EnWave: Questions to Brent Charleton | Value Bridge
Archieve - Everything Brent Charleton Said
Business Summary
EnWave Corporation commercializes its Radiant Energy Vacuum (REV) technology for dehydration applications across food, cannabis, and pharmaceutical sectors. The company licenses its technology to partners, sells commercial-scale machines, and earns recurring royalties. Installed REV capacity exceeded 2,800 kilowatts by late 2024, with utilization ranging between 50% and 100% depending on the partner. Large partners like Dole and GEA report near full utilization, while others are still ramping. EnWave maintains manufacturing capacity of up to 10 large-scale machines per year, with outsourcing agreements in Mexico and Turkey for additional demand. License terms extend to at least 2043, with potential extension to 2045 if new patents are filed. Machines have lifespans exceeding 12 years, with magnetron replacements every 5,000 hours at a cost of about $60,000 per unit. EnWave has monetized assets like NutraDried, resold returned machines at margins, and secured tax credits such as USD1.2 million under the Employee Retention Tax Credit program. Partners include global CPG firms, cannabis operators, and pharmaceutical companies evaluating scale-up opportunities with GEA.
Catalysts & Milestones
2013 - First large-scale REV machine installed, still operational after 12 years
2019 - Arla launched cheese snacks under Explorers brand; Ashgrove Cheese added second unit in Australia
2020 - EnWave announced joint development with GEA Lyophil for pharmaceutical dehydration; U.S. Army developed REV-based rations with pilot machines
2021 - PiP International trialed REV for pea protein isolates in Alberta; Calbee began scaling snack projects in Japan
2022 - Dole purchased a 10-kilowatt unit to trial snack and upcycling applications; AstraZeneca engaged in proof-of-concept work with GEA Lyophil
2023 - Bridgford Foods prepared installation of a 120-kilowatt unit for U.S. Army cheesecake rations; REVworx secured SQF Level 2 certification with 98% pass rate
2024 - Total installed REV capacity surpassed 2,800 kilowatts; multiple cannabis machines scheduled for Australia; U.S. Army funded additional machinery for rations
2025 - Licenses confirmed to run until 2043, with potential extension to 2045 via new patent filings; pharmaceutical pilot-scale projects advancing in Germany and U.S.
Investment Highlights
Installed base above 2,800 kilowatts, with utilization between 50% and 100%
Large-scale machine capacity of 10 units annually, scalable via outsourcing
Each large-scale unit generates CAD100,000–300,000 royalties annually
Dole and GEA operating near 100% utilization on installed machines
Tax credits of USD1.2 million confirmed, with USD0.5 million received
Future Growth Drivers
Repeat machine purchases from partners exceeding existing manufacturing capacity
Dole scaling snack and ingredient projects with potential for multiple large units
GEA partnership advancing toward GMP-certified pharmaceutical dryers
U.S. Army rations pipeline with funded machinery and partner collaborations
Cannabis adoption in Australia and North America through 10- and 120-kilowatt units
Risk Factors
Quarterly volatility due to lumpiness in large-scale machine sales
Cannabis sector partners facing financial distress delaying installations
Pharmaceutical commercialization dependent on CapEx and regulatory approvals
Royalty revenue concentration among three to four large partners
Heavy reliance on critical European microwave components despite North American sourcing
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Capital Allocation
21/12/2020 What is the optimal capital position for EnWave given the $18 million cash balance?
We are well capitalized today, which is why we are considering the Normal Course Issuer Bid (NCIB). If our share price does not reflect the progress and value we have created, we will repurchase shares. We are also investing $1.5 million into REVworx. Having balance sheet strength reassures prospective licensees that we are a stable partner capable of growing with them. We believe we have sufficient capital to execute our growth plans and will be opportunistic with the NCIB.
21/12/2020 What cash cushion is needed to keep counterparties comfortable?
A $10 million balance would be sufficient.
21/12/2020 Why did you not buy shares under the NCIB when the stock dropped to CAD0.56?
We agree that would have been an attractive entry point. However, the NCIB was not yet implemented at that time. It was approved in October and has now been in place for a little over two months. Going forward, if our share price does not reflect the company’s value and growth prospects, we will use the NCIB in those situations.
01/03/2021 When can shareholders expect a dividend?
Only after several quarters of consistent positive cash flow. Having both business units profitable is the ideal scenario before considering a dividend program or share buybacks. The goal is to generate sufficient royalties to cover overhead, with excess royalties and machine sale margins flowing to the bottom line. At that point, we can evaluate the best way to reward shareholders.
01/03/2021 What is the status of the share repurchase program (NCIB), and what are your Asia business development efforts?
We placed bids on several occasions outside blackout periods. Only last week was an order filled, with about CAD3,500 of stock repurchased in the CAD1.30–1.40 range. We will continue to be opportunistic, especially when the stock price weakens, given the strength of our pipeline.
In Asia, we continue our partnership with Calbee, which now operates three 10-kilowatt units and plans to scale up to large machinery this year. We are also active in Thailand, Singapore, Indonesia, Australia, and New Zealand.
27/08/2021 Will you consider adding another unit at NutraDried?
Yes, if growth opportunities in co-manufacturing materialize, a third machine could be required. We will install additional capacity when justified by distribution wins and bulk channel expansion.
It is contingent on growth, but we are prepared to invest in capacity as demand supports it.
23/08/2022 Do you need to raise cash through a private placement?
No, we have ample cash on our balance sheet and no immediate need to raise capital. EnWave is trending toward breakeven for the year, while NutraDried has been losing cash. We are undertaking expense reduction to bring NutraDried back to breakeven.
16/12/2022 With strong interest in REVworx, will you increase capacity in 2024?
First, we must secure contracts in the near term. Second, we want to encourage companies to invest in their own internal capacity. If a partner is committed to using EnWave as a long-term toll service provider and it is profitable for us with clear returns, then yes, we would consider increasing capacity beyond 2023 into 2024.
23/02/2023 Do you forecast additional cannabis install buybacks and resells?
Past buybacks were opportunistic, driven by mismanagement at certain partners, and we resold those assets at healthy margins. Looking forward, I do not expect further buyback and resale opportunities on large-scale equipment, apart from the planned resale of NutraDried’s assets to new partners.
26/05/2023 Do you still plan on buying back shares, and if so, when?
At this point, we have no imminent plans to repurchase shares. Our current capital is being directed to growing our royalty-generating business. If in the future management believes there is value in executing a buyback, we will take into account the circumstances at that time and make the decision accordingly.
24/05/2024 Are you buying back shares?
