Alexium International Group (ASX: AJX) could form a strategic alliance in North America to licence the company's Flame Retardant Nylon Treatment, for use in the military, government agencies, upholstery and industrial workwear markets.
The company has received a letter of intent from Duro Textiles to license Alexium's flame retardant treatment under an exclusive commercial agreement for Duro's nylon products.
Duro Textiles is one of the largest dyers, printers, finishers and distributors of textile products in the United States. Duro's military products range from light to heavy weight fabrics used in ultra-lightweight breathable ponchos, tents, sleep systems, physical training uniforms and ballistic nylon tactical outerwear.
The two companies are working to formalise the agreement over the coming weeks, with the aim of delivering the treatment to a number of commercial nylon customers.
Key terms of the commercial agreement have been agreed upon, and include an upfront licence fee, development cost sharing, machine sales, milestone payments and royalties based on product sales with minimum quantities.
Once the agreement is fully executed, both companies plan to launch a number of flame retardant nylon fabrics in the next year, targeting a market opportunity in excess of 4 million linear yards of nylon.
After a technical ramp-up and market introduction period, the agreement with Duro is expected to establish a solid revenue stream for Alexium which will assist the company in expanding into other technology platform areas.
Alexium chief operating officer and executive director Stefan Susta said Duro's strength in key markets which Alexium is targeting will serve the company well.
"We recognize Duro's industrial production capacity, distribution and sales channels, and their ability to make a sizable investment in this technology," he said.
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