Webcast  – Jan 15, 2020

Kristina:            Thank you so much for joining us today on this special live segment of A Tech Moment. I’m your host, Kristina Etter, and a few months ago I was touring a hemp processing facility in Colorado and I learned of this new cannabinoid purification technology that I knew was going to revolutionize this industry, but I was sworn to secrecy. Now, soon to complete an RTO and be publicly listed on the CSE, I am thrilled to help Sixth Wave Innovations announce their technology to the world.

Today it’s my pleasure to introduce to you Dr. Jonathan Gluckman, Sixth Wave’s CEO, who’s going to talk to us today about Affinity. Affinity is a new cannabinoid separation and purification system that is going to simplify the process and completely change the game for cannabinoid production. Welcome to the show, John.

Jonathan:           Thank you and thank you, everybody, for logging in.

Kristina:            So before we jump into the presentation, real quick let’s cover just a few logistics and the first thing I want to talk about is kind of the layout of our presentation.

John’s going to give us a little presentation about Affinity here to start the show, and then afterwards we’re going to have just a quick Q&A between John and I, just a little interview talking a little more in-depth about the company and the technology. And then after that, we are going to have a live Q&A session; so you’re welcome to ask your questions all along the way, just know that we’re not going to answer those until towards the end of the show.

And then also just so you know, any resources that we do have from the show is going to be made available to you after the fact so if you do have to drop off, you’re going to be able to connect again later and be able to get those resources. So without further ado, John the floor is yours, please go ahead and tell us all about Affinity.

Jonathan:           Well thanks. I apologize in advance, my voice is a little raspy today, it’s what happens to me in winter and I’m also not used to not having a live audience, so going through my presentation without interruption will be a unique experience. Right, so let me give you a little bit of background on Sixth Wave.

Actually, myself and our team have a long history of working together and we’ve been specializing in the technology called molecular imprinted polymers, which is a specialized science in the polymer sciences.

We have three main locations; our Canadian headquarters which is mostly for the business operations, and then we have two laboratories; one located in Salt Lake City where we do a lot of our work on inorganics, metals and mining, and our Baltimore, Marland facility which is mostly dealing with the cannabinoid extraction but also some medical applications that we do.

OK, so a little bit about our product development history. This isn’t the first product that we’ve been launching using these molecular imprinted polymers. The company actually started working in the explosives detection field and we developed some polymers that would detect IEDs that were widely used by the U.S. and the coalition forces during the Afghan and Iraqi wars. We still sell some of that but not very much as those wars have mostly wound down and the IED threat is no longer of paramount importance.

We have some pharmaceutical things that we brand under the name PADS, that stands for Pathogenic Amine Detection Systems. These are developed to detect the biogenic amines from particular bacteria that cause harm, they can cause anything from food poisoning, E. coli and others. Then we have our IXOS line of products which are the mining products, and the Affinity products which are our life science products and specifically used for cannabinoid extraction and purification.

And I go through that not so much to demonstrate things that you’re not interested in but to show you that we have a history of deploying these things, of commercializing them and specifically we’ve taken the platform that we developed for IXOS, for the mining, and have adapted that technology both in how it’s implemented, but also in how we make these beads to be applied for the cannabinoid stuff.

Why is that important, well we’re used to dealing with having to sequester or gather and separate things down at the parts per billion level in gold mining and dealing with flow rates of the lead solutions that are in the tens of thousands of litres or gallons per minute, and so trying to address the size and scale that was required for effectively gathering the cannabinoids out of the primary extracts from cannabis extraction was a fairly small problem for us in relative terms.

OK, so a little bit about the Affinity beads. So we make these, they’re predominately a polystyrene bead. They’re made with all GRAS or generally regarded as safe components so they don’t outgas, and they don’t outsource anything that would be harmful to anybody who’s purifying with the cannabinoids and wants them to be sold either in pharmaceutical grades or at the commercial and consumer levels.

The polymers are made by scratch by us to our formulation and, as we put those together, we imprint those polymers for the specific cannabinoids that we’re looking for; in this case, CBD, THC, CBN and those. And as we grow the number of cannabinoids that we have specific extraction media for, we’ll be focussing on things that become more and more available in the biomass.

So, as we know, next year’s biomass may be in much higher concentrations of things like CBG and CBN and THCV, and as those things develop, we’ll be ahead of the market in terms of developing media that’s pointed at getting those at very high purity levels.

If we magnify the view of them, the beads are microporous, meaning that they have a lot of surface area. Not just the outside of the bead is imprinted with the molecules for gathering the CBD or THC, but all of the inside porosity as well and that way we have a very high capacity for gathering the cannabinoids with a small amount of our media.