Currently, we are not employing a buyback program and have not executed any buybacks. All current buying is through a third party. However, we maintain the right to use the plan already in place at an appropriate time when we see fit.
Competitive Advantage
11/12/2019 Are consumer packaged goods companies showing interest in partnerships or acquisitions?
Our strategy is focused on growing the branded Moon Cheese product. While some companies have approached us to use Moon Cheese as an ingredient in their own snacks, that is not aligned with our strategy. Building Moon Cheese as a unique brand will ultimately create more shareholder value.
27/05/2021 Is the bulk cheese being used commercially or just in trials?
It is being used commercially in keto-friendly, high-protein trail mixes that combine nuts, seeds, and cheese. These mixes have gained strong U.S. distribution. While not under our brand, the volumes are meaningful and provide exposure for our proprietary cheese process, which has a strong moat. We expect to grow alongside these partners.
27/08/2021 What are the expectations from ongoing litigation?
We cannot comment beyond prior disclosures. Updates will be provided publicly as appropriate. Importantly, we pursue legal action to protect our intellectual property, which underpins our royalty model and is central to our business.
16/12/2022 Update on past trials with AstraZeneca or other pharmaceutical companies?
We have been working closely with GEA Lyophil, our joint partner in developing vacuum-microwave technology for large pharmaceutical companies. They acquired one of our machines for their German facility and hosted dozens of major pharmaceutical companies to test vacuum-microwave against lyophilization, the industry incumbent. Feedback has been positive, and we are in discussions with GEA about commercialization in the coming years.
Our strategy is to monetize through this partnership, where GEA delivers large-scale machinery and EnWave receives a percentage of revenue derived from those future sales.
23/02/2023 Why do some clients not want to keep exclusivity in their licenses?
Exclusivity is granted by product type and geographic region, with minimum annual royalties to ensure partners make genuine commercialization efforts. Some companies have chosen to forgo exclusivity after weighing costs against expected benefits, particularly when growth has been slower than anticipated.
Even without exclusivity, partners can sell products globally, but the machinery must remain within the licensed geographic region. This structure aims to provide local competitive advantages, such as lower raw material or labor costs.
23/04/2025 When do the licenses expire?
The licenses last until the final patent in the portfolio expires. Currently that is 2043, but if we successfully file another patent this year, it would extend to 2045.
23/04/2025 What is the lifespan of the machinery?
The first machine installed in 2013 is still working well, so we know the lifespan is at least 12 years. The machines are primarily stainless steel, and the consumable parts are the magnetrons that generate microwave energy. These have a finite life of 5,000 hours but are easily replaced during cleaning at a cost of about $60,000 for all magnetrons in a large-scale machine.
Operations
11/12/2019 How are you planning for NutraDried’s capacity expansion?
We are prospecting new facilities since the current site cannot hold additional REV lines. The new facility will accommodate a third line initially and have room for a fourth and fifth. Fully built out, this could support about EUR100 million in top line revenue. Expansion will be incremental, starting with the third line, then adding more as demand requires at lower incremental cost.
11/12/2019 Do you have a timeline for the fourth machine?
No, we have no specific timing. We will first reach capacity on the third line and then plan accordingly.
11/12/2019 Will NutraDried’s new facility support up to five large REV machines and $100 million capacity?
Yes. The facility will be built to house up to five large machines. We currently operate two and will install a third upon moving. Additional lines will be added as demand requires, eventually supporting around $100 million in revenue.
11/12/2019 Can you share more about the Moon Cheese rebranding?
We launched new packaging informed by consumer testing to maximize shelf appeal and purchase intent. The design highlights nutritional benefits such as high protein, low to no carbs, and no sugars. We are also marketing these claims digitally and through PR campaigns.
11/12/2019 What new flavors are being introduced?
Based on consumer testing, we are launching Cheddar Bacon and Garlic Parmesan, ranked just below Cheddar. These choices reflect our data-driven approach to product development and strategy execution.
21/12/2020 What defines an anchor client for REVworx and how many customers are you targeting?
Our REVworx tolling facility will operate a continuous 60-kilowatt quantaREV unit and three 10-kilowatt batch units. We define an anchor customer as one using at least 25% of the line’s capacity. When modeling REVworx, we are conservatively targeting profitability in 2022.
21/12/2020 Do you plan to expand REVworx into a larger toll manufacturing business?
The goal is not to become a large toll manufacturer. REVworx is meant to compel companies to become long-term royalty partners of EnWave. Pricing is structured to encourage users that start at REVworx to eventually invest in their own line. Often, companies hesitate to deploy $2.5 million for a large-scale line or invest heavily in facility upgrades. REVworx allows them to prove their business case upfront and later commit to internal manufacturing.
21/12/2020 Will COVID-driven changes to operations and trade shows remain permanent?
Yes, many changes will remain. We now conduct 10-kilowatt remote installations without sending personnel internationally, supported by training collateral for new licensees. We will reduce trade show attendance, since we see more realistic licensing opportunities through our sales and referral network and have been effective using virtual engagement tools. We do not expect to spend hundreds of thousands on trade shows again.
21/12/2020 Could REVworx grow into a major business line and handle NutraDried overflow?
We hope REVworx grows significantly, driven by companies seeking to launch new products. Some clients we are targeting could confirm new product launches by March. REVworx projects may also evolve into NutraDried opportunities, though that is still uncertain. As for capacity overflow, not currently. REVworx uses a 60-kilowatt quantaREV system, while NutraDried employs nutraREV systems. However, if we install a nutraREV system at REVworx in the future, it could support NutraDried overflow.
01/03/2021 How do you balance private label capacity with branded Moon Cheese growth?
At this point, all customers are good customers, whether private label or distributors for Moon Cheese. We will take opportunities until NutraDried’s capacity is fully utilized. Previously, we turned down private label and co-packing opportunities to prioritize brand building, but that has changed.
I anticipate new business will come not only from the NutraDried sales team but also through EnWave’s sales force. Together, they will bring opportunities for NutraDried to capitalize on in the coming quarters.
01/03/2021 How many REVworx customers can you serve with initial capacity?
Some companies we are in discussions with could take the entire capacity of REVworx with a single project. Others, such as SunRhize, only require up to 15% of capacity to launch a new product.
Realistically, REVworx could have as many as eight clients or as few as two to maximize capacity. Of course, we also have to consider rapid expansion.
01/03/2021 Can you increase Moon Cheese selling prices to offset cheese price volatility?
We are not in a position to change sales prices rapidly. There is enough margin in Moon Cheese that minor fluctuations in cheese pricing will not materially impact margins.
For co-manufacturing and private label, we build in mechanisms to account for cheese price swings. We also employ forward buying to lock in favorable prices when available.
