Dear Shareholders, Yesterday, Dr. Bob Brookins, Aaron Krech and...

Dear Shareholders,

Yesterday, Dr. Bob Brookins, Aaron Krech and I held our third Alexium webcast and we had a record number of live listeners and submitted questions. Some highlights of the call:

• 4C Highlight - Cash Generation – Alexium realized positive cash generation for the quarter of $358,000, the first whole quarter of positive cash generation since inception of Alexium. Our cash position at the end of that quarter was over A$9.45m.

• 4C Highlight - Margin Improvements – GP margins continue to increase, up from 18% in the previous period to 23% for Q1 and are tracking higher towards our target average margin of 40%

• Major Regulatory Shift – new decisions by the US Federal Consumer Safety Product Commission and the states of Rhode Island and Washington to ban non-polymeric organohalogen flame retardants signal a shifting regulatory environment strongly in Alexium’s favor.

• Growth in 2H FY 2018 – sharp upward growth expected in 2H 2018 in both top-line revenue and GP margins as customer base ramps up for typically active spring quarter and as key new customers who have completed production trials over the past months now begin active supply following their customer marketing initiatives

. • Increased Focus on Strategic Partnerships/Licensing Arrangements – as Alexium works more on platform products, Alexium is engaged with third parties to identify and understand key markets for those products and to identify more licensing partners to maximize market penetration quickly. Current license discussions on Alexiflam NF are advancing towards final stages.

• Wide Range of Revenue Stream and Opportunities – Alexium continues to convert opportunities into active sales in market spaces such as pillows, protective wood coatings, disposable nonwovens and additional mattress components.

• Military Progress - working with a major uniform fabric supplier in the uniform space has accelerated our defense related work to the point where the work is now solely on the uniform material upon which to apply our Alexiflam FR with the next stage of tests to occur this quarter

. • New Innovative Products in the Pipeline - Alexium’s R&D team have completed initial testing and commenced patent work on new products involving fire retardants and phase change materials for use in the consumer electronics and building industries including and environmentally friendly flame retardant for wood products.

Thanks again to all the shareholders who participated and look forward to the next webcast as the company continues to make strong progress and grow our product and customer base.

Sincerely,

Dirk L. Van Hyning, Ph.D.
Chief Executive Officer