identifies our non-director executive officers and specifies their respective ages and positions with the Company.
| Name | Age | Position | |||
| Charles R. Trego | 60 | Chief Financial Officer | |||
| Philip S. Baker | 63 | Chief Operating Officer | |||
The following paragraphs provide summary biographical information furnished by our directors and non-director executive officers.
Directors
Michael Kishinevsky, 45, is an independent director who has served on our board since June 2005. Mr. Kishinevsky is a Canadian lawyer who had been principally engaged in the practice of corporate and commercial law from February 1995 until August 2005. For five years Mr. Kishinevsky served as general legal counsel for C&T. Mr. Kishinevsky currently serves as a director of Sunrock Consulting Ltd., a company he co-founded in October 1995, which specializes in the import and distribution of carbon black and synthetic rubber. He is also the president and director of SunBoss Chemicals Corp., a corporation specializing in chemical additives for the custom rubber mixing industry. Mr. Kishinevsky is a 1989 graduate of the University of Calgary (B.Sc. in Cellular, Molecular and Microbial Biology and B.Sc. in Psychology) and a 1993 graduate of the University of Ottawa Law School. Mr. Kishinevsky was called to the bar in the Ontario courts in 1995 and is a member of the Law Society of Upper Canada. The Company has determined that Mr. Kishinevsky should serve as a director due to his legal background as well as his import and distribution experience which provides expertise on the Board with regard to product distribution.
Howard K. Schmidt, Ph.D., 52, is an independent director, who has served on our board of directors since April, 2005. Dr. Schmidt has been employed as a Petroleum Engineering Consultant at Saudi Aramco since August, 2009. Dr. Schmidt is an expert in the field of carbon nanotechnology and single-wall carbon nanotubes, and occasionally acts as an expert witness in nanotechnology patent litigation. He founded AOTA Energy, LLC in mid-2009 to pursue long-term research in renewable energy and sustainable water technologies. Prior to Aramco, Schmidt served as a Senior Research Fellow in the Department of Chemical and Biomolecular Engineering at Rice University in Houston, Texas. Between September, 2003 and March, 2008, he was the Executive Director of the Carbon Nanotechnology Laboratory (the “CNL”) at Rice University. Before joining CNL, Dr. Schmidt operated Stump Partners, a Houston-based consultancy firm and was involved in two Internet ventures. In 1989, Dr. Schmidt founded SI Diamond Technology, Inc., a company that received the prestigious R&D 100 Award from Research and Development Magazine in 1989, went public in 1993, and recently changed its name to Applied Nanotech Holdings, Inc. Dr. Schmidt holds two degrees from Rice University (BS-Electrical Engineering, 1980 and Ph.D.-Chemistry, 1986). The Company has determined that Dr. Schmidt should serve as a director due to his unique and extensive technical knowledge.
David Anthony, 50, was appointed to our board of directors in September 2009. Mr. Anthony is an experienced entrepreneur, venture capitalist, and educator. He is Managing Director of 21 Ventures LLC, which since founding in 2004, has provided seed, growth, and bridge capital to over forty technology ventures across the globe, focusing mainly in the cleantech area. He sits or has sat during the past five years on the boards of Clean Power Technologies Inc., Energy Focus Inc., Solar EnerTech Corp., and ThermoEnergy Corporation, and numerous private companies. Since 2004, he has held the position of Adjunct Professor at the New York Academy of Sciences, a leading global scientific association with over 30,000 members. Prior to 21 Ventures, LLC, David launched Notorious Entertainment, a developer of multimedia brands. David received his MBA from The Tuck School of Business at Dartmouth College and a BA in Economics from George Washington University. The Company has determined that Mr. Anthony should serve as a director due to his experience in finance and related areas.
Robert G. Averill, 70, has served on our board of directors since February 2004. Mr. Averill is retired and principally involved in personal investments. He served as a director of Implex Corp., a New Jersey based developer and manufacturer of orthopedic implants that he co-founded in 1991 and then sold to Zimmer Holdings, Inc. From 1978 to 1991, Mr. Averill held a variety of executive positions with Osteonics Corp., a developer and manufacturer of orthopedic implants that he co-founded in 1978 and then sold to Stryker Corporation. From 1971 to 1977, Mr. Averill served as a director and held a variety of executive positions with Meditech Inc., a developer and manufacturer of orthopedic implants that he co-founded in 1971 and sold to 3M Corporation in 1975. Mr. Averill holds 28 patents on a variety of orthopedic devices and materials, and he is the co-author of several publications in the field of orthopedics. Mr. Averill holds two degrees from the Newark College of Engineering (BS-mechanical engineering, 1962 and MS-engineering management, 1966). The Company has determined that Mr. Averill should serve as a director due to his extensive engineering and manufacturing background.
Thomas Granville, 66, has served on our board of directors since February 2004 and is both our chairman of our board of directors and chief executive officer. Mr. Granville served as the president of a New York State elevator company that specialized in the installation and maintenance of elevators, escalators, moving walkways and other building transportation products. Mr. Granville also served 15 years as treasurer and ten years as the president of the National Elevator Industry Inc., a trade association that represents elevator manufacturers and contractors, where his duties included labor negotiations for national contracts and oversight duties to a $2.3 billion national pension fund. Mr. Granville has also been a partner, or the general partner, of a number of real estate partnerships that owned multi-family housing, commercial real estate and a cable television company. Mr. Granville is a 1967 graduate of Canisus College. (BA-Business Administration). The Company has determined that Mr. Granville should serve as a director due to his position as senior executive officer of the Company, which gives him valuable insight, as well as his prior managerial experience which provides unique insight for the Board into the operations of the Company.
Glenn Patterson, 57, was appointed to our board of directors in February 2004. He is currently president of HAP International Inc., an investment research and analysis company specializing in renewable and smart grid applications. Mr. Patterson is also a project executive with Rosendin Electric, a privately held electrical energy systems company. Mr. Patterson, in addition to Axion Power International Inc., sits as a director on Shopoff Properties Trust Inc., a publicly held REIT. Until November 2004, Mr. Patterson was president of the Oregon Electric Group, an electrical power and technology services company based in Portland, Oregon. In September 2001, the Oregon Electric Group of which Mr. Patterson was a major owner, was sold to Montana-Dakota Resources, whose major subsidiaries includes electrical power generating, utility and distribution companies with operations in 40 states. Mr. Patterson graduated from Willamette University (BS-Economics) in 1975. The Company has determined that Mr. Patterson should serve as a director due to his extensive background in power generation and electrical power areas.
D. Walker Wainwright, 60, is an independent director who was appointed to our board of directors in January 2007. He is Chairman of Interboro Insurance Company, a provider of personal lines insurance products in New York State. He is also the founder and chief executive of Wainwright & Co. LLC, an independent financial advisory firm and investment manager. The firm’s activities include the identification and assessment of alternative investments, the monitoring of these investments and the creation of proprietary portfolios. In this respect, the firm works with investment management firms, not-for-profit organizations and family offices as an independent consultant to create client-specific solutions. Wainwright & Co. also researches and reviews private investments, including private equity funds, to assist in determining their suitability for specific accounts or portfolios. Formerly a Managing Director in investment banking at Smith Barney, Inc. and at Kidder, Peabody & Co., Mr. Wainwright has over 35 years’ consulting, banking and investment banking experience. Having directed Kidder’s investment banking efforts in the Asia Pacific Region, he has extensive international experience and has lived in Australia and Lebanon. Mr. Wainwright began his career at Chemical Bank and, subsequently, the Schroder Group. He is a graduate of Stanford University (A.B. – 1972) and of Columbia University (M.B.A. – 1976). The Company has determined that Mr. Wainwright should serve as a director due to his long term finance and banking experience.