01/03/2021 Where will cost savings from NutraDried restructuring appear in the P&L?
The majority will come out of SG&A. While some reductions apply to fixed manufacturing costs, most savings are in sales, marketing, and G&A. We are pulling back on paid marketing that was not delivering expected results and reallocating those dollars.
01/03/2021 Beyond cost cuts, has NutraDried’s sales and marketing strategy changed?
Yes. Moon Cheese is no longer the sole focus. We are now pursuing co-manufacturing and private label opportunities, which require different selling approaches, channels, and customers. Infrastructure is being built to support this strategy.
01/03/2021 Does NutraDried’s strategy mean no further expansion of branded products?
No. We are pursuing both branded and private label strategies. The objective is to utilize capacity fully, absorb fixed overhead, and drive profitability. NutraDried also serves as a pseudo-REVworx, allowing other companies to bring products to market, which benefits EnWave long term.
01/03/2021 Do you still view EnWave as a three-legged revenue model?
Yes. Machine sales and royalties remain core, but NutraDried continues to be important. While Moon Cheese is no longer the sole focus, private and white label opportunities will complement branded sales going forward.
01/03/2021 How large is the private label opportunity, and can it fill capacity over 18 months?
It is a large opportunity. Many companies have sought bulk supply of REV-dried products, and we now have the capacity to meet that demand. The product has diverse applications beyond Moon Cheese, including ingredient blends, salad toppers, and other uses. We will pursue bulk opportunities that complement, not harm, Moon Cheese distribution.
Additionally, we are exploring dairy snack applications such as yogurt snacks. These should create complementary opportunities alongside Moon Cheese.
27/05/2021 Why was the REVworx startup delayed to August or September?
The delay was due to a construction permit from the City of Delta. Our contractors began immediately once the permit was granted, but the approval process took much longer than expected.
27/08/2021 What is the timeline and capacity outlook for REVworx startup and commissioning?
The project was delayed slightly while we secured permits in Delta. We now have everything except one final permit related to flooring modifications. Once received, we can install the machine in mid to late September. After curing and setup, commissioning should be completed in October.
Revenue from REVworx should begin in Q1 2022. It will start modestly as customers are onboarded, but interest is already strong. We have not signed binding contracts yet, as we want to avoid overpromising before certifications are complete. Our sales and business development teams are actively building a pipeline, and we expect REVworx to contribute revenue in 2022.
16/12/2021 Will Whole Foods have exclusivity for the launch?
We will launch as broadly as possible. Whole Foods committed first and will have one exclusive flavor profile for a limited time. The other core flavors in the five-flavor portfolio will be available for wider distribution.
16/12/2021 Will Cheese Sticks complement or replace Moon Cheese in stores?
The new lineup is complementary to Moon Cheese. Whole Foods taking three stick items nationally is a major win, and it does not displace existing Moon Cheese distribution. Historically, Moon Cheese has been shelved in crackers or deli, not always in snacks. Sticks belong in salty snacks, and we will be the first to offer a 100% cheese puff format. Whole Foods was the first to commit, and we are confident this will be incremental. They even displaced another brand to carry three SKUs of sticks, showing their conviction.
16/12/2021 Are bulk sales still excess inventory or now longer-term contracts?
We are pursuing longer-term opportunities. The sales cycle is longer than a typical CPG sale because we are working with partners to create new snack combinations that include Moon Cheese. We had a large Q3 bulk order from a customer supplying Costco, though that did not repeat in Q4. That customer remains important, and we are developing additional opportunities to expand bulk sales in 2022.
16/12/2021 What is NutraDried’s current capacity and room for expansion?
We currently run two large-scale machines. With leasehold improvements, we could install a third by rearranging finished goods warehousing. That is our expansion plan when we are ready to scale further.
16/12/2021 How do you view the Costco Canada promotion and sustainability of presence there?
We recently announced national distribution with Costco Canada, with a 10-ounce Gouda product on shelves in January. It is fewer warehouses than the U.S., making it manageable, but still a strong opportunity. We are glad to be back after last year’s April distribution. Costco remains an important channel for brand awareness, and we are already pursuing opportunities to place the new sticks there. Execution depends on whether they require national scale immediately, which would mean ramping up production quickly, but it is worth pursuing given the exposure.
25/02/2022 Does producing the new stick product require major equipment changes?
No. It uses the same 200-kilowatt lines already installed in Ferndale. The main adjustments are minor, such as reconfiguring the pre-drying and cutting step from cubes to sticks. We may add small equipment, but no major overhaul is needed.
The expected cost for modifications is in the CAD60,000 to CAD100,000 range.
25/02/2022 Can your equipment be used for drying grains like corn?
Our Vacuum-Microwave equipment can dry any product, but it is not economical for commoditized grains like corn, where hot-air drying is cheaper despite reducing nutritional quality.
Where we see value is in high-value crops and proteins. For example, we are working with PIP International in Alberta on pea protein isolates, an application well suited to our technology. We look forward to advancing that project toward scale-up this fiscal year.
25/02/2022 Will you move entirely to U.S. or Canadian suppliers to reduce foreign dependency?
For many components, yes, we already source from North America. However, critical microwave componentry is not available here and must still be procured from key European suppliers. That reliance will not change.
25/02/2022 Are inventory buffers sufficient amid supplier lead-time challenges?
Supply chain issues are not universal, but we are seeing delays with electrical components and longer backlogs from third-party manufacturing partners. What once took eight weeks can now take sixteen. To get ahead, we place purchase orders early for sub-assemblies and secure electrical components in advance. These parts have no shelf life, so stocking them longer is not an issue.
We are comfortable with current buffers and confident in our pipeline. Deploying some extra working capital to build machines on spec is not a major risk under these conditions.
23/08/2022 What is the status of signing an anchor REVworx customer?
Line trials are critical for long-term commitment to continuous production. It is not enough to show success on our 10-kilowatt units; consistency must be proven at scale. Over the past month, we have run trials with several prospects. One likely customer could represent up to one-third of plant capacity.
We currently have eight viable companies running trials, most of them large and financially capable. We hope to confirm several as customers in the coming quarters.
23/08/2022 Is the yogurt product still in the pipeline for NutraDried?
Yes, the yogurt product is still in the pipeline. However, the immediate focus is reducing expenses and achieving breakeven. Once stable, we can allocate resources to new innovation, recognizing the risk that comes with launching new products.
16/12/2022 What is the outlook for REVworx capacity utilization?
Several companies are close to signing toll service contracts. If successful, utilization could range from 25% to 100%, depending on how many deals close. That represents the business on the table for us to win.