So how are these things put together, just a little bit of polymer science. Essentially, we take monomers which are their starting points, in this case, it’s styrene and we mix a lot of that together with some initiators and we’ve created a specialized ligand that we incorporate into that that has our imprint molecule. In this case, it’s a replica of the THC CBD molecule and we link that so that it will have binding capacity when the polymer is made.

So we put all those things together and we put it into a reactor, we stir that reactor which has some basically soapy water in the bottom of it, and we take these oily monomers along with this initiator and a chemical reaction happens and it forms our polymer. If we spin the blades inside our reactor properly, well then we get beads of the right size and that’s what we shoot for is to get beads that look a lot like … I thought I had them on my desk, but they seem to have disappeared – but they look like beads.

We have done an extensive amount of patenting. This is the patent platform that we started out with for our IXOS stuff which talks in much more general terms about how we create our molecular imprints, but we have patents pending for our cannabinoids as well and we’ll be patenting all around the world. Key here for us is that these are not process patents, so we’re not trying to take somebody else’s process and rearrange the deck chairs as it were, these are fundamental patents in how you make molecular imprinted polymers for use in this field. So we’ll continue to do that.

So what’s the problem that we were trying to solve. Well as we know, you know, we’re in the beginning throes of cannabis 2.0, I’m happy to say the stocks seem to be rebounding in the last few days and we hope to see that continue for everybody involved, but the essential problem was we ended up with a huge amount of production in the last year and not enough processors. And when you want to get down to having say T-free, or you want to do isolates of the different cannabinoids, the go-to has really been looking at chromatography.

Chromatography, while it’s used in some large applications in the pharmaceutical industry, has tried to be adapted for this industry but it’s fairly costly and it’s not easy to do. There’s a lot of waste, so between 5% and 15% of the product that you send through chromatography might not get good separations and be able to use, and because it’s expensive to use you can’t reprocess that material cost-effectively.

And so cost-effectiveness for chromatography has been an issue. Having multiple machines on your floor in order to be able to get production levels up is another issue because it drives additional costs. Some chromatography even use chemicals that are not healthy to use and that poses purification issues later on.

So with those things we looked at our problem and said we have to be able to do this fairly cheaply and at a large scale and we have to make it easy; something that can be done with a very low capital equipment cost that we could maintain, that could be operated by people without PhDs or master’s degrees to use chromatography, and something that would be easy to maintain and could operate on a continuous basis and not necessarily as a batch process.

So what we’ve created is a carousel system, and while this isn’t a completely formed picture on your right here, this is pretty close to what our system platform will look like. It’s fairly small and the size of this equipment is – essentially, it’s a three-foot by three-foot by about six-foot-high unit and as you see around the edges it has columns and that’s where our media is.

Inside of the unit is a specialized valve that controls the flow of material. So there is a section of the machine that is dedicated to collecting the cannabinoids, and then there are other sections in the machine which are dedicated to removing the cannabinoids and providing the isolates or – and then reconditioning the beads for use for collection again.

All of the control of that is done automatically so that all those operations are happening at the same time. So at the same time that you’re collecting, other columns in there are eluting or removing the cannabinoids to give them back to you and other columns are preparing the media for reuse, and the only materials that use in here are water and ethanol.

So we’ll take any crude extract as long as it’s mostly winterized, we’ll be able to dilute that in the water-ethanol mixture, send it through our beads so that it doesn’t clog up the system, the beads will remove the cannabinoids or just will remove the THC if you’re looking to do T-free or T-free compliant full spectrum ex – distillates, sorry, and we can configure the equipment to operate in either of those things.

Advantages, unlimited scalability. As I said, we come out of the mining industry and so while this machine is scaled to be able to give you about 20 kilograms of finished product per day or 20 litres T-free of finished product per day, we have no problems and we’re actually dealing with some folks that are looking to do as much as 1,000 litres of finished or a 1,000 kilos per day of finished product. And so for us, the operation of the equipment is no different, it’s just the size of the columns used and the media and the pumps to move things around that changes.

We can do this with very little capital outlay, our equipment costs almost nothing. In fact, our model is to be able to sell that to our users at near our costs. We have very high content recovery because it’s continuous operating equipment, we lose nothing, there’s no place for the cannabinoids to go except on the beads or into the output so we get a higher yield than chromatography does, it’s a minimal footprint.

It has very high selectivity and precision for the cannabinoids that you want and, again, it’s highly automated. So aside from making sure that your feed tanks continue to be full and that the output tanks continue to be emptied and solvent recovery is done, there’s really nothing to do to change the settings in our equipment once we’ve set that up on your side.

Unlimited scalability, see redundancy is good. So the baseline Affinity unit here again, as I said, is scaled at about 20 kilos but we’re making machines that are much larger and for certain applications, we’ll even customize equipment for a particular utilization. We have some customers that are interested in mobile devices and so we may configure the system to fit into a mobile device a little bit easier than this one does.