Executive officers
Philip S. Baker joined the Company as Chief Operating Officer on April 1, 2010. He was with Santa Fe Springs CA-based Trojan Battery Company from 1997 to 2009. From 2006 to 2009 he was Senior Vice President and General Manager of a new battery facility for which he led all the phases of development and operations in Sandersville, GA. Baker guided the lead-acid battery plant from negotiations and permitting forward, and is considered to be an expert in quality control and documentation, productivity and the maximization of uptime, automation and the management of environmental issues. Prior to Sandersville, Baker served from 2001 to 2005 at the Trojan plant in Lithonia GA as Senior Vice President and General Manager, where he executed a turn-around in leadership, quality and output, introduced Kaizen events and Six-Sigma tools and improved productive output by 20% in critical bottleneck areas. Before Lithonia, Baker worked for Trojan in Santa Fe Springs as Director of Operations. He was with privately held Wyomissing PA-based Glen-Gery Corporation, a manufacturer of building materials where 700 employees reported upstream to him. He began his career at the Houston Brick & Tile Company. He is a graduate of Georgia Institute of Technology in 1971 ( BS in Ceramic Engineering ).
Charles R. Trego joined the Company as Chief Financial Officer on April 1, 2010. He most recently served as Executive Vice President and Chief Financial Officer of Minrad International, an Amex-listed pharmaceutical and medical device company in Orchard Park, NY. Minrad was acquired by India's Piramal Healthcare in early 2009, and Trego was an integral part of the acquisition strategy and managed the bridge financing through the transition. Prior to that, from 2005 to 2008, he was Senior Vice President and Chief Financial Officer of Elmira NY-based Hardinge Inc, a Nasdaq-listed global machine tool company ($327 million in annual revenue), and from 2003 to 2005 he was Chief Financial Officer and Treasurer of Latham NY-based Latham International ($180 million in annual revenue), a privately held manufacturer and marketer of swimming pool components, His career began with a position as Senior Auditor with Ernst & Whinney in Dayton, and continued with increasingly responsible financial officer positions with Ponderosa Inc, Bojangles of America, Rich Sea Pak, Rymer Foods and Rich Products Corporation. During his 14-year tenure as Chief Financial Officer at Rich Products, revenue increased from $650 million to more than $1.8 billion. He has over 30 years experience as a financial officer of global middle businesses across several industries and include private (family), public and private equity ownership structures. He has served as the chief financial officer of startup, turnaround, restructuring and growth businesses with revenue ranging from $25 million to $ 2 billion. Trego graduated from the University of Dayton in 1972 ( BS in Accounting ) and in 1978 (MBA). He achieved his CPA designation in 1973 from the State of Ohio.
CORPORATE GOVERNANCE
Our board of directors directs the management of the business and affairs of our company as provided in our certificate of incorporation, our by-laws and the General Corporation Law of Delaware. Members of our board of directors keep informed about our business through discussions with senior management, by reviewing analyses and reports sent to them, and by participating in board and committee meetings.
Board Leadership Structure and Risk Oversight; Diversity
Our Company is led by Thomas Granville, who has served as chief executive officer and chairman of the board since 2005. Our board of directors is divided into three classes of directors that serve for staggered three-year terms. Two of our current board members have been elected to serve for terms that expire on the date of our 2011 Annual Meeting; two have been elected to serve for terms that expire on the date of our 2012 Annual Meeting; two have been elected to serve for a term that expires on the date of our 2013 Annual Meeting; and one was elected by our board of directors in September 2009 to serve for a term that expires on September 21, 2012. The board has three standing committees – audit, compensation and technology. The Audit Committee is comprised solely of independent directors, and each committee has a separate chair. Our Audit Committee is responsible for overseeing risk management, and our full board receives periodic reports from management.
Our board leadership structure is used by other smaller public companies in the Unites States, and we believe that this leadership structure is effective for the Company. We believe that having a combined Chairman/CEO and chairs for each of our board committees is the correct form of leadership for our Company. We have a single leader for our Company and oversight of Company operations by experienced directors, three of whom are also committee chairs. We believe that our directors provide effective oversight of the risk management function, especially through the work of the Audit Committee and dialogue between the full board and our management.
The Company does not currently consider diversity in identifying nominees for director. Due to the small size of the Company, the priority has been in attracting qualified directors, and issues such as diversity have not yet been considered.
The following table identifies our current directors and specifies their respective ages and positions with our Company.
| Name | Age | Position | |||
| Thomas Granville | 66 | Chief Executive Officer and Director | |||
| Howard K. Schmidt, Ph. D. | 52 | Director | |||
| Michael Kishinevsky | 45 | Director | |||
| Glenn Patterson | 57 | Director | |||
| Robert G. Averill | 70 | Director | |||
| D. Walker Wainwright | 60 | Director | |||
| David Anthony | 50 | Director | |||
Executive officers.
The following table identifies our non-director executive officers and specifies their respective ages and positions with the Company.
| Name | Age | Position | |||
| Charles R. Trego | 60 | Chief Financial Officer | |||
| Philip S. Baker | 63 | Chief Operating Officer | |||
Presiding Director
Our Chief Executive Officer, Thomas Granville, acts as the presiding director at meetings of our board of directors. In the event that Mr. Granville is unavailable to serve at a particular meeting, responsibility for the presiding director function will rotate among the chairmen of each of the committees of our board of directors.
Corporate Governance
Our board of directors believes that sound governance practices and policies provide an important framework to assist them in fulfilling their duty to stockholders. Our board of directors is working to adopt and implement many “best practices” in the area of corporate governance, including separate committees for the areas of audit and compensation, careful annual review of the independence of our Audit and Compensation Committee members, maintenance of a majority of independent directors, and written expectations of management and directors, among other things. In 2010, all incumbent directors other than Dr. Howard K. Schmidt attended 75% of our meetings of the board of directors.
Code of Business Conduct and Ethics
Our board of directors has adopted a Code of Business Conduct and Ethics, which has been distributed to all directors, officers, and employees and will be given to new employees at the time of hire. The Code of Business Conduct and Ethics contains a number of provisions that apply principally to our Chief Executive Officer, Chief Financial Officer and other key accounting and financial personnel. A copy of our Code of Business Conduct and Ethics can be found under the “Investor Information” section of our website at www.axionpower.com. We intend to disclose future amendments to certain provisions of our code of ethics and conduct, or waivers of such provisions, applicable to our directors and executive officers, at the same location on our web site identified above. The inclusion of our web site address in this proxy statement does not include or incorporate by reference the information on our web site into this proxy statement.
Communications with the Board of Directors
Stockholders and other parties who are interested in communicating with members of our board of directors, either individually or as a group, may do so by writing to Thomas Granville, c/o Axion Power International, Inc., 3601 Clover Lane, New Castle, Pennsylvania, 16105. Mr. Granville will review all correspondence and forward to the appropriate members of the board of directors copies of all correspondence that, in the opinion of Mr. Granville, deals with the functions of the board of directors or its committees or that he otherwise determines requires their attention. Concerns relating to accounting, internal controls or auditing matters should be immediately brought to the attention of our audit committee and will be handled in accordance with procedures established by that committee.
Director Independence
Our board of directors has determined that five of our directors would meet the independence requirements of the NYSE AMEX if such standards applied to the Company. In the judgment of the board of directors, Messrs. Granville and Anthony do not meet such independence standards. In reaching its conclusions, the board of directors considered all relevant facts and circumstances with respect to any direct or indirect relationships between the Company and each of the directors, including those discussed under the caption “Certain Relationships and Related Transactions” below. Our board of directors determined that any relationships that exist or existed in the past between the Company and each of the independent directors were immaterial on the basis of the information set forth in the above-referenced sections.
Board Committees
The board of directors currently has three standing committees: the audit committee, the compensation committee, and the technology committee. These committees are responsible to the full board.