16/12/2022 Any update on NutraDried distribution with Costco?
Costco remains a potential rotation or multiple rotations in different regions, but nothing has been contracted for fiscal 2023. We continue working toward securing opportunities with Costco.
16/12/2022 Update on U.S. Army ration program?
The Army received approval for funding additional machinery to implement components into their ration program. Their fiscal year started in October, so we expect word in the coming months on the release of that funding.
Meanwhile, we are negotiating potential licenses with industry partners where that machine would be placed. We remain optimistic about advancing the Army relationship in fiscal 2023.
16/12/2022 How broad is NutraDried’s bulk business pipeline?
We are targeting a broad range of customers, but a handful would be especially meaningful. We have visibility into when those could materialize in fiscal 2023 and included them in our internal budget.
Currently, we are close to confirming business with two or three customers. No purchase orders yet, as audits are required before engagement, but prospects are promising. If confirmed, we will update shareholders.
16/12/2022 If the U.S. Army buys a large-scale machine, how fast can you deliver?
Typical lead time is six to seven months from purchase order. However, we have invested in long-lead inventory for two large-scale machines in fiscal 2023, which should allow faster delivery.
If a purchase order comes in December or January, delivery could occur in the summer of next year.
16/12/2022 Why wasn’t the Dole machine installed in Q4?
Delays were due to Dole’s own operational timing, not our ability to deliver. Sometimes partners need longer to be ready to receive equipment.
16/12/2022 What does REVworx capacity utilization translate into in revenue?
At industry-acceptable margins, full utilization equates to about CAD 2.5 million in anticipated revenue, tied to throughputs at the facility.
23/02/2023 Do R&D costs include trial runs for new candidate clients, or is the technology fully mature?
Yes, R&D costs include trial runs for new candidate clients.
25/08/2023 Can you describe the evolution and utilization rate of REVworx between Q2 and Q3?
Brent Charleton: Through Q2 and Q3, REVworx was primarily used for line trials to validate throughputs for specific product applications, ensuring costing models for fiscal 2024 supply contracts are accurate. The results were positive. We are now in the final stages of negotiating material contracts that could take up the majority of our capacity next year. Packaging is being designed and ordered by these customers, and we are eager to disclose details once possible.
Brent Charleton: In the meantime, we have completed smaller commercial production runs for Western Canada snack companies, processing fruits, vegetables, and confectionery products. These orders are in the tens of thousands of dollars, while we anticipate upcoming contracts to bring hundreds of thousands of dollars in revenue.
25/08/2023 What is the utilization rate of the installed base generating royalties?
Brent Charleton: It varies significantly across partners. Internally, we are building a register to better monitor performance and validate the accuracy of reporting. This will strengthen our quarterly reporting on utilization rates. At present, three to four companies dominate our royalty payments.
25/08/2023 How is REVworx functioning, including certifications?
Brent Charleton: In addition to Bart’s question on capacity utilization, we recently passed our Safe Quality Food (SQF) Level 2 certification for the second consecutive year with a 98% pass rate. This is critical for servicing larger consumer packaged goods companies and will be put to good use in fiscal 2024 with material manufacturers.
15/12/2023 How are you managing production personnel while waiting for machine orders?
Despite volatility in machine orders, our team remains busy with process innovations, machinery refinements, and installations. We currently have staff in Japan completing a large-scale installation, and several more international visits are scheduled for paid preventative maintenance work.
15/12/2023 What is the update on Bridgford Foods and the U.S. Army project?
The 120-kilowatt machine is scheduled for installation in Q2 fiscal 2024 in North Carolina, where we will train staff for U.S. Army cheesecake ration production. Bridgford is also collaborating with other commercial partners aiming to enter the Army ecosystem.
23/02/2024 Clarify number of machines in production and inventory
Dylan Murray: BranchOut Foods has a machine contracted to begin fabrication in summer 2024, but fabrication has not yet started. Regarding inventory, we still have one large-scale machine that was repatriated from NutraDried.
Brent Charleton: The number of small machines is around 10, either returned from rental agreements or held in inventory. Several near-term projects with 10-kilowatt units should reduce this number to below four machines. Multiple 10-kilowatt units are expected to be needed by royalty partners before transitioning to large-scale machines. Ideally, we want immediate deployment of the 10-kilowatt units to bridge the period between purchase, fabrication, delivery, and commissioning of larger machines. Several opportunities like this are in our near-term pipeline.
24/05/2024 When will pending cannabis industry machines be installed?
We recently completed commissioning of the 120 kilowatt machine at Bridgford Foods, funded by the U.S. Army. It is now commercially running for both military rations and line trial work with other businesses, which should help drive royalty growth over the next 12 months. A second 120 kilowatt machine purchased by a U.S. cannabis partner has not yet been installed, as their facility remains incomplete. The ultimate destination of that unit is still to be determined.
Some 10 kilowatt cannabis units are scheduled for Australia. One has installation timing confirmed for this year, while the other remains undetermined. As you can imagine, some of these companies are struggling financially. I believe that covers the main machines, but if you want details on a specific unit, we can provide additional context.
23/08/2024 What is the total installed capacity with clients in kilowatts and the average utilization rate?
Hi Bart. Right now we have three active 10-kilowatt machines at foreign facilities for product development and potential commercialization. We have also seen more collaboration at our Vancouver innovation center, where potential adopters can test pilot, lab, and full commercial scale equipment while working closely with our food science team. Many companies prefer this approach instead of bringing machines in-house for evaluation.
As for total installed REV capacity, we disclosed 2,800 kilowatts as of September 30 in our year-end statements. The figure is now higher with new installations. Utilization varies widely, generally between 50% and 100%. Dole, for example, is near 100% on its first large-scale machine, as is GEA Ly in Canada for cheese snacks. Others, like Orto Al Sole in Italy, are still ramping up. We provide a chart in our corporate presentation tracking installed capacity, which we update as more machines come online.
23/08/2024 How many machines were under construction at the end of Q3?
At the end of Q3, we were working on three machines. Two units, either 120 or 100 kilowatts, are for BranchOut, where some design changes were required. A third, a 120-kilowatt machine, was sold to an unnamed current royalty partner to support co-manufacturing demands in consumer packaged goods.
We also keep 10-kilowatt machines in inventory for rapid deployment, but we are not building new ones at the moment. Looking forward, we aim to close new pharmaceutical pilot-scale opportunities and fulfill purchase orders to expand manufacturing capacity for brands that have provided forecasts for 2025 and 2026.
24/02/2025 How many 120-kilowatt machines are currently available in inventory?
