Ann: June Shareholder Newsletter, page-52

I reckon if they hit CFN as announced but then have to buy a tin of coffee for the smoko room they'll probably be below the marker again.

Product making stage means no profit/margins just costs, as you aren't selling product.

Trial stage (in our case) means no profit/margins just costs, as as you are doing it for a loss or at break even.

The very early commercialisation stage means very low margins but due to other trial costs and ramp up of inventory no profits. For us in a very competitive market meant selling our products at a discount early on to get our foot in the door and our name into the market place, doing this whilst still conducting lots of trials still have an effect on margins from month to month until payment is received for the trials from the customer, even at break even charges.

Still in the early commercialisation phase but our margins have improved due to customers now physically wanting our products, our prices and margins have increased because they now need our products to stay competitive in areas such as the bedding market, we now have large revenues starting to come through from our original customers and these revenues are on the brink of being able to pay for all expenses and current trial outlays.

This will bring us to a CFN position, however when your just touching on that position, fluctuating above or below it for a quarter or so is not out of the question, however the more customers that come into the fully paying customers category at our long term margin rates will make our CFN concerns a thing of the past.

Some time after that we'll be operating from a cash flow positive position, this terminology to me means you are paying for something out of a positive kitty, you don't fall below the CFN position to do so.

IMO, this is where the company should be pulling the new products they've said they've shelved off of the shelf and push for evolution and expansion to stay in front of our competitors.

Doing things like this builds a bigger more diverse company that can then handle issues that may arise in the future with competitors on a single product line, it means we have other avenues to make revenue if a competitor eventually out does one of our products, however putting new products into the market costs lots which again slows these large profits people are talking about, the reinvestment of funds into new products from Dr Bob in a business like ours early on is not only good, but it may prove crucial to our existence through diversity later on, we're only a very small fish in a pond full of giants.

The reason for this post is to try and show that Alexium the business started out costing us heaps (as has been well highlighted by many posters through those early stages talking about margins, where are they now?), you start out losing heaps and gradually you rein that back in until you stick your nose in front, they were very normal business phases and we are still working through very normal business phases.

As we've seen, it takes a long time to go from losing multiple millions of dollars annually to reaching a CFN position, that's just business, we're on the cusp of this achievement however expecting big profits in the near future would mean slowing or stopping future progress, the evolution of the business shouldn't allow big profits for another year or two IMO, it needs to be reinvested to stay in front of the market.

Cheers.