We can in fact as you grow, if it looks like you need new equipment, we’ll be happy to help you replace that equipment or we can operate these certainly in parallel and the modular configuration makes it very flexible for our users.

Lower CAPEX. Again, I talked about this, but if we talk about chromatography equipment that might be able to process 20 or more kilos of finished product you might be looking at costs that are, I don’t know, between $500,000 and $1.5 million depending. So if we’re trying to sell ours at nearly cost, we expect that to come out at something under $200,000 Canadian. So that’s a fraction of the cost there. This is a nice little top view of our equipment and you can see that inside there is our little centre distribution hub or valve.

Why Affinity and does this make sense for you financially. Well in some respects the real question is what are we comparing against, chromatography, and we can do a couple of things that chromatography can’t. For example, chromatography, it’s very important to start out with very clean material going into your chromatography equipment otherwise those chromatography media will get clogged and have extremely reduced lifetimes and, in fact, if there’s too much other material in it you won’t get good separations.

Well, we don’t have that problem. We can work with a very large background of things so, in some respects, we can – and I’ll talk about this in a minute – we can incorporate other additional models for your processing that may eliminate certain steps like full winterization and even distillation. We can go directly from crude material to getting isolates, and there’s some unique things about that as well in terms of being able to remediate for heavy metals and potentially pesticides.

But if we just do a comparison of the amount of money that’s lost in cannabinoids that are not easily separated or captured through the chromatography process, there are extremely high amounts of money that are lost in here. Our goal is to make sure that the total cost of operation for you is less than the losses that you might experience by just using chromatography and, if we’re able to improve the rest of your flowsheet and remove other processes where there are additional losses, all of those benefits should accrue to you as the consumer, as the user of the equipment and the final producer.

Why Affinity – again, I’m repeating myself a little bit here, but repetition is good for memory – higher yield. Again our potential yield rates, and we’ve been demonstrating in the upper 90%, is about 99.9. We can reprocess almost for free because everything is already in solvents and it’s just running it through the beads again, very little electricity because we require no heating and no pressure vessels and no cooling, we just run at standard room temperature, and so we expect to be saving more than $0.25 cents a gram at current prices on what your operating costs are just by giving you the additional yield.

Streamlined circuits, as I mentioned earlier, we can do some neat things. I noticed that here we left CO2 extraction and so doing away with winterization isn’t exactly true in this case, I apologize for the mistype. But if you’re using cryogenic ethanol extraction, for the most part, you get a winterized product that’s coming out. The rest of the remaining solids and anything and heavy lipids that haven’t been removed, can be removed with simple filtration.

So as we take that raw extract and we dilute it with the water-ethanol mixture in order to make it flow across the beads and enhance the absorption, those solids will fall out and precipitate out and can be easily removed. So if you wanted to do something like a T-free crude, should there be a market for that in the future, you could go directly from your crude extract, pass it through our system, we’ll be able to remove the THC and give you all of the rest of the material back out the backend of this.

So that would be your full spectrum essentially crude oils and if you wanted to take that and further distil it, that would be great. If you’re using it for other products where you really want all the rest of the things that might be in the crude, then you can use it for those products of T-free.

Alternatively, we’re looking at a lot of people now that want to do T-free distillates. Again here you would go through your normal distillation processes, we would take that distillate, we would remove the THC onto our beads and what would come out at the end of the absorption circuit would be essentially your full spectrum distillate minus the THC and so again here we’re removing some of the steps.

We’re able to get the acidified and the non-acidified versions, so whether you do decarboxylation ahead of time because your final product requires fully decarboxylated material or not, we really will be unaffected. So if you’re looking to sell products that are going to be used in vapes or other heated products, then you don’t need to do the decarboxylation step.

One more. Again, we can do isolates, and in this case one of the main benefits is that again if we’re dealing with at least partially winterized materials we don’t need to do additional filtration, we don’t need to do fractional distillation. So we can grab all the cannabinoids out of the material and then selectively remove them from the beads so that you can get multiple pots. Then essentially you get your THC in one pot, your CBD in another pot, your minor cannabinoids and then you can recombine them as isolates into final products, or if isolate is what you’re trying to sell you’d have your high purity isolates.

Our executive team has a tremendous amount of depth. Myself and Sherman McGill were founders of the company back in 2013. Dr. Kalivretenos, who’s our Chief Scientific Officer has been working with Sherman and myself for nearly 15 years now. And John Cowan, who is our Chief Operating Officer, has extensive experience in the automotive industry as well as in the medical devices industry and so he’ll be bringing all of that engineering expertise to ensuring that the equipment that we make, the beads are certified for GMP.

They’re manufactured in a GMP facility and all the equipment that we’re building to the Affinity system will be built to GMP, EU GMP standards. We will be providing with our SOPs full documentation of all that, sources of materials used and everything so that you’ll be able to apply for your GMP certifications as required.

