Hi everyone,
Well the suggestions for more questions seems to have dried-up - seems there aren't too many long-term holders left who care to hear from the company (or who will believe what the company has to say).
Therefore, I am tempted to go with the below collation. I have added in some questions of my own. I also added a summary (incomplete - but it gets the message across) of past management misguidance and mistakes at the top to ensure that Sue (in particular) is aware of past history and understands how disillusioned and angry shareholders are. I am happy to remove this and go only with the questions if people think that is better.
Anyway, here is what I have so far - let me know your thoughts:
*********
For Sue:
People have lost faith in the company. Institutions are selling out (Morgan Stanley, Citibank, Moelis and more) and many long-term retail shareholders have also sold out. No one believes anything the company is communicating. This is due to a long history of missed targets, unkept promises, hollow reassurances, mismanagement and strategic blunders, and an inability to win new contracts. For example:
- We were told Alexium had been selected as the sole supplier of FR solutions to the US military. This turned out to be manifestly untrue.
- For FRACU, we were told several years ago that we had passed Pyroman testing as would shortly be in field trials. Several years later we are back to square one with now a third uniform variant that still needs to pass Pyroman - there appears to be no realistic end in sight for winning the FRACU contract.
- We find that there are up to 8 companies involved in field trials for various military uniforms but Alexium does not appear to be involved in any of these.
- We find there are trials of a hot weather uniform with FR capabilities (some using NyCo blends) ongoing in Hawaii – but it seems Alexium is not involved.
- It appears the Navy is commencing use of a new FR uniform but this is based on inherently FR materials and Alexium has not been able to capture this opportunity (perhaps did not try to do so?)
- We were told we were the only company that could do FR on Nylon and NyCo blends. This appears to be untrue.
- We were told in November 2016 that a license deal was “imminent” for Alexiflam NF in Europe. 18 months later we have suffered through finding that our solution needed to be modified to handle 50 wash cycles, then 100 wash cycles, then that it needed REACH certification. Why did the company not know of these requirements? We now find that, even after REACH has been obtained, we are only in a testing stage with one manufacturer and one potential licensee and there is no “imminent” deal. Why?
- We were told, in late 2016, that we had won a contract with Pegasus that would bring in $10 million in recurring revenue. 18 months later where is this revenue?
- We were told that our margins would be increasing over time. We now find that we are under margin pressure and margins are falling. Openly discussing margins to the market was a major strategic blunder.
- At the AGM we were told that our existing bedding customers were interested to use Alexicool on lower tier mattresses and we could expect a 400% increase in sales. We now find we are under margin pressure and struggling to prove to clients that our product is superior and worth using over cheaper alternatives.
- At the AGM, we were told that the second major mattress supplier in the USA was interested to use Alexicool and we could expect that this would double sales into top tier mattresses and also into lower tier mattresses when that eventuated. This does not appear to be happening.
- Since Pegasus in late 2016, we do not appear to have won any significant new contract. If our products are so good and cost competitive – why is this?
- In December 2016 the company announced that baseline sales in 2017 would be $18.5 million with potential of up to $44 million (not specified if this was $A or $US). This target was comprehensively missed. It is now mid-2018 and we still appear a considerable way from achieving it, let alone profitability.
- The former CEO and soon to be former Chairman were paid exorbitant salary packages, despite retail shareholder objection, ostensibly because we were an ASX300 company and going from strength-to-strength. Look at where we are now.
- In the lead-up to the AGM and at the AGM the company stated there was no need to raise capital. Shortly afterwards, the company did an Institutional Placement and SPP. Although reasons were provided, retail investors feel deceived. Note that the retail SPP was heavily undersubscribed.
There are many other examples of misinformation, incorrect guidance, false assurances, missed deadlines and mismanagement from the company. Again, no one believes anything the company says and this is clearly reflected in the shockingly low share price and continuing share price down trend. Why should shareholders and the market have any faith that information from the company has any truth or validity to it? How does the company intend to arrest the slide in confidence and rebuild reputation?
Sue, given the current state of affairs with the company and the disillusionment and anger amongst shareholders – why did you agree to join the board and ultimately to Chair the board of Alexium?
Sue, how do you envisage your leadership will differ from past management, and what can we expect to see within the next 3 months?
Sue, what input and roles do you expect from other directors such as Brig. Gen. Cheney, Mr Metz, Ms Poll and Ms Thurman under your leadership? What will you do to extract a greater contribution from them?
