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

Again, thank you for joining us, and I'll pass over to Billy.

All right. Thank you, Simon. Good morning to our friends in Australia, and good evening to our friends and colleagues in the States. Hope everybody is doing well and healthy. So we'll give a business update this evening and a progress report on how things are going here with Alexium. It's been a good start to the quarter. Results aren't where we want them, but those are following, and we're going to lay out a plan for the remainder of FY '25 and some of the highlights of what's to come. So I've been here now for just a little bit over 2 years, and we've been on a journey at Alexium. And just a refresher to those that haven't been with us the whole time. I was brought in to drive the commercialization of significant intellectual property and technology that have been developed at Alexium over the prior years. So we've been really hard at refining those products and also getting the culture at Alexium ready to become a more commercial organization that's focused on the production and the sales of those products. And this last quarter and really this last fiscal year have been significant in the progress of the culture moving along and us studying the processes and readying the company for growth and to scale up. Tonight, I'm going to talk a lot about our flame-retardant technologies. We've had significant breakthroughs over the last year and commercial breakthroughs over the last period. We recapitalized the business in FY '24, and we are now moving forward with proper capital and positioning for the growth that's coming in the New Year. We did restructure the sales team this past fiscal year, and the new team members are on board and have come up to speed nicely. And the customers are receiving them well. The markets are receiving them well, and they've learned the technology quite quickly. And our pipeline is really more robust now than it's ever been, and we're moving into a season of significant closings of a lot of those opportunities. And a lot of that is to the new team that's in place that's helping me drive new sales. In addition to FR, over this last period, we've had significant breakthroughs in our PCM business. We've changed the strategy, and we've had significant technological breakthroughs in our products and technology suite for PCM. So I'll give some details around that tonight. And in the upcoming updates over the next few periods, you're going to hear a lot about FR and PCM and how we've focused the business into really our core technologies and our core opportunities and markets. So over the last period really and then the year prior, we've been in a slump in revenues. The bedding market has been weak, and it continues to be weak. Obviously, the world has been watching what's going on in America, and there's a lot of change going on here. But the bedding market stayed recessed after the peaks that it had in COVID in 2021. In early 2022, it really went off a cliff, so to speak, and it's been riding the bottom ever since. Now we're starting to become a little more bullish in the U.S. market to have some recovery in the coming year. And frankly, the cycle of mattress purchases, which drives a lot of that market, is starting to turn over from that 2- to 3-year slump. So we expect some upticks in that market to come in the next 12 to 18 months. That would really benefit the base business of Alexium, which has really been reduced over that period due to those weak markets. Nonetheless, we've made a lot of inroads to diversify our sales by diversifying our product mix within the bedding market, also in developing new opportunities outside the bedding market. And the company has been highly concentrated also in North America. We're now growing sales in Europe, active there, and we have a number of opportunities in the Australia, New Zealand, Asia region that we'll be updating everyone over the coming periods. So over FY '24, just a recap of what happened over the last fiscal year. We recruited some new sales professionals, and we deepened the bandwidth of the team and the level of the activity and the quality of activity has sharply increased since. We're driving international sales now. I just returned from a trip to the Asia Pacific and Australia region, 2 weeks of customer visits, and we were well received there, and there are a number of opportunities we'll be pursuing in that region going forward. And the technology is basically going to be adopted there and cooling and also comfort technologies. There is -- it's trailing a little bit from North America, but in that region, it's on the uptick. So we expect to have sales in the New Year in the region. We've changed the nature of the Board and our advisers. We did add an industry adviser who's also on the Board now. That's the former CEO of a business that was in thermal regulation in North America. So he's joined the team now as an adviser and also a Nonexecutive Director, and he's been very active in helping us guide where we're going to develop business and how to focus the business for growth and the technology for growth as well. And then also, as I've mentioned, we've made significant enhancements in our FR and PCM products and technologies. So overview for FY '25. It's the next phase of our growth and diversify. And just as a recap for that strategy, the company was, again, concentrated in North America, concentrated really with one very large customer and all the supporting Tier 1, which is like OEM producers for automotive, but Tier 1 producers for that bedding brand, concentrated in North America and concentrated in PCM