UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549


_______________


Form
10-Q




þ
              QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934


For
the quarterly period ended December 31, 2009




OR




o
              TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For
the transition period
from          to




Commission
File Number:     0-13111




AXION
INTERNATIONAL HOLDINGS, INC


(Exact
name of registrant as specified in its charter)




Colorado
              84-0846389(State
      or other jurisdiction of incorporation or
                organization)
              (IRS
      Employer Identification No.)


180
South Street, Suite 104, New Providence, NJ 07974




(Address
of principal executive offices)




908-542-0888




(registrant’s
telephone number, including area code)




_______________




Indicate
by check mark whether the registrant (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 þ     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  þ





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 þ


Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).




Yes £  No
þ




The
number of outstanding shares of the registrant’s common stock, without par
value, as of January 31, 2010 was 19,736,232.












TABLE
OF CONTENTS





PAGEPART
      I.
                FINANCIAL
      INFORMATIONItem
      1.
                Financial
      Statements
                
                1Item
      2.
                Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                
                11Item
      3.
                Quantitative
      and Qualitative Disclosures About Market Risk
                
                15Item
      4.
                Controls
      and Procedures
                
                15PART
      II.
                OTHER
      INFORMATION
                
                17Item
      1.
                Legal
      Proceedings
                
                17Item
      1A.
                Risk
      Factors
                
                17Item
      2.
                Unregistered
      Sales of Securities and Use of Proceeds
                
                17Item
      3.
                Defaults
      Upon Senior Securities
                
                17Item
      4.
                Submissions
      of Matters to a Vote of Security Holders
                
                17Item
      5.
                Other
      Information
                
                17Item
      6.
                Exhibits
                
                17SIGNATURES
                
                18







PART 1.  FINANCIAL INFORMATION




Item 1. Financial Statements


AXION
      INTERNATIONAL HOLDINGS, INC.CONSOLIDATED
      BALANCE SHEETS





December 31,
                
                
                September 30,2009
                  unaudited
                
                
                2009ASSETSCurrent
      assets:Cash
      and cash equivalents
                
                $
                338,192
                
                
                $
                1,257,516Accounts
      receivable
                
                
                135,822
                
                
                
                314,027Unbilled
      revenue
                
                
                166,999
                
                
                
                -Inventories
                
                
                304,928
                
                
                
                76,533Prepaid
      expenses
                
                
                7,500
                
                
                
                1,915Total
      current assets
                
                
                953,441
                
                
                
                1,649,991Property,
      equipment, and leasehold improvements, at cost:Equipment
                
                
                13,754
                
                
                
                9,838Machinery
      and equipment
                
                
                443,964
                
                
                
                406,639Purchased
      software
                
                
                56,404
                
                
                
                56,404Furniture
      and fixtures
                
                
                13,091
                
                
                
                9,322Leasehold
      improvements
                
                
                420
                
                
                
                29,300527,633
                
                
                
                511,503Less
      accumulated depreciation
                
                
                (240,220
                )
                
                
                (205,156
                )Net
      property and leasehold improvements
                
                
                287,413
                
                
                
                304,347License,
      at acquisition cost,
                
                
                68,284
                
                
                
                68,284Deposits
                
                
                10,713
                
                
                
                10,713Total
      assets
                
                $
                1,319,851
                
                
                $
                2,035,334LIABILITIES
      AND STOCKHOLDERS' DEFICITCurrent
      liabilities:Accounts
      payable
                
                $
                569,517
                
                
                $
                546,920Accrued
      liabilities
                
                
                374,333
                
                
                
                357,172Notes
      payable
                
                
                -
                
                
                
                14,000Current
      portion of convertible debentures, net of discount
                
                
                420,714
                
                
                
                253,795Total
      current liabilities
                
                
                1,364,564
                
                
                
                1,171,886Convertible
      debentures, net of discount
                
                
                2
                
                
                
                157,347Total
      liabilities
                
                
                1,364,566
                
                
                
                1,329,233Commitments
      and contingencies
                
                
                -
                
                
                
                -Stockholders'
      equity/(deficit):Common
      stock, no par value; authorized, 100,000,000 shares;19,736,232 and
      19,243,669 shares issued and outstanding at December 31, 2009 and
      September 30, 2009, respectively
                
                
                11,894,765
                
                
                
                10,009,677Retained
      earnings (deficit)
                
                
                (11,939,480
                )
                
                
                (9,303,576
                )Total
      stockholders' equity/(deficit)
                
                
                (44,715
                )
                
                
                706,101Total
      liabilities and stockholders' equity/(deficit)
                
                $
                1,319,851
                
                
                $
                2,035,334





See
accompanying notes to consolidated financial statements.


1





AXION
      INTERNATIONAL HOLDINGS INC.CONSOLIDATED
      STATEMENT OF OPERATIONS





Three months
                  ended
                  December 31,
                  2009
                  Unaudited
                
                
                Three months
                  ended
                  December 31,
                  2008
                  UnauditedUnauditedRevenue
                
                $
                302,541
                
                
                $
                4,200Cost
      of goods sold
                
                
                246,040
                
                
                
                -Gross
      margin
                
                
                56,501
                
                
                
                4,200Operating
      expenses:Research
      and development costs
                
                
                26,615
                
                
                
                154,940Marketing
      and sales
                
                
                105,040
                
                
                
                46,732General
      and administrative expenses
                
                
                2,461,600
                
                
                
                427,542Depreciation
      and amortization
                
                
                64,364
                
                
                
                10,875Total
      operating costs and expenses
                
                
                2,657,619
                
                
                
                640,089Loss
      from operations
                
                
                (2,601,118
                )
                
                
                (635,889
                )Other
      expense (income), net:Other
      income
                
                
                -
                
                
                
                -Interest
      expense, net
                
                
                34,786
                
                
                
                60,732Debt
      conversion expense
                
                
                -
                
                
                
                -Total
      other expense, net
                
                
                34,786
                
                
                
                60,732Loss
      before income taxes
                
                
                (2,635,904
                )
                
                
                (696,621
                )Provision
      for income taxes
                
                
                -
                
                
                
                -Net
      loss
                
                $
                (2,635,904
                )
                
                $
                (696,621
                )Weighted
      average common shares - basic and diluted
                
                
                19,550,964
                
                
                
                14,217,968Basic
      and diluted net loss per share
                
                $
                (0.13
                )
                
                $
                (0.05
                )





See
accompanying notes to consolidated financial statements.


