Alexium Sales Customer and Revenue Update

PERTH, AUSTRALIA and GREER, SC--(Marketwired - Dec 22, 2014) -  Alexium International Group Limited (Alexium) (ASX: AJX) (OTCQX: AXXIY) is pleased to set out the near term revenue outlook in the Defense Sector and the Commercial Sector across the transport, furnishings, consumer product and apparel markets for our award-winning environmentally-friendly flame retardant solutions.

ADVANCEMENTS IN THE DEFENSE SECTOR - BATELLE MEMORIAL INSTITUTE.

Alexium has now contracted with the United States Department of Defense (DoD) through the U.S. Army Natick Solder Systems Center (Natick) and The Batelle Memorial Institute (the world's largest non-profit research and development organization) to develop the next generation Fire Resistant Army Combat Uniform (FRACU). Alexium is finalizing the administrative details with Batelle and first payments are expected to be received by Alexium in the first quarter of 2015.

The initial program Alexium targeted was the Flame Resistant Army Combat Uniform (FRACU), a program for the U.S. Army that produces 4-6 million yards of fabric per year, which represents a recurring revenue potential of US $10-16M per year for Alexium. The FRACU treated fabric Alexium developed in 2014 was tested for flame retardancy in three independent external labs, including Natick, and exceeded flame retardancy requirements in every case. 

Launching FR products into the defense sector will continue to be a significant focus in 2015. We are anticipating a greatly expanded effort with Natick to launch the FRACU uniform and have already made significant progress securing partners throughout the entire military uniform supply chain with the intent of working not only with Natick, but also directly with prime defense sector contractors at the garment level to help Alexium in this program.

By using our connections in both the military and textile industry, Alexium is in the unique position of addressing the entire supply chain, from design of the chemistry all the way through production and treatment of the final garments.

Alexium will also be able to extend its FR products to meet FR uniform requirements of the other branches of the U.S. Military to cover the U.S. Marines, U.S. Air Force, U.S. Navy and U.S. coast guard as new FR programs are expanded by the DoD to cover all military branches. This represents a significantly larger recurring revenue opportunity for Alexium in the defense sector.

In addition, in 2015, Alexium will work on a specialized NyCo material which can be made FR and further functionalized for additional performance to meet specialized defense sector requirements.

Alexium will also be able to meet FR Uniform requirements of NATO member countries as a next stage target market.

COMMERCIAL SALES GROWTH

Based on continuing successful product performance, Alexium continues to fill an aggressive scale-up pipeline with revenue forecasts on target beginning 1Q 2015. Notwithstanding that the textile industry has historically been slow to adopt change, Alexium has made significant progress in various customer's development cycles with a number of production trials ongoing. Customers are moving to eliminate bromines, the traditional mainstay of FR, from their products as customer awareness and potential government legislation drives product suppliers to seek environmentally friendly FR solutions.

Key Indicators:

• Alexium has provided FR treatments over textile materials for over 20 customers, which have all passed flame retardant specifications. Those customers are working to engineer in additional product specific functionalities for end user requirements, such as enhanced breathability, water proofing, oil and stain repellency and the like before moving to scale up;
• Alexium is currently working with 9 customers in scale-up for which Alexium has produced FR fabrics which pass all their performance specifications;
• Alexium has already achieved commercial production with 3 of those customers;
• Alexium expects the first 2 customers to enter into supply contracts for sustained revenue in the first quarter of 2015 with the third currently reviewing end user requirements and approval processes. Just these first 2 opportunities alone represent $1 Million each year in initial recurring revenue with ramp ups expected;
• Alexium's chemistries have repeatedly shown the ability to meet flame resistance standards in virtually every single fabric substrate in a wide range of textile markets.

Critical to the success of our customers in the textile industry (and therefore critical to Alexium's success) is the ability to introduce Alexium's chemistry into the textile finishing process with minimal-to-no change in fabric performance characteristics or manufacturing complexity.

