The market has spoken, page-34

Lets just get real here and analyse the 4c commentary:

• "Cash receipts during the month of June exceeded cash outflows by A$350,000, resulting in Alexium’s first ever cash positive month."

Well if I did not pay my major chemical supplier by 30 June and paid them on the 1st of July I probably could make 1 month cash flow positive... I would have preferred a comment by the company that they are now at breakeven or better going forward.

• "Cash receipts of A$6.7M during the period represent a 6% increase over the previous quarter. Margins were significantly higher such that COGS required to produce cash were sharply lower relative to the previous period. The net cash outflow for the quarter was 50% lower than the previous quarter, from an outflow of A$5.9M in Q3 down to an outflow of A$3.0M in Q4."

6% was far less than most expected and certainly I expected around 15% at least.

• "Cash receipts for the past six months of A$13.3M exceed calendar year 2016 entire cash receipts of A$11.1M by 19.8%."

Good statement if we take $6.7 million and times that by 4 we get a base line of around A$27million - @ 30% Gross that's around $8 million. The ongoing costs as I see it are R&D $2 million , Staff costs around $4 million admin costs around $1,8 million plus say $600K for the rest. That's around $8.4 million. So it does suggest we are very close to breakeven if we are getting 30%.

What you can see is that the ongoing costs are really well managed and seem to be dropping. I suspect its a change of approach from NC - Go Sales and DVH go profitability ...

• "At the end of the period, Alexium had A$1.5M in receivables in addition to A$3.4M in cash and cash equivalents."

Sorry just a rubbish statement as I don't know what the movement in creditors are or the change from the prior quarter. We need working capital figures to see profitability. I am pleased they are stating this but we need one more - creditors so that we can track it quarter by quarter. So Better but just one more number please. Or opening working capital closing working capital items.

• "Increasing cash generation from improving financial performance has enabled Alexium to receive offers of new working capital facilities on more advantageous terms."

This cost seems to be growing so having cash on hand seems strange but sounds good as a cost to get to profit.

This part is pure opinion:

I think that in hindsight its great that we have moved from project launch - NC to viable business and changed management style to DVH.

They still need to resist temptation to put out only some of the news - which I personally think is mostly the good bits without addressing the bad bits.

Purely on the face of it the so called inventory build was in fact poor or actually no margins on a lot of turnover. You cannot have another build of inventory and we cannot keep having cost of product exceeding cash flow. I am happier with lower turnover at better margins which seems to be the message that people took away from the Sydney meeting.

I personally would not be unhappy with a CR to give DVH the room to keep building a profitable business - 3 months ago I would not have invested in a CR. These numbers after analysis are at least showing a trend and sufficient of a trend in my opinion. I have always believed that a 10% increase in investment can yield a far quicker and more secure investment - however only if you can see enough in the trend to extrapolate the future. I think $10 million would delete the $250K quarterly financing charge. That would make a lot of sense.

The caveat - I have to believe that 30% Gross margin is real.

So I am happier with my investment today but I think I have bee fed a lot of snow for the past year and only now am I getting the real deal. I don't believe in fake it till you make it. I think it breeds a market that doesn't believe and I think that this is what this company is suffering from.

Personally the team paid themselves outrageously , they didn't feed brokers enough information to stop the crazy price climb - I know a CEO that phones the analysts and gets them to understand the business model so that they understand the future performance expectations that management have and don't therefore get wild expectations out in the market that are not achievable.

This is a stock that the faithful are still in the money on this but most that bought in from mid 2015 are probably underwater. I am as well and I only bought in in in mid 2016 after all the hype had gone but management were , in my opinion, still marketing blue sky and not reality.

I was a year too early and most bought in 2 years too early.

I think many have sold and wont come back and the faithful are still here because they have not as yet been disillusioned probably because they have not lost yet and have a cost of around 20 to 40c so not sitting in red. For this reason I think its a good opportunity now but certainly wasn't when I bought in.

I think the base level is 50c and I would be happy with a CR @45c - I know the faithful don't want this as that pushes up their average but looking at how close this business is to profit saving a $1 million a year could push you into profit in 2018... That's a far better outcome then still losing.