2





AXION
      INTERNATIONAL HOLDINGS INCCONSOLIDATED
      STATEMENTS OF CASH FLOWS





Three months
                  ended December
                  31, 2009
                
                
                Three months
                  ended December
                  31, 2008Unaudited
                
                
                UnauditedCash
      flow from operating activities:Net
      loss
                
                $
                (2,635,904
                )
                
                $
                (696,621
                )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation,
      and amortization
                
                
                64,364
                
                
                
                10,875Accretion
      of interest expense on convertible debentures
                
                
                9,572
                
                
                
                44,400Issuance
      of common stock, options and warrants for services and for accrued
      interest
                
                
                1,475,089
                
                
                
                80,803Changes
      in operating assets and liabilities:Accounts
      receivable
                
                
                11,206
                
                
                
                (4,200
                )Inventories
                
                
                (228,395
                )
                
                
                (94,680
                )Prepaid
      expenses and other
                
                
                (5,585
                )
                
                
                361Accounts
      payable
                
                
                22,599
                
                
                
                19,809Accrued
      liabilities
                
                
                17,160
                
                
                
                37,503Net
      cash (used in) operating activities
                
                
                (1,269,894
                )
                
                
                (601,750
                )Cash
      flows from investing activities:Purchase
      of equipment and leasehold improvements
                
                
                (45,430
                )
                
                
                (6,700
                )Net
      cash (used in) provided by investing activities
                
                
                (45,430
                )
                
                
                (6,700
                )Cash
      flows from financing activities:Proceeds
      from short term notes
                
                
                -
                
                
                
                125,000Issuance
      of common stock, net of expenses
                
                
                410,000
                
                
                
                1,275,000Repayment
      of notes and convertible debentures
                
                
                (14,000
                )
                
                
                -Net
      cash provided by financing activities
                
                
                396,000
                
                
                
                1,400,000Net
      increase in cash
                
                
                (919,324
                )
                
                
                791,550Cash
      at beginning of period
                
                
                1,257,516
                
                
                
                138,826Cash
      at end of period
                
                $
                338,192
                
                
                $
                930,376Supplemental
      disclosures of cash flow information:Cash
      paid for interest
                
                $
                -
                
                
                $
                -





See
accompanying notes to consolidated financial statements.


3





AXION
INTERNATIONAL HOLDINGS INC.AND SUBSIDIARIES





Notes
to Consolidated Financial Statements





(1)       Summary
of Significant Accounting Policies





(a)         Business
and Basis of Financial Statement Presentation





Axion
International Holdings, Inc. (“Holdings”), formerly Analytical Surveys, Inc.,
was formed in 1981 to provide data conversion and digital mapping services to
users of customized geographic information systems.  In fiscal 2006,
Holdings acted upon its belief that it would not be able to sustain the
operations of its historical business.  Holdings focused on completing
its long-term contracts that would generate cash, sold certain operations and
briefly transitioned its principal business into that of an independent oil and
gas enterprise. In May 2007, Holdings terminated its oil and gas executives and
took steps to reduce expenses and commitments in oil and gas
investments.





As a
result, in November 2007, Holdings entered into an Agreement and Plan of Merger,
among Holdings, Axion Acquisition Corp., a Delaware corporation and a newly
created direct wholly-owned subsidiary of Holdings (the “Merger Sub”), and Axion
International, Inc., a Delaware corporation which incorporated on August 6, 2006
with operations commencing in November 2007 (“Axion”).  On March 20,
2008 (the “Effective Date”), Holdings consummated the merger (the “Merger”) of
Merger Sub into Axion, with Axion continuing as the surviving corporation and a
wholly-owned subsidiary of Holdings.  Each issued and outstanding
share of Axion became 47,630 shares of Holdings’ common stock (“Common Stock”),
or 9,190,630 shares in the aggregate constituting approximately 90.7% of
Holdings’ issued and outstanding Common Stock as of the Effective Date of the
Merger.  The Merger resulted in a change of control, and as such,
Axion (“we”, “our” or the “Company”) is the surviving entity.





The
preparation of the financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.





In the
opinion of management, all adjustments necessary for a fair presentation of such
consolidated financial statements have been included. Such adjustments consist
of normal recurring items. Interim results are not necessarily indicative of
results for a full year. These consolidated financial statements should be read
in conjunction with our consolidated financial statements included in our annual
report on Form 10-K for the year ended September 30, 2009.





Our
consolidated financial statements include the accounts of our majority-owned
subsidiaries. All significant intercompany balances and transactions have been
eliminated in consolidation.





Reverse
Merger.  The Merger has been accounted for as a reverse merger
in the form of a recapitalization with Axion as the successor.  The
recapitalization has been given retroactive effect in the accompanying financial
statements. The accompanying consolidated financial statements represent those
of Axion for all periods prior to the consummation of the Merger.





Going Concern. We have
incurred significant losses since inception and we have a working capital
deficit. These conditions raise substantial doubt about our ability to continue
as a going concern. We must raise additional capital through the sale of equity
or debt securities, through an offering of debt securities, or through
borrowings from financial institutions.


4





(b)         Statement
of Cash Flows





For
purposes of the statement of cash flows, we consider all highly liquid debt
instruments purchased with an original maturity of three months or less to be
cash equivalents.





(c)         Equipment
and Leasehold Improvements





Equipment
and leasehold improvements are recorded at cost and are depreciated and
amortized using the straight-line method over estimated useful lives of two to
five years.  Repairs and maintenance are charged directly to
operations as incurred.





(d)         Allowance
for Doubtful Accounts





We accrue
a reserve on a receivable when, based upon the judgment of management, it is
probable that a receivable will not be collected and the amount of any reserve
may be reasonably estimated.  As of December 31, 2009 we had an
allowance for doubtful accounts of $0.