Audit Committee – Our board of directors has created an audit committee that presently consists of Mr. Wainwright and Dr. Schmidt. Mr. Wainwright serves as the current chairman of our audit committee. Each of the members has a basic understanding of finance and accounting, and is able to read and understand fundamental financial statements. The board of directors has determined that each of the members of the audit committee would meet the independence requirements applicable to NYSE Amex listed companies although such standards do not apply to our company. Our board of directors has also determined that based on work history none of our current committee members meet the definition of an “Audit Committee Financial Expert” as defined in Item 407(d)(5)(ii) under Regulation S-K, promulgated under the Securities Exchange Act of 1934. The audit committee has the sole authority to appoint, review and discharge our independent registered public accounting firm. The audit committee reviews the results and scope of the audit and other services provided by our independent registered public accounting firm, as well as our accounting principles and our system of internal controls, reports the results of their review to the full board of directors and to management, and recommends to the full board of directors that the our audited consolidated financial statements be included in our Annual Report on Form 10-K.
The audit committee met 11 times during the year-ended December 31, 2010. The audit committee charter can be found on our website under About Axion; Corporate Governance / Committees , at www.axionpower.com.
Compensation Committee – Our board of directors has created a compensation committee that presently consists of Messrs. Averill, Patterson, Kishinevsky and Wainwright. Mr. Patterson serves as chairman of the compensation committee. The compensation committee makes recommendations concerning compensation of the executive management team and non-employee directors and administers our stock-based incentive compensation plans. The compensation committee typically meets in separate sessions independently of board meetings. The compensation committee typically schedules telephone meetings as necessary to fulfill its duties. The chairman establishes meeting agendas after consultation with other committee members and Mr. Thomas Granville, our Chief Executive Officer. Subject to supervision by the full board of directors, the compensation committee administers our stock option plans. Our Chief Executive Officer and other members of management regularly discuss our compensation issues with compensation committee members. Subject to compensation committee review, modification and approval, Mr. Granville typically makes recommendations respecting bonuses and equity incentive awards for the other members of the executive management team. The compensation committee in conjunction with other non-employee directors establishes all bonus and equity incentive awards for Mr. Granville and the other executive members of the management team. Our board of directors has determined that all members of the compensation committee would meet the independence requirements applicable to NYSE Amex listed companies although such standards do not apply to us.
The compensation committee met 4 times during the year ended December 31, 2010. The compensation committee charter can be found on our website under “ About Axion; Corporate Governance; Committees ,” at www.axionpower.com.
Technology Committee – Our board of directors has created a technology committee that consists of Dr. Schmidt, Messrs. Averill Kishinevsky and Granville. The technology committee provides board-level oversight, guidance and direction to our R&D staff, supervises evaluates and makes recommendations with respect to the acquisition and licensing of complementary and competitive technologies and supervises the activities of our intellectual property lawyers.
The technology committee conducted 1 formal meeting during the year ended December 31, 2010 and met informally with our former CTO and other members of the R&D and manufacturing teams during the course of the year.
We do not have a nominating committee – Given the relatively small size of our board of directors and the desire to involve the entire board of directors in nominating decisions, we have elected not to have a separate nominating committee, and the entire board of directors currently serves that function. With respect to director nominees, our board of directors will consider nominees recommended by stockholders that are submitted in accordance with our By-Laws. We do not have any specific minimum qualifications that our board believes must be met by a board recommended nominee for a position on our board of directors or any specific qualities or skills that our board believes are necessary for one or more of our directors to possess. We also do not have a specific process for identifying and evaluating nominees for director, including nominees recommended by security holders. The board has not paid fees to any third party to identify or evaluate potential board nominees.
EXECUTIVE COMPENSATION
The following table sets forth the compensation earned by or paid to our Named Executive Officers with respect to the year ended December 31, 2010. The Named Executive Officers are as shown. We did not have any non-equity incentive plans, pension plans or deferred compensation plans during the year ended December 31, 2010.
SUMMARY COMPENSATION TABLE
| Stock | Option | All Other | Total | ||||||||||||||||
| Name and Principal | Salary | Bonus | Awards | Awards | Compensation | Compensation | |||||||||||||
| Position | Year | ($)(1) | ($)(2) | ($) (3) | ($)(3) | ($)(4) | ($) | ||||||||||||
| Thomas Granville | |||||||||||||||||||
| CEO and Director (5) | 2010 | 350,708 | 270,000 | 113,112 | 33,653 | 767,473 | |||||||||||||
| Thomas Granville | |||||||||||||||||||
| CEO and Director (5) | 2009 | 324,000 | 23,458 | 347,458 | |||||||||||||||
| Charles R. Trego | |||||||||||||||||||
| CFO | 2010 | 161,827 | 185,364 | 38,323 | 385,514 | ||||||||||||||
| Philip S. Baker | |||||||||||||||||||
| COO | 2010 | 143,702 | 160,884 | 76,743 | 2010 | 381,329 | |||||||||||||
| Edward Buiel (7) | |||||||||||||||||||
| Vice President and CTO | 2010 | 80,308 | 454,262 | 534,570 | |||||||||||||||
| Edward Buiel (7) | |||||||||||||||||||
| Vice President and CTO | 2009 | 180,000 | 18,230 | 198,230 | |||||||||||||||
| Donald Hillier | |||||||||||||||||||
CFO (6) | 2010 | 20,192 | 41,119 | 61,311 | |||||||||||||||
| Donald Hillier | |||||||||||||||||||
CFO (6) | 2009 | 150,000 | 19,643 | 169,643 | |||||||||||||||
| 1. | Salaries are presented as the contractual amount paid during 2010. |
| 2. | Discretionary bonuses are not made pursuant to any specific bonus plan. Bonuses cited were awarded and paid in 2010. |
| 3. | Stock and option awards were granted pursuant to the individual employment contracts. Options are valued using the Black-Scholes-Merton option pricing model. |
| 4. | Other compensation includes Company perquisites relating to pre and post-employment consulting contracts, severance payments, auto allowance, personal use of company cars, accrued vacation payments, moving expenses, gross–ups on stock awards, other earned compensation, as well as healthcare premiums paid under the group health plan. |
| 5. | During 2009, $ 6,231 of the compensation reported to Mr. Granville was remitted to Gallagher Elevator Co. (Gallagher) pursuant to his 2005 employment contract. Remaining payments were remitted directly to Mr. Granville through our payroll department. |
| 6. | Mr. Hillier joined the Company on June 19, 2008. Salary and other compensation cited for 2008 reflects the apportionment of these expenses based on his dates of service for that year. Mr. Hillier served as our chief financial officer throughout fiscal year 2009 and was terminated on February 5, 2010. |
| 7. | Dr. Edward Buiel. On June 23, 2008, the Company entered into an Executive Employment Agreement with Dr. Edward Buiel as Vice President and Chief Technology Officer, which terminated on May 31, 2010. Upon expiration of his status as employee, 50,000 shares of restricted stock were forfeited pursuant to the terms of his 2008 employment agreement. On June 7, 2010 the Company agreed to engage Dr. Buiel as an interim independent contractor with compensation at $10,000 per week, plus travel expenses to and from all work sites, meals, administrative expenses, other travel related expenses, and health care benefits through December 31, 2010. Dr. Buiel is currently working as a consultant to the Company on a project basis. There is no formal consulting agreement in place, and Dr. Buiel’s compensation is determined on a project specific basis. |
Employment Agreements
During 2010, the Company has entered into executive employment agreements with Thomas Granville, Charles R. Trego, and Phillip S. Baker. These agreements generally require each executive to devote substantially all of his business time to the Company’s affairs, establish standards of conduct, prohibit competition with our company during their term, affirm our rights respecting the ownership and disclosure of patents, trade secrets and other confidential information, provide for the acts and events that would give rise to termination of such agreements and provide express remedies for a breach of the agreement. Each of the executives is allowed to participate in our standard employee benefit programs, including medical/hospitalization insurance and group life insurance, as in effect from time to time. Each of the covered executives will generally receive an automobile allowance, reimbursement for all reasonable business expenses incurred by him on behalf of the Company in the performance of his duties, and a severance package that guarantees continued remuneration equal to the executive’s base salary for a total of 23 months so long as the Company elects to enforce the provisions of the Non-Competition Agreement, should the executive be unable to find employment or accepts employment at a reduced rate of pay due solely to the Non-Competition Agreement. There are no non-qualified deferred compensation plans. The provisions of the individual agreements are set forth in the following table:
| · | Thomas Granville. On June 29, 2010, the Company entered into an Executive Employment Agreement with Thomas Granville as Chief Executive Officer. Pursuant to this agreement, Mr. Granville receives an annual salary of $380,000, and an annual car allowance of $9,000 for the period commencing June 29, 2010, and terminating June 30, 2013. Mr. Granville’s base salary is subject to annual review, and such salary is subject to renegotiation on the basis of Mr. Granville’s and the Company’s performance. In addition, Mr. Granville received a signing bonus of $270,000 and was paid on July 9, 2010. The Company also granted Mr. Granville an option to purchase 360,000 shares of our common stock at a price of $1.50 per share at a vesting rate of 10,000 shares per month through the term of the agreement. Mr. Granville is eligible to participate in any executive compensation plans adopted by the shareholders of the Company and the Company's standard employee benefit programs. |
| · | Charles R. Trego. On April 1, 2010, the Company entered into an Executive Employment Agreement with Charles R. Trego as Chief Financial Officer. Under the terms of his employment agreement, which has a term of three years (and thus terminates on March 31, 2013), Mr. Trego receives an annual salary of $225,000, which is subject to review after the initial six month term of the agreement and annually thereafter, an annual car allowance of $9,000, bonuses as determined by the compensation committee, and a 5-year option to purchase 265,000 shares of our common stock at a price of $1.50 per share. 27,000 options shall vest upon execution of this contract and, beginning in June 2010, 7,000 options will vest monthly through the remaining 34 months of this agreement. |
| · | Philip S. Baker. On April 1, 2010, the Company entered into an Executive Employment Agreement with Philip S. Baker as Chief Operating Officer. Under the terms of his employment agreement, which has a term of three years (and thus terminates on March 31, 2013), Mr. Baker receives an annual salary of $199,800,which is subject to review after the initial six month term of the agreement and annually thereafter, an annual car allowance of $6,000, and a 5-year option to purchase 230,000 shares of our common stock at a price of $1.50 per share, of which 26,000 options shall vest upon execution of this contract and, beginning in June, 2010, 6,000 options will vest monthly through the remaining 34 months of this agreement. |
Warrants
As of April 6, 2011, we have 12,576,070 outstanding warrants that represent potential future cash proceeds to our company of $12,872,447. The warrants are divided into seven classes that are presently exercisable and expire at various times through December 8, 2014. The following table summarizes the number of warrants in each class, the anticipated proceeds from the exercise of each class, and the expiration date of each class.
Warrant Series | Number of Warrants | Exercise Price | Anticipated Proceeds | Expiration Date | |||||||||
| Series V Warrants | 680,000 | $ | 4.00 | $ | 2,720,000 | December 31, 2011 | |||||||
| 2007 Bridge Warrants | 183,755 | 2.35 | 431,824 | December 31, 2012 | |||||||||
| 2008 Conversion-Warrants | 580,940 | 2.60 | 1,510,444 | June 29, 2013 | |||||||||
| 2008 Quercus | 10,000,000 | 0.75 | 7,500,000 | June 29, 2013 | |||||||||
| 2008 Derivatives | 1,085,714 | 0.57 | 618,857 | June 29, 2013 | |||||||||
| 2009 Bridge Warrants | 45,661 | 2.00 | 91,322 | August 12, 2014 | |||||||||
| Total | 12,576,070 | $ | 12,872,447 | ||||||||||
The holders of warrants are not required to exercise their rights at any time prior to the expiration date and we are unable to predict the amount and timing of any future warrant exercises. We reserve the right to temporarily reduce the exercise prices of our warrants from time to time in order to encourage the early exercise of the warrants.
Stock Options
As of April 6, 2011, we have 3,558,520 outstanding stock options that represent potential future cash proceeds to our company of $6,991,233. The outstanding options include 1,789,410 options that are currently vested and exercisable, or 1,794,442 that will become vested and exercisable within 60 days, and represent potential future cash proceeds to our company of $4,176,135 and $4,186,683, respectively. The remaining options will vest and become exercisable over the next three years. The following table provides summary information on our outstanding options.
| Vested Option Grants | Unvested Option Grants | |||||||||||||||||||||||
| Shares | Price | Proceeds | Shares | Price | Proceeds | |||||||||||||||||||
| 2010 Employee & officer plan options | 431,500 | $ | 1.50 | $ | 647,250 | 1,017,548 | $ | 1.50 | $ | 1,526,322 | ||||||||||||||
| Directors plan options | 316,910 | 1.98 | 628,885 | 164,062 | 1.10 | 180,016 | ||||||||||||||||||
| Non-plan options to consultants and employees | 1,041,000 | 2.79 | 2,900,000 | 587,500 | 1.89 | 1,108,750 | ||||||||||||||||||
| Total | 1,789,410 | $ | 2.33 | $ | 4,176,135 | 1,769,110 | $ | 1.59 | $ | 2,815,088 | ||||||||||||||
The holders of options are not required to exercise their rights at any time and we are unable to predict the amount and timing of any future option exercises. We reserve the right to temporarily reduce the exercise prices of our options from time to time in order to encourage the early exercise of the options.
Outstanding Equity Awards At 2010 Fiscal Year-End
| Option Awards | Stock Awards | ||||||||||||||||||||||||||
| Non-Plan | Equity Incentive Plan Awards | Equity Incentive Plan Awards | |||||||||||||||||||||||||
| Number of shares underlying unexercised options | # Shares | ||||||||||||||||||||||||||
| Name | # Exercisable | # Unexer-cisable | Unearned | Option Exercise Price | Option Expiration Date | Number Unearned Shares or units of stock | Market Value | Unearned shares, units, or other rights not vested | Market Value | Footnotes | |||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | ||||||||||||||||||
| Granville, Tom | 120,000 | - | - | $ | 2.50 | varies through 4/30/2012 | Issued pursuant to April 2005 Executive Employment Agreement. Options Expire 5 years after monthly vest date | ||||||||||||||||||||
| Granville, Tom | 90,000 | - | - | $ | 2.50 | varies through 6/15/2015 | Issued pursuant to June 2008 Executive Employment Agreement. Options Expire 5 years after monthly vest date | ||||||||||||||||||||
| Granville, Tom | 60,000 | 300,000 | - | $ | 1.50 | varies through 6/29/2018 | Issued pursuant to June 2010 Executive Employment Agreement. Options Expire 5 years after monthly vest date | ||||||||||||||||||||
| Buiel, Edward | 80,000 | - | - | $ | 4.00 | varies through 8/31/2013 | Issued pursuant to Sept 2005 Executive Employment Agreement. Options expire 5 years after monthly vest date | ||||||||||||||||||||
| Buiel, Edward | 50,000 | - | - | $ | 3.75 | 12/29/2015 | Options issued pursuant to Dec 2006 Executive Employment Agreement. Lump sum vesting date - 12/29/2009 | ||||||||||||||||||||
| Buiel, Edward | 50,000 | - | - | 3.75 | 5/30/2015 | Options issued pursuant to Dec 2006 Executive Employment Agreement. Lump sum vesting date - 5/31/10 upon expiration of employment contract | |||||||||||||||||||||
| Buiel, Edward | 100,000 | - | - | 2.50 | 5/30/2015 | Issued pursuant to June 2008 Executive Employment Agreement. Lump sum vesting date - 5/31/10 upon expiration of employment contract | |||||||||||||||||||||
| Charles Trego | 76,000 | 189,000 | - | $ | 1.50 | varies through 3/30/2018 | Issued pursuant to April 2010 Executive Employment Agreement. Options Expire 5 years after monthly vest date | ||||||||||||||||||||
| Philip Baker | 68,000 | 162,000 | - | $ | 1.50 | varies through 3/30/2018 | Issued pursuant to April 2010 Executive Employment Agreement. Options Expire 5 years after monthly vest date | ||||||||||||||||||||
| Hillier, Don | 95,000 | 0 | 0 | 2.50 | varies through 01/15/15 | Issued pursuant to June 2008 Executive Employment Agreement. Options Expire 5 years after monthly vest date | |||||||||||||||||||||
Post-Termination Compensation
We have not entered into change in control agreements with any of our named executive officers or other members of the executive management team, although our employment agreements with certain members of management do call for immediate vesting of options upon a 50% change in control. No awards of equity incentives under our 2004 Incentive Stock Plan or awards of options under our 2004 Outside Directors Stock Option Plan provide for immediate vesting upon a change in control other than a restricted stock grant of 36,000 shares issued to Robert Nelson. However, the compensation committee has the full and exclusive power to interpret the plans, including the power to accelerate the vesting of outstanding, unvested awards. A “change in control” is generally defined as (1) the acquisition by any person of 30% or more of the combined voting power of our outstanding securities or (2) the occurrence of a transaction requiring stockholder approval and involving the sale of all or substantially all of our assets or the merger of us with or into another corporation.