What Alexium has shown without fail through our scale-up efforts in 2014 is that our chemistries are among the easiest in the industry to apply in manufacturing and actually improve many adjacent performance attributes of the final fabric (i.e. strength and durability). 

As a result, although the pace of Alexium's commercial launch is always set by the pace of our customer's approval processes, our chemistry's performance level and ease of use has allowed us to move through the scale-up process much faster than typical new product times, and this has Alexium primed for a strong financial start to 2015.

EUROPEAN SALES
Our marketing joint venture with iTextiles encompassing production in Pakistan, Middle East and Sri Lanka for sale into Europe of FR products under a co-branding strategy is proceeding well with positive customer feedback. A second delivery of Alexium chemistry to iTextiles is on target for January 2015 for an expansion of the Asia and European product rollout.

We also expect the first customer of our distribution partnership with Euroflam in the UK to proceed to a commercial supply contract for FR solutions in 2015. Further information will be provided as trials are completed.

CHEMICAL LOGISCITS AND SUPPLY
We have ensured our branded and patented FR chemical formulations can be readily supplied to our customers through our toll manufacturers Marlin Inc. in North Carolina and InChem Inc. in South Carolina. All necessary EPA and REACH chemical registrations and logistics approvals have been obtained, exceptional product stability demonstrated, and export licenses achieved for all our FR products. This will ensure a smooth supply of large-scale chemical delivery to our customers in the product chain.

GRANTS AND PARTNERSHIPS
Alexium continues to work closely with Israel-based ^6.5 billion large scale flame retardant producer Israel Chemicals Limited (ICL) to develop new non-brominated products for their customers. This is supported by a $250,000 grant to Alexium under the South Carolina Research Authority's SC/Israel Colalborative R&D Program.  

The partnership between Alexium International and ICL, leveraging both ICL's large cap resources and Alexium unique chemistries, is expected to result in exciting new FR products in 2015.

2014 A BREAKOUT YEAR
Alexium is dedicated to providing unique eco-friendly flame resistant products, formulation expertise and steadfast customer support. That dedication since 2009 and critical strategic and staffing decisions in 2014, has built Alexium a solid foundation to meet the growing demand for eco-friendly non-brominated FR products which are also durable, cost effective and performance enhancing.

This year has been pivotal for Alexium in two ways. First, we have seen where Alexium products have generated a number of innovative applications in the flame retardant markets.

The basis for this growth is the second point -- the strong team Alexium has assembled and the exquisite understanding of our FR chemistries and their application areas from the molecular to the market level, allowing us to provide the right solution for the right customer.

A LOOK AHEAD
Alexium enters 2015 in a very strong position, with increasing recurring revenues and sales growth, low cash costs, over $5m in cash and the market moving towards Alexium for cost-effective environmentally friendly FR solutions as bromine is replaced in consumer products and the Defense sector.

"Whilst we grow revenues in the Defense sector, transport, furnishings and apparel markets in the US, Europe and elsewhere during 2015, Alexium will also be able to look to joint venture our FR technology to replace brominated compounds widely used in the building industry and electronics industry and capture more of this $7 Billion annual market," stated Nick Clark, CEO and Executive Director of Alexium.

For more information visit: www.alexiuminternational.com

About Alexium

Alexium International Group Limited (ASX: AJX) (OTCQX: AXXIY) holds proprietary patent applications for a process developed initially by the U.S. Department of Defense, which allows for the surface modification and attachment of nano-particles or multiple chemical functional groups to surfaces or substrates to provide functions such as fire retardancy, water proofing, oil proofing, and anti-microbial treatments. Applications under development include but are not limited to textiles, paints, and packaging, glass and building materials. Alexium's fire retardant chemical treatment are currently marketed for different fabric markets under the Ascalon™, Nycolon™, Nuvalon™, and Polytron™, Omnitron™ and Bactron™ trademarks.