Alexium International Group Limited (AJX) Earnings Call Transcript & Summary

All right. Well, good morning, everyone, and welcome to the 2020 Annual General Meeting of Alexium International Group Limited. My name is Rosheen Garnon. I'm a nonexecutive director and the Chair of Alexium, and I will be chairing our meeting today. Due to COVID-19 pandemic and the resultant public health concerns, this year's meeting is being delivered live via webcast. Every effort has been made to ensure that this meeting runs smoothly for our shareholders. If we experience any technical issues today, a short recess or an adjournment may be required depending on the number of shareholders affected. If this occurs, I shall advise you accordingly. There being a quorum present, I declare the meeting to be properly constituted and declare the meeting open. I would like to introduce my fellow directors who are on the call today, and I'll just ask them to switch their videos back on so that you can see them. We have retired Brigadier General Stephen Cheney. We have...

Good to be here, Rosheen.

Simon Moore Collinton.

Thank you very much, Rosheen.

Dr. Paul Stenson who is our newest director.

Thank you, Rosheen.

And of course, we have our CEO, Bob Brookins.

Well, thank you.

And we also have Jason Lewis, our CEO, (sic) [ CFO ] joining us as well.

Thank you, Rosheen.

In attendance, we have [ amongst ourselves ], our Company Secretary and from then, we have with us James Williams. Representing the auditors is Matthew Leivesley of Grant Thornton, the company's auditor. And finally, Automic, our share registry is represented by Jonathan Cooper. And it's via Automic that we are coming to you today. So I'd like to thank them. Voting today will be conducted by way of a poll on all items of business. In order to provide you with enough time to vote, I will open voting for all resolutions before the formal business. In order to vote at this meeting, you need to have registered your shareholding with Automic. If you haven't done so, you can follow the instructions on the screen to register and log in to enable you to vote at this meeting. I would like to highlight that where undirected proxies have been given in favor of the chair, I will be voting these proxies in favor of all resolutions being put to the meeting today. Shareholders may also have voted at this meeting by completing and lodging their proxy form online. [Operator Instructions] We will not be answering questions where an SRN or an HIN has not been provided. [Operator Instructions] Please note that while we can submit questions from now on, I will not address them until the relevant time in the meeting. [Operator Instructions]. Please also note that your questions may be moderated or, if we receive multiple questions on 1 topic, amalgamated together. Due to time constraints, we may run out of time to answer all your questions. If this happens, we will answer them in due course via e-mail, posting our responses on website as well. [Operator Instructions] I will either deal with the question personally or ask someone who is better placed to respond. We will do our best to answer any relevant question raised. [Operator Instructions] Now in terms of the Notice of Meeting, the Notice of Meeting was made available to all registered members on the 13th of November 2020 and, with your agreement, I will take it as read. I'll now move to ordinary business. This meeting has been called for the purpose of considering and, if thought fit, passing the resolutions as detailed in the Notice of Meeting. I now declare voting open on all items of business. You can submit your votes at any time. I will give you a warning before I move to close voting. As previously stated, all resolutions today will be decided by a poll. So I'll turn to the financial statements and reports. The first item of business is to receive and consider the annual financial report for the company for the financial year ended June 2020, together with the declaration of the directors, the director's report, the remuneration report and the auditor's report. Are there any questions or comments in relation to the financial statements and reports? Just having checked the Q&A, there are no questions, so we will come to the items of business for which a vote is required. So resolution 1 is the adoption of the remuneration report. The directors have prepared a remuneration report to 30 June 2020, and it is included in the company's 2020 annual report. Please note that this resolution is advisory only and does not bind the company. So the resolution is to consider and, if thought fit, to pass with or without amendment the resolution that appears on the screen as a nonbinding resolution. Please note the voting prohibition statement on this resolution as set out in the notice of meeting and as shown on this slide. Are there any questions or comments in relation to this resolution? Having received no questions, for those shareholders who have not voted on today's proceedings, please now select either for, against or abstain for resolution 1. The results of the proxy voting are as shown on the slide now being presented to the meeting. We will now move on to the next resolution. Resolution 2 relates to the election of Simon Moore as a director. Resolution 2 concerns the standard director rotation and reelection requirements under the ASX listing rules and the company's constitution to consider and, if thought fit, to pass, with or without amendment, the resolution which appears on your screen as an ordinary resolution. Are there any questions or comments in relation to this resolution? Having received no questions, for those shareholders who have not voted on today's proceedings, please now select either for, against or abstain for resolution 2. The results of the proxy voting are as shown on the slide now being presented to the meeting. We will now move on to the next resolution. Sorry, I've just been asked a question. So we're being asked to provide you with the number of proxy votes for each question. And so I can do that. So for adoption of the remuneration report, there are approximately 139 million votes. For resolution 2, on the election of Director, for Simon Moore, there are approximately 211 million votes that have been voted. I'll now move to the next resolution, and that is resolution 3, relating to the appointment of Paul Stenson. Resolution 3 concerns the standard director rotation and reelection requirements under ASX listing rules and the company's constitution, and that is to consider and, if thought fit, to pass, with or without amendment, the following resolution, as shown on your screen, as an ordinary resolution. I have a question in relation to this resolution, and that is to ask Mr. Stenson to speak briefly in support of why he would like to be a director of Alexium. So Paul?