Currently, the one machine under construction is the only unit available for immediate deployment. Once that machine is sold, which we expect very soon, we will immediately begin construction of another. Given our strong pipeline, we expect to sell several of these large-scale units within this fiscal year.
24/02/2025 Is there an update on the vaccine front?
Yes, collaboration with GEA continues. They purchased a lab-scale unit from EnWave to showcase our technology to their wide pharmaceutical customer base. Testing is ongoing, and we have received positive results with several projects. We hope to share more details later this fiscal year.
We also have a third-party pharmaceutical co-manufacturer in the United States working directly with a large pharmaceutical company. This project could lead to another sale of a pilot-scale pharmaceutical-grade unit sometime this year.
23/04/2025 From a machine sales perspective, what is your manufacturing capacity?
Our current manufacturing capacity for large scale machines is 10 per year. If demand surpasses that, we already have relationships in Mexico and Turkey to leverage outsourced manufacturing, so there are no concerns. If a large company prefers not to manufacture and only wants the product, we can connect them with our royalty partner who focuses on co-manufacturing. That would also push companies like Microdried Melny to buy additional machines to support partners such as Kraft Heinz. This is how we see growth developing.
23/04/2025 Do you monitor machines and is there room for growth in installed capacity?
Yes, we remotely monitor all machines, tracking hours of use, baskets, and trays processed. We then audit quarterly royalty payments. There is definitely room for growth because some companies are operating at full capacity while others are at 50–70%. Incremental royalty growth is possible depending on how each partner executes its business case.
Competition
11/12/2019 What percentage of NutraDried sales came from Costco?
We are not commenting on specifics regarding Costco. Some details are available in our Management Discussion and Analysis.
11/12/2019 Will Costco continue distribution and coupon programs in 2020?
We cannot predict Costco’s future plans. What we can say is that product velocity consistently exceeds expectations at Costco and other retailers. The pace of adding new stores is greater than losing them, so we expect sales to continue growing. Future promotions and rotations remain to be determined.
21/12/2020 Does termination of the Tilray license also end the sub-license?
Yes. The original Tilray agreement provided proof-of-concept for cannabis applications. We expected minimal long-term royalty revenue because Tilray’s sub-licenses were structured as net zero for EnWave. Tilray faced internal challenges, ordering non-GMP machines while building GMP facilities, and did not consult us before committing. This was a business relationship issue, not a technology problem.
27/05/2021 How should we think about Costco’s future orders and visibility?
We have always sold to Costco on a rotational basis, with the occasional national promotion. Relationships with buyers remain strong, though competition in all-natural cheese snacks has intensified. Forecasting future orders is difficult, but Costco still likes our products, and we expect to generate more rotations. The timing and size are hard to predict.
25/02/2022 Why have some cannabis sales campaigns failed, and what pushback do you face?
When we first entered cannabis, we knew our technology had value but lacked proof of its impact. Early Canadian customers allowed us to refine protocols and gather data showing higher quality product with faster processing, lower cost, and more terpene and cannabinoid retention. Before that, campaigns often failed because we could not prove results. Now, we have evidence and can demonstrate outcomes directly.
Remaining pushback comes from traditionalists unwilling to change. For those open to testing, placing 10-kilowatt units in their facilities has yielded a 100% success rate. We have demos underway across California and other states, supported by third-party testimonials and visits to large-scale operations. We believe this will address concerns and convert more prospects into royalty partners this year.
27/05/2022 Is pricing driven more by market dynamics than contractual obligations?
Yes. Every time we raise prices, retailers pass them through to the shelf. If you step out of line within the category, it directly impacts consumption. So we must strike a delicate balance.
23/02/2023 Why hasn’t cannabis drying been a bigger focus and priority?
We have consistently pursued cannabis drying by engaging with every known cannabis company in North America. We offered smaller units at no cost to reduce barriers and prove our value proposition. Despite ongoing discussions with major players in the U.S. and Canada, they continue to delay evaluations. For now, the sector seems disorganized, but we will continue to push aggressively.
Growth
11/12/2019 What drove higher NutraDried expenses and Costco sales percentage?
NutraDried experienced rapid growth, which required increased expenses to support scaling. We hired a full-time CEO, three regional sales directors, and additional staff in sales planning, HR, accounting, and finance. We also rebranded and relaunched Moon Cheese with new packaging, a marketing agency, and digital campaigns. These investments are aimed at sustaining revenue growth.
11/12/2019 How do you expect NutraDried sales to grow toward CAD40 million?
We see strong growth prospects in both retail grocery and big box channels such as Costco. Retail grocery distribution is typically stickier, so we are focused on expanding there while pragmatically pursuing additional big box opportunities.
11/12/2019 Is NutraDried growth from deeper penetration or new retail channels?
It is both. We are expanding with existing retailers like Whole Foods and Publix, while also entering new channels. However, we avoid disclosing detailed strategy publicly to prevent competitors from replicating it.
11/12/2019 Will royalty growth outside NutraDried come mainly from cannabis machines?
Growth will come from both cannabis and food. Several food licenses are ramping up, so royalties are not solely dependent on cannabis. Large cannabis machines will contribute significantly in 2020, but food partners will also drive growth.
11/12/2019 Are global dairy partners starting to show momentum?
Yes, we see immense potential with large license partners. Many are still in small market trials, but feedback has been very positive. With added capacity, royalty potential from international dairy companies could eventually surpass NutraDried’s U.S. contribution.
11/12/2019 Which partners are most advanced?
Arla launched snacks under their Explorers brand in Denmark and is progressing well. Ashgrove Cheese in Australia has gained strong distribution, purchased a second 10-kilowatt unit, and is considering larger machinery. Patatas Fritas has not yet received its 10-kilowatt unit. Friesland Campina has done solid development work, and we plan collaboration with them early next year.
11/12/2019 Where does the Calbee partnership stand?
We are very excited about Calbee. Their 10-kilowatt machine is fully operational in Japan, and we have clear visibility on their product rollout and testing over the next 12 months. While I cannot disclose exact timing, Calbee has a thoughtful scale-up project that should become meaningful to their business through 2020–2021.
11/12/2019 Will Calbee sales focus only on Japan or also international markets?
The initial focus is on Japan, but longer-term plans include international distribution.
21/12/2020 What is your approach to alternative protein products?
We see strong growth in alternative proteins that mimic traditional fresh protein formats. We engaged with several market leaders, acquired their raw materials, and ran proof-of-concept tests at our pilot plant. These trials have led to deeper discussions, and we expect some companies to enter formal evaluation agreements soon. We aim to secure our first North American licensees in this space in 2021.
21/12/2020 How much additional Moon Cheese distribution can you achieve with current and new customers?