Director Compensation
The following table provides information regarding compensation paid to non-employee directors for services rendered during the year ended December 31, 2010.
| Fees Earned or | Stock | Option | |||||||||||||
| Paid in Cash | Awards | Awards | |||||||||||||
| Name | ($) (1) | ($) | ($) (3) | Total ($) | |||||||||||
| Thomas Granville (2) | |||||||||||||||
| Dr. Igor Filipenko (4) | $ | - | $ | - | $ | - | |||||||||
| Robert G. Averill | 69,297 | 34,860 | 104,157 | ||||||||||||
| Dr. Howard K. Schmidt | 44,250 | 36,500 | |||||||||||||
| Michael Kishinevsky | 56,500 | 37,000 | |||||||||||||
| Glenn Patterson | 60,646 | 39,000 | |||||||||||||
| Stanley A. Hirschman(5) | 69,198 | 33,750 | |||||||||||||
| D. Walker Wainwright | 72,872 | 14,882 | 87,754 | ||||||||||||
| David Gelbaum (6) | - | ||||||||||||||
| David Anthony (6) | - | ||||||||||||||
| Joseph Bartlett (6) | - | ||||||||||||||
| 1. | Fees are presented based on the amount paid during 2010. |
| 2. | Mr. Granville was reelected to serve on the Board of Directors at the Annual Meeting held on June 09, 2010. Mr. Granville received no compensation during 2010 for his service as a Director, as he served as our chief executive officer during that time period. For a summary of the compensation received by him as chief executive officer during 2010, see Summary Compensation Table above. |
| 3. | One director was reelected to serve on the Board of Directors at the Annual Meeting held on June 09, 2010, receiving 77,922 five-year options with an exercise price of $0.77 per share, pursuant to the 2004 Outside Directors Stock Option Plan. The options granted shall vest at the rate of 25,974 per year commencing on the date of the company's Annual Meeting, so long as the director serves as a member of the board on the date of such meeting. Another director received 8,000 five-year options with an exercise price of $3.60 per share pursuant to terms of his 2007 appointment. The options are valued using the Black-Scholes-Merton option pricing model. |
| 4. | On January 11, 2010, Dr. Igor Filipenko gave notice of his resignation as a director of the Company, effective immediately. |
| 5. | Stanley A. Hirschman resigned as a director on September 28, 2010. |
| 6. | David Gelbaum, David Anthony and Joseph Bartlett were added to the Board as a condition of the Quercus Trust Amendment to Warrants and Securities Purchase Agreement. These members received no compensation for 2009. Mr. Gelbaum resigned as a director on March 3, 2010. Joseph Bartlett resigned as a director on September 28, 2010. |
The members of our board of directors are actively involved in various aspects of our business ranging from relatively narrow board oversight functions to providing hands-on guidance to our executives and scientific staff with respect to matters within their personal experience and expertise. We believe that the active involvement of all directors in our principal business and policy decisions increases our board of directors’ understanding of our needs and improves the overall quality of our management decisions. In recognition of the substantial time and personal effort that we require from our directors, we have adopted director compensation policies that provide for higher director compensation than is typically found in companies at our early stage of development.
Only non-management directors are compensated separately for service as members of our board of directors. Each of our non-management directors received the following components of compensation for the period January 1, 2010 through December 31, 2010:
| · | A basic annual retainer of $25,000 for service as a director; |
· | A supplemental retainer of $6,000 for service as chairman of any committee; |
· | A supplemental annual retainer of $3,000 for service as a committee member; |
· | A meeting fee of $1,500 per day for each board or committee meeting attended in person or $500 for each board or committee meeting attended by telephone; and |
· | Reimbursement for all reasonable travel, meals and lodging costs incurred on our behalf. |
· | Options to reelected directors. |
· | Reimbursement for expenses up to $5,000 annually for education related to chairmanship of a committee. |
The 2004 stock option plan for independent directors that authorized the issuance of options to purchase $20,000 of our common stock for each year of service as a director was amended on September 28, 2010 increasing the shares reserved for issuance under the outside directors’ stock option plan from 500,000 to 1,000,000 by Resolution of the Board of Directors.
For 2010, 2009, 2008, 2007, 2006, 2005 and 2004, we issued 85,922, 128,585, 179,555, 0, 60,000, 70,000 and 54,000, options pursuant to our directors’ stock option plan, respectively. Of this total, no options were exercised during the year ended December 31, 2010, 316,910 options are currently vested and exercisable at a weighted average price of $1.98 per share and 164,062 options are unvested and will be exercisable at a weighted average price of $1.10 per share.
On April 6, 2011, we had 85,453,302 shares of common stock. The following table sets forth certain information with respect to the beneficial ownership of our securities as of April 6, 2011, for (i) each of our directors and executive officers; (ii) all of our directors and executive officers as a group; and (iii) each person who we know beneficially owns more than 5% of our common stock. Normally, the Company would rely on the Section 16 filings for our 5% owners. Our reporting is limited to the information we do have when we do not have the benefit of further information.
Beneficial ownership data in the table has been calculated based on the Securities and Exchange Commission rules that require us to identify all securities that are exercisable for or convertible into shares of our common stock within 60 days of April 6, 2011 and treat the underlying stock as outstanding for the purpose of computing the percentage of ownership of the holder.
Except as indicated by the footnotes following the table, and subject to applicable community property laws, each person identified in the table possesses sole voting and investment power with respect to all capital stock held by that person. The address of each named executive officer and director, unless indicated otherwise by footnote, is c/o Axion Power International, Inc. 3601 Clover Lane, New Castle PA 16105.
