What happened at the EGM., page-86

Hi everyone,

@Wally49: thanks for the correction – 8lb per sq yrd (or even 7.2) really would be heavy in anyone’s language.

@Sceptical Prophet: regarding your question about Sue’s discussion of the verification of announcements process – they didn’t elaborate on this any further. I take it to mean that they have put a QA process in place where announcements must go past certain sets of eyes for review before release, and those people must document things in order to have some accountability and traceability (an audit trail) for all announcements or public comments made. Dirk did discuss they wanted to be sure future announcements were neither overly optimistic nor overly pessimistic – that they were accurate and balanced. Under promise and over deliver.

On another note, I see there is discussion that the new military initiative (the treating of the 9 out of 10 non-FRACU uniforms) may be announced by June. I’m not sure where this time frame came from (someone mentioned they thought it was in an earlier announcement or the AGM) – but I want to reiterate that at the EGM the company was at pains NOT to put timeframes on anything. They will discuss milestones but not timeframes.

We could speculate that given Alexium has received 300 additional yards of fabric for testing it is possible we could demonstrate reliability and repeatability of out FR treatment fairly soon and that may get us to the point where the partnership is announced relatively soon. I suppose this could happen around mid-year but it could take longer. Even if this happens, it seems we would still have a number of hurdles to get across. 1) We need to successfully scale up from pad-dip to spray on application. 2) We need to successfully get through military review (whatever they may involve). 3) We need to get through a minimum 90 day limited user evaluation / field trial process. And, I suppose, there would then be a further review by the military. This will all take time, there will no doubt be some teething issues along the way and things could ultimately go wrong.

My point is that we need to be very careful that OUR speculation on timeframes does not morph into some supposed “fact” from the company which we all get frustrated about if things take longer.

I am guessing that if we make it to field trial then some limited revenue would flow from this as we treat some trial uniforms. However, I would not expect (should everything work and we go into full production) that we would be looking at the first big whack of cash for treating existing inventory before the end of the year (earliest) and then the ongoing $40mill for normal throughput of new uniforms into next year sometime. This is purely my speculation and I have absolutely no information from the company to base it on other than what I heard at the EGM and have reported on this thread.

Also, it occurred to me that we don’t know exactly what our partner does. We were told that they are at the very end of the supply chain. I don’t know if this means they are a “cut-and-sew” operation that receives fabric from suppliers and then manufactures uniforms, or if they receive completed uniforms form suppliers and then do things to them (i.e. perhaps they apply insect repellent and package completed uniforms received from cut-and-sew manufacturers). Given they handle 80 to 85% of all uniforms across all the service branches, I guess they can’t be the only cut-and-sew manufacturer for all of them (but they could be – we just don’t know). Anyway, there will be a difference in applying our FR to finished uniforms as opposed to fabric (maybe that’s why we are going with a spray on process) and this may take time to work through. If we generally are applying FR to fabric before the cut-and-sew, we may need to work out a process to treat the existing inventory effectively. Alternatively, if we are already dealing with a partner that works with finished uniforms then that might not be a big issue because we are already in a process dealing with finished uniforms. Alexium seem to have indicated our FR is “functional” so we can add out FR to existing processes for insect and water repellency easily enough. It’s all food for thought and I have no clear answers.

Anyway, I think shareholders need to be careful not to get too excited or to set our expectations ahead of what the company can realistically achieve – or put our own hard target dates on things. They will let us know as they achieve milestones but we should not invent our own timeframe and then hold them to it.

Best wishes,

Alhotcop9