sales. So we've now diversified the product mix in North America. We're pushing to global sales. And we also have diversified the customer mix. So that's setting the company up for significant growth and sustained growth and then not to have all the eggs in one basket. So that's in our core market of bedding. We spend a lesser amount of our time looking at adjacent markets and driving our technologies into new markets. Specifically, lately, that's been a heavy dose of FR. But we've structured the team lately to focus more on less. So a theme that you're going to hear and where we've been driving discipline into the business is -- and it's unique for Alexium. We have significant intellectual property that can play in a lot of different markets. But if you chase too many things at once, you water down the efforts of the business and you dilute the results. So we've spent the recent time -- recent period focusing the team on less. So the theme is really more focused by focusing on less. And so you're going to hear a lot about phase change materials and FR. And really, the intent there is for folks to understand that we've created significant near-term opportunities for the company by bringing very laser focus in those areas in our core markets. And then we spend a lesser percent of our time, but we do continue to invest energy and effort into developing the adjacent markets, but the focus is on short-term results and hitting our goals for this year, and then we will move into those expansion and scale markets as we deliver success in the core markets. So for the plan this year, we're going to maintain our key accounts. You've got to keep the business you have. We're saturating the North American market through that diversification and product and customer mix. We're driving growth by breaking new accounts abroad in Asia Pacific, Latin America, and the European markets. We have diversified revenue growth from new sales from our existing technologies into adjacent markets, and you'll hear a lot about that around FR tonight. Now we're driving strategic alliances as well with key supply chain partners. We're doing some co-development products right now that move Alexium up the supply chain closer to the end customer and into positions where we can control more of our destiny and what we're making and taking to market, and we can grab more of the revenue per unit to drive sharper growth sooner. So the sales approach and key objectives for the year and the new team members are really helping to bring this to bear, but we're selling our current products to our core market, and that's bedding, and we're saturating North America. And we were very tethered over really before the last year to a very large player in the North American market and then all the supporting cast of companies that make the different components for those products. We're now working with multiple of the top 10 brands in North America and diversifying that customer mix. Most of those sales in the past were phase change materials. Now we're driving sales from FR and phase change materials, both have significant short-term growth, and also our comfort technologies from DelCool and Eclipsys. So diversifying the product mix there is positioning us to scale. New accounts in the regions I mentioned before, and we're also starting there with multiproduct offerings. In parallel, to a lesser percentage, we're also working on non-bedding markets and adjacencies. We've had some nice developments with the U.S. military and then FR products into other markets. And then we're leveraging the skill sets and relationships of all stakeholders. We've had involvement from our non-exec Board, making new meetings and opening new doors for us in new markets. And then the advisers from that group are also making introductions in North America, which has really sped up the relationships and us establishing new opportunities quickly. So the new team, once they're up to speed, which they're getting there now, we're going to continue to hire sales professionals and drive the products into the market. I would see us adding people in the New Year, at least one in the first half of the New Year, second half of our fiscal year, positioning that person to drive sales into new markets into the FR space, which is a very large market. Key objectives for the year, we'd double our revenue, our run rate right now. We want to go from $500,000 to $1 million. $1 million puts us right on the cash-positive threshold. We've got the opportunities in the pipeline to do that in the near term and hit that goal. We want to reach a sustained minimum month-over-month contracted sales volume of that $1 million and continue to grow past that quickly. We've been working on supply agreements right now. We have multiple agreements in draft that we're working to close terms on for repeat volume month-over-month, quarter-over-quarter. We'll keep you guys updated. So we want to drive the share price and make sure the shareholders are rewarded for their loyalty and their investment in this company. I believe this next season we're heading to is the season when Alexium finally hits the mark. We're going to leverage the momentum and reinvest in the business and continue to grow. We don't want to hit that first milestone cash positive results. We intend to blow past that and continue to grow. I believe the market cap is much larger than that for this business, and the near-term opportunities in our pipeline certainly evidence that. So from '24 to '27, this is really the last 3 years of a 5-year strategy that we put into place when I joined the business in late 2022. So FY '25 is really about diversifying and