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

Good morning, and welcome to the Alexium International FY 2021 Full Year Results Investor Conference Call. I will now introduce our presenters today, Bob Brookins, Chief Executive Officer; and Jason Lewis, Chief Financial Officer. I will now hand over to you. Thank you, Bob.

Thank you, Lisa. Welcome, everyone, and thanks for joining the AJX investor conference call. Today, we will be reviewing our FY '21 results, followed by a Q&A session, where everyone can talk directly with management. Obviously, we would prefer to be meeting with everyone in person. But unfortunately, the COVID situation prevents that, and I believe it's been probably a little around 18 months since Jason and I have been in Australia, but obviously, look forward to meeting everyone again soon in person. There's really 2 drivers for our call today. One is to hold a virtual meeting where investors can talk directly with AJX management. The second, wanted you to hear from management and get a detailed update about where we are. Relative to a few years back, when I stepped in as CEO and Jason as CFO shortly thereafter, Alexium was in a much -- is not simply in a much stronger position than it is today. It is actually evolved into an organization where we have multiple points of strength. But at this point, I'd describe it as the sum is greater than its parts. And to convey that, there are 3 key points in our presentation that we go through that we're going to really try to drive this home and which will point out, here in the first section of the review of the fiscal year '21. And I think you'll get a much better understanding about how the management team really sees how well positioned Alexium is. And with that, let's begin. Bethany, if you go to the second slide. Start briefly with an overview on Alexium. Obviously, we are listed on the Australian Stock Exchange, but all operations are based here in the United States, where Jason and I work out of Greer, South Carolina. We're an advanced materials provider for thermal management and flame retardant applications. That really has been the focus of the company over the past 3 years. And as you'll see in this presentation, we'll increasingly be -- really where our focus is. We develop performance-driven products that are really developed with environmentally friendly solutions. And this point of us developing environmentally friendly solutions is increasingly a salient point for our customers. General consumers are much more sensitive now to how their actions impact the environment. Now ultimately, what Alexium provides will be differentiated by performance at times cost. But we are actively working to integrate eco-conscious materials to meet that driving need from the consumers. Now in the innovations that we developed, these are backed by granted and pending patents that secure the company's position in key markets. Beyond just giving us the security of the position we grow in the markets, we've also seen that this provides greater freedom on our commercial strategy and allowing us to be in more open co-development efforts with our customers. Now our commercialization strategy is really driven by a customer-centric model, where we develop products in consultation with our market partners. This is one of the 3 key points I really want to drive home because at this point, this commercial strategy is where Alexium really thrives. As many of you are aware, Chris Crawford joined Alexium in January this year -- calendar year as Alexium's VP of Sales and Marketing. And his team has really done a great job of growing the sales funnel and really expanding the strategy even beyond where we had just, say, 18, 24 months ago. Now where this consultative strategy is really most evident is in our most recent product launches. And the development of new platforms like Eclipsys or BioCool. These are not developed because we see competitor sales in the market where we see that we can also offer our [ ME2 ] versions, where we're just one more product supplier in the market. That approach is analogous to one more pizza restaurant selling one more pizza. We developed these products because they enable our customers to have marketing claims that were not achievable before and allow it to have them -- allows them to have a much better differentiated position in the market. And working together with customers is really what has helped cement our position in the market and has become resonant with the Alexium's brand. Lastly, I do want to mention that in our product manufacturing strategy, this is based on contract manufacturers. Alexium is focused on developing technologies or products and commercialization of them, that manufacturing is handled through toll partners. This provides for a flexible and a capital-light operation. And as -- from what we've seen over the past couple of years, this is really a strength of the company and will be a focus for how Alexium moves forward in the future. Next slide, please. Now this slide is a focus on our product portfolio, which again I said, was focused on thermal management and flame retardant applications. Now from when we just -- Jason and I took over the management team here just a few years ago, Alexium originally had just 3 products in the market. And since then, this has significantly expanded to 5 platforms, 2 of the -- with 2 of these platforms actually being launched this year. Now as you can see, this is the second key point that I really want to drive home is that the breadth of a Alexium's product portfolio today is much greater than anything we've had in the past. This portfolio has expanded what the sales team has available and gives them more opportunities to grow revenue. We think back to when my time when I was Head of Research, we were -- our market opportunities were frankly limited to FR NyCo for military uniforms. As you can see in the addressable market, listed down below, this is a high-value market with a sizable opportunity. But having such a narrow focus really limits what our sales team is able to do. With the broader product portfolio, our strategy is not myopically focused on simply a single target. We have a range of market segments that we can now target. This derisk our growth strategy and allows for a more consistent growth profile, which I believe you're beginning to see here in the second half of the past fiscal year, and you'll see it going forward. Now the table below outlines some of the key markets where Alexium is active and is color coated to give you a sense of what product platforms applied to each. Bear in mind, this is not the limit of what our sales team or technical team is working on. But it does help you give a sense of key target markets really where we see ourselves being able to be successful. Next slide, please. Now with that, I'd like to turn it over to Jason, who will give us a review of our fiscal year '21.