(e)        
Inventories.




Inventories
are priced at the lower of cost (first–in, first–out) or market and consist
primarily of raw materials and finished goods.  No adjustment has been made
to the cost of finished goods inventories as of December 31, 2009.





(f)        Revenue
and Cost Recognition





Revenue
from product sales is recognized when persuasive evidence of an agreement with
the customer exists, products are shipped or title passes pursuant to the terms
of the agreement with the customer, the amount due from the customer is fixed or
determinable, collectibility is reasonably assured, and when there are no
significant future performance obligations.  Customers are billed
based on the terms included in the contracts, which are generally upon delivery
of certain products or information, or achievement of certain milestones defined
in the contracts.  When billed, such amounts are recorded as accounts
receivable.





Revenue
on construction projects is recognized on the percentage-of-completion method
based on contract costs. Contract costs include purchased material, material
processing, subcontractor services, labor and other direct
costs.  Costs of uninstalled materials specifically produced for a
project are included in costs used to measure extent of progress toward project
completion. Losses on contracts are recognized in the period such losses are
determined.  We do not believe warranty obligations on completed
contracts are significant.  Changes in job performance, job
conditions, and estimated profitability, including those arising from contract
penalty provisions, and final contract settlements may result in revisions to
costs and income and are recognized in the period in which the revisions are
determined. Unbilled
revenue represents revenue related to services completed but not billed, and
advance billings represent billings in advance of services
performed.





(g)       Income
Taxes





Income
taxes are reflected under the liability method, which establishes deferred tax
assets and liabilities to be recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized as income in the period that includes the
enactment date.





U.S.
generally accepted accounting principles require that we record a valuation
allowance against deferred tax assets if it is “more likely than not” that we
will not be able to utilize it to offset future taxes.  Due to our
recent history of unprofitable operations and due to the continuing
uncertainties surrounding our future operations, we have not recognized any of
this net deferred tax asset.  We currently provide for income taxes
only to the extent that we expect to pay cash taxes (primarily state taxes and
the federal alternative minimum tax) on current taxable income.


5





(h)         Impairment
of Long-Lived Assets Other Than Goodwill





We assess
the potential for impairment in the carrying values of our long-term assets
whenever events or changes in circumstances indicate such impairment may have
occurred.  An impairment charge to current operations is recognized
when the estimated undiscounted future net cash flows of the asset are less than
its carrying value. Any such impairment is recognized based on the differences
in the carrying value and estimated fair value of the impaired
asset.





(i)          Stock-Based
Compensation





We record
stock-based compensation for transactions in which we exchange our equity
instruments for services of employees, consultants and others based on the fair
value of the equity instruments issued at the date of grant or other measurement
date. The fair value of common stock awards is based on the observed market
value of our stock. We calculate the fair value of options and warrants using
the Black-Scholes option pricing model. Expense is recognized, net of expected
forfeitures, over the period of performance. When the vesting of an award is
subject to performance conditions, no expense is recognized until achievement of
the performance condition is deemed to be probable.





(j)         Earnings
(Loss) Per Share





Basic
earnings (loss) per share are computed by dividing earnings (loss) available to
common shareholders by the weighted average number of common shares outstanding
for the period.  Diluted earnings (loss) per share includes the
effects of the potential dilution of outstanding options, warrants, and
convertible debt on our common stock as determined using the treasury stock
method. For the three months ended December 31, 2009, there were no dilutive
effects of such securities because we incurred a net loss in each period.
Potential dilutive common shares issuable under our convertible instruments,
warrant agreements and stock option plans amounted to 7,530,920 as of December
31, 2009.





(k)         Financial
Instruments





The
carrying amounts of financial instruments approximate their estimated fair
values. The fair value of a financial instrument is the amount at which the
instrument could be exchanged in a current transaction between willing parties.
The carrying amounts of cash, receivables, accounts payable, and accrued
liabilities approximate fair value due to the short maturity of these
instruments.





(l)          Concentration
of Credit Risk





We
maintain our cash with a major U.S. domestic bank. The amounts held in this bank
exceed the insured limit of $250,000 from time to time.   We have not
incurred losses related to these deposits. The Company’s accounts receivable and
unbilled revenue balances as of December 31, 2009 include an aggregate of
$251,999 due from one customer.





(m)         Operating
Cycle





In
accordance with industry practice, we include in current assets and liabilities
amounts relating to long-term contracts, which generally have operating cycles
extending beyond one year. Other assets and liabilities are classified as
current and non-current on the basis of expected realization within or beyond
one year.


6





(2)Project
revenue





In
November 2009, the Company received two “Delivery Order Authorizations”
(“DOA’s”), or contract purchase orders, from Centennial Contractors Enterprises,
Inc. together with collateral contract documents for the demolition and
construction of two bridges located on the United States Army Base at Fort
Eustis in the state of Virginia. The contract award of $957,587 includes the
costs and expenses for equipment, labor and the Company’s composite construction
materials. The Company has contracted with third-parties for the design and
build specifications and the demolition and rebuild work. The project officially
commenced upon receipt of the DOA’s and is expected to be completed within the
fiscal year ending September 30, 2010. In connection with the bonding activities
related to the project, the Company has granted a broad security interest in its
assets to an insurance company.





(3) Inventories





The
components of inventories are:





December 31, 2009
                
                
                September 30, 2009Finished
      goods
                
                $
                228,328
                
                
                $
                46,731Raw
      materials
                
                
                76,600
                
                
                
                29,802Total
      inventories
                
                $
                304,928
                
                
                $
                76,533





(4) Accrued
liabilities





The
components of accrued liabilities are:





December 31, 2009
                
                
                September 30, 2009Payable
      to insurer for legal settlement
                
                $
                100,000
                
                
                $
                100,000Refundable
      oil and gas receipts
                
                
                129,334
                
                
                
                129,334Accrued
      interest
                
                
                101,858
                
                
                
                76,644Other
                
                
                43,141
                
                
                
                51,194Total
      accrued liabilities
                
                $
                374,333
                
                
                $
                357,172





(5) Debt





The
components of debt are summarized as follows.





