Ann: S&P DJ Indices Announces March Quarterly Rebalance, page-2

What convenient timing for a positive email:

Dear Shareholders,

Over the last year, we have communicated on several occasions the quick traction Alexium is achieving with our newest product, Alexicool. In the bedding industry, Alexicool has made a significant footprint in a very short period of time. Late last year, we secured our first significant account selling an all-in-one PCM/FR/anti-odor solution with a single global brand. From that time, to its important introduction at the biggest show in bedding, (the Las Vegas Furniture Market), to today, our bedding business has grown at an impressive pace.

The most immediate result of the success of the Las Vegas Furniture Market was the brand which debuted the Alexicool mattress, which attributed to the doubling of the supplier's annual forecast, with increased shipments starting immediately, alongside a whole series of additional brands quickly adopting our product and initiating ongoing orders. Lastly, a series of purchasing decisions at one of the largest mattress retailers in the U.S. has recently resulted in one of Alexium’s three suppliers into the bedding market doubling their ongoing orders indefinitely.

What started out as Alexicool going to a single brand through a single finisher has now expanded to our chemistry now going on ten different bedding brands representing a current run rate of over 20,000 lbs of Alexicool chemistry per week. This will provide us cash neutrality sooner than expected. We reported an average margin of 40% recently, however as long as our orders continue to increase at the pace we are seeing, we could anticipate our margin to increase from a definite 40% to 50%. This is also due to strategic R&D and supply chain choices.

Sincerely,

Dirk L. Van Hyning

Deputy CEO