FRXIF: A Stock On the Cusp of Catching On Fire

By Brad Sorensen, CFA

OTC:FRXIF

READ THE FULL FRXIF RESEARCH REPORT

FRX Innovations FRXIF is a global manufacturing company, producing a family of environmentally sustainable flame-retardant products that serve multiple large markets, in the US and globally, spanning electronics, automotive, electric vehicles (EV) and medical devices.

Flame retardants aren't often a product people think about, but there is likely a flame retardant of some sort on many items that initially wouldn't even be considered to need such treatment. From TV's, to cars, drapes, carpets, computers, appliances and mattresses—just to name a few, fire retardants are ubiquitous in people's lives all over the world. While most people don't think about such things, many existing retardants could be having a detrimental effect on health, and governments are starting to pay more attention to that possibility and issuing new regulations in an attempt to eliminate those negative health consequences. According to the National Institute of Health, many of the chemicals used in most flame retardants are associated with such adverse health effects as:

• Endocrine and thyroid disruption

• Impacts to the immune system

• Reproductive toxicity

• Cancer

• Adverse effects on fetal and child development

• Neurologic function

For obvious reasons, however, we don't want to necessarily get rid of fire retardants as they are an important safety component in many of the items people come into contact with every day. This is where FRX comes in. As we'll detail below, FRX Innovations provides a solution that provides the benefit of fire retardants but has none of the potential health hazards that come with traditional halogenated retardants. The company bills itself as "the world's premier polymeric, non-halogenated flame retardant (FR) provider for a range of consumer and industrial products and applications in electrical & electronics, electric vehicles, transportation, building & construction, fiber & textile, medical devices and other end-use markets."

In short, FRX provides the solution that governments are increasingly starting to mandate, and manufacturers and consumers are increasingly demanding through its Nofia product—described in detail below. We believe that this move to safer fire retardants is in the relatively early stages but is an inevitable growing wave that FRX is riding on top of.

FRX has been developing such a solution for over a decade and is now positioned, in our view, to benefit from this growing wave. As an example, FRX notes that it was the first company to supply non-halogenated, non-migrating, fire retardant materials of low concern to human health and the environment commercially under the brand name Nofia. Nofia is based on chemistry that allows the polymerization of a phosphonate monomer into unique oligomeric and polymeric brominated fire retardants, which have "clear advantages" such as:

• Halogen free

• Does not migrate from the host plastic

• Does not bioaccumulate

• Supplied as pellets (no liquid handling or dust formation)

• Improves properties other than flame retardancy.

As mentioned, Nofia is a registered trademark of FRX. Nofia products are manufactured at its manufacturing facility on the Port of Antwerp in Belgium, one of the world's largest chemical producing clusters. The FRX production plant in Antwerp was constructed in 2013 with completion in 2014. It is highly efficient and requires only two technical operators per shift. It operates to the highest quality standards and is ISO 9001 certified. Nofia Polyphosphonates are produced using sustainable green chemistry principles such as a solvent-free production process, no waste byproducts, and near 100% atom efficiency. FRX's portfolio includes an extensive patent estate with 64 patent applications globally as of March 31, 2022. Per company management, Nofia flame retardants are independently assessed by the following organizations to have the best sustainability ratings of any similar product: GreenScreen, Benchmark 3, ChemFORWARD SAFER Class B, TCO listing, ChemSec Marketplace Alternative as an Oeko-Tex for textile applications—an impressive list that helps confirm that Nofia is safe for humans to be around.

With all of this potential positive movement, we believe FRX stock is at an attractive option for investors looking for growth and has a modestly higher risk tolerance, which is always required when looking at companies at the lower end of the market capitalization spectrum.

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