Alexium International : Clarification on Quarterly Activity Report and Appendix 4C

	ABN: 91 064 820 408
US CORPORATE OFFICE	US: 350 W Phillips Road
Greer, SC 29650 USA
350 W Phillips Road
Greer, SC 29650 USA
T: [phone]	AU: Level 7, 330 Collins Street
	Melbourne, Victoria, 3000

For personal use only

ASX │ 4 February 2022

Clarification on Quarterly Activity Report and Appendix 4C

Melbourne (Australia), Greer (South Carolina, US) - 3 February 2022: Alexium International Group Limited (ASX: AJX) provides a clarification on its recent Quarterly Activities Report and Appendix 4C for the period ended 31 December 2021, lodged on 31 January 2022.

In addition to the business update commentary that was provided in the Quarterly Activity Report and further to the information in the Appendix 4C under 'Payments to related parties of the entity and their associates' (item 6), Alexium confirms that aggregate payments to related parties of US$257K includes three months payments of Directors fees and three months interest on the outstanding Colinton Capital loan.

An updated Quarterly Activities Report and Appendix 4C are attached.

About Alexium International Group Limited

Alexium International Group Limited (ASX: AJX) is a performance chemicals provider for advanced materials applications with a focus on flame retardancy and thermal management. The Company is driven by an innovation model for addressing market gaps with patent-protected technologies. These environmentally friendly solutions have applications for several industries and can be customized to meet customer needs. Key markets for Alexium are military uniforms, workwear, and bedding products. Alexium brands include Alexicool® and Alexiflam®. For additional information about Alexium, please visit www.alexiuminternational.com.

Authorised for release by the Board of Alexium International Group Limited.

Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

For personal use only

QUARTERLY ACTIVITIES REPORT FOR THE PERIOD ENDED 31 December 2021

For personal use only

+Rule 4.7B

Q2 FY2022 Highlights:

• Continued Strong Sales & Cash Receipts for the Reporting Period o Cash receipts of US$2.8m and sales of US$2.7m
  o Cash receipts are a 46% increase versus the same period in prior fiscal year
• Letter of Intent Signed for $3M/$5M Line of Credit

1. Alterna CS to provide working capital funding to support the growth of the company

• 1. Facility is a three-year US$3.0M asset-based facility which can be increased to US$5.0M as the Company grows
• Awarded "Innovation Award" by Serta Simmons Bedding (SSB)
• 1. "Innovation Award" given at SSB Supplier Summit for development and commercialization of thermal management products

• 1. SSB is a globally recognized mattress brand and a major manufacturer of mattresses and bedding products
• Premier Body Armor Commercializes Eclipsys™-Based Products
• 1. This highlight is the first sale of Eclipsys™ product

• 1. This is also the Company's first commercialisation of thermal management products outside of the bedding market
• FR NyCo Work Completed with Goods Moving to Military Testing
• 1. Fabrics were manufactured on a roll goods basis in South Carolina

1. Fabrics were treated with the Alexiflam® and Alexiguard™ products developed by the Company

Introduction by CEO, Dr. Bob Brookins:

"Over the past six months, Alexium has completed the key milestones that were outlined in our October 2021 investor presentation. These milestones are integral to the continued growth of the company across multiple fronts. While all of these are significant contributors, I see the successful commercialization of the Eclipsys™ technology for body armor as the real standout as it broadens one's perspective of what Alexium is and where it is headed.

"While shareholders invest in Alexium for its growth potential as a materials innovator, I believe the attention can focus too narrowly on one of two areas: cooling technologies for bedding or flame retardant applications for military uniforms. Both technology applications are significant parts of the Company but understate the breadth of our technology portfolio and their potential applications and unique technologies. The successful commercialization of the Eclipsys™ technology for body armor demonstrates this point."

Cash Receipts & Sales Summary for the Reporting Period

Cash receipts for the period totalled US$2.8m, continuing the Company's strong sales trend from the prior quarter. Cash receipts for 1H FY2022 total US$5.7m which is a 46% increase in cash receipts versus the same period in the prior fiscal year. The two primary drivers for this growth are continued expansion of Biocool™ product sales and commercialization of Alexium products in support of the total mattress cooling system (TMCS). Sales for the period were $2.7m. Consistent with prior year, sales decreased by ~25% in December relative to November.

ASX Listing Rules Appendix 4C (01/12/19)	Page 1
+ See chapter 19 of the ASX Listing Rules for defined terms.

