Ann: Letter to Shareholders - Upcoming EGM, page-64

Hi Everyone,

I just wanted to clarify:

1) Does the C/N only allow for GPB to get an absolute maximum of 35,922,041 shares to be issued regardless of the share price or does the clause under Part 5 (b) "the lowest issue price of any shares (or equivalent) issued by the company during the term of the convertible note" mean that if the company was to issue a share at say 10c during the term of the C/N that GPB could get around 100 million shares (or more - given USD an all)?

2) Can GPB only acquire the shares if a "conversion condition" is triggered as defined in Part 7? - or can they claim the shares any time they want?

3) If GPB claim the shares, would Alexium still be liable for repaying the loan or would the loan effectively be extinguished?

I realise that 13.5% interest, the warrants, the "success" bonus for early repayment and the initial "issue discount" are all pretty steep (although the warrants bring some cash in if exercised), however, if GPB stand to gain an absolute maximum of 35,922,041 shares and they can only ever claim them if a "conversion condition" occurs, then it seems to me that there is a lot of panic about nothing (conspiracy schemes to crash the company so nefarious types can take it private aside) and the lower the share price drops the bigger the risk for GPB. Or do I have something wrong?

Like everyone, I'm really struggling to reconcile everything that is going on and am hurting badly with the current SP. And like everyone, I am dismayed to hear that margins are now being squeezed and I am fearful whether new customers (if any are really there) and revenue in general have offset the fall in margin. I really don't know what to believe anymore. If anyone from Alexium does read this forum, it would be smart of the company to rapidly put out a clarifying statement about this to stem the panic that the newsletter has created. Don't make us sweat it out to the 4C.

Perhaps they thought that the notice of EGM would calm people when they see Directors buying. Given that GR has put in $135K (and a lot more on the way down - which I grant that so far has proven to be unwise), ST (a new director) has put in $100K, SC, CP (a new director) and CM put in $10K, KT and DH put in $5K - why would these guys give up their own money if they thought things were going bad? Even if the money does come to them through salaries as directors it's still money they don't need to waste if they think it's all going to the dogs, contracts will never be won and the share price will not eventually recover. Maybe some of them are being led by others, maybe they're all a bit dumb (although I think we should give some benefit of the doubt to the new kids on the block) , but are they all really in a conspiracy and / or completely stupid (including the new ones)?

In the end, I can't think of anyone who is actually winning in any of this if thing go bad.

Sensible and reasoned responses to the above would be most welcome.

Alhotcop9