Our science team is heavily populated with PhDs. I think we have six on board now which is the largest percentage of our overall staff and you can see they’re spread out between our Salt Lake City and our Baltimore laboratories.

In summary – my goodness, I’m under time – in summary, our Affinity system here is kind of revolutionary. We’re applying a technique that we’ve successfully commercialized in other applications and been able to scale up to very large-scale production. We’re currently in the process of scaling up the bead production to be able to provide us with plenty of beads.

These beads are basically a polystyrene base, so they have a very long longevity. There’s really no need for us to replace them in your system, but it’s part of our total support package as we move forward to supporting our customers those will be replaced at no cost. So that’s not a cost you have to worry about bearing and we know with chromatography some of those materials like C18 are very expensive to replace and need to be replaced quite frequently.

We’re focussed on the extraction sector. Again, we’re not a primary extraction equipment but we are purification equipment, so whatever the final products are that you’re trying to get to whether it’s T-free remediation, whether it’s isolates or whether it’s T-free crude, should that gain some popularity, this is what our equipment will be used for.

We have existing patents both at the international and at the United States level. We have the capability to mass-produce both the beads and we’re setting up manufacturing for our equipment in Europe and the United States and Canada so that we can deal with almost world-wide distribution of this.

We have a very aggressive revenue plan. I think that’s not really the topic for this conversation, but after we’ve sold you the unit the way we continue to make money and help make sure to support you is with – I use the word royalty, it’s not really a royalty and some people don’t like that name, but we’ll charge you a per usage amount and for that, we’ll continue to support the equipment, we’ll upgrade the beads as new formulas come up.

We’ll help you adapt if we develop – when we – excuse me, when we launch the CBG and the other beads to make sure that those get incorporated into your system and enhance your capabilities and all that’s part of the support that you’re paying for with that usage fee.

Currently, we are scaling up our manufacturing. We expect to be finished with the final specifications and development of SOPs and the data packages in the next 45 days, and we expect to be able to start rolling out equipment early in the second quarter. We are available and encourage anybody to get in touch with us; we’d be more than happy to host you at our laboratories, show you how everything works, discuss this with you in much more detail and help work into the timelines that you’re particular processing requirements need for the potential adoption of our equipment.

I think that the remaining slides are the remainder of our disclosures which keep us all out trouble. I really don’t think that I’ve misrepresented anything to you, and I look forward to all of your questions.

Kristina:            Thanks so much, John, for that presentation. Affinity is such exciting technology. So before we dive into some audience questions, let’s dive into a few questions that I have for you personally. You touched base a little bit at the beginning of the presentation on the history of the company, but tell us exactly what that a-ha moment was when you realized that you were working with was going to be applicable in cannabinoid production?

Jonathan:           Well it’s kind of a strange thing. Some of the investors as the cannabis market was expanding, I don’t know, 18 months ago and things were starting to legalize more and Canada was really focussed on legalization, it became apparent that people were starting to ask us, you know, can we do this for cannabinoid separation, have we addressed any organic molecules. And since we had, it seemed like a natural thing and looking at the structures it seemed like we could very quickly adapt the molecules that we had developed for the mining industry to this industry.

I think the biggest a-ha moment actually was at the PDAC conference a year or so ago, which is the prospectors and investors in the mining sector, we sat there and we were talking with the metallurgist about our mining application and they kept asking us could we do cannabinoid separation because they thought that’s where all the investor money was going recently, and so we were telling them that we were working on that and it became another huge topic of conversation. So I think the demand was there and, you know, that’s we focussed on.

Kristina:            That’s fantastic. Now tell me a little bit about the machine itself. You talked about this a little bit here at the end, but as far as – you know, I spoke to some people that went to MJBizCon and they said a lot of the extraction equipment and laboratory equipment was either on backward or their brokers were having difficulty getting equipment from Asia.

Tell us a little bit more about where these machines are being produced and how you anticipate being able to address some of those market concerns and get equipment into people’s hands?

Jonathan:           Yeah, that’s a great question and it’s one, of course, that I won’t say we’re struggling with but that we’re addressing head-on. So the good news is that the platform that we’re building on is really a platform that’s been generally adopted for a lot of water purification and mining applications, so the concepts of a carousel system with columns that are filled with, you know, in other applications either activated carbon or ion-exchange resins, we’re simply replacing that media with our media.

And so the control systems for all those are fairly well known and there are multiple suppliers that build that. We focussed in on trying to identify the simplest piece of equipment and making sure that it was going to be easy to maintain. We realize that in this industry we’re dealing with the need to meet, you know, food requirements and potential FDA requirements and additional testing; and so as we’re coming out of the water treatment industry, we’re dealing with partners that know how to do that but we will be engaging multiple manufacturers.