Sue, what changes are you making to the KPI and accountability systems that you believe will close the gap between what your executive team plan and what they then go on to actually deliver?
Sue, it is evident to shareholders that the baseline document produced in December 2016 was way off the mark in terms of sales forecasts. What do you believe has been the problem in even today being unable to deliver on those forecasts? What has been done to-date and what do you plan to do to remedy this, and/or prevent a re-occurrence of missed promises?
Sue, how and what measures and controls are going to be put in place to ensure that all announcements are true and accurate and delivered in a timely manner?
Sue, you have a number of high profile roles in other companies and organisations - will you still be maintaining those and what impact will they have on your time and input as Chair of AJX?
For Gavin
What is your intention for your shareholding now that you are no longer on the Board?
Will you retain your current holding for the long term?
We had always assumed that you would provide a large part of a blocking stake in any “low-ball” takeover offer that might come in. Do you intend to retain your current holding and continue to protect the company from any such takeover attempt? This is particularly important given the terms of the CN / credit facility.
EGM Resolutions 11 and 12 and the C/N or loan facility generally
Considering the phrasing of resolutions 11 and 12, with the amount of funds having been raised why is there a need to "free up" the cap for further issuance of shares without shareholder approval?
Can the board state, without equivocation, that the credit note will NOT be repaid with shares (or options) rather than cash, as is allowed under the C/N agreement?
General (for Dirk?)
How long in duration are the contracts we sign with clients (for example out major mattress supplier or Pegasus)? Can they switch away from Alexium at short notice and what is preventing them from doing so? What is Alexium doing to mitigate / minimise this risk?
So far, other than Gavin, it appears Directors have only bought during the recent SPP and even then, other than Sue and Gavin, their investment is very low. If the company’s products and prospects are so good, why haven’t the Board and management bought significant numbers of shares on market, particularly considering how low the share price currently is?
Is the company concerned that with such a small MC that a competitor may initiate a “low-ball” takeover offer and what is management’s thoughts and plans in this eventuates?
In regards to applying a basic level of FR to all military service uniforms - is this something that will be won in one contract with the DoD, or will it be won piecemeal and over time with each different branch of the military?
We were told, in late 2016, that we had won a contract with Pegasus that would bring in $10 million in recurring revenue. 18 months later where is this revenue?
We have been led to believe that there is a large network of third party sales agents. If this is so, how do you plan to measure, monitor and ensure that they add value to Alexium? Further, why are our sales so slow and why are we not winning more contracts?
What is our sales progress into Global markets (outside the USA)? What steps is Alexium taking to achieve sales outside the USA?
What is the nature of the current relationship with ICL? Do you believe there have been inherent risks in that relationship and if so how do you plan to address them?
Around six to nine months ago, we have had a number of announcements relating to margins and being cash flow neutral. However it seems that expectations created by those announcements cannot be sustained. What is in place to ensure that Alexium is on a sound financial footing?
What is the relative sales value of fire retardant chemicals vs Alexicool? If Alexicool has represented the majority of sales, what is the status of Alexium as a genuine player in the fire retardant market?
Can the company provide any actually realistic time frames and probabilities of success on any of the cornerstone opportunities discussed in the latest 4C?
Will the company continue to issue monthly newsletters? If not, how will information and progress be communicated to shareholders going forwards?
Leading up to the AGM and subsequent capital raising, the company did a series of webcasts / Q&A sessions. Why did these suddenly stop immediately following the CR? This has made retail shareholders feel they were manipulated. Will webcasts be done again in future?
Have we genuinely obtained REACH certification in Europe? What certifications might be needed in Asia, USA and other parts of the world? What is out progress on these?
At what stage is the Alexiflam NF certification in the USA? When can we realistically expect this?
Are there other products that need certifications (as has been the case with Alexiflam NF). If so, what certifications and what stage are we at with each product and certification?
Regarding the licensing of Alexiflam NF in Europe, are we likely to have several licensees or will it be an exclusive arrangement with one licensee? If it is exclusive, will Alexium retain the right to sell direct or will be have to go through the licensee? What performance targets will be set on the licensee (i.e. will they have to sell a certain amount of product in a given time or grow business at a certain rate, etc)? If they do not perform, how can Alexium terminate the agreement and license through someone else?
*********
If everyone agrees to the above, I might send it through this evening to give time for the questions to be circulated amongst the Board and management so they have time to work out considered responses at the meeting - however, I'll wait for some feedback from you before making a decision about sending it this evening.
Regards,
Alhotcop9
Expand
(20min delay)