Sure. Thanks, Rosheen, and thank you for the question. My background is in chemistry. So a long career, more than 30 years, in specialty chemicals, specialty chemical materials which, of course, are the basic building blocks of the Alexium product line. So I fully understand the chemistry and the product line, and I can definitely bring value there. I've also, like the CEO of Alexium, a Ph.D. in chemistry, so I think I can bring some good value helping Bob, the CEO, with my chemistry background so -- because everything is based on technology. Leading from that is the partners protection of the product line, which I understand quite well and Bob is taking care of in a very good way already. I'm also the CEO of 2 companies here in the United States, again, specialty chemical type material companies, one happens to be in the area of flame retardants, things. So I think between these 3 ideas, I can bring some good value to the team at Alexium in Greer, South Carolina.

Thanks, Paul. There being no further questions in relation to this resolution, for those shareholders who have not voted on today's proceedings, please now select either for, against or abstain for resolution 3. The results of the proxy voting are as shown on the slide now being presented to the meeting. And I can tell you that the votes cast are approximately 210 million votes. I will now hand the chair over to Simon Moore as the next resolution relates to my own reelection.

Thank you, Rosheen. Resolution 4 concerns the reappointment and reelection of Rosheen Garnon as a director of the company, and the resolution is now on the screen. Are there any questions or comments in relation to the resolution? I can't see any there at the moment. So if there are none, we will continue on. The results of the proxy voting are shown on the next slide. If you could, cast your vote, please. And with that, I will pass it back to Rosheen and move on to the next agenda item.

Thanks, Simon. And just in terms of the question that's been asked about the proxy votes, once again, it's about 211 million votes that are being cast. Now the next resolution relates to the grant of shares to Brigadier General Stephen Cheney. Shareholders might remember that this relates to the grant of shares in lieu of director fees. This better aligns the interest of the directors with the interests of shareholders and provides an opportunity for the directors to acquire shareholdings in Alexium. We are doing 2 rounds of these this year. And the reason for that was, you might remember, we did the capital raise last year. And so at that point, we did not put a motion to the AGM. So in order to grant these shares to Stephen and myself, we will be considering 2 periods. For this first one, so Stephen covers the period 1 October 2020 to 30 September 2021, so it's forward-looking. So we will consider, and if thought fit, to pass the following as an ordinary resolution which appears on your screen. Please note the prohibition statement relating to voting on this resolution is set out in the notice of meeting and shown on the slide. Are there any questions or comments in relation to this resolution? Having received no questions, for those shareholders who have not voted, please vote now for resolution 5. The results of the proxy voting are as shown on the slide now being presented to the meeting. And once again, there's approximately 211 million votes that have been cast. So once again, as the next resolution relates to myself, I'm going to ask Simon to chair the movement of this resolution.

Thank you very much, Rosheen. Resolution 6 relates to the grant of shares to Rosheen in lieu of directors' fees and remuneration in cash payment. The background is the same as with the resolution 5 subject material. The resolution is set forth on the screen. Again, could you please note that the voting exclusion statement and also the voting prohibition statement? We'll now put the proxy votings on the screen. You can see the for, against and discretionary there. And again, I think we're in the order of 211 million shares being voted for this resolution. If you haven't voted, please take this moment to cast your vote. And with that, I'll hand it back -- the chair back to Rosheen for [ consideration ] of Resolution 7.

Thanks, Simon. We're doing a bit of a tag team here today. So resolution 7 relates to the grant of shares to Brigadier General Stephen Cheney. And this is for the 12-month period, 1 October 2019 to 30 September 2020. So that's the resolution as it appears on the screen. Please note that there is a voting prohibition statement on this resolution, and that's set out in the notice of meeting, and it's shown on the slide. Are there any questions or comments in relation to this resolution? None having been received, for those shareholders who have not voted, could you please now select your voting preference for resolution 7? The results of the proxy voting are as shown on the slide now being presented to the meeting. And once again, it's about 211 million shares that have been voted. And once again, I'll hand back to Simon for the last resolution in relation to my remuneration.

Thank you very much, Rosheen. Resolution 8 is in relation to the grant of shares to Rosheen in lieu of cash directors' fees for the historical period, 1 October 2019 to 30 September 2020. The resolution is on the screen. If you could please note the exclusions in relation to voting and the voting prohibition statement. The proxy results are now shown on the screen. Again, approximately 211 million shares have been voted. If you could, please, if you haven't already, vote at this point in time on resolution 8. And with that, I'll hand the chair back to Rosheen.