As I said, in Europe in order to meet the EU GMP requirements we have a manufacturer in Europe that will be able to address those concerns and will be able to produce and manufacture using all the EU standard equipment and sizes for piping and all the rest of that so that it’s easily maintained.

In the United States, we’ll have some facilities probably located in the Arkansas region which is kind of central for the United States so that as we need to support making sure, you know, our model is based on as long as the processor is processing and making money we make money, so if they’re down that means that we’re not making money.

So we want to be in as partners with our customers and that means having stockpiles of equipment around so that we can quickly replace things and make sure that everybody is not interrupted in their production capability. So we’ll have processing in the United States, we’ll use that also to avoid any issues with imports that might catch us because the United States laws are still a little bit squirrely in terms of dealing with equipment into the cannabis industry.

For Canada, we don’t have those problems and we’ll probably have manufacturing here in Atlantic Canada, but we’re also talking with a manufacturer who’s guaranteed us some fairly decent production levels in the Vancouver area and that will help us meet some of the east overseas and west overseas requirements, as well as both ends of the spectrum here in Canada.

Kristina:            So now you have been working with a hemp processor here in Colorado for the prototype. Can you tell us a little bit about how that testing is going and when do you think this is actually going to be available for other people to start running in their facilities?

Jonathan:           So the great news is, you know, we have a lot of experience from prototyping in the mining industry and building smaller units, so what we did is we applied that knowledge base to develop a reconfigurable pilot platform where we could play around with process optimization; how many columns do we want in the absorption circuit versus the other circuits, how fast can we flow material through, what is the loading capacity, how do we elute it effectively, how are we going to demonstrate proper and cost-effective solvent recovery for the system.

So we’ve been working through all of those things in order to create multiple SOPs depending on what our user wants to accomplish out of the equipment. Again, SOPs for say something like a T-free crude are certainly going to be different than trying to do a T-free distillate or to do isolates and so that testing is going very well. We are in dynamic testing with all of that, we’re getting great results both from our own analytics, we have onsite both GC and HPLC for analytics there, as well as third party confirmation.

We expect to be done with that process optimization work and using all of that for the final specifications of the equipment. Again, I would say we’re probably 30 days, maybe 45 days at the outside, before we’re done with that; but we’re certainly able to demonstrate all of those possible processes with the equipment already in terms of all of the usage applications, and we are able to demonstrate that data both at that processer and in our laboratories.

Kristina:            Great, fantastic. So obviously there’s a lot of curiosity and I’m looking in the questions here and I’m seeing that we’re getting a lot of questions about this, so let’s talk a little bit about that royalty program that you mentioned and just exactly how does this help producers, help keep their costs low and help keep production running?

Jonathan:           Yeah again, you know, we looked at a holistic problem. We’re sort of systems engineers as well as chemists and so, you know, it’s kind of a total cost of ownership thing that we worry about. And so, again, our royalty structure, of course, will be flexible to what the market demands are for the cannabinoids and what the pricing is, but we’ve set that so that in a general sense the costs to us for you to do that should be less than the losses that you would normally occur in using alternative technologies.

So again, if we’re able to save you 15 or more percent of your actual sellable cannabinoids at the end of the process, well at $2,000 a kilogram, that’s $250 worth of savings, your royalty to us should be less than that. And for that royalty, it’s not just money going out of your bank, but we’re there to support you. We’ll be shipping equipment out to replace stuff, we’ll send our technicians out to replace that, you’re not going to be replacing the media, there are very few things to wear out so you should have very high uptime which is also a problem acknowledged with chromatography.

You should have lower labour costs with it because it’s continually operating equipment as opposed to batch processing, and we can scale the equipment to meet all of the production requirements without you having to have an entire roomful say of smaller chromatography equipment running concurrently. I hope that helped.

Kristina:            Definitely. So now before we jump into audience questions, I just have one last question for you and that’s really what does your future playbook look like; what’s in the future for Sixth Wave, what does success look like for Sixth Wave in the coming years?

Jonathan:           You know, we’d really like to become the default standard for how people start doing purification. For us, the important elements to doing that is demonstrating success, the most prevalent thing that people are looking for is the ability to create T-free products right now in order to remain compliant with the United States of CBD products.

So we want to be totally successful for everybody, we want people to want our equipment, to be happy with our support, and then we want to be able to build on that to be able to stay in the forefront of the cannabinoid research and the biologics, the genetics that are coming out so that as the medical research starts to show more and more promise for some of these secondary cannabinoids, that we have the capability on a continuing basis to provide those solutions to the producers who have adopted our technology.