growing off that diversity. So again, rounding out the commercial team here, making the culture more focused on sales and marketing-centric activities. The growth that you see there, those ratios 40-20-40, if you recall, if you're with us in the past 18 months, we were showing focus around 70-20-10, and that's core market, adjacent market, and breakthrough market focuses. Now we're shifting the focus to more breakthroughs, less focus on the core, even though that is the primary focus each day. 20 into the adjacents and 40 into the breakthrough. That's heavily focused on our product development and business development efforts, but it's really positioning us for diversified growth beyond bedding. Again, the Alexium technologies play very well in the bedding space, but there are larger markets we intend to pursue after we deliver meaningful results in bedding that are much larger than the bedding space itself. We've moved our FR efforts with the military and NyCo development along quite nicely. I'll update further here shortly. Commercializing Eclipsys in tactical gear, that's been a little slower out of the gate and gotten less focus as we focus on PCM and FR, but it is still active. Commercializing Eclipsys and DelCool in the new markets in that shoes, the medical space, cold chain, and workwear, we've got that sitting on the back burner right now to focus on short-term success. So you'll hear a lot tonight about picking those up down the road, keeping some of the small opportunities moving along, keeping the technology fresh, but really focusing on near-term results. And then we're securing the company's supply chain right now. So we're adding new suppliers, new contract manufacturing, and we're setting up for scale right now. We anticipate a significant increase in volume in the New Year. And then obviously, the goal is cash flow positive. So the strategic plan and the drivers for growth, maintaining our sales in PCM and bedding, diversifying revenue in the bedding market, and that's the customer mix and product mix, growth, and diversified revenue to markets outside of bedding. So we call that adjacent markets. The 3 of those combined are going to get us the results we need near term to drive profitability and share price. But we've got to maintain our foundational sales in the North American market. And the change of strategy, I'll lay out tonight, we've refined the existing strategy, and those changes have opened up growth where we've been able to extend our market in PCM globally and short term, specifically in North America. We're going to continue to saturate this market and add more customers in North America. We're creating a very good position in PCM and FR right now that are allowing us to continue to grow North America and push globally simultaneously. And then we want to mitigate the overconcentration in bedding. So we've got to go to the adjacent markets beyond that. Should we go through another downturn in the bedding market, we don't want to be exposed like the company was in the past where we had too much concentration. So over the near term, deliver the financial goals in that market and then continue to diversify beyond that market, so the company is more robust and more weatherproof from a downturn in the future. Tonight, we're going to talk a lot about PCM and FR and the products associated with those technologies. AlexiCool is our traditional workhorse microencapsulated phase change material, effective on textiles and foam, provides premium cooling for mattresses and top of bed, which is toppers and pillows. It's used for heat absorption, specifically formulated for the application methods, which is a number of different textile applications. We sell it in solution, slurries and now dry powders. The slurries and dry powders are new developments for the company where we've had some breakthroughs in our manufacturing and our technology to be able to get the material more stable thermally and in a position where we can take it to higher solids and do more advanced drying processes. And then we've now rolled out a new enhanced derivative I'll talk about tonight. It's like nothing else in the phase change material market. BioCool is the sister product to AlexiCool, and it's a newer one, and it makes up the majority of the phase change sales for Alexium. It is bio-based, plant-derived, USDA bio-preferred, COSMOS certified, also effective on textiles and foam, also provides premium cooling. And we also formulate it for a number of different application methods, and that's different types of textiles and foams for bedding applications. And we now have a plus-enhanced derivative of BioCool as well. So some enhancements we've made in phase change materials that are driving near-term growth. So the primary source of our revenue heavily concentrated in phase change materials. And we looked at our strategy mid this calendar year. The Board was in town, and we did a significant strategy session. They were here for several days, and we broke apart really the overall strategy of the company and then the specific product and market strategies. And then we had some advice from a new adviser and non-exec director that was basically pointing us to ways to extend the market in the short term by approaching it differently. We were really focused on brands and direct consumers of our products. And we didn't have a line of sight into the opportunities in the short term to sell to folks that were making formulas and distributing some of these products that had established relationships and markets. So we made a shift in the strategy to start approaching some of the formulators and distributors and offering some