Due
                    
                    December 31,
                      2009
                    
                    
                    September 30,
                      20089%
      convertible debentures
                    
                    September
      2010
                    
                    $
                    278,236
                    
                    
                    $
                    278,2368.75%
      convertible debenture
                    
                    December
      2010
                    
                    
                    172,500
                    
                    
                    
                    172,50010%
      convertible debenture
                    
                    February
      2011
                    
                    
                    300,000
                    
                    
                    
                    300,00010%
      convertible debentures
                    
                    March
      2011
                    
                    
                    300,000
                    
                    
                    
                    300,000Discount
                    
                    
                    
                    
                    (630,024
                    )
                    
                    
                    (639,594
                    )420,718
                    
                    
                    
                    411,142Less
      current portion
                    
                    
                    
                    
                    420,716
                    
                    
                    
                    253,795$
                    2
                    
                    
                    $
                    157,347





The
Company’s 9% and 8.75% convertible debentures were issued in the year ended
September 30, 2008 in connection with debt modifications which resulted in debt
conversion expense charges in that year. The recorded discount on these
debentures, $30,026 in the aggregate as of December 31, 2009, is being amortized
to interest expense on the interest method through their scheduled maturity
dates.





The
Company’s 10% convertible debentures were issued under purchase agreements in
the year ended September 30, 2009, together with warrants, for aggregate
proceeds of $600,000. The total of the calculated fair value of the warrants and
the intrinsic value of beneficial conversion features contained in the
debentures exceeded the proceeds received. Accordingly, the Company recorded a
discount on the notes substantially equal to the principal amount of the notes.
The recorded discount on these debentures, $599,998 in the aggregate as of
December 31, 2009, is being amortized to interest expense on the interest method
through their scheduled maturity dates. As a result of the application of the
interest method, unless the debentures are converted earlier, substantially all
of the discount is expected to be amortized during the first two quarters of the
Company’s fiscal year ending September 30, 2011.


7





Each of
the debentures above contain features that allow the Company to redeem the notes
prior to their scheduled due dates. In certain events of default by the Company,
the holder may generally require the Company to redeem the notes at the greater
of 120% of their principal amounts or their conversion value. Based on the life
of the notes and the likelihood and effect of substantive exercise of these
provisions the Company has determined that these features have minimal
value.





(6)Stockholder’s
Equity




In
October 2009, the Company issued 200,000 shares of its common stock to
consultants for services performed in the Company’s strategic planning and
financing activities. The shares had a fair value of $600,000 at issuance based
on the quoted market price of the Company’s stock on the OTC Bulletin Board.
This amount were recognized in general and administrative expenses in the three
months ended December 31, 2009.


In
November 2009, the Company sold 200,000 shares of common stock and 20,000
three-year warrants, exercisable at $2.91 per share, for aggregate proceeds of
$410,000. As a placement fee, the Company paid $8,200 and issued 20,000
three-year warrants, also at the exercise price of $2.91 per share.




In
November 2009, the Company issued 360,000 five-year warrants exercisable at
$0.90 per share to a consultant for strategic planning, business development and
investor relations services to be performed. The warrants had a fair value of
$1,033,909 at December 31, 2009 based on the Black Scholes pricing model, of
which $344,636 was recognized in general and administrative expenses in the
three months ended December 31, 2009. Also in November, the Company issued
74,726 shares of common stock to a consultant for business development,
marketing and sales services performed. The shares had a fair value of $198,024
at issuance based on the quoted market price of the Company’s stock on the OTC
Bulletin Board. Under the agreement, which expires in 2011, the consultant will
be granted options to purchase up to 500,000 additional shares of common stock
at an exercise price of $0.01 per share contingent on attaining specified sales
targets.





In
December 2009, the Company agreed to issue 104,554 five-year warrants
exercisable at $0.88 per share to a consultant for services performed in the
Company’s financing efforts. The warrants had a fair value of $283,788 at the
date of grant based on the Black Scholes pricing model, which was recognized in
general and administrative expenses in the three months ended December 31,
2009.


8





The
following table sets forth the number of shares of Common Stock that were
issuable upon exercise of outstanding warrants as of December 31, 2009. Net
share settlement is available to warrant holders.





Expiration
                        
                        Conversion/
                          Exercise Price
                        
                        
                        Common
                          Shares
                          IssuableClass
      A Warrants
                        
                        2011
                        
                        $
                        5.36
                        
                        
                        
                        95,473Class
      B Warrants
                        
                        2011
                        
                        
                        5.96
                        
                        
                        
                        95,473Class
      E Warrants
                        
                        2011
                        
                        
                        4.74
                        
                        
                        
                        188,018AdvisorWarrants
                        
                        2011
                        
                        
                        2.36
                        
                        
                        
                        47,482Warrants
      issued in short-term borrowings
                        
                        2012
                        
                        
                        1.00
                        
                        
                        
                        100,000Warrants
      issued in short-term borrowings
                        
                        2013
                        
                        
                        0.88
                        
                        
                        
                        200,000Warrants
      issued in short-term borrowings
                        
                        2014
                        
                        
                        0.88
                        
                        
                        
                        671,000Warrants
      attached to 10% convertible notes
                        
                        2014
                        
                        
                        0.90
                        
                        
                        
                        1,500,000September
      2009 investor warrants
                        
                        2012
                        
                        
                        3.13
                        
                        
                        
                        50,000September
      2009 finder warrants
                        
                        2012
                        
                        
                        3.13
                        
                        
                        
                        50,000November
      2009 finder warrants
                        
                        2012
                        
                        
                        2.91
                        
                        
                        
                        20,000November
      2009 finder warrants
                        
                        2012
                        
                        
                        2.91
                        
                        
                        
                        20,000November
      2009 consultant warrants
                        
                        2014
                        
                        
                        0.90
                        
                        
                        
                        360,000December
      2009 consultant warrants
                        
                        2012
                        
                        
                        0.88
                        
                        
                        
                        104,554Weighted
      average exercise price and total shares issuable
                        
                        
                        
                        
                        1.45
                        
                        
                        
                        3,602,000





The
following table sets forth the number of shares of Common Stock that were
issuable upon conversion of convertible debt as of December 31,
2009.