The company has other things in its playbook; as I mentioned, we have other products already in mining and the biogenetic amine PADS products, but we expect to be getting into some of the newer strains of things that are coming out that are showing high medical efficacy for treatment of PTSD and other things, and these are also molecules that need to be extracted from plant materials and so there’s a lot of extension to that.

And I’m sure that as the cannabis market grows, and our producers become more in tune with the continuing medical research for some of these other molecules, that we want to be the go-to people for them to adopt purification technologies for those as well.

Kristina:            Well it’s definitely going to be interesting to see how the cannabinoid market continues to expand. Obviously, formulations, product formulations and different cannabinoid formulations is definitely something that has been on the horizon and it’s this kind of technology I think that’s going to take us into that next realm of cannabinoid production and formulation. So very, very interesting to see this evolve.

Jonathan:           Thank you.

Kristina:            Now let’s slide over to audience questions here, and one thing that I see kind of coming up in different contexts is what type of material does the Affinity actually use. I mean it can’t use like raw biomass as actually it’s not an initial extractor, correct?

Jonathan:           That’s correct, right. So we’re expecting that the biomass is still going to go through some primary extraction process. So as we all mostly know here, the primary processes for cannabis products have been supercritical or supercritical CO2, in the large-scale processes for hemp extraction there’s been a lot more work done to increase the size and capabilities of ethanol or cryogenic ethanol extraction. We realize that there are some new technologies, perhaps microwave extraction, cold water extractions and others.

All of those result in what the industry calls a crude extract, I like to refer to it as [laughs] – affectionately like bear poop; so it’s very viscous, thick stuff, it’s brown or black and it smells horrible depending on how refined it is. So at the core, we can take those materials and, again, as long as the main lipids and fats have been removed and plant material through different processes. whether it’s partial winterization, full winterization or filtration, we can then take that as input material.

For those people that are processing for T-free distillates, they have some options. They can either implement us before the distillation process, or they can implement us after the distillation process in which case they already have a very clean material that they’re just trying to do THC remediation for.

I will come back and mention that our absorption media has no particular affinity for wanting to collect heavy metals, and so if you’re dealing with raw materials that you’re going to have heavy metals in, that it would be possible to process distillates with our equipment and have those heavy metals pass through and they should not be part of the output – sorry, isolates.

Kristina:            And I think too the remediation and the heavy metals and contamination remediation I think is also something that’s going to be big coming forward as well. Obviously, there’s more and more hemp being produced and outdoor growers and big field growers and things like that, you’re not going to be able to control all of that all the time, so I definitely see where any type of contaminant or toxin remediation would absolutely be beneficial.

Jonathan:           Yeah.

Kristina:            So how does the efficiency of Affinity actually compare to say legacy flash chromatography?

Jonathan:           You know, there’s a lot of different flash chromatography equipment out there and so it’s hard to make a specific generalization. But, you know, essentially chromatography is a relatively slow process, it’s somewhat still a batch process in that you have a single column that you’re using to both load them and then you finish loading and then you have to selectively unload the cannabinoids from the column.

We work in a continuous flow so that rather than having to change a column over from one process to another, the carousel system automatically changes the flow of material from the columns into the different stages. So we always have a clean column coming into the absorption circuit while the other columns are moving into the removal circuit.

Again, we come out of the mining industry where we’re trying to reduce the gold left in the lixiviant down to like one part per billion, so we’ve been configuring the equipment so that we make sure to get all the cannabinoids out and nothing is wasted. If there is mixing, more material does come out that needs to be recycled. Again, because it’s a continuous flow situation, we can configure the equipment to reprocess that to get either additional purity if required or to capture any lost cannabinoids.

Kristina:            And the next question that came up is so how many cycles in a day can the Affinity run?

Jonathan:           It’s going to be a little bit dependent on what the input material is coming in. So if we’re dealing with high concentration distillates coming in then we do a different dilution than if we’re working with low-quality material coming in.

The goal is to scope that – we’re scoping to an output, so what we found is that the producers are keenly interested on hitting an output production per day and what we would do is scale the columns to be able to accommodate that for the variety of input material that that processor would be responsible for.

So if they’re a seed to end product person and they know that they’re always going to be getting, you know, 12% or 50% cannabinoids in the material going through, then we would scale the system to be able to give them 20 or 40 or 100 kilos of finished product per day.

If they’re a toll processor and they may be dealing with a variety of things, then we’ll give them the SOPs to be able to reconfigure the rotation of the equipment to happen to be able to process that lower quality material or potentially higher concentration material.

Kristina:            OK. And you mentioned that you’re going to have this available in Europe, is there anywhere now in Europe?

Jonathan:           I wish it were the case but not quite yet. In fact, as I mentioned we’re going to have a small facility that we’re using predominately for research and development, and as part of that we’ll have a small processing facility that we operate full time as well and that will be located in the Arkansas area just outside of Little Rock and that will become one of the showcases. And as we’re working with some of our early adopting partners, several of them have indicated that they would be more than happy to be showcases and we’ll probably identify one of them in Europe in the coming months.