For personal use only

Appendix 4C

Quarterly report for entities subject to Listing Rule 4.7B

Looking forward to 2H FY2022, the Company expects the 1H FY2022 positive trend for improving revenue and EBITDA to continue. This will be driven by new revenue streams which are beginning in 2H FY2022 as new customers adopt Biocool™ and Eclipsys™ products. The broader bedding market has softened beyond seasonality which is attributed to a number of factors including Omicron and supply chain issues. Orders from these new customers (that have commenced in January) mitigate this near-term impact. With the rate of new business acquisition coupled with our current capital structure, the Company is well positioned to continue delivering on its strategic goals.

To demonstrate the overall sales trend for the past 12 months, the graph below shows a trailing three-month average for monthly revenue.

Regarding operating activity outflows, (refer to Item 1.2 of the Appendix 4C), the outflows were predominantly comprised of raw material purchases, manufacturing costs, staffing costs, and corporate/administrative costs. While manufacturing costs and raw material purchases were higher due to increased sales, other costs are in line with our typical quarterly expenses.

Related Party Payment Activity

Related party payments totalled $257K including $194K for Directors fees and payroll for Dr Brookins, Executive Director. Dr Brookins payroll included FY 2021 bonus payment of $41K. Interest payment related to the term loan of $63K was made to Colinton Capital Partners.

Letter of Intent Signed for US$3m/US$5m Line of Credit

The Company has signed a letter of intent with Alterna CS to provide working capital funding to support the growth of the company. The currently contemplated facility is a three-year US$3.0M asset-based facility which can be increased to US$5.0M as the Company grows. The borrowing base consists of eligible accounts receivable and inventory. The initial fund usage interest rate is 8.25% and adjusts with upward changes in the Wall Street Journal Prime Rate. Regarding the line of credit, the Company's Chief Financial Officer Jason Lewis stated, "In the early stages of new product commercialization for products like Eclipsys™, the ramp-up phase can present working capital challenges, and this line of credit will help us manage those challenges. We look forward to finalizing the line of credit in February to support the Company's growth."

ASX Listing Rules Appendix 4C (17/07/20)	Page 2
+ See chapter 19 of the ASX Listing Rules for defined terms.

For personal use only

Appendix 4C

Quarterly report for entities subject to Listing Rule 4.7B

Alexium Awarded "Innovation Award" by Serta Simmons Bedding

At the recent Supplier Summit at Serta Simmons Bedding (SSB) in Atlanta, GA, Alexium was awarded the "Innovation Award" for development and commercialization of thermal management products. SSB is a globally recognized mattress brand and a major manufacturer of mattresses and bedding products in the US. Commenting on the award, Alexium Vice President of Sales and Marketing Chris Crawford said, "Alexium has built a strong relationship with SSB over the past five years based on technical problem solving and innovation to address market needs. To be named SSB's Innovator of the Year is exciting while also being humbling. It is a culmination of the work and collaboration between the two companies to bring innovative ideas to market while capturing the consumer's voice in a commercial product. We look forward to years ahead with SSB in continuing that collaborative relationship while reaching new heights in the bedding market."

Premier Body Armor Commercializes Eclipsys™-Based Products

Alexium is pleased to announce the commercialization of Eclipsys™ based products in partnership with Premier Body Armor, a US-based manufacturer of body armor systems with a focus on protective apparel for first responders and individual protection. This represents the first sale of Eclipsys™ product by Alexium as well as the Company's first commercialisation of thermal management products outside of the bedding market. The image below shows the online marketing of Eclipsys™ products by Premier Body Armor:

Alexium is currently working with multiple segments of the body armor market as a focal point for commercialization of the Eclipsys™ technology in addition to various bedding applications.

FR NyCo Work Completed with Goods Moving to Military Testing

The Company has successfully completed all production work on flame retardant nylon/cotton fabrics (FR NyCo). The fabrics were manufactured on a roll goods basis and treated with the Alexiflam® and Alexiguard™ products developed by the Company. All work at this next stage will focus on supporting the testing and evaluation by military programs who have expressed interest in these products. Commenting on the successful completion of this work, Chief Executive Officer Dr. Bob Brookins stated, "The Alexium team has done a great job in bringing the FR NyCo effort to this point. All of the flame retardant, wash durability and comfort metrics we have targeted have been satisfied, and our focus now turns to supporting third-party testing evaluation. While

ASX Listing Rules Appendix 4C (17/07/20)	Page 3
+ See chapter 19 of the ASX Listing Rules for defined terms.