of our products to be formulated by them for their existing customers and markets. And that not only extended the short-term addressable market for us, it created a speed to market like we hadn't seen in the past. So we also made a change in our manufacturing strategy and went down the supply chain into our production. In the past, Alexium, we were formulating our AlexiCool products off of microcapsules that were purchased, and we were making our own microcapsules for BioCool for our bio-based products. The change in strategy now is that we are making microcapsules for all of our PCM products, which has streamlined our production and has also allowed us to make some breakthroughs in the technology and the performance of the products. That's opened the opportunity to offer microcapsules to other players that are formulators, not only in the bedding space but in other markets. So sharply increased our addressable market in the near term, North America and globally. It also opened up significant quality improvements in the performance of the product and the way we're making it, gained some efficiencies in the way we're making it. So these are significant breakthroughs in phase change materials that the company has been making and selling for years that have happened over the last 6 months. In addition to that, we are now been through active trials and successful trials on BioCool Plus. BioCool Plus is the first enhanced derivative of our phase change materials and essentially has more cooling capacity than any other phase change material in the bedding space in the market globally. So the plus is really the cooling capacity and the regenerative capacity of the PCM. We're active in several projects right now and the feedback has been overwhelmingly positive so far. The performance of this product creates a cost advantage. So for the price, they're getting more cooling capacity, more wow factor, more cool to the touch at the point of sale. And what that has created for us is a number of new opportunities to displace competitors on a very powerful value proposition tied to cost and performance. So so far, so good. We were active with multiple projects. And again, I anticipate in our coming updates in the coming periods to be talking about new supply contracts tied to these breakthroughs. Quite excited about it. Going forward, on the other side of our business, and this is deep in the company's DNA, is our flame-resistant technologies and flame retardant products. The original flame retardant technology of Alexium is AlexiFlam. And you guys have all heard FR NyCo and us talking about military fabrics and military apparel fabrics. That's AlexiFlam that's used for that. We can customize the solution for a number of different fabrics, but that specific development that we've been pushing with the U.S. military is AlexiFlam. It's a wash-durable FR treatment out to 50 industrial launderings, very durable. It's also color-resistant, meaning it stands up to the dyes of camouflage and different military prints. It also stands up to the NIR and SWIR, so short wave infrared and near infrared heat signature requirements that are now required in the military. So we've had nice breakthroughs in that, and we're very active in that development work for the military and have gotten positive results. We reported last year that we passed the Pyroan at the North Carolina State University. And that was in a collaborative effort with the U.S. Army on an open iterative agreement where we were doing development work to give them a low-cost fabric that could be used for all soldiers and warm weather theaters. AlexiGuard is another workhorse product that Alexion has been using for years. Many people might not know, but we use AlexiGuard and some of our phase change materials as well as an FR component to offset any fuel load that's added to beds. In the United States, mattresses have to be flame-resistant by law. Phase change materials can add fuel load to mattresses. So we add AlexiGuard to offset that. So it's been in a lot of our products for a number of years It's also a very effective textile softener. So it works very well in those additives to help the aesthetics of the additives that we're putting on textiles and foam. It's a nontoxic aqueous-based material, works on a number of different substrates, woven and nonwoven textiles, and we formulate it for a lot of different applications. In the States, though, there's been a lot of regulatory pressure on FR chemistries. I'll speak to that in just a moment. AlexiShield is our latest FR technology and is driving a lot of the short-term growth and breakthrough for the company. Very similar to AlexiGuard and its types of applications. It's free of any banned substances and any proposed banned substances. So it's very much ahead of the regulatory curve for the furniture and bedding markets in North America, also effective on a number of types of textiles and foam, and we also formulated it for a number of applications. And it's an evolution of our AlexiGuard technology. So AlexiShield specifically, it's the latest development in our FR coatings. We developed this to be ahead of the regulatory curve, and we were challenged by a large bedding customer early in the calendar year 2023 to come up with an iteration of our FR technology that was free of organophosphorus. Organophosphorus had a proposed ban at that time for California. And we've since learned that New York was also eyeing similar bans. And just recently, New York did pass the legislation banning organophosphorus from use in FR products in bedding and furniture. So the development started last year, and we were able to get the product