Kristina:            Great, fantastic. And the beads themselves, we have a question asking can you tune the beads to extract hemp proteins as an isolate?

Jonathan:           So there is nothing limiting about the molecular imprinting process and the way we developed that that would prevent us from looking at proteins and gathering certain proteins. The nice thing is all those proteins have definitive shape and so we can key to that shape and they have charge complexes and places that we can create a reason for the protein to want to bind to the bead.

So we can address those. We haven’t yet started to look at those hemp proteins but, as the market becomes clearer on those things, it certainly is a project that we could either work for a particular customer or that we may take on on our own.

Kristina:            OK. And what level of specificity are you achieving with the extraction?

Jonathan:           So far right now we have been able to demonstrate T-free levels at below detectable limits both at HPLC and less stringent requirements, depending on the processor we can also do just T-free compliant material which is below the 0.3%. On the lesser cannabinoids, we more or less have been leaving them in one bunch because we haven’t been dealing with biomass that has enough of those for specific separations.

We do see some ability already to separate CBC and we may be able to tune things a little bit further to give more CBC specific outputs. But again, for us, the future is looking to implement CBG, CBN, THCV, those seem to be some of the high priority ones coming up and those will be a very high specificity.

Kristina:            Yeah, it’s definitely going to be interesting to see how the demand changes for the different cannabinoids as more and more research is done, and we start to learn more about these individual compounds. It’s definitely going to be fun to watch the market expand from here.

Jonathan:           Absolutely.

Kristina:            So after the extraction process takes place, are there any traces of ethanol, pesticides or any of the other contaminants that are in the original crude leftover in the finished product?

Jonathan:           It’s kind of a little bit dependent. So on the side of pesticides, boy there are a lot of pesticides. So we have not honestly had an opportunity to test all of them or to deal with enough hot material coming in to know whether we’re going to be able to give outputs that have no pesticides in it. Metals are a little easier because there are only four or five key metals and they are easy to stay in solution and they don’t have any particular attraction to our beads.

So if you are looking at taking crude material and processing it through, I feel fairly good that we’re not going to see metals come forward. I don’t know yet – in the isolates that you would produce, I can’t speak 100% for all of the pesticides. If you’re giving us distillate and trying to get a full spectrum just T-free distillate out of it, of course, the output from our system is the full spectrum distillate minus the THC, so really not doing anything to specifically absorb heavy metals or pesticides on the beads with the THC. So they, unfortunately, would remain if it was used in that configuration.

Kristina:            OK. And what support can you provide for new entrants say in the States, and in this case it’s Louisiana, where there’s very little infrastructure set up?

Jonathan:           Yeah, again, our plan is to have a complete support infrastructure. So as we deliver the equipment to you, we’ll be delivering it with SOPs, with all the materials that you need to move through GMP compliance. We intend to put together a kit, if you will, that will include at a minimum all the specifications that you would need for input and output containers, for solvent recovery and we would be able to help advise you on all of that stuff.

If required, we do intend to sign up with a couple of key suppliers of those equipment and be able to configure that as part of our installation process with you. We are very, very much not a throw it over the fence kind of company, good luck after delivery. Again, our whole idea here and the reason that we’re wanting to get, you know, more or less in business bed with our customers and make money when they do is that we have an opportunity to help ensure the success of every adopter.

Kristina:            Got you. Now on the beads themselves, they are imprinted to basically grab a particular cannabinoid, is that correct. Now once those beads hold those cannabinoids, how then are the cannabinoids released from the beads?

Jonathan:           Great question and I’m sorry I didn’t address this. So, as I said, the first thing that we do is we take that crude input material and we have to dilute it down a little bit in order for it to flow easily through the system, we do that with a mixture of ethanol and water.

Once the cannabinoids are loaded onto the columns all we really do is wash them with a higher concentration ethanol mixture, which is just ethanol and water again, and the cannabinoids come off and so you’ll end up with the cannabinoid. If you’re doing T-free remediation, you’ll end up with an output that has THC in ethanol-water, you’ll do solvent recovery on that to end up with your cannabinoids and you’ll be able to recycle that ethanol-water back for subsequent use.

Kristina:            And what’s the smallest quantity that the Affinity will process and what’s that kind of turnaround time for a small batch?

Jonathan:           I’m guessing, I don’t want to go too far out of line because we haven’t figured out exactly what the operating parameters will be, but you can figure that we’re going to be processing about a kilo an hour from the equipment. Of course, you can run it slower and process less, but the entry-level machine will be geared to producing about a kilogram of finished product or a litre of T-free distillate per hour.