Principal
                      Amount
                    
                    
                    Conversion/
                      Exercise Price
                    
                    
                    Common
                      Shares
                      IssuableSeries
      A Debenture
                    
                    
                    78,236
                    
                    
                    $
                    0.30
                    
                    
                    
                    260,787Series
      B Debenture
                    
                    
                    200,000
                    
                    
                    
                    0.30
                    
                    
                    
                    666,667September
      2008 Debenture
                    
                    
                    172,500
                    
                    
                    
                    1.50
                    
                    
                    
                    115,000September
      2009 Debentures
                    
                    
                    600,000
                    
                    
                    
                    0.90
                    
                    
                    
                    666,667





(7) Stock–based
compensation





The
following table summarizes stock option activity in the three months ended
December 31, 2009:





Number of Shares
                    
                    
                    Weighted Average
                      Exercise PriceOutstanding
      at beginning of period
                    
                    
                    2,219,799
                    
                    
                    $
                    0.47Granted
                    
                    
                    -
                    
                    
                    
                    -Exercised
                    
                    
                    -
                    
                    
                    
                    -Outstanding
      at end of period
                    
                    
                    2,219,799
                    
                    
                    $
                    0.47





(8)          Impact
of Accounting Pronouncements





In April
2008, the Financial Accounting Standards Board (“FASB”) issued guidance.
generally codified under ASC Topic 350, “Intangibles – Goodwill and Other”, that
amends the factors that should be considered in developing renewal or extension
assumptions used to determine the useful life of a recognized intangible asset
in order to improve the consistency between the useful life of a recognized
intangible asset and the period of expected cash flows used to measure the fair
value of the asset and was effective for fiscal years beginning after December
15, 2008. The adoption of these changes did not have a material effect on the
Company’s consolidated financial statements..


9





In June
2008, the FASB issued guidance. generally codified under ASC Topic 260,
“Earnings per Share”,, which classifies unvested share-based payment awards that
contain non-forfeitable rights to dividends or dividend equivalents as
participating securities and requires them to be included in the computation of
earnings per share pursuant to the two-class method and was effective for
financial statements issued for fiscal years beginning after December 15, 2008,
and interim periods within those years. It requires all prior period earnings
per share data presented to be adjusted retrospectively. The adoption of these
changes did not have a material effect on the Company’s consolidated financial
statements.




In
September 2008, the FASB issued FSP No. 133-1 and FIN 45-4, “Disclosures about
Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No.
133 and FASB Interpretation No. 45; and Clarification of the Effective Date of
FASB Statement No. 161” (“FSP 133-1”). FSP 133-1 requires more extensive
disclosure regarding potential adverse effects of changes in credit risk on the
financial position, financial performance, and cash flows of sellers of credit
derivatives. FSP 133-1 also amends FASB Interpretation No. 45, “Guarantor’s
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness to Others,” to require additional disclosure about
the current status of the payment or performance risk of a guarantee. FSP 133-1
also clarifies the effective date of FASB Statement No. 161, “Disclosures about
Derivative Instruments and Hedging Activities,” by stating that the disclosures
required should be provided for any reporting period (annual or quarterly
interim) beginning after November 15, 2008. The adoption of these changes did
not have a material effect on the Company’s consolidated financial
statements..





In June
2008, the FASB issued guidance, generally codified under ASC Topic 815,
“Derivatives and Hedging”, on how an entity should determine whether an
instrument (or an embedded feature) is indexed to an entity’s own stock. This
guidance provides for use of a two-step approach to evaluate whether an
equity-linked financial instrument (or embedded feature) is indexed to its own
stock, including evaluating the instrument’s contingent exercise and settlement
provisions. This guidance was effective for financial statements issued for
fiscal years beginning after December 15, 2008. The adoption of these changes
did not have a material effect on the Company’s consolidated financial
statements.





In
October 2009, the FASB issued Accounting Standards Update 2009-13, “Revenue
Recognition – Multiple-Deliverable Arrangements” which addresses how to separate
deliverables and how to measure and allocate arrangement consideration to one or
more units of accounting. The provisions of this update will be effective
prospectively for revenue arrangements entered into or materially modified in
fiscal years beginning on or after June 15, 2010. The Company is currently
evaluating the effect, if any, that adoption will have on its consolidated
financial statements.





In
January 2010, the FASB issued Accounting Standards Update 2010-06, “Fair Value
Measurements and Disclosures – Improving Disclosures about Fair Value
Measurements”, which adds and clarifies certain disclosures about the use of
fair value measurements in financial statements. The provisions of this update
will be effective for interim and annual reporting periods beginning after
December 15, 2009. The Company is currently evaluating the effect, if any, that
adoption will have on its consolidated financial statements.


10





Item 2.  Management’s
Discussion and Analysis of Financial Condition and Results of
Operations





The
discussion of our financial condition and results of operations set forth below
should be read in conjunction with the consolidated financial statements and
related notes thereto included elsewhere in this Form 10-Q. This Form 10-Q
contains forward-looking statements that involve risk and uncertainties. The
statements contained in this Form 10-Q that are not purely historical are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as
amended, and the Private Securities Litigation Reform Act of 1995. When used in
this Form 10-Q, or in the documents incorporated by reference into this Form
10-Q, the words “anticipate,” “believe,” “estimate,” “intend”, “expect”, “may”,
“will” and similar expressions are intended to identify such forward-looking
statements. Such forward-looking statements include, without limitation,
statements relating to competition, management of growth, our strategy, future
sales, future expenses and future liquidity and capital resources. All
forward-looking statements in this Form 10-Q are based upon information
available to us on the date of this Form 10-Q, and we assume no obligation to
update any such forward-looking statements. Our actual results, performance and
achievements could differ materially from those discussed in this Form 10-Q.
Factors that could cause or contribute to such differences (“Cautionary
Statements”) include, but are not limited to, those discussed in Item 1A. “Risk
Factors” and elsewhere in our Annual Report on Form 10-K.  All
subsequent written and oral forward-looking statements attributable to us, or
persons acting on our behalf, are expressly qualified in their entirety by the
Cautionary Statements.