Thanks, Simon. So Resolution 9 is the issue of shares. And this relates to the issue of shares under a professional services agreement between the company and S3 Consortium Pty Limited as consideration for the provision of investor relations services to the company. The details in relation to resolution 9 is set out in the explanatory memorandum, which forms part of the notice of the meeting. And this resolution is to consider and, if thought fit, to pass the resolution as it appears on the slide as an ordinary resolution. Please note the voting prohibition statement on this resolution as set out in the notice of meeting and is showing on the slide before you now. Are there any questions or comments in relation to this resolution? Having received none, for those shareholders who have not voted on today's proceedings, can you please now vote for resolution 9? The results of the proxy voting are on -- are shown on the slide now being presented to the meeting. And the -- in relation to the issue of shares, we have had a total votes of 165 million. We'll now move on to resolution 10, and this is the approval of the 10% placement facility. So it seeks shareholder approval by way of specialist resolution to the company to have an additional 10% placement capacity as provided for in Listing Rules 7.1a of the ASX listing rules. Further details in relation to this resolution are set out in the explanatory memorandum which forms part of the notice of meeting. Your directors have recommended that shareholders vote in favor of resolution 10. Now in considering this resolution and if thought fit to pass it, it will be a special resolution. And the resolution itself is on the slide as shown. Are there any questions or comments in relation to this resolution? Having received none, can I ask shareholders who have not voted to please now vote for resolution 10? The results of the proxy voting are being shown on the slides now. And once again, the approval of resolution 10, I have -- we have received about 211 million votes. So that concludes the formal business of the meeting. In a couple of minutes, I will close the voting system. Please ensure that you have cast your vote on all resolutions. And I'll now pause for a moment just to allow you time to finalize those votes. [Voting]

So I'm just going to allow 1 more minute for everyone to register votes. So bear with us as we just like to allow everybody time to be able to do that. [Voting]

I will now close the poll. When the voting has been collated, the results will be declared on each resolution and released on the announcement platform of the Australian Stock Exchange. Thank you, ladies and gentlemen. That now concludes the formal part of the meeting, and I hereby declare the meeting closed. I just want to make a couple of comments. I want to thank everyone for their attendance and interest. And it's important, I think, that we give Bob the opportunity to provide an update to shareholders. But before we do that, I just wanted to acknowledge what an extraordinary year we've just been through. If I think back to our last AGM, we were in the middle of planning the capital raise. I want to take this opportunity to thank all of our shareholders for your unwavering support as we restructured the balance sheet of Alexium. Quite simply, we couldn't have done it without you. The fact that we eliminated a high-cost debt, brought in a new cornerstone investor with deep expertise of working with companies, such as Alexium, has enabled us to concentrate on the commercialization of our products. Just reflecting on our journey over the past 2 years since I joined Alexium, we've set a new strategy for the company to position in thermal management. As you've seen today, we've reconstituted the Board, so you've had Simon Moore join Dr. Paul Stenson, and I've been with the company for just over 2 years. Already, we've been able to leverage the market knowledge and networks of both Paul and Simon to great effect. Restructuring and resolving the capital structure was a key priority. So since then, we've been able to expand our product portfolio from 1 to 4, and Bob's going to talk about them today. And as Jason has previously articulated, and he keeps making a big point about this, we have improved our operations and our gross margin. Whilst the onset of COVID has slowed our progress, I'm proud of the whole team at Alexium. They're a dedicated and passionate team and really focused on their work. They're highly talented, and our product suite reflects all of that hard work. And I'd like to take this opportunity to thank all of them. I'd also like to acknowledge Bob and Jason in particular. They've worked tirelessly to reposition the company. While I am disappointed that we have not been able to make more progress this year due to COVID, the Board and management are very clear now that our sole focus is to drive revenue. And the recent additions to our commercial team will further enhance our capability in this area. I look forward to providing you with updates on our progress throughout the year. Thank you once again for all of your support. I will now hand over to Bob. Bob, I think you're on mute.