Thank you, Bob. Good morning, everyone. All values will be in U.S. dollars, unless otherwise noted. Next slide, please. Year-over-year revenue growth of 19.7% was a result of increased sales in the foam mattress and top of bed market segments. Additionally, BioCool cooling technology provided new sales along with conversion of existing customers in the fourth quarter. Due to the impact of COVID-19, new development was slowed for commercialization of new platforms. Although gross margin was down 170 basis points from prior year, it was mostly related to product mix. Any changes in the product costs were managed through pricing efforts. Operating expenses without depreciation and amortization remained flat year-over-year led by the reduction in payroll expenses and travel due to COVID restrictions. R&D expenses increased as less cost for a reclass to the balance sheet by way of internal development costs related to intellectual property capitalization. Operating EBITDA improved $300,000 with increased sales and flat expenses. Operating and investing cash outflows were down $2.1 million with cash receipts on increased sales, tight inventory management and reduced cash interest. Cash interest reduced by $600,000 year-over-year as a direct result of the replacement of high-cost term loan in December of 2019. Annual cash interest savings are over $1 million. Next slide, please. Although revenue is about even for H1 and H2, each half year has increased in relation to its respective period in the prior year with a more noticeable movement in H2 of $760,000. H1 gross margin was suppressed due to product mix, while H2 was positively impacted by the introduction of our BioCool technology. H2 also experienced the highest gross profit in the trending 3 years. Operating expenses have normalized within a consistent range due to consistent tight controls on spending. There's been a significant decrease in the EBITDA loss in H2 versus H1 with increased revenue and controlled expenses. Next slide, please. COVID-19 impact. Consumer demand in the bedding market remained strong in the year. Supply chain disruptions in other markets limited the commercial activities for new product launches for Alexium. Alexium's contract manufacturers remained operational, which meant we were able to meet increased customer demand without interruption. Customer engagement remained limited through Q3 with customers being more accepting of appointments in Q4 for visitors who are vaccinated. Our corporate office and R&D facility remained under strict on-site check-in protocol with restrictions being eased June 1 once we had a high percentage of employees confirmed fully vaccinated. Visitor check-in protocols remain in place. Next slide, please. Here are a few more highlights in addition to the ones previously mentioned for revenue through EBITDA. Alexium had other income of $921,000 related to the forgiveness of the 2 U.S. CARES Act PPP loans related to the U.S. stimulus packages. The first loan was fully forgiven and the second is expected when the application process opens in the next quarter. We've also experienced increases in amortization as a result of several capitalized intangible assets being placed in service. We did not experience any impairment on intangible assets for the year. There is also additional income with the change in the fair value of the derivative of the loan due to share price and volatility factors in the Black-Scholes valuation model. Next slide, please. We experienced increased cash receipts with strong cash and a decrease in payments for materials and manufacturing by utilizing the combination of communication with our sales and operating process coupled with the implementation of our materials resource planning module in our new ERP system. The company has minimal capital expenditures as it utilizes a capital-light model using contract manufacturing. Development costs year-over-year were down -- were over $300,000 -- down over $300,000 as several assets have been placed in service. We have also received our second PPP loan in the second half of the year in the amount of $468,000. The overall result was a cash decrease of $1.8 million for the year. Next slide, please. Net working capital decreased $300,000 year-over-year with increases in AR due to revenue growth. Inventory and AP were higher due to the upcoming sales demand. Capital expenditures are related to office and lab equipment. Intangible asset amortization has increased year-over-year with assets being placed in service. Finally, as previously mentioned, there's a noticeable decrease in the fair value of the derivative related to the loan. This is all for the FY '21 overview. Thank you. Bob?