Basis
of Presentation





The
financial information presented in this form 10-Q is not audited and is not
necessarily indicative of our future consolidated financial position results of
operations or cash flows. Our fiscal year-end is September 30, and our fiscal
quarters end on December 31, March 31, and June 30. Unless otherwise stated, all
dates refer to our fiscal year and fiscal periods.





Overview





Axion
International Holdings, Inc. (“we”, “our” or the “Company”) is the exclusive
licensee of patented technologies developed for the production of structural
plastic products such as railroad crossties, bridge infrastructure, marine
pilings and bulk heading.  We believe these technologies, which were
developed by scientists at Rutgers University (“Rutgers”), can transform
recycled consumer and industrial plastics into structural products which are
more durable and have a substantially greater useful life than traditional
products made from wood, steel and concrete.  In addition, we believe
our recycled composite products will result in substantial reduction in
greenhouse gases and also offer flexible design features not available in
standard wood, steel or concrete products.





Critical
Accounting Policies





Management’s
Discussion and Analysis of Financial Condition and Results of Operations are
based upon our financial statements, which have been prepared in accordance with
generally accepted accounting principles (“GAAP”) in the U.S. The preparation of
financial statements in conformity with GAAP requires management to make
estimates, judgments and assumptions that affect the amounts reported in our
condensed consolidated financial statements and accompanying notes. Our critical
accounting policies are those that affect our financial statements materially
and involve difficult, subjective or complex judgments by
management.





An
accounting policy is deemed to be critical if it requires an accounting estimate
to be made based on assumptions about matters that are highly uncertain at the
time the estimate is made, and if different estimates that reasonably could have
been used or changes in the accounting estimate that are reasonably likely to
occur could materially change the financial statements.


11





Use of Estimates.  The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date the financial statements and the
reported amount of revenues and expenses during the reporting
period.  Actual results could differ from those
estimates.





Revenue and Cost Recognition.Revenue is recognized when persuasive evidence of an agreement with the
customer exists, products are shipped or title passes pursuant to the terms of
the agreement with the customer, the amount due from the customer is fixed or
determinable, collectability is reasonably assured, and when there are no
significant future performance obligations.





Customers
are billed based on the terms included in the contracts, which are generally
upon delivery of certain products or information, or achievement of certain
milestones defined in the contracts.  When billed, such amounts are
recorded as accounts receivable.  Revenue earned in excess of billings
represents revenue related to services completed but not billed, and billings in
excess of revenue earned represent billings in advance of services
performed.





Contract
costs include all direct material and labor costs and those indirect costs
related to contract performance, such as indirect labor, supplies, tools and
depreciation costs.  Losses on contracts are recognized in the period
such losses are determined.  We do not believe warranty obligations on
completed contracts are significant.  Changes in job performance, job
conditions, and estimated profitability, including those arising from contract
penalty provisions, and final contract settlements may result in revisions to
costs and income and are recognized in the period in which the revisions are
determined.





Inventories. Inventories are
priced at the lower of cost (first–in, first–out) or market and consist
primarily of raw materials.  No adjustment has been to the cost of
finished goods inventories as of December 31, 2009.





Property and Equipment.Property and equipment is recorded at cost and depreciated over the
estimated useful lives of the assets using principally the straight-line method.
When items are retired or otherwise disposed of, income is charged or credited
for the difference between net book value and proceeds realized
thereon.  Ordinary maintenance and repairs are charged to expense as
incurred, and replacements and betterments are capitalized.  The range
of estimated useful lives to be used to calculate depreciation for principal
items of property and equipment are as follow:





Asset Category
              
              Depreciation/
                Amortization PeriodFurniture
      and fixtures
              
              3
      to 5 yearsComputer
      equipment and purchased software
              
              3
      yearsMachinery
      and equipment
              
              2
      to 5 yearsLeasehold
      improvements
              
              Term
      of lease





Goodwill and Intangible
Assets.We do not amortize intangible assets, and instead
annually evaluate the carrying value of intangible assets for
impairment.  We hold licenses and expect the cash flow generated by
the use of the licenses to exceed their carrying value.





Impairment of Long-Lived
Assets.Assets such as property, plant, and equipment, and
purchased intangibles, are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Goodwill and other intangible assets are tested for impairment
annually. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to estimated undiscounted future
cash flows expected to be generated by the asset. If the carrying amount of an
asset exceeds its estimated future cash flows, an impairment charge is
recognized by the amount by which the carrying amount of the asset exceeds the
fair value of the asset.  There have been no events or changes in
circumstances that necessitated a review of impairment of long lived
assets.


12
 
 Stock Based Compensation.We record stock-based compensation for transactions in which we exchange
our equity instruments for services of employees, consultants and others based
on the fair value of the equity instruments issued at the date of grant or other
measurement date.  The fair value of common stock awards is based on
the observed market value of our stock.  We calculate the fair value
of options and warrants using the Black-Scholes option pricing
model.  Expense is recognized, net of expected forfeitures, over the
period of performance.  When the vesting of an award is subject to
performance conditions, no expense is recognized until achievement of the
performance condition is deemed to be probable.
 
 Reverse Merger Purchase
Accounting.In connection with our Merger, we have made
estimates regarding the fair value of the assets acquired and the liabilities
assumed.   Adjustments to these estimates are made during the
acquisition allocation period, which is generally up to twelve months from the
acquisition date.  Subsequent to the allocation period, costs incurred
in excess of the recorded acquisition accruals are generally expensed as
incurred and if accruals are not utilized for the intended purpose, the excess
will be recorded as an adjustment to the cost of the acquired entity, which was
charged to paid in capital.
 