[indiscernible] Well, we had to have 1 solid mistake, there we go. So sorry about that. So on behalf of the directors, the management team and the staff, I appreciate everyone joining us for our Annual General Meeting. Given we are using a virtual format this year for the AGM, we will need to address all questions as a separate Q&A at the end. Given a little familiarity I now have with the how would it work with Zoom here, if anyone has any questions as we're going through, I'll keep an eye on what we have there. And where we can make it a dialogue and less of a presentation, I think it would be better for all. So I hope everyone takes advantage of using that Q&A format. And if there's any specific topics that you would like to see addressed, I encourage you to do that. If we can now go to the third slide. That's the disclaimer. I would like to start with a short introduction to Alexium. Just to -- for those of you who are new to the story, Alexium is listed on the Australian Stock Exchange, was based in the United States in Greer, South Carolina. We are an advanced materials provider of proprietary technologies for flame retardant thermal management applications. Those are the key markets that we focus on. And we are a technology leader in textile and foam-based products for U.S. consumer and military markets. On the U.S. consumer side, major market for us at this time is bedding on top of that. And we'll continue to look at our expansions beyond that. We focus on developing our patented and patent-pending technologies are really designed to address key market gaps and address consumer needs. One notable aspect about the company is our product manufacturing is to a tolling partners. This enables us to have greater flexibility and responsiveness to business growth and allows us to operate under a capital-light model. Now you can see in this diagram to the left here, this outlines what we have been able to identify as key factors for our commercial success, which has been an understanding what does the customer needs, developing technologies that address those and then using analytics to demonstrate the value of our products. That has really been integral to the work we've done with Alexicool, where we've been able to move our customers to thinking not simply about the aesthetics of how they use thermal management, really delving into the science of thermal management. This has been integral to the position that we've built in that market. At a number of spots in the presentation, you'll see how our efforts have evolved as we have a better understanding of what our customer needs and how our technologies can serve those, and we'll be touching on that in further slides. If we can go to the next slide, please. Taking a look back at the last fiscal year, you see revenue has increased by approximately 28%. That is despite impacts of COVID-19 outbreak. While we targeted greater growth in revenue over that period, this is encouraging given the situation. This increase in revenue did -- coincided with improvements in gross margins, as you see here. Margins are dictated by a number of factors, including product mix, raw material costs and manufacturing costs. As mentioned in the last quarterly, we are taking steps to further improve manufacturing costs, and we look forward to get all that implemented in the coming quarters. Cash management is really a priority for us, and I'm sure everyone understands that. And at this time -- and expenses have been improved on a number of fronts, which is reflected in our improved operating EBITDA. If we can go to the next slide. This slide provides a breakdown of revenue and operating expenses on a half year basis, which is provided for reference. As Rosheen mentioned earlier, at the start of the fiscal year, a focus for the company was to improve the capital structure by eliminating a notably high debt that we have with GPB and providing working capital. The capital raise that was completed in January this calendar year enabled us to do just that and is positioning the management team and Board to focus on growing the company from here. This has been further promoted by the engagement of Simon Moore joining the Board as well as Paul Stenson. Also, I do want to note that Alexium was able to utilize the US CARES Act for a loan of $0.5 million, which is expected to be forgiven based on how the loan is structured. Someone asked here if we are looking to move into the Chinese market. We'll be talking about it in a couple of slides, think we'll be able to touch on that. Also one other question, will we talk about what measures we take to keep staff safe from COVID-19? I think this would be a good point, if we could touch on that. Obviously, COVID-19 has been a -- while it's been an issue globally, the United States seems to be in an extraordinary position in how the degree has impacted us and what has been the response, both politically and culturally, I'll say. We have been very attentive to making sure that we can keep the staff working while ensuring that they can do so safely. Part is that -- some of those measures that we have implemented is having -- every day the staff come in, they have their temperature check. They answer a questionnaire to confirm that they have not had exposure to COVID-19. And then once they're here, we implement appropriate social distancing guidelines as recommended by the CDC. Additionally, at the close of every day, we go through a program of cleaning all the surfaces to make sure that everything is as clean and as safe as it can be. And we have -- frankly, Alexium has been very fortunate that we have not been significantly impacted by COVID. Thank you for the question. If we can move on to the next slide, Slide 6.