There is significant opportunity to expand distribution. For example, Safeway Albertsons took both 2-ounce and 1-ounce formats, but only about 30–40% of stores carry the 2-ounce, while the 1-ounce has enterprise-wide distribution. That leaves room for growth. Beyond that, we have identified 14,000 additional grocery locations that can add Moon Cheese. Growth depends on individual buyers and whether they bring on multiple SKUs per store.
21/12/2020 Are you continuing to expect Costco rotations despite avoiding inventory liquidation?
Yes, Costco remains part of our core business. Rotations are lumpy and unpredictable since we deal with individual buyers in each region. Sometimes they cluster at certain times, while at other times there may be a pause. We will continue targeting rotations at Costco but are also expanding into meaningful retail grocery and c-store channels. Costco remains an important customer. With new product formats and flavors like protein blitz mix, we will also offer unique items to Costco and others, sometimes on a semi-exclusive basis.
21/12/2020 What are your prospects in the U.S. cannabis market following the new subsidiary launch?
We are very encouraged by inbound interest from U.S. cannabis producers. The MORE Act passed in Congress is positive, and if Senate results in Georgia favor Democrats, broader legalization could follow in late 2021. We have completed legal due diligence and are comfortable selling machines in states where cannabis is legal. We expect U.S. cannabis to become a core part of business development in 2021.
01/03/2021 What does the U.S. cannabis pipeline look like this year?
In the U.S., we have five to six qualified potential licensees considering both large-scale and 10 kilowatt units. We are confident that new commercial relationships will be established this year. Internationally, we have representation in Australasia and another five qualified leads there.
With Terpene Max data available and early adopters like Tigard willing to speak publicly about their success, we now have credibility. Traditionalists once insisted on room or rack drying, but our technology is proving itself as a global game changer as the industry matures.
01/03/2021 What revenue potential do you see from the CAD1.5 million REVworx investment?
We expect to begin generating revenue in the spring and summer, scaling as new contracts are secured. The facility has potential to generate high single-digit millions in revenue at capacity.
Importantly, while margins from REVworx revenue matter, the bigger goal is product incubation. Additional capacity allows us to service new, smaller opportunities that can grow into larger ones and eventually drive machine orders.
27/05/2021 Should Costco revenues be viewed as incremental on top of core programs?
Yes, Costco is opportunistic and not part of our long-term strategy. To replace missed volume there, we began selling bulk cheese to consumer packaged goods companies for use in ingredients and inclusions. That channel has already generated more than 1.5 million orders and will ramp up in Q3.
27/05/2021 Will the new CEO continue focusing on grocery, checkout, and convenience store expansion?
Correct, we remain focused on expanding Moon Cheese distribution in grocery, which is the largest opportunity. We also launched Protein Blitz Mix, which sits in the trail mix section instead of crackers or chips. We believe this provides incremental distribution opportunities.
27/05/2021 How does the REVworx pipeline look for filling capacity?
We are balancing several larger projects that want REVworx as their first manufacturing step before eventually moving in-house with their own equipment in 2022. SunRhize Tempeh is progressing well and should be an anchor tenant, and we are also in discussions with a very large fruit company and several others. These groups are working through costing so they can commit as soon as operations begin. The pipeline has only strengthened since we last discussed it.
27/05/2021 Are you using REVworx to re-engage past prospects that avoided upfront costs?
Yes, our sales team has reconnected with companies that previously declined due to high capital costs and product launch risks. REVworx reduces that barrier by enabling product trials and early market entry before moving manufacturing in-house to improve margins. Several companies are lined up, and we will actively revisit more prospects once the facility launches.
27/05/2021 Was NutraDried product revenue, excluding Costco, down year-over-year?
No, excluding Costco, NutraDried product sales showed a modest year-over-year increase. Growth came mainly from grocery channels, and we are pursuing new distribution opportunities with key customers that could further move the needle.
27/08/2021 What is catalyzing cannabis sales growth near-term?
Seeing is believing. Prospects visiting our license partners, watching machines in operation, and running trials on our 10-kilowatt units has been critical. They can collect data themselves that verifies our claims.
When we say drying with our technology results in 30% to 50% more terpene retention, higher THC and CBD levels, and equal or better smoke quality compared to room or rack drying, it sounds almost too good to be true. Demonstrating this first-hand builds credibility. That is why we are confident that once a few more dominoes fall, adoption in the U.S. will accelerate, especially with the companies we are in active discussions with.
27/08/2021 What is the current and future store count with Walmart, and does this include Sam’s Club?
We have two one-ounce items placed in about 400 Walmart stores, located in checkout lanes. If successful, we have been told this could expand into 1,300 stores in the U.S. We already received orders, and products should be on shelves in six to eight weeks.
This initial placement is a valuable entry point. Our longer-term goal is to move into the snack aisle at Walmart. We see this as the first step toward deeper distribution with that retailer.
27/08/2021 Is the Dole relationship dependent on new products or can it be applied to existing ones?
To clarify, Elea Pulsed Electric Field Technology is not part of the Dole applications. Their focus is expanding into shelf-stable dried snacks, which is new for them compared to canned or juice-based formats. That is one part of the project. The second part involves early engagement with their ingredients division, using our technology to process off-cuts and B or C grade materials into powders for functional ingredients.
This is not just about selling one 10-kilowatt unit. We are deeply integrated with Dole’s leadership in marketing, product development, and strategy. We have weekly calls with senior executives, and they are committing near-term capital to move quickly. They may initially use existing royalty licensees to produce early-stage product, but the long-term plan is to bring manufacturing in-house to control costs.
27/08/2021 What are the benefits of the bulk sales model at NutraDried?
When we produce Moon Cheese, it is first packed into bulk boxes before seasoning and packaging. Some customers buy the dried cheese in bulk for use in snacks, trail mixes, and similar products. This B2B model generates clean margin since we avoid freight, commissions, and trade spending.
We are now in discussions with several major snack companies about incorporating our cheese format into their innovation pipelines. Early interest is strong, and we expect the channel to grow.
27/05/2022 How much lumpiness should be expected in NutraDried sales across partners?
In grocery channels like Kroger, sales are consistent. The growth we achieved at Kroger this quarter should repeat next quarter, and we expect that account to remain strong. The lumpiness always comes through Costco, as you know. We had a large Costco Canada program in Q2, but nothing confirmed for Q3. So that creates volatility. Our main focus remains growing grocery channels, since wins at Kroger and Whole Foods create durable value.