 Litigation.We are subject to
various claims, lawsuits and administrative proceedings that arise from the
ordinary course of business.  Liabilities and costs associated with
these matters require estimates and judgment based on professional knowledge and
experience of management and our legal counsel.  When estimates of our
exposure for claims or pending or threatened litigation matters meet the
criteria of SFAS No. 5 “Accounting for
Contingencies”, amounts are recorded as charges to
operations.  The ultimate resolution of any exposure may change as
further facts and circumstances become known.
 
 Recent Accounting
Pronouncements
 
 In
October 2009, the FASB issued Accounting Standards Update 2009-13, “Revenue
Recognition – Multiple-Deliverable Arrangements” which addresses how to separate
deliverables and how to measure and allocate arrangement consideration to one or
more units of accounting. The provisions of this update will be effective
prospectively for revenue arrangements entered into or materially modified in
fiscal years beginning on or after June 15, 2010. We are currently evaluating
the effect, if any, that adoption will have on its consolidated financial
statements.
 
 Results
of Operations
 
 Three
Months ended December 31, 2009 compared to the three months ended December 31,
2008
 
 Revenue.For the three months
ended December 31, 2009, we recognized $302,541 of revenue compared to $4,200 of
revenue for the three months ended December 31, 2008.  In the current
fiscal year, we received orders for and initiated work on the demolition and
construction of two bridges on the United States Army base at Fort Eustis in
Virginia, which are expected to be completed during our year ending September
30, 2010.  Work completed through December 31, 2009 includes primarily
engineering and the production of Company material specific to the project and
resulted in the recognition of $251,999 of revenue.  In addition,
during the current period, we recognized approximately $40,000 and $10,000
respectively from other construction activities and the sale of railroad
ties.  Other construction activities pertained primarily to
modifications on our Fort Bragg project substantially completed in the year
ended September 30, 2009.
 
 Cost of sales.Cost of sales
amounted to $246,040 for the quarter ended December 31, 2009, or approximately
81% of sales.  Because we are in the early stages of commercial
activities, costs of these sales may not be indicative of costs of sales in the
future, which may vary significantly, particularly as a result of the pricing of
individual contracts, concurrent production activities, the use of
subcontractors and the mix of product sales and services.  In the
three months ended December 31, 2009, a portion of certain fixed production
costs, which might otherwise have been fully allocated to the Fort Eustis
project were absorbed in the concurrent production of inventories of railroad
ties.
  13
 
 Research and Development
Expense.Research and development expense for the three months
ended December 31, 2009 and for the three months ended December 31, 2008 totaled
$26,615 and $154,940 respectively. Expenses in the 2008 period were principally
related to the development of our molds, products, and quality control
processes. We continue to work with our scientific team at Rutgers University to
enhance our product formulations, develop new innovative products, and expand
the reach of our existing products and anticipate that research and development
expenses may fluctuate significantly in the future as a result of such
projects.
 
 Marketing and Sales
Expenses.Marketing and selling expenses for the three months
ended December 31, 2009 and for the three months ended December 31, 2008 totaled
$105,040 and $46,732, respectively. This increase related to the addition of
internal sales personnel since December 31, 2008. Our initial target markets are
the domestic and international railroad industry, the U.S. military, vehicular
and pedestrian bridges, marine rehabilitation, golf architecture, and industrial
engineering firms and, accordingly, our marketing and sales expenses may
increase.  In addition, we may make use of outside agents and services
for its anticipated expanding activities.
 
 General and
Administrative.General and administrative costs for the three
months ended December 31, 2009 totaled $2,461,600, compared to $427,642 in the
three months ended December 31, 2008. The increase is primarily due to
stock-based compensation in the form of shares and warrants issued to several
consultants.  In the current fiscal quarter, we substantially
increased our general business development efforts and publicity of our initial
completed projects and expanding business activities. In addition, we engaged
consultants to advise on our strategic and financing plans and
activities.  We expect to continue to use stock-based compensation in
dealing with a number of consultants.  As a result, recorded general
and administrative expenses may vary significantly from period to period based
on projects initiated and the price of our common stock.
 
 Depreciation and
Amortization.Depreciation and amortization for the three
months ended December 31, 2009 and 2008 totaled $64,364 and $10,875
respectively, reflecting increased purchases of molds.
 
 Interest Expense, Net.
Interest expense for the three months ended December 31, 2009 and 2008 totaled
$34,786 and $60,732 respectively, primarily reflecting lower outstanding
debt balances in the current period. The Company recorded a discount on certain
notes substantially equal to the principal amount of the notes.  The
recorded discount on these debentures, $599,998 in the aggregate as of December
31, 2009, is being amortized to interest expense on the interest method through
their scheduled maturity dates.  As a result of the application of the
interest method to these discounts, unless the debentures are converted earlier,
substantially all of the discount is expected to be amortized during the first
two quarters of the Company’s fiscal year ending September 30,
2011.
 
 Liquidity
And Capital Resources:  Plan Of Operation
 
 As of
December 31, 2009, we had $338,192 in cash and cash equivalents and $1,319,850
of current liabilities.  In addition, the undiscounted total face
value of our debt amounts to $1,064,736, which is due between September 2010 and
March 2011.  In the three months ended December 31, 2009. we used
$1,269,894 of cash in operations, primarily as a result of production activities
for the Fort Eustis bridge project and inventory of railroad ties and our
expanding general and administrative activities as discussed above.  
Financing activities, consisting principally of the sale of common stock
generated net cash of $396,000 in the period.  We expect to continue
to incur net cash outflows from operations for the foreseeable
future.  Our ability to fund our planned operations, and pay principal
and interest on our outstanding debentures when they begin to come due later in
the year if not previously converted, depends on our future operating
performance and ability to raise capital. The timing and amount of our financing
needs will be highly dependent on the success of our sales and marketing
programs, our ability to obtain new construction contracts, the size of such
contracts and any associated working capital requirements.  At
December 31, 2009, except for $705,588 expected to be recognized on the Fort
Eustis bridge project, the amount of firm sales commitments for future projects
was not significant.
  14
  Contractual obligations:
 Payments due by periodTotal
                        
                        
                        Less than 1
                          year
                        
                        
                        1-3 years
                        
                        
                        3-5 years
                        
                        
                        More than 5
                          yearsLong-Term
      Debt Obligations
                        
                        $
                        1,050,736
                        
                        
                        $
                        450,736
                        
                        
                        $
                        600,000Minimum
      royalties (a)
                        
                        
                        720,000
                        (a)
                        
                        
                        40,000
                        
                        
                        
                        280,000
                        (a)
                        
                        
                        400,000
                        (a)
                        
                        
                        
                        (a)
 
 (a)
              Subject
      to voluntary termination by us upon 120 days prior notice under our
      license agreement with Rutgers.  After year 5, the minimum
      annual royalty is $200,000 per year.  We may also pay a
      percentage of consideration received for any future
      sublicenses.
 