Bob, we might take just remind everyone, when they're submitting their questions, if they can put their SRN numbers in, please? That would be great. Thank you.

Yes. Now one key point that distinguishes where Alexium is today versus 12 months ago is the expansion of our product portfolio. When I first stepped in as CEO, we, of course, have a number of initiatives going on, such as our work on FR NyCo. But for the sales team directly, I told them to focus on 3 words: Alexicool, Alexicool and Alexicool. This is where our margins are good. This is where our momentum is strong. We had traction in the bedding market, and we needed to leverage that. And it has been successful, as you can see, where we've been able to continue to grow revenue. But since then, we have now expanded that portfolio significantly to we're now beyond just 1 platform. To touch on that briefly, as you can see here, we now have our biobased PCM, which was developed and manufactured by Alexium, which allows us to expand the range of markets that we can now go into. Phonon is a new platform which was launched a few months ago that establishes a whole new paradigm for perpetual cooling. This is a patent-pending technology developed here at Alexium. This is both a complement and an extension beyond what we can do in PCM. On the flame retardant side, we have our Alexiflam NF treatment for FR socks which gives us a proprietary FR technology where we can take a cotton-based sock, which is like a knit fabric, literally that type of fabric you would have with a sock, which provides a safer, environmentally friendly and less expensive product for protecting foam-based mattresses to meet the regulatory standards here in the United States. And lastly, we have our Alexiflam FR, which is a core flame retardant used for work in military uniforms but which we can also look at to grow in additional markets. Now this expansion of the product portfolio increases our market opportunities and further enables us to drive growth. If we can go to the next slide, please. One key point I'd like to make about these platforms is that these are not simply developments that were made by the technical team. They are driven by insight from the market that are provided by the commercial team and our customers. And our innovations are guided by what the market needs. In this work over the past 18 months, there has been a natural evolution toward our -- a unique portfolio of environmentally friendly products. It's worth noting, this was not an explicit decision where -- as you typically see with companies who are developing eco-friendly technologies, where they're really trying to take 1 particular type of product to market. This is simply a recognition of what our customers need and how can we provide insights through our innovations for how we can get there. Now what I think really helps to distinguish Alexium in that regard is that, more often than not, eco-friendly products end up being at a sacrifice of performance and at a more costly position. While everyone would love to be, I think, more environmentally friendly, as a general rule of thumb, if it costs 10% to 20% more, it's just simply not viable. Now our position is that we can use our innovation so that we can provide something that's ecologically friendly but is still cost competitive and can give you equivalent to better performance than the products that are currently being used. I think this is something that's really going to help distinguish Alexium and will be a point of growth for us in the future. Next slide, please. Now what I'd like to do is just take a few minutes to talk on the different initiatives that we have going on at Alexium and what we're doing to help drive revenue growth in those areas. First, just speak to the Alexicool platform. We really have 3 key areas where we're looking to drive near-term revenue growth. First, I want to speak to our total mattress cooling systems which we introduced to investors a few months back. By leveraging our broad product portfolio and the analytical tools we have at Alexium, we're able to develop what we call total mattress cooling systems where, as shown in the diagram to the right, we can integrate cooling technologies at different tiers within a mattress that enables our customers to have a more strongly differentiated product than what they currently have out there. This allows us to better support our customers and also the revenue we get per unit of our mattress or our bedding product increase as a result because we are a fully integrated product. Now with the development of our Phonon technology, this provides us a new-to-the-world approach for providing perpetual cooling, and this is going to be a key part of our strategy in the total mattress cooling systems as we move forward. We have some -- as you've seen in our previous communications, we do have some new mattresses that are coming into the market later this -- into the mid calendar year, and we'd have further designs that we're working on with customers. Now additional focus for Alexium is to increase market penetration through targeted market segments. Through the recent developments in our PCM technologies, where we are now manufacturing our biobased PCM, Alexium can now expand its opportunities beyond the premium high-performance market segment. Something that we're always reflecting on is when we look at the total market opportunities that are out there for cooling technologies, how can we better take a market share, which is about how do we better serve our customers. In some places, like the work we do with Soft-Tex, they are really focused on providing a premium product, and we can get them there. But then there's also customers who are really trying to address maybe a lower-tier market segment. Based on the developments that we've had around our biobased PCM, this now allows us to more strongly address those markets. Now what must happen concomitantly with everything we have above is that we're going to need to expand our supply chain footprint outside the U.S. This is not a -- I would say, a vague notion that, by going into a region we're not currently in, that we can -- we have increased opportunities. This is really about serving our existing customer base and recognizing what opportunities we need to be seizing by moving into -- having a supply of our products in Asia. This is work that Jason and I are actively working on, and we'll be providing updates about that in future quarterlies. If we can go to the next slide, please. I do have 1 question here. I'll address from Helen where she's asked if any Alexium-treated products will be available in Australia. We are actually now working with some bedding suppliers who their major consumer markets are in Australia. This is in, I would say, in not early stages, I'd say, kind of middle stages at this point. But typically, the Australian bedding market has not been much of a focus for thermal management technologies. But from what we're hearing that, we're seeing that there is a bit of a transition there. Now turning to our -- speak to our Alexiflam platform. We have the -- we'll talk first about the Pine Belt partnership that we have for development of FR NyCo. Alexium has partnered with Pine Belt, who's a current finisher of uniforms for U.S. military, but working to commercialize our FR treatment of the nylon cotton fabrics. Both parties have proprietary chemical and application technologies that are relevant for the effort and integrating these for best practices on both sides as acquired, really is a focus of what we're doing today with them. Despite delays that we've had related to COVID-19 pandemic, which of all the different initiatives that we have at Alexium, I'd say the FR NyCo has been most impacted. We're still making progress, and both parties look forward to finalization of this process. The current focus of this effort is to demonstrate manufacturability of FR NyCo at Pine Belt's facility. And that's what we're currently working on with the next round of work coming in, in the next month. Success here will allow us to move on to testing and evaluation by the U.S. military. One thing we've been very encouraged by is some recent communications within -- with the U.S. military has further reaffirmed their interest in moving the -- an FR NyCo product into their offering, and so we just need to continue to -- the work we have with Pine Belt to get that manufacturing process over the line. If we can go to the next slide, please. Additional products that we have in our Alexiflam platform is our FR sock for foam mattresses. The commercialization of Alexiflam in-app is fully underway. One significant benefit for this platform is that the same network of contacts that we have with Alexicool, we can also utilize here for the FR sock. This is where we're using our sock as a barrier fabric for the foam mattresses. As we discussed earlier this year, UL testing of this product has demonstrated equivalent performance with incumbent products -- relative to incumbent products while being eco-friendly and providing the cost savings. It really is a great value proposition for the [ in ] brands. Potential customers for this product are in various stages of evaluation, going from prototype to full production scale. This is something, as we'll show on our final slide in a minute that this is something that we are looking -- targeting revenue for in the near to mid-term. Also, with our distribution partner for Alexiflam NF, this agreement was finalized for the latter part of fiscal year 2020. And we are underway and working with them. Due to the global scale of FR cotton applications, this really makes sense for us to have a partner like this who has the kind of scope as the market demands. While we have had some delays here due to the -- due to COVID-19, efforts are progressing well for opportunities in both the U.S. and the EU. And we are actually in the process of scheduling the initial production trial with one of their customers, which is something we look forward to seeing that move forward with. If we can go to the next slide, please. Now this slide provides a general overview of the major initiatives that we have here at Alexium and their current status as well the timing for anticipated revenues. As you can see, we have an important 6 to 12 months here as key new products go into market. And put it simply, at this point, we have to focus on execution. It's about just getting all of these over the line, ensuring that -- what this means is ensuring that we are ready to supply our customers and that we can help our customers manage their commercialization products as they go through their final supply chain and marketing work to get these products ready for the market. That's the end of my presentation here. So I think it might be good just to leave this perfectly right there. And Rosheen, I think we can now go to the Q&A portion of the meeting.