| Common Stock | Warrant & Options (1) | Combined Ownership | Percentage | |||||||||||||
Quercus Trust (2) 1835 Newport Blvd A109 – PMB 467 Cosa Mesa, CA 92627 | 7,701,104 | 10,000,000 | 17,701,104 | 18.5 | % | |||||||||||
AWM Investment Company, Inc. (3) Special Situations Cayman Fund LP 527 Madison Avenue, Suite 2600 c/o Austin W Marxe & David M Greenhouse | 1,694,386 | - | 1,694,386 | 2.0 | % | |||||||||||
AWM Investment Company, Inc. (3) Special Situations Private Equity Fund 527 Madison Avenue, Suite 2600 c/o Austin W Marxe & David M Greenhouse | 1,270,789 | - | 1,270,789 | 1.5 | % | |||||||||||
AWM Investment Company, Inc. (3) Special Situations Technology Fund LP 527 Madison Avenue, Suite 2600 c/o Austin W Marxe & David M Greenhouse | 770,946 | - | 770,946 | 0.9 | % | |||||||||||
AWM Investment Company, Inc. (3) Special Situations Technology Fund II LP 527 Madison Avenue, Suite 2600 c/o Austin W Marxe & David M Greenhouse | 4,735,809 | - | 4,735,809 | 5.5 | % | |||||||||||
James E. Winner Jr. & Donna C Winner JT TEN (4) Winner Building, 32 West State Street, Sharon, PA 16146 | 8,245,614 | - | 8,245,614 | 9.6 | % | |||||||||||
Manatuck Hill Partners, LLC (5) 1465 Post Road East Westport, CT 06880 | 7,200,000 | - | 7,200,000 | 8.4 | % | |||||||||||
Hare & Co. (6) Bank of New York Mellon, One Wall Street, New York NY 10286 Attn Anthony V. Saviano, 3rd floor / Window A | 7,150,000 | - | 7,150,000 | 8.4 | % | |||||||||||
| Gelbaum, David (7) | 7,701,104 | 10,000,000 | 17,701,104 | 18.5 | % | |||||||||||
| Averill, Robert | 3,774,059 | 617,183 | 4,391,242 | 5.1 | % | |||||||||||
| Glenn Patterson | 2,752,001 | 260,317 | 3,012,318 | 3.5 | % | |||||||||||
| Filipenko, Igor (8) | 1,217,197 | 45,809 | 1,263,006 | 1.5 | % | |||||||||||
| Granville, Tom | 696,596 | 270,000 | 966,596 | 1.1 | % | |||||||||||
| Buiel, Edward | 305,000 | 305,000 | 610,000 | * | ||||||||||||
| Hillier, Donald | 30,000 | 95,000 | 125,000 | * | ||||||||||||
| Trego, Charles | - | 97,000 | 97,000 | * | ||||||||||||
| Baker, Phillip | - | 86,000 | 86,000 | * | ||||||||||||
| Wainwright, Walker | 8,000 | 27,840 | 35,840 | * | ||||||||||||
| Schmidt, Howard | - | 52,000 | 52,000 | * | ||||||||||||
| Hirschman, Stan | - | 44,285 | 44,285 | * | ||||||||||||
| Kishinevsky, Michael | - | 44,000 | 44,000 | * | ||||||||||||
| Bartlett, Joseph | - | - | - | * | ||||||||||||
| Anthony, David | - | - | - | * | ||||||||||||
| Directors and officers as a group (15 persons) | 16,483,957 | 11,944,434 | 28,428,391 | 29.2 | % | |||||||||||
* Less than 1%.
| (1) | Represents shares of common stock issuable upon exercise of warrants and options held by the stockholder that are presently exercisable or will become exercisable within 60 days. |
| (2) | The trustees of The Quercus Trust are Mr. David Gelbaum and Ms. Monica Chavez Gelbaum, each with shared voting and dispositive power over the shares held by this trust. |
| (3) | AWM Investment Company, Inc. (“AWM”) the general partner of and investment adviser to the Special Situations Cayman Fund, L.P. AWM also serves as the investment adviser to Special Situations Private Equity Fund, L.P., Special Situations Technology Fund II, L.P. and Special Situations Technology Fund, L.P. Austin W. Marxe and David M. Greenhouse are the principal owners of AWM. Through their control of AWM, Messrs. Marxe and Greenhouse share voting and investment power over the portfolio securities of each of the funds listed above |
| (4) | 8,245,614 shares formerly held by James A. Winner Jr. & Donna C Winner were transferred to street name on 9-9-10. We do not have the benefit of further information. |
| (5) | Manatuck Hill Partners LLC is an investment adviser acting on behalf of its clients' accounts with investments in Manatuck Hill Scout Fund, LP, Manatuck Hill Mariner Master Fund, LP, and Manatuck Hill Navigator Master Fund. Steve Orlov & Mark Broach serve as the legal representative for these accounts. Steve Orlov & Mark Broach share voting and dispositive power over the shares. 7,200,000 shares were transferred to street name on 6-3-10. We do not have the benefit of further information. |
| (6) | Hare & Co. is an investment advisor operating in the U.K., with offices in New York. Blackrock Investment Managers (UK) Ltd has voting and dispositive power over the shares. |
| (7) | The ownership reflected for David Gelbaum is the actual and beneficial ownership of The Quercus Trust. The trustees of The Quercus Trust are Mr. David Gelbaum and Ms. Monica Chavez Gelbaum, each with shared voting and dispositive power over the shares held by this trust. |
| (8) | Includes 1,026,295 shares beneficially held by Dr. Igor Filipenko and 236,711 shares beneficially held by his wife. |
Transactions with Executive Management
See the “Executive Compensation” section for a discussion of the material elements of compensation awarded to, earned by or paid to our named executive officers. Other than as stated in the “Executive Compensation” section, we have not entered into any transactions with executive management.
Director Independence
Our board of directors has determined that five of our directors would meet the independence requirements of the NYSE AMEX if such standards applied to the Company. In the judgment of the board of directors, Messrs. Granville and Anthony do not meet such independence standards. In reaching its conclusions, the board of directors considered all relevant facts and circumstances with respect to any direct or indirect relationships between the Company and each of the directors, including those discussed under the caption “Certain Relationships and Related Transactions” below. Our board of directors determined that any relationships that exist or existed in the past between the Company and each of the independent directors were immaterial on the basis of the information set forth in the above-referenced sections.
SECTION 16(a) REPORTING COMPLIANCE DISCLOSURE
Section 16(a) of the Exchange Act requires the Company’s executive officers and directors, and persons who own more than ten percent of our common stock to file reports of ownership and changes in ownership with the SEC. Executive officers, directors and greater than ten percent beneficial owners are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.
To our knowledge, based solely on a review of the Section 16(a) reports furnished to us and written representations that no other reports were required to be filed pursuant to Section 16(a) and the related rules of the SEC, for transactions occurring in fiscal year 2010, our officers, directors and holders of more than 10% of our common stock filed all Section 16(a) reports on a timely basis, other than as described below. For transactions occurring in fiscal year 2010, one or more Forms 4 (Statement of Changes of Beneficial Ownership) was inadvertently filed late for each of the following persons, as indicated: Mr. Robert Averill, a member of our board of directors (three filings disclosing a total of five transactions were late); Stanley Hirschman, a former member of our board of directors (two filings disclosing four transactions were filed late – two forfeitures were not filed); D. Walker Wainwright, a member of our board of directors (three filings disclosing seven transactions were filed late); Glenn Patterson, a member of our board of directors (one filing involving ten transactions was filed late), Philip Baker, our COO (one filing disclosing one transaction was filed late), and Thomas Granville, our CEO, (one filing disclosing two transactions was not filed, one dates back to 2008).
Fees of Independent Registered Public Accounting Firm
The following table presents fees for professional audit services billed for services rendered by EFP Rotenberg, LLP for the audit of the Company’s annual financial statements for the years ending December 31, 2010 and 2009, and for fees billed for other services rendered by EFP Rotenberg, LLP during those periods.
| 2010 | 2009 | |||||||
| Audit Fees | $ | 104,793 | $ | 81,507 | ||||
| Audit-Related Fees - registration statement consents | $ | 13,336 | $ | 4,586 | ||||
| Tax Fees | $ | 5,000 | $ | 14,000 | ||||
| All Other Fees | $ | 2,500 | $ | 0 | ||||
On October 8, 2009, Axion Power International, Inc. received notice that its current auditors, Rotenberg and Co., LLP, had resigned in connection with their merger with EFP Group, which was effective as of October 1, 2009. The Company has engaged the new firm resulting from the merger, EFP Rotenberg, LLP, to continue as the Company's independent registered public accounting firm. All of the partners and employees of Rotenberg and Co., LLP and EFP Group have joined the new firm, EFP Rotenberg, LLP. EFP Rotenberg, LLP is currently registered with the PCAOB.
