FIVE REASONS TO WATCH SIXTH WAVE INNOVATIONS (CSE:SIXW, OTCQB: ATURF)
- Innovative nanotechnology company applying Molecularly Imprinted Polymers (MIPs) to detect and extract target substances at the molecular level.
- Platform technology utilizes synthetic compounds allowing for high scalability, low cost, easy implementation into current workflows in virtually limitless verticals and applications.
- Transitioning from R&D to global commercialization in CBD/THC purification, Gold/Silver processing and Rapid Pathogen (eg. COVID-19) Detection.
- Commercializing its Affinity(tm) CBD/THC purification system in Q1-2021; received inquiries and interest for over 250 units from over 130 LP’s worldwide. One unit is capable of generating over $125,000 (CAD)/month in revenue to Sixth Wave.
- Low pre-revenue market capitalization given robust revenue projections for 2021 and beyond
ECMB Capital Partners has given shares of SIXW a target of $1.68 within 2 years – a ~480% increase from today’s share price – using projected cumulative revenue of $80 million by December 2022.
Corporate Website: SIXTHWAVE.COM
Shares Outstanding: 87,696,000
Market Capitalization (Nov 13th): $24,000,000 (CAD)
Having debuted on the Canadian Stock Exchange in February, Sixth Wave Innovations (CSE: SIXW, OTCQB: ATURF) is nearing commercialization in three industry verticals: gold processing featuring IXOS®, a line of extraction polymers for the gold mining industry; CBD/THC purification using its Affinity™ technology; and a system for rapid virus detection, including COVID-19, based on whole virus recognition.
Sixth Wave Innovations (CSE: SIXW, OTCQB: ATURF) uses Molecular Imprinted Polymers (MIPs) to detect and bind targeted substances at the molecular level.
In layman’s terms Molecular imprinting produces synthetic polymer beads specially formulated to capture a specific target molecule (gold, CBD/THC, pathogens). The process creates cavities within the nanosized bead that match the shape of the target substance and then the particles complete themselves by filling the voids.
The Company’s proprietary platform is highly scalable, easily implemented into various workflow environments, is infinitely adaptable and has the ability to replace antiquated, costly and time-consuming processes currently plaguing multiple sectors.
Given their low market capitalization of less than $20 million and transitioning from R&D to commercialization, Sixth Wave is positioned to deliver outsized gains for investors becoming aware of the opportunity at this stage.
This article will focus on the significant near-term revenue opportunity as the Company prepares to roll out its Affinity™ cannabis purification platform on a global scale.
Sixth Wave Affinity™ platform set to replace dated, expensive, inefficient CBD/THC purification methods.
Sixth Wave’s value proposition is largely driven by its efforts to develop a commercially viable and competitive process for the CBD and THC purification industry.
Cannabis LP’s (Licensed Producers) are fighting oversupply and profit-crushing, razor thin margins in a fiercely competitive industry. They are worried that the market is getting saturated and that the price of distillate is coming down. Until producers have a dramatically different process that cuts costs, they’ll never be able to sustain their businesses on thin margins because of the price pressure from over supply.
Sixth Wave’s Affinity™unit is designed to capture and extract cannabinoids to ensure the purest end product, replacing antiquated, expensive time-consuming processes including winterization, distillation and chromatography. Affinity™ represents a seismic shift in terms of cutting the actual processing cost so that LP’s can remain profitable even at low distillate prices. This is of particular importance to small and mid-sized operators looking to stay competitive against giant LP’s.
Sixth Wave’s Affinity Represents A Watershed Moment For The Cannabis Industry
Today’s purification methods can result in a stunning loss of up to 43% of distillate (finished product) compared to only 5% using Sixth Wave’s Affinity unit.
It’s ability to dramatically increase throughput while lowering costs has attracted interest and inquiries for Affinity™ installations from over 135 cannabis producers around the world, for over 250 units.
Studies show that the majority of CBD products being marketed do not contain the amount of CBD indicated on the label, and 20% contain some amount of THC – the active ingredient in cannabis that produces the “high”.
Existing methods for cannabinoid (CBD) purification from hemp and cannabis are only effective with small volumes of plant material and require significant capex and opex costs. Producers must work with multi-stage processes to separate individual cannabinoid compounds resulting in material loss at each stage. Ultimately, as the industry grows, the small-scale operators will have to be replaced by vast processing plants with economies of scale, otherwise margins will not improve.
Sixth Wave has developed its Affinity™ purification process to extract CBD and/or THC from cannabis or hemp using their patented MIPs (Molecularly Imprinted Polymers) system. Work so far has justified the company’s view that the technology will provide a robust, cost-effective method for providing high-purity THC and CBD for the commercial market.
Based on implementations derived from its IXOS product for the mining sector, Affinity has no limits to scalability allowing Sixth Wave to meet the demands of small LPs as well as the industrial processors.
On the road to commercialization
Sixth Wave has deployed a rapidly reconfigurable pilot Affinity™ Alpha plant at a major US hemp processor. Meanwhile the company is engaging contract manufacturers to produce the Affinity™ Alpha line of purification systems with the goal of having manufacturing in North America and the European Union.
In early April, the company announced the execution of a Memorandum of Understanding (MOU) with Green Envy, LLC for the minimum purchase of three Affinity™ extraction units to produce full- spectrum distillates.
Green Envy is a cannabinoid extraction company specializing in the production of concentrates, distillates and edibles. The first unit will be installed and commissioned at a Green Envy facility in Riverdale, Michigan.
The MOU provides Green Envy with a 12-month exclusivity period (a first mover provision) to utilize the Affinity™ system for the cannabis markets in Michigan and Massachusetts.
OpEx / CapEx Revenue Model Ensures Mutual Profitability
The biggest saving for the client is at the front end; The cost for an Affinity unit is $175,000 – $200,000 versus $1.5 million – $2.0 million for today’s legacy processing platforms. With lower capex the customer has greater volumes (through higher recoveries) and some residual cost savings after Sixth Wave has gleaned revenues via its “usage fee” which is linked to savings achieved.
Sixth Wave is already launching its IXOS platform into the mining sector and has adopted an OpEx and CapEx revenue model that ensures a cooperative relationship with their customers – Sixth Wave is just as motivated to keep them up and running at peak efficiency as they are. Continuous processing translates into increased cash flow on both sides.
The Company has simply ported this revenue model over to Affinity.
With Affinity™ machines producing around 1 kg per hour of distillate or isolate, envision around 20 kg per day of production, with Sixth Wave collecting 20-30 cents per gram or $4-6,000 per day.
A conservative estimate of $5,000/day for 25 operating days would allow for each Affinity™ unit to generate CAD $125,000/month in revenue to Sixth Wave.
Sixth Wave anticipates launching a global commercial rollout for Affinity™in Q1-2021. Based on the level of interest received to date, the Company is projecting up to 56 units to be operational by December 2022 generating up to $80 million in cumulative revenue.
Summary
Sixth Wave’s Affinity™ CBD/THC purification system is entering commercial production. A first sale has been made with cash flow expected soon, either through a usage-fee model or with revenue linked to production volumes.
Sixth Wave currently trades at a market capitalization of approximately $20 million (CAD). Each of the verticals the company is targeting (gold extraction, rapid viral detection, CBD/THC purification) carries the capacity to take shares of Sixth Wave to much higher ground. The company’s Affinity™ cannabis purification platform commences global rollout in Q1-2021.
For investors this could be a rare opportunity to get into a first mover, market share growth opportunity company before the stock gets a significant re-rating, and begins to trade on forward multiples, based on predicted future earnings.
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