Thank you, Jason. All right. Bethany, if we could get you to go to the next slide. Now I'd like to talk a little bit about the fiscal year-end, fiscal year '22, I give you a bit of an outlook in terms of what this loss. Next slide, Bethany. Let's get the slide a moment to catch up. There it goes. So hopefully, everyone can see it now. Looking forward to fiscal year '22. This is a pivotal year for Alexium's growth, where the commercial and technical developments that we've been working on the past couple of years are really coming to fruition. Now as I said at the beginning, there are 3 key points that demonstrate how Alexium has evolved, and it really has positioned itself so well for growth. First point being the successful commercial strategy, being led by our VP of Sales, Chris Crawford. That's going excellent. Also, second point being that with our expanded product portfolio, this diversifies our opportunities across markets and offer some unique specific market applications within those. The last and third point and I think the one that most distinguishes where Alexium is today is the strong market momentum that Alexium now has. From early days of Alexium when it was in the start-up phase into an emerging company, gaining traction in the market is difficult to being a new player on the block. Alexium is now past that really has a strong momentum, and what we talk about it here is the wind is in our sales as we can see it. This is not a situation where I'm asking for investors to look at it and say, look at the potential of the technology and look at what the future can look like. When you look at the revenue drivers that we have right here in front of us for the fiscal year '22, these are all things that are -- these are all opportunities that we are in the midst of supplying and are ramping up. We have our total mattress cooling system, which is going to be fully commercialized in the basically next month or 2, and we're now in the ramp-up phase of that. We have continued market penetration for BioCool products, as we disclosed in a relatively recent announcement. This -- we have seen strong adoption with our existing customers, where our run rate is now approximately half of our sales into mattresses. We're now seeing increasing adoption by new players -- by new customers in our market as we're getting -- further launching that in the market. We also had continued growth in Alexicool sales for foam applications. This is something that with our Alexicool products for foam. Over the past year, this has been our greatest area of growth. And based on what we see in the sales funnel for the coming year, will continue to be so. So all of these are revenue drivers that are going to take us from what we had last year and further build upon that base. And key thing is we're now in the ramp-up phase, and we'll be fully through those in this first half of the fiscal year. In addition to these 3 items, we also have our Eclipsys product, which will be commercialized for body armor. I expect some questions around this for -- during our Q&A session. Obviously, all of our product launches typically go through the bedding industry, and we are working with parties on that. But based on some customers that we're working with, this really has developed rapidly with body armor. The value to our customers is so manifest that it's been one of the more speedy commercial developments that we've had. Now again, I just want to reemphasize, these are not simply the only new revenue growth we'll have this year, I'm just speaking to the ones that everyone has some immediate evidence that they can see occurring right now. Now on top of the increased revenue, we're also going to have improved margins. As we begin to further increase our place in the market, this allows us to get to certain volumes that drive economies of scale that we really have not been able to achieve in the past. We are feeling that benefit today. Furthermore, with new product lines, such as our BioCool product lines, we're now able to provide stronger margins, which helps to further improve profitability. Now one key aspect to this, which Jason mentioned just a moment ago, is as we're going through the growth phase that we are right now, one significant value is that we have an asset-light model, which means we have negligible capital investment that's needed to support revenue growth. Much of the support that we see is going to be needed in the near future, it's going to be minimal, and it's going to be really in support of the commercial team and to further expand into adjacent markets. Again, this contract manufacturing model also allows for us to be quite nimble in terms of how we can grow into new markets and quickly scale for the production capacity that our customers need. This is going to be a really important point for us this year, whereas in the past -- say, past fiscal year and before that, we were simply providing PCM products with our Alexicool and BioCool product lines. With new products like Alexiflam NF, which goes to FR Sock, which everyone is aware of, also with Eclipsys. So more complicated supply chains, more contract manufacturers that we're having to engage. And the because we are using that contract model is something that we can move rapidly and our customers are not having to wait for us to build up that scale. Notable last point to make here is because we are working with contract manufacturers with this growth we have in front of us in fiscal year '22, we feel confident that we have adequate resources to support the growth that we have in front of us. Bethany, if you'll go to the next slide. One last point before we go to the Q&A. This outlines some key milestones for fiscal year '22, just so everyone has some sense of what do we have in front of us. In the first half of the year, we'll finish our optimization of our FR NyCo manufacturing process, and we'll have that submission into -- for the military for testing and evaluation. I expect some questions around that Q&A. So we'll discuss that further there. In terms of -- as I mentioned a moment ago, we have a major customer who has fully commercialized the mattress -- the total mattress cooling system that we've been working with on -- with some of our partners in the market, and that will be fully finalized in the next month or 2. And lastly, complete commercialization of Eclipsys technology and body armor market. Now looking out to second half of fiscal year '22, broader market penetration to BioCool products in the bedding market. To be honest, that's occurring now. But this is going to be something that will occur fully all through the year as we began to further introduce customers to our BioCool product line. We also, in the second half of '22, will complete commercialization of Alexiflam NF or FR Sock. And as I mentioned in a recent 4C, this really has been -- this and FR NyCo have been the 2 platforms that have been most impacted by COVID-19 simply because they have a more complicated supply chain, a lot more difficult to conduct production trials and get materials in place. But we're now -- feel very confident that we'll have all that finalized in the second half of the fiscal year. And lastly, the second half of '22 will also complete commercialization of the Eclipsys technology for betting applications, which I'm sure many of you expect to see. Bethany, next slide, please. That's all for our review of the fiscal year '21 results and also a brief update on what we see fiscal year '22 looking like. I'm sure that you can see from our discussion here today that we are really excited about where Alexium has gotten to. All the work that we've done over the past 3 years is coming to fruition and to see all of these new products going into -- with new customers and really seeing those finalized over the next few months. It is really happy to see -- really satisfied to see where the company is at this point and really have a lot of strong growth ahead of us. So what I'd like to do now is turn over to, I believe, Lisa, where we'll go into the Q&A session.