Audit Committee Preapproval of Registered Public Accounting Firm Services
Our independent registered public accounting firm will provide audit, review and attest services only at the direction of, and pursuant to engagement fees and terms approved by, the audit committee. Such engagement will be pursuant to a written proposal, submitted to the audit committee for review and discussion. If acceptable, the audit committee will engage the independent registered public accounting firm pursuant to a written retention agreement, duly approved by the audit committee. As proscribed by Section 10A(g) of the Securities Exchange Act of 1934, certain non-audit services may not be provided by our independent registered public accounting firm, including bookkeeping or other services related to our accounting records or financial statements; financial information systems design and implementation; appraisal or valuation services, fairness opinions, or contribution-in-kind reports; actuarial services; internal audit outsourcing services; management functions or human resource functions, broker or dealer, investment adviser, or investment banking services; legal services and expert services unrelated to the audit; and any other service that the Public Company Accounting Oversight Board determines, by regulation, is impermissible.
The audit committee has reviewed the proposed retention for compliance with three basic principles, violations of which would impair the independent registered public accounting firm’s independence: (1) an independent registered public accounting firm cannot function in the role of management, (2) an independent registered public accounting firm cannot audit his or her own work, and (3) an independent registered public accounting firm cannot serve in an advocacy role for our company. If the audit committee determines that the proposed retention does not and will not violate these principles, it may authorize, in writing, the retention of the independent registered public accounting firm for the agreed scope of non-audit services and compensation structure.
The Company does not currently have an audit committee financial expert due to the various experiences of those directors on its audit committee. Due to the Company’s limited resources and stage of development, it is not able to select from as large a pool of potential directors as other public companies and seeks to attract those directors, who present an overall composite of characteristics beneficial to the Company. At this time, the Company has not been successful in finding a director with the sought profile who would also qualify as an audit committee financial expert. Furthermore, in order to compensate for the lack of a financial expert, the audit committee engages consultants with financial expertise in specific areas on an as-needed basis. Although the Company has no current plans to seek an individual who so qualifies, it will re-examine this priority in future years as appropriate and certainly should it become so necessary in compliance with future regulatory requirements.
| 2.1 | Reorganization Agreement (without exhibits) between Tamboril Cigar Company, Axion Power Corporation and certain stockholders of Axion Power Corporation dated December 31, 2003. | (1) | ||
| 2.2 | First Addendum to the Reorganization Agreement between Tamboril Cigar Company, Axion Power Corporation and certain stockholders of Axion Power Corporation dated January 9, 2004. | (1) | ||
| 3.1 | Amended and Restated Certificate of Incorporation of Tamboril Cigar Company dated February 13, 2001. | (2) | ||
| 3.3 | Amendment to the Certificate of Incorporation of Tamboril Cigar Company dated June 4, 2004. | (3) | ||
| 3.4 | Amendment to the Certificate of Incorporation of Axion Power International, Inc. dated June 4, 2004. | (3) | ||
| 3.5 | Amended By-laws of Axion Power International, Inc. dated June 4, 2004. (3) | |||
| 3.6 | Certificate of Amendment to the Certificate of Incorporation of Axion Power International, Inc., dated June 14, 2010. | (25) | ||
| 4.1 | Specimen Certificate for shares of Company’s $0.00001 par value common stock. | (9) | ||
| 4.2 | Trust Agreement for the Benefit of the Shareholders of Mega-C Power Corporation dated December 31, 2003. | (1) | ||
| 4.3 | Succession Agreement Pursuant to the Provisions of the Trust Agreement for the Benefit of the Shareholders of Mega-C Power Corporation dated March 25, 2004. | (4) | ||
| 4.4 | Form of Warrant Agreement for 1,796,300 capital warrants. | (9) | ||
| 4.5 | Form of Warrant Agreement for 667,000 Series I investor warrants. | (9) | ||
| 4.6 | Form of Warrant Agreement for 350,000 Series II investor warrants. | (9) | ||
| 4.7 | Form of Warrant Agreement for 313,100 Series III investor warrants. | (9) | ||
| 4.8 | Form of 8% Cumulative Convertible Senior Preferred Stock Certificate | (D) | ||
| 4.9 | First Amended and Restated Trust Agreement for the Benefit of the Shareholders of Mega-C Power Corporation dated February 28, 2005. | (11) |
| 4.10 | Second Amendment and Restated Trust Agreement for the Benefit of the Shareholders of Mega-C Power Corporation dated November 21, 2006. | (19) | ||
| 4.11 | Certificate of Powers, Designations, Preferences and Rights of the 8% Convertible Senior Preferred Stock of Axion Power International, Inc. dated March 17, 2005. | (12) | ||
| 4.12 | Certificate of Powers, Designations, Preferences and Rights of the Series-A Convertible Preferred Stock, Par Value $0.0001 Per Share, of Axion Power International, Inc. dated October 23, 2006. | (13) | ||
| 4.13 | Amended Certificate of Powers, Designations, Preferences and Rights of the Series-A Convertible Preferred Stock, Par Value $0.0001 Per Share, of Axion Power International, Inc. dated October 26, 2006. | (13) | ||
| 4.14 | Certificate of Amendment to the Certificate of Powers, Designations, Preferences and Rights of the Series-A Convertible Preferred Stock, Par Value $.0001 Per Share, of Axion Power International, Inc. dated February 24, 2010. | |||
| 9.1 | Agreement respecting the voting of certain shares beneficially owned by the Trust for the Benefit of the Shareholders of Mega-C Power Corporation. | Included in Exhibit 4.2 | ||
| 10.1 | Development and License Agreement between Axion Power Corporation and C and T Co. Incorporated dated November 15, 2003. | (1) | ||
| 10.2 | Letter Amendment to Development and License Agreement between Axion Power Corporation and C and T Co. Incorporated dated November 17, 2003. | (1) | ||
| 10.3 | Tamboril Cigar Co. Incentive Stock Plan dated January 8, 2004. | (A) | ||
| 10.4 | Tamboril Cigar co. Outside Directors Stock Option Plan dated February 2, 2004. | (A) | ||
| 10.5 | Stock Purchase & Investment Representation Letter among John L. Petersen, Sally A. Fonner and C and T Co. Incorporated dated January 9, 2004. | (1) | ||
| 10.6 | Letter Amendment to Development and License Agreement between Axion Power Corporation and C and T Co. Incorporated dated January 9, 2004. | (1) | ||
| 10.7 | First Amendment to Development and License Agreement between Axion Power Corporation and C and T Co. Incorporated dated as of January 9, 2004. | (5) | ||
| 10.8 | Definitive Incentive Stock Plan of Axion Power International, Inc. dated June 4, 2004. | (3) | ||
| 10.9 | Definitive Outside Directors’ Stock Option Plan of Axion Power International, Inc. dated June 4, 2004. | (3) | ||
| 10.10 | Executive Employment Agreement of Charles Mazzacato. | (9) | ||
| 10.11 | Executive Employment Agreement of Peter Roston. | (9) | ||
| 10.12 | Amended Retainer Agreement between the law firm of Fefer, Petersen & Cie dated March 31, 2005. | (C) | ||
| 10.13 | Retainer Agreement between the law firm of Fefer, Petersen & Cie and Tamboril Cigar Company dated January 2, 2004. | (10) | ||
| 10.14 | Bankruptcy Settlement Agreement Between Axion Power International, Inc. and Mega-C Power Corporation dated December, 2005. | (E) |
| 10.15 | Second Amendment to Development and License Agreement between Axion Power International, Inc. and C and T Co. Incorporated dated as of March 18, 2005. | (12) | ||