Also, Moon Cheese has outperformed competitors. Compared with ParmCrisps and Whisps, Moon Cheese achieved the best year-over-year growth in the category over the past six months, while Whisps declined and ParmCrisps underperformed us. Importantly, Moon Cheese buyers are incremental to the category: only 10.4% also buy ParmCrisps, and 17.5% buy Whisps. This means new distribution gains are not significantly cannibalizing other products.
23/08/2022 Will bulk sales rebound, or should we expect continued lumpiness?
Bulk sales will not be particularly lumpy, but growth is taking time. We are building a customer base using our product as an ingredient. We are attending ingredient shows and developing that channel. The one major customer from last year does not seem to be continuing, so we are working to build new relationships.
23/02/2023 When will EnWave machines be sold in India and what is the local pipeline?
Our strategy is to work with third-party resellers to expand in new regions. In India, we partnered with Ken Kanchan Metals, which helped us participate in trade shows and build a pipeline of six to eight projects we hope to close within 12 to 18 months. Additionally, LD Food, an announced partner, operates a 10-kilowatt unit for product development and may scale within this fiscal year. They have also hosted other companies to conduct market trials using our technology.
26/05/2023 Are new products being developed with or for the US armed forces?
Yes. We are working with a prominent egg manufacturer on three ration inclusions already presented to the US Army, which received favorable feedback. We are now collaborating with both parties to establish a CRADA research agreement to secure funding for this manufacturer and improve the likelihood of new product introductions into the ration ecosystem.
25/08/2023 Can you provide more information about the Dole partnership?
Brent Charleton: The Good Crunch snack line, using our machinery, is performing well. Dole wants to diversify its snack portfolio beyond bananas and pineapples. We are discussing additional manufacturing capacity requirements in the near term. Certain license partners may provide co-manufacturing capacity in North America, which would be strategically advantageous versus Southeast Asia for new product rollouts. We look forward to this partnership evolving in the coming quarters.
15/12/2023 How much utilization time does REV Works see with potential customers?
Most utilization is tied to developing new contracts and progressing the sales pipeline for customers transitioning to in-house manufacturing. We are pursuing several material REV Works contracts for fiscal 2024, which could add up to CAD1.5 million in revenue. While not materially significant for top line growth, REV Works serves as a critical sales tool to de-risk product launches and encourage long-term licensing royalty agreements.
23/08/2024 How are you handling medical cannabis research in the U.S. and Canada, and what are expansion plans in other countries?
We collaborate closely with our royalty partners on process protocol improvements in both the U.S. and Canada. We will continue similar efforts in Europe, Australia, and New Zealand.
On expansion, we are open to partnering with any cannabis companies operating legally in their jurisdiction. That said, the cannabis industry remains in consolidation and cost-reduction mode. Currently, our pipeline is about 90% food opportunities, with the balance split between pharmaceutical and cannabis projects.
23/04/2025 How do royalties vary by product?
It depends on the product being produced. Moisture levels affect throughput, and market value also matters. For example, cheese snacks may sell for $5 per package versus dried pineapple at $3 per package. With a 3% royalty, cheese snacks generate more royalties due to both higher throughput and higher market value.
Financials
11/12/2019 Can you quantify NutraDried’s expenses in millions?
For the full year, these investments totaled about CAD3 million. We expect to make similar investments in 2020 as we continue building the brand and creating consumer demand for our snacks.
21/12/2020 How much Costco cash is still outstanding from the BOGO promotion?
We have collected all cash related to the September Costco BOGO promotion. While Costco remains a customer with ongoing receivables, the Q4 promotional balance has been fully collected.
27/05/2021 Are expense reductions mainly in sales and marketing and worth about CAD 2 million annually?
The majority of reductions are in sales and marketing, with some in general and administrative costs. We are also cutting manufacturing expenses to improve margins. Most savings come from reducing costly agencies, consultants, and fees that did not generate returns. These actions took effect in March and April, so full benefits will be reflected in Q3 and Q4.
27/05/2021 Have we only seen partial benefits of cost cuts so far?
Yes, only about one-third of a quarter’s benefit was visible, as it took time to unwind contracts. By April, we had already realized the full benefit, which will flow through starting in Q3.
27/05/2021 How will the CAD 1.5 million bulk orders impact financials and cadence?
The 1.5 million orders will be reflected in Q3, with most shipped in May and more expected in June. We already have several large customers buying bulk, and we expect growth into July, August, and the fall. We have shifted to proactively pursuing these opportunities rather than waiting for inbound demand.
27/05/2021 Will declining cheese prices provide a benefit?
Yes, benefits should appear in Q4. We forward-bought through early summer, so lower prices will start helping later in the year. Futures have ticked up as the U.S. economy reopened and food service demand returned, but we do not expect the volatility of 2020.
27/05/2021 Are all 44 royalty partners paying, and how many are material contributors?
Of the 44 license agreements, about five or six are dormant and not paying. Roughly 10 are large contributors with commercial-scale production and steady growth, including cannabis partners who recently added a 60-kilowatt machine. The remainder are smaller but expected to grow as their products gain traction. Some also use capacity from larger licensed partners, showing collaboration across the ecosystem.
27/08/2021 What is your finished goods inventory position given the sales cycle and installation delays?
For large machine orders, we recognize revenue over time using percentage of completion. Once we receive an order and progress begins, revenue flows into cost of goods in our P&L. For 10-kilowatt machines, revenue is recognized only after installation and training are complete.
This means delays in installation or facility readiness can push revenue recognition back by one or two quarters. Until then, those machines remain in finished goods inventory. Once installed and operators are trained, the revenue is booked.
27/08/2021 Why will SG&A not rise despite activity ramping up?
We will attend tradeshows where possible, such as Expo East in September, but we do not expect significant near-term travel. Many U.S. buyers are still holding meetings remotely, which keeps costs lower.
We have already streamlined expenses and do not plan to add them back. The current platform is sufficient to support growth without materially increasing SG&A.
27/05/2022 Do profitability differences exist between Moon Cheese and Sticks?
It is less about puffiness and more about the cheese’s moisture content before drying. Yield varies by cheese variety. Cheddar, with lower moisture, gives a better yield than Mozzarella. Sticks yield is slightly below Cheddar. From a pure cheese perspective, Sticks are slightly less profitable.
That said, the difference between Cheddar and Mozzarella is not significant enough to matter at scale. With enough volume, Sticks still have the opportunity to be very profitable. It ultimately comes down to the moisture content of the incoming cheese.
23/08/2022 How will higher cheese costs affect Q4?
At the end of Q3, we held cheese bought at peak June prices. That higher-cost cheese will work its way through in Q4. The cheese we are buying now is at more reasonable levels, so the price pressure should abate going forward.
23/08/2022 Will Dole’s 120-kilowatt machine generate CAD2 million in royalties per year?