[Operator Instructions] The first person we've got is Alex. Alex, you self-muted there locally, I think. Now, Alex has taken himself out. We now have Jeff.

I saw you back in Melbourne a couple of times in the past.

I remember.

Good, good. Look, I missed a bit of the first part of the conversation because I have Internet problems. The power went off here. So excuse me if I ask a question that you might have covered. Just perhaps on the uniform, the FR on uniform part. There was a -- the U.S. Marine's put out a request for information probably earlier this year for FR on uniforms. Did Alexium have full plan in part in that? Or would you -- can you comment on that?

I can simply say that we -- yes, we are familiar with that request for information, and information was provided to them regarding what we're doing. To be honest with you, they were already well aware of it because we have many discussions with them.

Just probably 2 other things on the -- if you don't mind, on the military side of things. I think I will collate a couple of years back that whilst the marines are the initial focus, the Army is sort of close behind or could even be run in parallel. Is that sort of still the case given that there's been quite a bit of time elapsed since you sort of first started looking at FR on uniforms? Is it still likely that the Army could be quite first behind?

The focus of all the work we've done has really been around the Marines while keeping the Army aware of developments. It's pretty typical in the U.S. that new technologies are more rapidly adopted by the Marines. And so that's been the driver for that strategy. It's just, I think -- got to make this so it doesn't sound bad, but Army is a much bigger organization, more bureaucracy, I mean that's the least negative way possible. But it's just a lot more hurdles that have to be managed. So it's much easier to go ahead and work in the range, get the product in front of them for their review. And then once is implemented, you kind of have a -- it's already out there in practice, and it makes it easier for others to see for adoption. One thing I do want to mention as well, Jeff, though, is that, as I mentioned earlier, on the breadth of the product portfolio now is that our approach on this has evolved because some of our technologies, most significantly Eclipsys, we see us having some really key applications for the -- of the key military applications. For instance, Eclipsys is going into shoes. Heat management is just a rampant issue, and the best thing that the market -- our predecessors have come up with is improved airflow. But Eclipsys really can be a game changer in terms of what can be done in terms of backpack gear, shoes and things like this. So we really see it as making them aware of our -- all of our product offerings and see what most addresses the problems that they have in front of them today.

And by huge you could also -- basically, you also could mean Army boots?

I mean Army boots. Yes, [indiscernible].

And just probably one last thing on the military side, too, was, there was talk initially that if the U.S. Marines did go with Alexium, that it might be a simple one word or one thing is a changed to the existing supply contract. And that [ one thing ] because it's going through Pine Belt. Is that sort of still the case? Or is it likely to evolve a bit more of a process now with sort of the Marine?