Thanks, Bob. And we've received a few questions ahead of the meeting. So I might address those first. And then if anybody wants to ask any further questions, we can take those as well. What I'll do is I'll read out the 3 questions that have got sub parts. I'm breaking them all together for you because, basically, I'll talk to all aspects of these questions in one. And so the questions are, can you please address these questions? Given the majority of Alexium shareholders are based in Australia, can you let us know what presentations which Alexium made in Australia over 2020 is virtually or in person? What promotion of Alexium to potential investors have member of the Board done in Australia over 2020, given that Alexium's U.S. employees have not been able to travel to Australia? The next question was, Alexium shares recently jumped to $0.10 with increased volume and for no apparent reason. Has there been any change in the top 20 shareholders since that event? Does the Board have any explanation for that increased activity? And then the final question, at what point will the Board of Alexium decide to promote the business of Alexium? Will it be the point at which AJX shares reach sub $0.01? How will Investors research Alexium if they've never heard of the company and its products? The markets really get an update. And when it does, it provides virtually no real information. It's a public company and the business of Alexium should not be a secret. So look, in response to that sort of question, so that's a really, really good set of questions, can I say? The first thing is we're going to publish the top 20 shareholder list tomorrow on our website, so you'll have an update. And I'll take you back to when we did the capital raise. So this time last year, we did a large number of presentations in October and November in order to generate interest in the rights issue. Bob and Jason were in Australia and, in fact, Jason extended his stay. So he was here for a couple of weeks in order to do all of those presentations. Normally, we would then undertake another roadshow around the May, early June time frame. And as you will all appreciate, this year, we were in the middle of COVID at that time. And both the Board and also management were solely focused on protecting the business. And so because the markets were in free fall and, quite frankly, we talk to people, and we agreed it wasn't the right time to undertake a roadshow. We had, however, already decided that we would not only use roadshows and presentations, but we would also leverage digital media to market Alexium to new potential shareholders. We've, therefore, concentrated on the digital avenue during COVID. We've completed a number of campaigns online. And the first -- and I'll say to you, the first couple of campaigns, we didn't really see much activity, and that was due to COVID. But we wanted to get the name of Alexium out there and build our profile. The last campaign, which we released focused heavily on the ESG aspects of our products. And we see that as being a really important source of potential investor funds for Alexium. So immediately after that campaign went out, that resulted in the recent spike in shareholder activity and so when the shares went to $0.10. Going forward, what I'd say to everyone is we will revert to the traditional presentations and roadshows. But we will continue to leverage the digital media as well because I think at this point in time, particularly with COVID, it's a great place to reach further potential investors. So I'll then move on to the next question, which is given the restrictions placed on travel during COVID, why is there no shareholder investor contact point based in Australia? Why are the shareholders expected to contact and deal with personnel in the U.S. when Alexium is an Australian company with predominantly Australian shareholders and Alexium relies on Australian funding to remain in business? Look, the short answer is we are actively seeking to manage costs. And Bob and Jason have taken over handling all investor inquiries. And quite frankly, we think they're the best placed at this point in time rather than putting another intermediary in there. So then we have another question here. And this one, I think I might hand to Bob. Rather than me taking all the questions, I might share some of the pain. So what was the purpose of the ASX announcement dated the 2nd of December 2020? It had no specific information, no time line, no information on the actual product nor on the markets or the market size or the possible revenue.

Sure. Thank you, Rosheen. So the purpose of that announcement, I think, first and foremost, was that we are updating our website and marketing collateral and marketing we'll have in trade publications. And a complaint that we've had from investors is that we need to keep them updated as we have developments like this. So it really is just keeping the market informed about what those -- what these new product offerings are and how we see them being positioned in the market. Regarding specific details in terms of what we'd see this meaning in terms of additional revenue, what this means in terms of our marketing strategy, I hope investors will appreciate that we have dealt in the past with our competitors and supply chain partners, seeing information that Alexium has released and then that ultimately ends up working against us. So we have to make sure that we don't reveal too much information through those type of announcements such as what we had here in December 2. I think that our focus would be in providing -- once we begin having successes with these new product lines, we will put those wins in context and help you understand where that revenue growth is coming from. That increase is going to be the way we need to be focused on our communications going forward.

Okay. And Bob, some other questions. So this one was also that came in ahead of the meeting, just about a commercial update on new cooling technology, which you've already presented. But I thought it might be useful just if you could outline some of the issues that we've had with COVID in terms of supply chain.

Yes, one of the key issues that we've had to manage on the Alexicool side of things regarding the supply chain is that -- is really getting materials moved around of the world, getting raw materials in place has been an absolute bare. Literally, new product launches are impacted by this where total mattress cooling system that we're working on needed to be delayed because the availability of polyols, as is used by for foam mattresses is simply not out there due to reduction in petroleum -- of petroleum production. Additionally, we've had people that we're working with the supply chain through their ability to support the work we're doing for the end brands has been impacted. So it really has been a lot about being creative and pivoting the supply chain so that we can be responsive to what the situation presents. And it has been an issue of timing for the opportunities that we have, but it has not been a loss of those opportunities. So all this continues to move forward. And as I showed in that last slide, it's really just about us continuing that execution to get it over the line.

So Bob, we've got a couple of other questions that have come up. So why does it appear that we are not increasing our customer base, for example, no new contracts signed or announced in Soft-Tex? The uptake of customers seems slow, especially in light of the products we have. If our technology is as good as we are to believe why aren't customer numbers increasing?

