Alexium International Group (ASX: AJX, AX: AJX, OTC QX: AXXIY) is now well placed financially to begin larger demonstration runs of its fire retardant nylon treatment after raising A$1.2 million through a share placement.
The company placed a total of 15 million shares at $0.08 each, with an attaching one for three, unlisted 18 month option at an exercise price of $0.125 to sophisticated investors and institutional clients of Baker Young Stockbrokers.
The capital raising increases Alexium's cash reserves at the end of the December quarter to over $2 million.
Alexium's fire retardant nylon treatment could generate high profit margins for the company with strong demand from the U.S. military and commercial customers in the U.S. and overseas.
The company is aiming to address demand from the U.S. military, which currently has 1.4 million soldiers serving on active duty and 800,000 soldiers on reserve duty, as well as commercial customers in the U.S. and abroad.
Significantly, the company anticipates a combined market demand of at least 4 million linear yards per year, with high profit margin potential.
The funding will also be used to begin certification testing for military and commercial customers, as well as expand the technology into other high margin product areas.
Another plus for Alexium and its fire retardant nylon treatment is that there is currently no other fire retardant solutions for nylon on the market.
Nylon is a widely used low cost material for tear strength, abrasion resistance, durability and breathability in textile and industrial applications but, until now, nylon fibres have not been able to be made fire retardant.
Alexium's treatment has met key technical milestones for flame retardancy, water repellency and durability, achieved through a protective nanocomposite char layer.
Chief operating officer Stefan Susta told Proactive Investors previously Alexium is currently in a number of discussions with potential partners and the company is seeking partnerships in other geographic locations for certain applications with several commercial partners that manufacture and supply the fabric.
"There's a significant market opportunity that we're chasing and I think we're extremely close in applying the technology that we've developed here in translating it to other markets as well that use nylon not just for military apparel," he said.
Importantly, licensing agreements are likely to attract upfront payments, milestones payments and royalties.
The eco-friendly flame retardant treatment is based on a new flame retardant mechanism that Alexium has discovered and developed for nylon fabrics.
The nylon treatment offers flame retardancy by the formation of a protective nanocomposite char layer.
This char layer also prevents any dripping or melting, which is characteristic of many synthetic flame retardant fabrics.
Notably, this performance is provided without using halogenated chemicals which are under increased scrutiny in the U.S. and Europe because of their potential impact to the environment and public health.