ready and start testing early this year. We leveraged everything we had in our arsenal from AlexiGuard and everything we've learned over years of making that. And then we reformulated and changed the manufacturing process to get to AlexiShield. It's highly effective on cotton, rayon, polyester and foam. We have already performed several production trials. So we've made plenty of pounds of this, and we passed a lot of different burn tests on a lot of different substrates, foam and textiles. We're working with our supply chain now to offer AlexiShield-treated fabrics for use as FR barriers in bedding and furniture. And we're offering those fabrics for sale, Alexium selling not only just the chemistry but also selling the textile. And that's part of the strategy change that was implemented at Alexium when I first got here, which was to move up the supply chain closer to the end customers, not just offer our technologies to folks that were offering components to end products, but also make the components and offer those with our technologies. And what we found in our journey over trying to move the company closer is that there were a lot of middlemen company out there, companies out there that were harvesting the value that was created by Alexium's technology and then selling the substrates just as carriers and vehicles for that technology. And many of them were using contract manufacturing and outsourced manufacturing, and there's a lot of textile and foam capacity in the market. So we turned that around and started becoming the customer and using our own technology to market and create the value proposition to sell the technology and the substrate that carries it. That generates more revenue per unit sold for Alexium. It gives us more control over what happens with the end customer, and it also allows us more leverage in our supply chain. And it's generated a lot of near-term opportunities for sharp growth for the business. Additionally, though, we're not going to abandon just selling the chemistry and the technologies. We're going to continue that practice. But we did, in cases where it makes the most sense, move up the market and move into selling components that go into finished goods. AlexiShield has proven to be a really good way to do that, especially since we've timed it just right. We're ahead of the proposed bans. So there's a lot of tailwinds in the FR market in bedding and furniture right now. Fiberglass has been banned, formaldehyde, polyfluorinated materials and other halogens, also antimony. Basically, all toxic species that are traditional FR chemistries have been banned. Now organophosphorus has been banned in New York. California should be passing their legislation in the coming quarters. And with those 2 states and their large populations, you'll see those types of bans get promulgated across the United States quickly because most brands aren't going to make different products just for those markets. They'll go ahead and make the change. So we're well ahead of that curve and leveraging it in the near term. Our thermal regulation materials, DelCool is our dehumidification fabric and textile. We're now leveraging that to some finished goods as well. We also are offering it in Europe and Australia and New Zealand region in addition to the sales we have in North America. A lot of strong interest for adoption there. And I'll speak more to that in a moment in some products that we're incorporating it into. And then Eclipsys, we first rolled that out for use in mattresses and tactical gear. We have a couple of companies looking at mattresses with Eclipsys right now for small starts in the New Year. We're still active with tactical gear, but we've taken some of the focus away from selling to that market to focus really on our core markets right now in bedding. So again, these technologies are there, and we're going to continue pushing them into the market. But again, driving focus into phase change materials and FR materials, and then any thermal materials into our core markets for bedding, that's really the focus of the company. And again, it's all about FY '25 and short-term results. So to that point, in the strategy of making more finished goods and components that go into finished goods, we developed the Alexium pillow. It's a luxury pillow incorporating 2 of our technologies, DelCool for dehumidification textile and AlexiCool for phase change coating on the cover for cooling. And we did this originally to just have a prototype, basically a minimum viable product to show to different customers to demonstrate the technology and to give them something to go sleep on and try the technology. So really a nice piece of collateral for marketing. But in making those prototypes, we learned that we actually are quite good at making the pillow and designing it. We had a good team that supported us, including some outsourced marketing and advisers, but also our product development team. And of course, we had the technology that differentiated the pillow, and we had all the ability to do the testing to support, legally support, and scientifically support all the marketing claims that we were going to use for the pillow. So it became very evident that we could produce the pillow, and we're very active with a lot of bedding brands around the world. Many of the bedding brands sell private label goods, meaning they'll take a technology under a license or they'll take a technology from a manufacturer and brand it and sell it under their brand and in their storefronts and in their merchandising schemes. So we made the decision to move forward with the Alexium pillow and take it to a number of those brands as a