With the roll goods route, it goes through a different adoption process. That is not so easily just kind of, I would say, less of a drop-in adoption. But it is from what we've seen to date, the roll goods application, we've had some insights that we can leverage on garment side, which will be relevant for Pine Belt. But it's just a much easier process for -- to run on the roll good site. And just to give you a sense of where we are at this point, we tend to talk about our work on something like FR NyCo. You have the primary specs that you need to meet, which needs to be durable, it needs to be FR, needs to be within a certain weight range. Those are essential elements. And then you have the secondary specs. It needs to -- you need to dress the tear strength and things like this. The primary specifications we can meet all of those with the roll goods application. And what we're doing now is just doing a bit of engineering so that we can get their secondary specifications optimize best we can. But where I met is come the end of the year, we're putting it in front of them and saying, this is where our offering is and let them take their valuation from there.

[Operator Instructions] We actually have Jeff back again.

Sorry, guys. Probably just 2 other quick questions. First one on body armor. With the actual first customer, can you sort of provide any comments on who that first customer might be supplying at the moment, first responders or military or -- I know it's probably very confidential.

Yes, I can't go into who it is. I can tell you that they are focused on first responders. Again, it's a speed-to-market matter.

Sure. And the other question was on the total mattress cooling system. You, I think, mentioned in one of your announcement that the near-term market is $2 million per annum. How does that relate to -- when you sort of talk about full commercialization, full run rate for this year or going forward, how does that compare to the $2 million mark that you're talking about earlier in your announcement? Is it close to that? Or is it a small part of that?

It is -- that is the size of the opportunity is $2 million per annum.

But that's not necessarily what you'd be doing in the coming year or the year...

No. No, simply talk about the -- put into that single opportunity that we have launching. When we're talking about our total mattress cooling system that we're developing with Eclipsys, that would be a completely separate revenue stream. Now the total addressable market that I would say for bedding as a whole, I'd put it around $50 million. That has some assumptions built around it because you have different classes of products, which you have different price points there. But that will give you a sense of the total market value for thermal management that we've identified as addressable. And for this cooling system that design that we are -- that our partners are launching in the coming months, that $2 million number just speaks to that single opportunity.

[Operator Instructions] Bob, we have no further question -- hang on, sorry, we do. Just for a moment. I'm not sure I don't have a name here. I just have a number. There you go.

It's Peter. Can you hear me guys?

I can hear you.

Hello.

ICL, it's been a while since we've heard anything about ICL, Bob and Jason. Is anything happening with ICL?

It is. We are continuing to work with them for licensing Alexiflam NF. It is slow going for them because of COVID. And anywhere you have a multinational supply chain, customer base, anything like this or a company, it is still very difficult to get things moving. So that has made it moving -- it's had it moving slowly. But they have -- things are moving forward well. They have identified target markets, have identified target customers with -- and we have -- they purchased chemistry from us, albeit on a small scale to -- for those trials. But it's just much slower than we would have liked. It's the kind of thing, I think, with the breadth of the product portfolio and the customers that we're now working with, at this point, speaking to every individual opportunity, and foresee, I think, is getting would be too cumbersome. So we're really providing updates once they get to a meaningful point, be it good or bad. But that is still moving forward well and as -- but at a fairly slow pace that it is.

Service uniforms. Is that something that we are addressing at this present time? Or are our priorities focused on the key markets that you have outlined?

When you say service uniforms, are you meaning for like workwear uniforms as we might use for Alexiflam NF?

Correct.

Right. So that is the market which ICL is work -- is focused directly on. And for Alexium commercial team, frankly, we are -- in terms of the FR side, we're really concentrated on the FR Sock product. The pull from the market has been very strong there. It's going to be a significant contributor to revenue, we see, as we go forward. But it is -- there's a lot of work to be done there. And given the pull that we're seeing from the market, driven by the fact that it is a cotton-based eco-friendly product, we're making sure we seize that opportunity strongly.

Okay. You might -- I mean you're limited in manpower, and it's best to go for the low-laying fruit at this point in time. And start driving some revenue, which is what everyone is looking at. So that's a again an...

100%. And if I could just address that point, it is obviously a bandwidth issue to some extent. Alexium is -- what are we now, Jason, 22, 23 people. And we are very much focused on what are those low-hanging fruits, particularly where is the pull from the market so strong. That's why the application of the Eclipsys to body armor has really risen to the front the way it has. When we spoke -- I'll say -- I'll just share this real quickly because I think it's a big humorous, if you like it, is we spoke to a -- one of the major suppliers of body armor and asked them what was -- what are they doing for -- to improve thermal management. And they say their guidance to their consumers is to embrace the sock. There is no solution. And -- but now we've got here what we're doing with body armor, where we're seeing tens of degrees reduction in the temperature of that person's feeling when -- and that is an improvement that they experience through the entire time that they're wearing the garment. This really is a disruptive technology, and the pull from the market is so strong that obviously, we go with the opportunities for suites.