| 10.16 | Executive Employment Agreement of Thomas Granville dated June 23, 2008. | (20) | ||
| 10.17 | Loan agreement between Axion Battery Products, Inc. as borrower, Axion Power International, Inc. as accommodation party and Robert Averill as lender respecting a $1,000,000 purchase money and working capital loan dated January 31, 2006. | (14) | ||
| 10.18 | Security agreement between Axion Battery Products, Inc. as debtor and Robert Averill as secured party dated January 31, 2006. | (14) | ||
| 10.19 | Security agreement between Axion Power International, Inc. as debtor and Robert Averill as secured party dated January 31, 2006. | (14) | ||
| 10.20 | Promissory Note between Axion Battery Products, Inc. as maker and Robert Averill as payee dated February 14, 2006. | (14) | ||
| 10.21 | Form of Warrant Agreement between Axion Power International, Inc. and Robert Averill. | (14) | ||
| 10.22 | Commercial Lease Agreement between Axion Battery Products, Inc. as lessee and Steven F. Hoye and Steven C. Warner as lessors dated February 14, 2006. | (14) |
| 10.23 | Asset Purchase Agreement dated between Axion Battery Products, Inc. as buyer and National City Bank of Pennsylvania as seller February 10, 2006. | (14) | ||
| 10.24 | Escrow Agreement between Axion Battery Products, Inc. and National City Bank of Pennsylvania as parties in interest and William E. Kelleher, Jr. and James D. Newell as escrow agents dated February 14, 2006. | (14) | ||
| 10.25 | Executive Employment Agreement of Edward Buiel dated June 23, 2008. | (21) | ||
| 10.26 | Consulting Agreement, by and between Axion Power International, Inc. and Andrew Carr Conway, Jr. dated as of September 27, 2007. | (16) | ||
| 10.27 | Amendment No. 1 to Consulting Agreement by and between Axion Power International, Inc. and Andrew Carr Conway, Jr. dated as of October 31, 2007. | (16) | ||
| 10.28 | Securities Purchase Agreement by and between Axion Power International, Inc. and Quercus Trust dated as of January 14, 2008. | (17) | ||
| 10.29 | Common Stock Purchase Warrant executed by Axion Power International, Inc. dated January 14, 2008. | (17) | ||
| 10.30 | Executive Employment Agreement of Donald T. Hillier dated June 18, 2008. | (19) | ||
| 10.31 | Amendment to Warrants and Securities Purchase Agreement by and between Axion Power International, Inc. and Quercus Trust dated as of September 22, 2009. | (22) | ||
| 10.32 | Securities Purchase Agreement by and between Axion Power International, Inc. and the Investors named therein dated as of December 18, 2009. | (23) | ||
| 10.33 | Registration Rights Agreement, executed by Axion Power International Inc. and the Investors named therein. | (23) | ||
| 10.34 | Amendment No. 2 to Securities Purchase by and between Axion Power International, Inc. and Quercus Trust Agreement dated as of January 14, 2008. | (23) | ||
| 10.35 | Lock-Up Agreement executed by Quercus Trust and David Gelbaum and Monica Chavez Gelbaum. | (23) | ||
| 10.36 | Lease Agreement by and between Steven F. Hoye and Steven C. Warner, Lessor, and Axion Power Battery Manufacturing, Inc., Lessee dated March 28, 2010. | (6) | ||
| 10.37 | Executive Employment Agreement of Charles R. Trego dated April 1, 2010. | (24) | ||
| 10.38 | Executive Employment Agreement of Phillip S. Baker dated April 1, 2010. | (24) | ||
| 10.39 | Executive Employment Agreement of Thomas Granville dated June 29, 2010. | (26) | ||
| 10.40 | Amendment No. 3 to Securities Purchase Agreement by and between Axion Power International, Inc. and the Quercus Trust dated September 30, 2010. | (27) | ||
| 10.41 | Commercial Lease with Becan Development, LLC dated November 4, 2010. | (28) | ||
| 31.1 | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) | |||
| 31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) | |||
| 32.1 | Statement of Principal Executive Officer Pursuant to Section 1350 of Title 18 of the United States Code. | |||
| 32.2 | Statement of Principal Financial Officer Pursuant to Section 1350 of Title 18 of the United States Code. |
| (1) | Incorporated by reference from our Current Report on Form 8-K dated January 15, 2004. |
| (2) | Incorporated by reference from our Current Report on Form 8-K dated February 5, 2003. |
| (3) | Incorporated by reference from our Current Report on Form 8-K dated June 7, 2004. |
| (4) | Incorporated by reference from our Current Report on Form 8-K dated April 13, 2004. |
| (5) | Incorporated by reference from our Form S-3 registration statement dated May 20, 2004. |
| (6) | Incorporated by reference from our Annual Report on Form 10-KSB dated May 2, 2004. |
| (7) | Incorporated by reference from our Current Report on Form 8-K dated April 13, 2003. |
| (8) | Incorporated by reference from our Current Report on Form 8-K dated February 16, 2004. |
| (9) | Incorporated by reference from our Form S-1 registration statement dated September 2, 2004. |
| (10) | Incorporated by reference from our Form S-1 registration statement dated December 17, 2004. |
| (11) | Incorporated by reference from our Current Report on Form 8-K dated February 28, 2005. |
| (12) | Incorporated by reference from our Current Report on Form 8-K dated March 21, 2005. |
| (13) | Incorporated by reference from our Current Report on Form 8-K dated November 8, 2006. |
| (14) | Incorporated by reference from our Current Report on Form 8-K dated February 16, 2006. |
| (15) | Incorporated by reference from our Current Report on Form 8-K dated January 3, 2007. |
| (16) | Incorporated by reference from our Current Report on Form 8-K dated November 6, 2007. |
| (17) | Incorporated by reference from our Current Report on Form 8-K dated January 17, 2008. |
| (18) | Incorporated by reference from our Current Report on Form 8-K dated January 31, 2008. |
| (19) | Incorporated by reference from our Registration Statement on Form S-1 dated July 3, 2008. |
| (20) | Incorporated by reference from our Current Report on Form 8-K dated June 27, 2008. |
| (21) | Incorporated by reference from our Current Report on Form 8-K dated July 2, 2008. |
| (22) | Incorporated by reference from our Current Report on Form 8-K dated September 22, 2009. |
| (23) | Incorporated by reference from our Current Report on Form 8-K dated December 18, 2009. |
| (24) | Incorporated by reference from our Current Report on Form 8-K dated April 6, 2010. |
| (25) | Incorporated by reference from our Current Report on Form 8-K dated June 15, 2010. |
| (26) | Incorporated by reference from our Current Report on Form 8-K dated July 6, 2010. |
| (27) | Incorporated by reference from our Current Report on Form 8-K dated October 4, 2010. |
| (28) | Incorporated by reference from our Current Report on Form 8-K dated November 10, 2010. |
| (A) | Incorporated by reference from our Current Report on Form 8-K/A dated February 2, 2004. |
| (B) | Incorporated by reference from our Current Report on Form 8-K dated April 4, 2005. |
| (C) | Incorporated by reference from our Registration Statement on Form SB-2 dated April 26, 2005. |
| (D) | Incorporated by reference from our Current Report on Form 8-K dated December 13, 2005. |
Financial Statements
Consolidated Financial Statements for Axion Power International, Inc. for the fiscal years ended December 31, 2009 and 2010, respectively as set forth in Item 8 of the Company’s Annual Report on Form 10-K filed with the Commission on March 30, 2011.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| AXION POWER INTERNATIONAL, INC. | ||
| By: | /s/ Thomas Granville | |
| Thomas Granville, Principal Executive Officer and Director | ||
| Dated: April 29, 2011 | ||
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Signature | Title | Date | ||
| /s/ Robert G. Averill | ||||
| Robert G. Averill | Director | April 29, 2011 | ||
| /s/ Glenn Patterson | ||||
| Glenn Patterson | Director | April 29, 2011 | ||
| /s/ David Anthony | ||||
| David Anthony | Director | April 29, 2011 |
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