That is a good question. We are, say, over the past 12 months are getting incremental increases in our customer base. Now some of this is more through a standard purchasing as opposed to a signed agreement, such as we have with Soft-Tex. But many of these programs as well working with new customers, they end up being single new product lines and end up being, say, within the overall growth of the -- revenue growth that we have, I guess, I'd say get lost on new ones but effectively something to that effect. Uptake of customers has, as you said, it does seem slow. One comment I would make there is we have some of our products, such as what we have done with PCM products for foam, some of what we're doing for top-of-bed applications. We really have been focused on providing premium products, providing -- where we can use our analytics to provide support. And those do not as well address the needs as what someone like a Soft-Tex is doing. And we're adapting that marketing strategy so that we can be more responsive and address the market needs for a more diverse customer base, which allow us to increase market penetration. So in a nutshell, if I can recap there, we are having some -- are having incremental growth. But I think what's really going to be the driver for even further growth is continuing to diversify how we can provide a -- be a supplier to the customers and more broadly address their needs, whether it's a premium product that has a very high-value for the end consumer or something that's really about being more competitive or being more environmentally friendly to address diverse market needs.

Thanks, Bob. So the next question we have, can you provide us with some more detail about Phonon? So how does it work? What's unique about it and what are the possible applications?

I think the most important thing I'll say regarding what makes Phonon unique is it has pushed us to some key technical insights that we had regarding thermal management using analytical tools that we have. It has pushed us to development of a key component that can be used in textile and foam products for improving thermal management. And in a sense, it accelerates the -- amplifies the effectiveness of phase change materials and also the cooling properties of the mattress as a whole. So this is not simply a distinct wet chemistry product as we have with our PCMs. It is more of a -- I'll describe it as a component that we work with our customers to integrate into a mattress or another product. Now in terms of where we see application, it really is focused on consumers and how you can use the -- by integrating Phonon, how you can make sure you don't have a concentration of heat near the consumer so that they end up being uncomfortable. Where we see potential applications for this, obviously, where we're currently active, which is in bedding. That could be extended into more, say, hospital beds, in thinking of medical applications, also looking at protective equipment such as what we use for helmet, outdoor gear, where such as a backpack, where again, you can have close proximity to consumer can really increase the -- how hot they're feeling. So we really see this as a platform that has very wide application. It does help distinguish us as a technology provider. We're not the only PCM manufacturer on the block, but we are the only Phonon manufacturer in the block. And showing them how we can use products like Phonon and PCM to work in concert to provide them a high-value proposition is really what has helped distinguish us in the work we've done in the bedding market where we can see -- we can continue to do that at greater levels with the integration of Phonon.

Thanks, Bob. And a final question that I have here. So if anyone's got any other questions, I'd request that they get submitted soon. Just looking at our revenue, we've kept talking about the revenue profile over the past several AGMs. How -- when will we actually see the trend starting to move upwards more than as is at the moment?

Yes. I think that when Rosheen and I first came into our roles since the beginning of fiscal year '19, there was that critical move where we moved away from the low profit type products that were currently being sold and really focusing on where we have high-value, higher-margin products. And that's what you see in that transition from fiscal year '19 and onward. We have had revenue increase from there. And as you look at in Slide 5 of the presentation, in terms of how things have fallen out from 1 half year to the other, it really is about how the customer purchasing trend is and just about the snapshots of where those periods come in. But across -- for all our customers, it has been a steady increase in the products that they're purchasing. I mean, it's -- we really can't overstate how decimated the second half of fiscal year '20 was by COVID. Basically our other markets where we are active went into a purchasing freeze. And I think at that point, you would have seen an uptick as opposed to what it might seem like a downward trend. But we're very close to what we had in the first half of fiscal year '20. And if not for the impact of COVID there, we would have seen a further revenue increase, which would have better reflected the increased customers and product lines that we're now selling to. And I think as you look at the first half of our current fiscal year, you will see that improvement there.

And so Bob, the next question relates to Pine Belt and just the work that we're doing there and, in particular, for getting a reliable coverage of FR over the uniform. Question is whether that's being resolved and, if not, when do we expect it to be resolved?

It is something that we are still working to optimize. Don't really want to -- based on NDAs or proprietary issues of what Pine Belt does as well as us, I can't really go into details. It is something that I'll generally say that it is something we're working to optimize and is the key point that we'll get that over the line. I think the challenge with innovation is you can never schedule it, right? So I can tell you that the areas that we're focused on right now are the right things to focus on. And really what this comes down to is how do we integrate the best insights, the best practices that Pine Belt has and Alexium has to make that a success. And it is something that we are making good progress on. And it's just a matter of us getting -- making those final tweaks to get over the line.

And Bob, you've been planning for the next round of tests at Pine Belt. So you've got all that put away and ready for when we can get approval to go back into Pine Belt.

Correct.

Okay. We've got another question here. Are any of the Alexium products used by clothing manufacturers? This seems the bigger potential market than just bedding and military uniforms.

I want to agree very badly, but the market shows the otherwise. And it's simply not what you see. There have been from others in the market, there have been attempts to make progress there, some in around apparel for medical staff, I'll say, for workwear, for activewear. And there's some success and then it quickly comes up the market. So I think it's been a -- really has been a challenge for those markets to -- for the PCMs to really be successful. Typically, it's been more of the cooling technology such as dry fit sort of what they call it here in the states. I'm not sure if it has the same name in Australia. But the -- I think that it is an area that -- where people have tried to be successful. And it just hasn't really caught on in the way that you've seen with the bedding market where, at this stage, what we're seeing is across all brands, across multiple value tiers within the bedding market that the -- that cooling technologies are considered an essential element of that. I think the key thing is to continue building the insights as we have using analytics, the development of unique technologies like Phonon. And that will position us where we can use PCM but also other technologies that can -- to find opportunity, I think, in areas outside of bedding. And I think apparel or, obviously, more standard consumer goods, I think, will be an area for development, but simply there has been a struggle in the market thus far. And going into the top of bed and more general mattress applications continues to be the most fruitful field for us to focus on.