That's what I would be doing. That sounds good. Can you throw a bit of color on your sales force or your marketing team because that was something that I felt in the past years was we were strongly underpowered?

Yes. So we -- as -- when Chris Crawford came in, he had a history of taking innovative products to market and even being an integral part of the development of those products. And early on it -- just to give you a sense of his background and how that comes into play for Alexium. He took a business unit when he first came in was of a few million a year. And by the time he left that company, had grown up to $50 million with him being the lead of the unit, okay? So he knows what it means to take an innovative technology and how do you place it in the market. And I'll also say he's probably one of the most broadest chemistry knowledge I've ever seen. He knows everything from how people make beer to how they make cotton fabric. So impressive breadth of knowledge. And so what Chris has come in is -- when he's come in, he has taken that kind of consultative model that we're working with, with key partners in the bedding industry and really has built a team around that, that is helping to drive growth in areas like FR Sock and in BioCool products going into bedding. And then working with -- also has some external salespeople that he's working with to help drive growth in adjacent markets. So we have 3 total people who are permanently part of Alexium internal, and then he has a number of people that he's working with as external sales. Now our plan is to further grow that in the -- over the coming year and actually coming months because based on our strategic plan, which really is going to be driven by I think -- in the bedding industry, we will maximize our potential there within about 12 to 18 months. But given the adjacent market opportunities that we see there, it's time for us to begin just like we've done over the past couple of years for bedding, now plant those seeds for those adjacent markets, which will need to be driven by some people on the business development side of things. So hopefully, that gives you a sense of how he's structuring the team and driving it there.

Our next question is from [ Barry Preston ]. You there, Barry. We'll go to go to Nick.

I'm just thinking about sports apparel. I know previously you guys were talking about combining the cooling as well as the wicking. You think about the huge markets there, sports footwear, jerseys everything in that side. I mean, I know you don't stretch yourself too thinly. But if you're thinking about the larger markets, what are your thoughts there?

I think sports apparel, I think there are some parts of that market, which our technology, both what we have today and what we have in our product road map to be coming out over the next, say, 6 to 18 months could have application there. I will tell you that I didn't want to go too much -- it seemed like it was a little too deep for our presentation, but since you asked the question, where we are more focused in on the thermal management side is in end applications where high heat and humidity retention by the product is so bad that it ends up limiting the usefulness of it. And the best example I can give for that is a helmet. You put on a helmet and it's there to be protecting, but it also increases heat stress. And that's because the helmet is holding all that heat and humidity that is a significant amount is released through your head. And there really has not been a good solution for people to get comfortable there. That's the same situation you have here with body armor. We learned just this over the past year that every year in New York City, that there is a police officer who dies from thermal stress from wearing body armor because they have to wear it all throughout their shift. So it's a -- these are areas where our products today, most importantly, Eclipsys as well as some new products that we'll have coming online shortly, where they can address a gap that our competitors have left behind. Now when it gets to sports apparel, frankly, the wicking-type shirts, they're quite effective. And I think there could be some segments, as I said, where that heat and humidity retention is really a challenge, and we would target those. But I think with this -- with Eclipsys really being the core technology to drive it, we see some significant gaps, such as bedding, helmets, body armor, so on and so forth, shoes where we can address some gaps that PCM and these other types of cooling technologies never were a quality solution for.

So with your existing customers, whether its bedding or body armor, I think previously, before Alexium quantified the actual efficacy of their product, then it seemed to be quite a commoditized market. So you may have been competing with people employes. Do you feel that, that pull now with the BioCool as well as the measuring kind of technics that you brought in that you're more of a price maker than a price taker?

Explain to me the price maker, price taker. Sorry, Jason, you don't -- I don't know that phrase.

I'd say I -- yes, well, obviously, being dictated by the market as opposed to same when we've got something that's quite differentiated and...

Yes, that's a good question. To be honest with you, Nick, we see that -- we now between our Alexicool products and BioCool which have further levels of differentiation beyond that. We have some products which are typically patented that provide for a higher level of performance. And in that case, we can drive a higher price and deliver on that performance. But on the flip side, now with the development of BioCool, where we have some manufacturing benefits that we can now leverage there, we can also target a sort of the lower end market where people are just looking for some measure of cooling, but not necessarily high performance. This has been a -- on the commercial side really has just opened up the opportunities that Chris Crawford and his team has in front of them. And so we don't really see it that has to be an either/or. Based on where we're positioned in the market now, we can be both.