finished good. We can sell then the pillow with foam cores in it. We can sell the pillow with an advanced fiber-fill, and we can sell them -- we're going to keep the SKU limited to just a few different cover types to keep the manufacturing efficient and lean and not too complex. We are new to this. But we've shown it to a number of brands already with one moving forward to adoption, already putting together the marketing focus group for it now and looking to launch it in the New Year. The pillow itself is fantastic. I myself sleep on it. We've given a few to a few investors and a few Board members and a number of customers and feedback has been overwhelmingly positive. Interesting thing in my recent trip to Australia, there's a whole menopause buzz going on in Australia, and I saw it everywhere. It was on the news, a lot of marketing, a lot of billboards, flyers, commercials talking about menopause. So we were showing this pillow to a lot of brands in that region. And a lot of people were defaulting that it was a great product for menopause because it's a very adaptive cooling and comfort story. So it deals with heat index and regulating temperature once microclimate around their head and it modulates whether you're a hot sleeper or not a hot sleeper, your temperature goes up and down throughout the night. And this pillow is able to regulate that. And it creates a very dry air and cool environment, very comfortable, so one of the focus groups we put together in that region is going to be focusing on that demographic, and we have menopause specialists that will be working with us on the marketing and to basically be a subject matter expert so that we can prove that it is beneficial for that. But beyond that, it's just a very comfortable product. I myself sleep on it, and I wake up very dry and comfortable. We're going to make these available to a lot of folks in the market in the near term. And obviously, some of our investors, we would love for you guys to try it. The pillows have tested 19 degrees cooler than very similar builds without our technology. We're also working with 2 different partners on foam cores. One is a viscoelastic memory foam, and the other is a very advanced breathable foam. The viscoelastic memory foam was getting about 14 degrees cooler, and then the breathable foam, 19 degrees cooler along with the fiber-fill pillow. So there's nothing like that in the market. People may claim cooling pillows, but this is literally tested. We have the instruments in-house, and we've used third parties to validate it. It truly is a cooling and comfort pillow. And again, this is Alexium moving up the supply chain. We're not branding this pillow as an Alexium brand and retailing it to consumers, but we are now going to wholesale it to private-label, to brands. And again, if we were just selling our DelCool technology or our AlexiCool technology together or separately, be a much lesser dollar per pillow unit than the actual pillow itself. And it would be a slower development cycle as well. It really speeds it up to have a finished component with a supply chain that can scale and make a large volume of these pillows ready to go. So, so far, the feedback has been great. We're just in the early stages of this, but we're expecting some adoptions of this in the new calendar year. Very excited about it. So in closing, look, it's been a sluggish start to quarter 1. Again, we've been in the doldrums of a market. There's been tremendous uncertainty in North America. We remain concentrated in North America. We remain concentrated in phase change materials. And you've heard probably some confusing messaging tonight around that. When I say we're diversifying in our core market, that's FR and phase change materials and our DelCool and Eclipsys products. But we've also diversified the types of phase change materials and the way we're going to that market. And that's proven to extend the market, the addressable market for us sharply in the near term. And then with the advent of all the breakthroughs of FR and opportunities around the regulatory bands for us in FR, we've diversified that product into bedding, and we've had a lot of success. And again, our second-half growth will be driven primarily by phase change materials and FR. And then beyond that, we're going to be pushing FR into other markets outside of bedding and then driving Eclipsys and DelCool in other markets and phase change materials as well. But we are expecting to catch up the results of the first quarter. We do have the opportunity to meet, possibly beat our budget on the closings that will happen over Q2 into Q3 and then the starts and ramp-ups that are going to happen in the second half of the year. There's large revenue potential in the pipeline right now and enough of them statistically for us to achieve those types of results. So the refinements to the strategy paired with our near-term focuses, it's made all this possible. And I can assure all of you that the team here is laser-focused and, again, focused on lesser types of markets, lesser types of technologies, and driving short-term growth from what we're really good at. So I can tell you everybody is motivated and excited about the second half of this year, and we're excited to finally deliver meaningful results to our loyal stakeholders and shareholders. So with that, I'm going to turn it over to Lisa. We're going to keep the financial update tonight very summarized because we just put out the 4C. So hopefully, everybody has had a chance to review that. Lisa is going to give just a few highlights and just a few major points for the finance side, and then we'll open up the floor for questions.