 We
believe we will need to raise additional capital through additional equity or
debt financing in the next twelve months in order to fund our planned operations
and repay our debt obligations. Our current operating plans for the next fiscal
year are to meet our existing customer commitments, enhance our research and
development capabilities, expand our marketing and sales and engineering staffs,
and continue to develop innovative solutions.  In April 2006, we
commenced an action against Tonga Partners, L.P. and others (“Tonga”) for
disgorgement of short-swing profits pursuant to Section 16 of the Securities
Exchange Act of 1934, as amended.  In September 2008, we were granted
summary judgment in the amount of approximately $5.0 million; however, the
defendants are appealing the order granting summary judgment.  We may
receive a substantial amount of cash pursuant to the judgment rendered against
Tonga, but the outcome and the timing of the appeal filed by Tonga is
uncertain.  We anticipate that we will have to raise additional funds
through the issuance of debt and/or equity during the next twelve
months.  There can be no assurance that financing will be available,
or if available, that such financing will be upon terms acceptable to
us. Please see the Risk Factor “We are dependent on our ability to raise
capital from external funding sources. If we are unable to continue to obtain
necessary capital from outside sources, we will be forced to reduce or curtail
operations” in “Item 1A.  Risk Factors” in our Annual Report on Form
10-K.
 
 Disclosure
About Off-Balance Sheet Arrangements
 
 We do not
have any transactions, agreements or other contractual arrangements that
constitute off-balance sheet arrangements.
  Item
3.  Quantitative and Qualitative Disclosures About Market
Risks.
 
 Not
applicable.
 
 Item
4. Controls and Procedures
 
 (a) Evaluation of
disclosure controls and procedures. We maintain “disclosure controls and
procedures,” as defined in Rule 13a-15(e) under the Securities Exchange Act
of 1934, or the Exchange Act, that are designed to ensure that information
required to be disclosed by us in reports that we file or submit under the
Exchange Act is recorded, processed, summarized, and reported within the time
periods specified in Securities and Exchange Commission rules and forms, and
that such information is accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial Officer to allow
timely decisions regarding required disclosure. In designing and evaluating our
disclosure controls and procedures, management recognized that disclosure
controls and procedures, no matter how well conceived and operated, can provide
only reasonable, not absolute, assurance that the objectives of the disclosure
controls and procedures are met. Our disclosure controls and procedures have
been designed to meet reasonable assurance standards. Additionally, in designing
disclosure controls and procedures, our management necessarily was required to
apply its judgment in evaluating the cost-benefit relationship of possible
disclosure controls and procedures. The design of any disclosure controls and
procedures also is based in part upon certain assumptions about the likelihood
of future events, and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future
conditions.
  15
 
 Based on
our evaluation as of the end of the period covered by this Quarterly Report on
Form 10-Q, our Chief Executive Officer and our Chief Financial Officer have
concluded that, as of that date, our disclosure controls and procedures were not
effective as a result of material weaknesses in our controls over financial
reporting discussed in Item 9A(T) of our most recent Annual Report on Form
10-K.
 
 (b)
Changes in internal control over financial reporting.
 
 In
October 2009, Michael Johnson resigned as our Chief Financial Officer, at which
time Gary Anthony was appointed to replace him.  There have been no
other changes in our internal control over financial reporting (as defined in
Rules 13a-13(f) and 15d-15(f) under the Exchange Act) that occurred during the
period covered by this quarterly report that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
  16
 
 PART
II. OTHER
INFORMATION
  Item 1. Legal
Proceedings.
 
 None.
 
 Item
1A. Risk Factors.
 
 Not
applicable.
 
 Item
2. Unregistered Sales of Securities and Use of Proceeds.
 
 In
October 2009, we issued 200,000 shares of common stock to consultants for
services performed in our strategic planning and financing
activities.
 
 In
November 2009, we sold 200,000 shares of common stock and 20,000 three-year
warrants, exercisable at $2.91 per share, for aggregate proceeds of
$410,000.  As a placement fee, the Company paid $8,200 and issued
20,000 three-year warrants, also at the exercise price of $2.91 per
share.
 
 In
November 2009, we issued 360,000 five-year warrants exercisable at $0.90 per
share to a consultant for services to be performed in our financing
efforts.
    In
December 2009, we agreed to issue 104,554 five-year warrants exercisable at
$0.88 per share to a consultant for services performed in our financing
efforts.
 
 All of
the foregoing transactions were conducted pursuant to the exemption from
registration provided by Section 4(2) of the Securities Act of
1933.
 
 Item
3. Defaults Upon Senior Securities.
 
 None.
 
 Item
4. Submission of Matters to a Vote of Security Holders.
 
 None.
 
 Item
5. Other Information.
 
 None.
 
 Item
6. Exhibits.
 
 Exhibits:
 
 31.1
                Section
      302 Certification of Chief Executive Officer31.2
                Section
      302 Certification of Principal Financial Officer32.1
                Section
      906 Certification of Principal Executive Officer32.2
                Section
      906 Certification of Principal Financial
Officer
  17
  SIGNATURES
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
 
 Axion
      International Holdings, Inc.Date:  February
      22, 2010
              /s/ James KersteinJames
      KersteinChief
      Executive OfficerDate:  February
      22, 2010
              /s/ Gary AnthonyGary
      AnthonyChief
      Financial Officer
  18