Yes. So this quarter is the one we've probably been waiting for. I think you guys are playing a straight back now in as far as only we're really putting in presentations on what you can see with probably some, I think, the activity. So do you see now that quarter-on-quarter, we're likely to get growth on growth and not really take any meaningful step backwards? And the reason why I asked that is that cash balance is pretty skinny. I don't think anybody want to see any dilution.

I'll jump in here, Jason, if there's anything you want to fill in. I know this is something -- I'm sure you have some thoughts on too. It is -- at this point, we see a steady growth of the company from here. I'm not going to tell you there's not going to be some ebb and flows. But I agree with you to, say, I can't remember the time frame exactly. But within not-so-distant past, there were some step backs here and there. But I think now given the traction, the momentum that we have in the market that I spoke of and, to be honest, also just the diversity of the customer base that we have now is that we might have one customer's falling a little behind, now you have another one who's ahead. And that's helping to kind of shake out that noise, so it's not so impactful and doesn't give it -- make it such a kind of a tenuous and concerning view for investors. But yes, I think you are going to see a much more consistent, predictable something that the management team can feel confident in terms of what the future is going to look like quarter-on-quarter. And like I said here, I'm not missing words that the wind is in our sails right now. We really do -- we're seeing significant growth, and we're just going to keep pushing. And it's just about us continuing to execute with customers and provide them what they need. Jason, anything you want to add there?

Nick, look, we do -- we put a lot of effort into forecasting. We really honed our processes with that. And to Bob's point, yes, we will see cash go down in times of growth because you're buying ahead of the inventory. But the costs are pretty much fixed at this point. And so it's going to be the ebb and flow of getting cash in and putting cash out. So we're self-funding at this point.

Obviously, Chris Crawford's an industry sales guy. What potential do you see Alexium maturing into? I mean the markets are huge, your chemical is differentiated. And the other question to that is we spent a lot of time with the ICL. So what they managed to do is kind of keep your guys to one side with your technology. Do we not need a competing partner, someone that might have a more invested interest in expediting the technology on the flame retardant side?

Yes, I see what you're saying. And I agree. I think that we have a relationship with ICL, and it's something that we want to give an opportunity to see if we could develop this with them given that relationship and that they do have a footprint that is nicely supportive to Alexiflam NF. But it is -- ultimately, I don't -- I would see us working with different channel partners to -- how would you say, maximize the opportunity that we have, the Alexiflam NF. I can tell you that with Crawford's predecessors, I don't think they really had a vision of how that would be done. I can tell you with certainty that Crawford has because he's done it himself. They talked about the kind of growth that he's driven with previous companies. That was not just him doing it himself. It's him leveraging people, both internal and external, to get it done. And in terms of our product road map, we have products at this stage, particularly around the FR side that were developed before that we do see that Alexium would work largely through distributors as opposed to feeling the need to drive sales purely through an internal process. I can tell you that where we're going to be most focused internally is places where that consultative strategy where we help to drive marketing claims with customers, where we can leverage that model, that's where we're going to be most focused. We've seen it, and it's working well with body armor and I think in these other markets where you're going to codevelop with our customers. It really being well suited. Other markets, one of the previous investors mentioned about workwear. I'll be honest with you. That's about having a big catalog and talking to all the people in the market and seeing which ones are interested in what you have to say. But that consultative approach is really -- is not as well suited for those type of markets. But -- so again, it's not an either/or, I think, as -- we're really focused right now on delivering on this fiscal year. It's -- I think it's all the questions you're asking, Nick, point two is a critical one for us. And so we're going to be driving FR Sock, driving Eclipsys, driving BioCool to success. And as we get on the backside of the year with that success behind us, then it's going to open up the opportunities because we will now be a bit freer in terms of working capital and can -- and start driving some new approaches to growth.

We don't have any further guests in the queue to ask any questions.

Well, that sounds good. So I think, Jason, we'll call it there. So I just want to thank everyone for joining. Hopefully, this has been informative for you all. And if you have any follow-up questions, feel free to reach out to the management team through info@alexiuminternational. And we look forward to seeing you all again soon.

Thanks.

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