Thanks, everyone, for being with us this evening or this morning, as the case may be. Just a couple of highlights, like Billy said, you have the 4C, you've got the presentation. So just a couple of things I wanted to point out. Sales for the quarter were at $1.1 million, which is down $0.4 million from the prior quarter, but margins remain very, very strong. Cash receipts were at $1.1 million, which is down $0.2 million from the prior quarter. So that does put some pressure on our cash. And so we're managing that very closely. For our long-term debt with the capital raise, we were able to extinguish the loan from Colinton as well as the bridge loan. And so that has reduced significantly the interest expense in our P&L. And we were also able, after the end of the fiscal year, to renegotiate our line of credit with alternate capital. We were able to reduce the interest rate spread on the interest payments, but also we're able to reduce the fixed costs, both monthly and annual fixed costs that we have. So that also helps us from a cash management standpoint. With the low sales, like I said, it does put pressure on our cash, and we will be continuing to monitor our cash position and our cash strategy and revising our cash strategy to help us properly prepare for the anticipated growth that we really truly believe is coming. Those are just some challenges for us to overcome in the near term as we begin to have some of these opportunities come to fruition.

Okay. Got a couple of questions in, Billy, if you're okay. I'll read those, and we can address those. One question is, how do investors purchase products with Alexium's technology on them?

So we anticipate the pillow in that region being available in the New Year. So not available for purchase yet, but that is coming. And then we'd be happy to put out a number of customer products where our technology is already incorporated. I can tell you there's a number of really good leading brands that have Alexium technologies in it that people may or may not be aware of where we're somewhat shrouded behind the curtain of their brands. But there are a number of really good bedding products, mattresses, and pillows in the world market right now available.

I think Billy, what we might do is take that as a question on notice and potentially put up on the website the products that feature our product. There are some instances where we'll need to get the sign-off of our partner, the OEM of the product. But I think it's a very reasonable request and reasonable on our part to have a list where people who wish to support that do so and see the products.

I can tell you there's one that's already I can disclose. It's quite easy. There is an advanced pillow. It's not the one we showed tonight that's been in the market at Mattress Firm in North America, can be bought online as well. And that's a licensed product. And AlexiCool, the market is licensed to them. So that is -- I can tell you guys, that is available. The others, as Simon said, we'll get expressed permission from the customer to disclose that. But there's a number of mattresses and other bedding products where we can make that available. And yes, we want everybody to go buy a mattress. So please, yes.

The other question is, when can we expect revenue from FR, for example, AlexiFlam, AlexiGuard, AlexiShield, and what has happened to shoes, cold chain, packaging, et cetera? And then where do we stand on military? So it's a lot packed into that one question.