Kristina:            OK. And we’ve got several questions here kind of talking about leasing the equipment or purchasing the equipment and then also, you know, wondering if you’re going to have any ability to sign up for the program without the royalty program. But from what I’m understanding that royalty program really isn’t a royalty per se, but it’s more of an ongoing support for the equipment, is that right?

Jonathan:           Right. So the company expects that we’ll have to be fairly flexible working with our customers. We’re going to be working with anywhere from, you know, multimillion-dollar processors that really don’t need access to cash versus other processors that might want help in financing the equipment going in and we expect to be in a position to help them. At this point in time, there is no plan to sell the media and sell the equipment outright without the support.

Kristina:            OK, and we’ve just answered that question so I’m going to skip that one. And this – yeah, this one is asking basically can you do a full spectrum with zero percent THC, and that’s basically what Affinity is really good at, right?

Jonathan:           Yeah and we’ve demonstrated that already both in the pilot system and in the laboratory.

Kristina:            It looks like … there we go [laughs], you had a little jump there. And what quality of ethanol will have to be removed from the final fractions then?

Jonathan:           What quantity or …?

Kristina:            Yeah, quantity. Sorry, I read that wrong.

Jonathan:           Again, it’s going to be kind of in the final configuration and that depends on the solvent recovery equipment that you’re using. So there are continuous operation solvent recovery systems that can process more than enough ethanol-water mixture. Again, nothing that we need requires 100% removal of the water so we’re generally dealing at most with – and in fact, when we buy ethanol, we’re buying the 95% ethanol, 5% water.

Kristina:            OK.

Jonathan:           By the way, if that didn’t fully answer the question, please send in more clarification or contact us afterwards and we can help give you more quantities for that.

Kristina:            And what is the best way, John, for people to contact Sixth Wave if they are interested in learning more about this system?

Jonathan:           Yeah, info@sixthwave.com, you can visit our website and sign up to be on our mailing list as well as put in direct enquiries, and Sherman McGill who’s our Vice President of Business Development will make sure to get in contact with you immediately. We’re seeing already quite a bit of activity and asks for the equipment. We are, I want to say, pretty close to taking pre-orders for people and we want to make sure that our manufacturers understand the demand that we need to meet as we get into production with them at the facilities that we’re setting up.

 And again, as I mentioned earlier, as we answer your questions through Sherman and through some dialogue with the rest of our technical team, we do expect that people will want to come and see us at the laboratory and see our equipment and perhaps verify, we’re happy to walk through a complete loading and unloading cycle and run the analytics for you right there to prove to you that our stuff is actually working.

Kristina:            Great. And we do have a clarification on that one question. Given a one kilo production, how much ethanol accompanies that?

Jonathan:           Given which production, how much?

Kristina:            One kilo.

Jonathan:           One kilo of production, so 10 … I think that we’re talking about – again please don’t quote me exactly, but I’m thinking that we’d probably need about 30 litres between the dilutions for the input and then the elution phases, and all of that can be recovered and reused in terms of the ethanol.

Kristina:            OK. And again, I’m assuming that when we’re done here with this webcast part of the resources that’s going to be available to people is going to be more information about your cost and the royalty program. So we don’t necessarily have to deep dive into that since that is going to go out to everyone anyway, but can you give us just kind of a ballpark on what the cost per litre is to run the Affinity?

Jonathan:           I think the best estimates that our engineers are giving us right now is that it should cost somewhere south of $0.20 a litre.

Kristina:            OK. And …

Jonathan:           And I think that includes – by the way, that includes solvent recovery.

Kristina:            That does include solvent recovery, OK. And obviously are you interested in partnering with any new entrants into the market or are you looking for people that are a little more well established?

Jonathan:           No, we’re more than happy to be working with new entrants. In fact, you know, again since we’re a little bit ahead of our production schedule here with early second-quarter releases of the equipment some of those newcomers are some of our best prospects because our timeline for delivery fits very nicely into the timeline for them purchasing equipment and we can help them with configurations that are optimized.

But again, you know, as part of our services any adopter we’re going to want to come in and look at the current flow, what equipment you have there, your flowsheets and be able to help you reconfigure solvent recovery to be optimally used in conjunction with our equipment and minimize the cost of adoption.

Kristina:            OK. And one last call for any questions here before we sign off. I think we made it through most of the questions here, I’m just double-checking.

Jonathan:           You all are an easy audience, thank you.

Kristina:            It’s a pretty easy audience today. And so yes, everybody, we will make this available after the fact. And, John, thank you so much for coming on today and using the Cannabis Tech platform to announce your technology to the world. I know this is super exciting for me personally to see this kind of technology coming to the market, so we really appreciate your time.

Jonathan:           My pleasure. I look forward to doing it again and thank you all for listening and we hope to hear from you.

Kristina:            Alright. Thanks, John.

Jonathan:           Bye-bye