Okay. And the next question -- so I've got a few questions here. At one stage, shareholders were told that we provided a fully integrated cooling FR solution for bedding. Are we still providing FR the bedding applications or are we just doing the cooling?

No, it is typically for our mattress applications, given the regulatory standards around mattresses, we are -- we do provide a -- our flame retardant, literally the same flame retardant we use in military applications and integrate that with our phase change materials. And we actually include actually 3 different tiers that we work on with customers, depending on what level of FR protection that they need.

So the next question goes to the change in the U.S. administration, and will this have any impact on Alexium's efforts, for example, funding going to a military and our efforts with Pine Belt?

Yes, there will be -- the change in the U.S. administration will have an impact. I think this relates to U.S. military. I think that the work we're doing there, protection for the war fighter is and always will be a priority for the military. And so I don't really see that as being impacted by the change in administration. I do see pressure for environmentally friendly products increasing as a result of having a democratic president and a more democratic leaning legislature. If you look at what happened during Obama's administration, that is when you had the move to the [indiscernible] legislation, which had significant impacts throughout markets, where they're pushing for more environmentally friendly products into -- gives greater scrutiny to incumbent flame retardants. So obviously, given the -- how Joe Biden worked with Barack Obama, you would expect to see some parallels in terms of how they would see important some environmentally friendly products.

And so while we're just talking about what's happening in the U.S. at the moment, in the last quarterly we'd say that, looking forward, management expects consumer demand to remain high in Q2, even though this quarter has been typically lower due to market seasonality. Has the recent surge in COVID-19 cases impacted this expectation?

Sorry, it went out, just expectation for.

So that we were expecting consumer demand to remain sort of reasonably high in Q2.

Yes. That does -- the trend we're seeing from all our customers is that this trend of high consumer demand for bedding products is -- will continue for the foreseeable future. No, no. I see Paul shaking his head. I think he's seen parallels in his own markets. Correct, Paul?

Yes. Bob, our market is exactly the same as yours. We were strong Q2, and we're going to be strong Q3 and Q4 as long as the people are stuck at home. Yes.

And I think the -- we have another question here about the change in administration and how will that help the federal and state governments in the U.S. to adopt legislation and they help push our environmentally friendly FR into markets more quickly. Bob, you've already answered that. The answer is yes. Yes, absolutely.

Agree. I think -- yes, agree.

And then the final question is about our new incoming Vice President Sales and Marketing. So that position has been filled. And [ Chris Crawford ] is starting with us on the 4th of January. So we're really, really excited to have Chris on board. And Bob, you've already been working with Chris to sort of get him up to speed so they can hit the ground running. And so with Chris, he's come on board. And we've also had another person join us by the name of [ Dan Brown ], who's got a lot of background in terms of the work that we do, flame retardants, but also working with the military. And so at the moment, we think it's really important that we get them embedded. And then what we'll do is reevaluate what other resources we need. But I think it's only a small team, it's important that we get Chris and Dan integrated appropriately.

Agree. Now if I can just expand on that briefly, Rosheen. I feel like we -- there's a lot we've accomplished over the past 2 years, and I understand that people want to see things move quickly. I've got a front row seat. I want to see it just move equally quickly. But of all the things we've done, I think one of the things that stands out the most for me is I think that Jason and I have done a very good job of turning around the culture here and have really, in terms of the technical team, how we're working with operations, that is what enabled us to get our biobased product -- PCM product commercialized at the speed in which we did. And as we begin getting all that correct, really understood what it is we needed as a commercial team. Paul was really integral in helping us go through that analysis of helping to understand not only what type of experience, background and skill set we need but also culturally how they would need to fit in and be a complement to the product development team. And I'm very excited about [ Chris Crawford ], and also our new sales team member -- sales member, [ Dan Brown ]. Making investment in sales to support further growth is a top priority. I think it's a key point previously when you had 1 platform. The sales team was fine for addressing the markets where we're active. Given what we have in front of us now, it's important that we get the sales team in place to really support those commercialization efforts. I think management team and Board are all completely in sync on that as a priority.

Absolutely. So that brings us to the end of our questions. I really want to thank all of our shareholders. And Bob, I know you and the management team will join me and the rest of the directors, thanking everyone for their continued support. And the key thing I would take out of today is very much our focus on driving the revenue, and that's the important thing for us to do right now. I would like to acknowledge our auditors. So Matthew Leivesley, thank you very much for joining us today and for all the work that you do. I also want to thank Jonathan from Automic. They've got some numbers to crunch. And as we mentioned, that we will be releasing the results on the ASX platform as soon as they're available. I would like to thank shareholders for everything that you've done in terms of participating today, all the questions. They've been great questions, and we really value having the opportunity to talk to you. We'd love to do it face-to-face. That would be our preference. But I guess, this is the next best option. So look, thank you, everyone. I'll now call the meeting to a close.

Thank you, Rosheen. Thank you, everyone.

Yes, thank you, Rosheen.