Yes. No problem there. So we expect sales from FR in Q1. We've had some small sales this quarter, we'll be reporting, and we -- I guess we'll put a little more detail around that, and those are some early starts that we expect growth from. But we expect closings and initial sales in Q1 and to be ramping -- excuse me, not Q1, Q3, beginning of the new year, Q3. I'm still being reprogrammed for the Australian fiscal year, but Q3 and ramping there through Q4 and into the next fiscal year. Again, we're in trials right now and moving the -- it's been going quite well. All results have been positive so far. And those are not in the military space. Those are in the private sector, in the bedding space. Beyond that, with the military, we're still in a slow development cycle with the military. Look, we have submitted results in fabrics as recent as the last 30 days, very positive feedback. We're on a short list of 5 in North America in the running. We do not know yet when the military is going to put out a large tender for that, but we do anticipate it to be in the next calendar year, so in the year 2025. Look, Alexium is closer than it's ever been. We've stayed close. We're working directly with the military and their development group. And our results have been positive, unlike previous attempts that didn't quite pan out where we are in the race right now. And again, we are hitting their targets for FR performance, for the weight of the fabric, for the feel of the fabric, and we know we're in the right area for the cost of the fabric as well. So we're hitting all the right marks to be included and be in that competitive bidding. It's just they're moving at a very slow pace. There are a number of things going on geopolitically that could speed that up. Unfortunately, they could slow it down as well. I can't predict how the government is going to make their spend decisions. I will tell you the trend over the last 3.5 years has been a reduction in that area. So you could see the new regime come in, in North America, and increase the spending and restore our coffers in the military, which could speed things up. But I can tell you, Alexium is well positioned for that. Regarding the adjacent markets mentioned, shoes and cold chain, we have actually let that sit. We do have an active project with one customer that's moving quite slow, and that's for Eclipsys in shoes. We are actually going to be at SHOT Show in January, and we had some small sales recently for Eclipsys into tactical gear for the ballistic vest. We are now going to be reenergizing that in the New Year, but just an approach to large agencies with large populations. What we learned when we launched Eclipsys and tried to move it to a lot of small different brands that make tactical vests is that they didn't have the volume, and it was very small, lots of small orders, very costly to make it. There was no efficiency in that supply chain. So to be successful in that space, you got to have a large population of users. So it's got to be something like the U.S. Border Patrol, federal prison systems, or maybe a large metropolitan police force that has thousands of officers. So those are the types of tenders we'll be chasing in the New Year. That said, it hasn't been our primary focus in development, in business development and sales here because we've really positioned the team on near-term results in our core market in bedding, and that's really a heavy focus on FR and PCM with a trailing focus on DelCool. And then cold chain, we've got on the back burner, again, for these short-term focuses. We know we have a product that will play well there. We know that that's a large space with large growth potential. Again, though, we owe it to our shareholders to focus and deliver short-term results. So we've got that on the back burner to drive that discipline.

And that's all the questions that have been submitted online.

Okay. Well, Simon will say a few parting turns. But again, I'd like to thank everybody for your support, and thank you for coming tonight. Again, please tune in for the next update. We're expecting some exciting news as we give updates in the new calendar year. Very excited about the new projects in the pipeline and the changes to the strategy and the enhancements to the products. It's really positioned us for an exciting year in 2025. Thank you all.

Thank you very much, Billy. Thank you for everyone for joining today. The other piece of news is that Carl Dennis, who is a Director of the company, has given notice that his circumstances have changed and he's going back into a full-time occupation, which will prevent him from continuing on the Board. And so he will withdraw his nomination from the Board with a view that at the AGM for reelection. His position on the Board will be filled on an interim basis running through to the next AGM by Mr. James Williamson, who is a representative of Wentworth Williamson, the second largest shareholder in the business. James has been a long-term investor and supporter of the company, and the Board is very excited to have him join the company. But importantly, we do acknowledge the work and the efforts that Carl has put into the business and a number of the initiatives that we're working on now, he's been intimately involved in. And so we wish him well with his future endeavors, and you'll see a formal announcement put up on the ASX today about that change. Again, thank you very much for joining us today. Thank you very much to the team here at Alexium. The guys and girls have been making some very strong progress both on the technology side of the business and on the commercial side. As Billy noted, we do feel that we are on the cusp of reaping some of the rewards of some very significant work over many years by the team, and we look forward to being able to provide you with an update on that at the AGM, hopefully, and then beyond that early in the new year with the 4C being made available at the end of January and a timing of a webinar update in and around that particular date. We'll again notify people formally of the date for the next webinar, probably towards the end of December or early January. So again, thank you very much, and have a great day or a great evening, depending on where you're joining from. Thank you.

Thank you everyone. Take care.

Thank you. Bye.