No, a single 120-kilowatt machine will not generate CAD2 million. Year-to-date, we have collected CAD1.1 million in third-party royalties, which is up significantly year-over-year. From experience, each large-scale unit can generate between CAD100,000 and CAD300,000 annually, depending on product and utilization.
To reach CAD2 million, we need to close additional large-scale purchase orders and bring machines in Peru and Italy online.
23/02/2023 Does the 15-year low stock price reflect the company’s financial reality?
I believe our stock is undervalued, even considering the NutraDried wind down. At current prices, I see this as a buy-in opportunity given the strong prospects of our technology business.
26/05/2023 Will REVworx financial reporting be consolidated or shown separately?
It continues to be consolidated until it becomes a material individual line item.
25/08/2023 Does the USD1 million from NutraDried include the USD1.5 million tax credits?
Dylan Murray: To clarify, it was a USD1.2 million Employee Retention Tax Credit (ERTC) and this is new for this quarter. USD0.5 million has been confirmed by the IRS, which we expect to receive in Q4 2023. As of this call, we have not received any further correspondence from the IRS about the remaining credit.
Brent Charleton: That said, receiving confirmation on just under half is a good leading indicator for us, suggesting a high potential of receiving the rest.
25/08/2023 Is the tax credit included in the USD1 million still due from NutraDried?
Dylan Murray: Correct, it is not included. The USD1 million is still due from Creations.
25/08/2023 What were this quarter’s royalties from cannabis?
Dylan Murray: I do not have the number on hand, but it is a minority compared to our overall royalty portfolio, which is largely food-focused.
15/12/2023 Do you break out royalties on your income statements?
Not on the face of the income statements, but in revenue note 18 we segment revenue streams, and royalties are discussed further in the MD&A.
24/05/2024 Do you still expect money from NutraDried sales or the U.S. government?
From Creations, related to the repatriated 100 kilowatt machine, about US$500,000 remains outstanding. Regarding IRS checks, there is still another half a million to US$700,000 outstanding. We have not received or recognized that amount for reporting purposes until we get direct confirmation from the IRS.
23/04/2025 Why has the stock price stayed stable despite growth?
It is a “show me” state right now, where we need to demonstrate more than two quarters of strong performance. Last year we had an ongoing legal dispute with a former executive who stole confidential information. We successfully sued, settled, and secured an IP transfer, closing that issue.
The lumpy nature of large-scale machine sales also impacts results. One quarter we may sell two or three machines, and the next quarter none, depending on the percentage of completion at that time. Revenue therefore has quarter-to-quarter fluctuations. As long as we show fiscal year improvement, the market will recognize that we are not a bankruptcy risk, but a consistently growing business with a well-managed balance sheet.
Outlook & Guidance
11/12/2019 Did you provide royalty targets for NutraDried and non-NutraDried next year?
Yes, we set approximate targets. We hope to grow our royalty base by at least 50% next year. The split between NutraDried and non-NutraDried is pro forma but represents our general expectations.
11/12/2019 Should royalty revenue roughly double as new machines come online?
Yes, that is the safe assumption. We have nine large machines in fabrication now versus eight contributing in fiscal 2019. As these staggered installations become operational through fiscal 2020, we expect by fiscal 2021 to have doubled royalty capacity.
11/12/2019 Is NutraDried’s topline revenue capacity $60 million once the third machine is running?
Yes. With three lines, NutraDried’s capacity will be up to $60 million in sales next year.
11/12/2019 What is the 2024 target for REV machine sales?
Our target is 10 large-scale machines and 10 small-scale machines.
21/12/2020 How confident are you in NutraDried’s diversification and what is the expected timing?
During the pandemic, it was difficult for NutraDried’s sales team to secure meetings, but in the fall we had several important discussions with major U.S. retailers in grocery and convenience channels. We expect commitments early in the New Year, with growth weighted toward the second half of 2021. Some distribution will begin in Q2, but Q3 and Q4 will be more meaningful. By late January or mid-February, we will have clear visibility on NutraDried’s second-half opportunities.
21/12/2020 Have there been recent pharma discussions, including vaccines, using your technology?
We announced a joint development agreement in January 2020 with GEA Lyophil of Germany, the largest pharmaceutical equipment manufacturer globally. Despite a brief pause early in the pandemic, inbound inquiries increased in late summer regarding vaccine dehydration and shelf stabilization. GEA has purchased a pilot-scale machine, now in build and scheduled to arrive in Germany in spring 2021, to demonstrate REV technology to pharmaceutical companies. Activity has picked up, and we see pharma as part of EnWave’s long-term vision.
Additionally, Merck remains an active partner. They own an R&D license and REV equipment for vaccine dehydration, and that project is ongoing.
21/12/2020 What progress is being made with the U.S. Army on rations?
Progress is strong. The Army owns two pilot-scale REV machines to develop shelf-stable rations for close-combat soldiers. These rations have received internal approval, and the Army is now exploring partnerships with U.S. industry players who could take additional REV equipment to process at scale. Those partners would then sell to one of four or five approved ration pack vendors, such as AmeriQual or Wornick. We are in discussions about licensing structures, and the Army is pursuing funding to expand capacity. We remain bullish on long-term prospects with the U.S. Armed Forces, though timing is the key variable.
01/03/2021 Should the forecast of five large and 12 small machine sales be increased after Q1 sales?
As of this call, two large and seven small machines have already been sold. There is certainly upside, but conservative expectations are appropriate. Walk before you run.
There is strong potential to exceed targets, but we will reassess at the next quarterly call before upgrading guidance.
27/05/2021 Could machine orders exceed guidance this year?
Yes, we are confident in hitting and potentially exceeding targets. U.S. cannabis companies are considering 60- to 120-kilowatt machines, larger than our typical 10-kilowatt units. Several royalty partners that started with smaller machines are now scaling up, so we expect large repeat orders within the fiscal year. Five to twelve orders would be profitable, but we are aiming higher.
27/05/2021 When will Aurora Cannabis machines be operational?
We built and delivered the 220-kilowatt machines as specified, but Aurora has delayed facility expansion. Meanwhile, Tigard produces about 90% of its cannabis with REV technology, and U.S. partners are also scaling. We believe Aurora should bring its equipment online soon, and if not, it reflects poor management given the value our technology is delivering elsewhere.
27/05/2021 How do you expect royalty margins to develop, and how do you ensure partners pay accurately?
We expect royalties to grow materially over the next few years. Three large machines are scheduled for installation by year-end, which will significantly expand the royalty base. The pipeline of machine orders and licenses is growing, and while royalties lag license signings by a few quarters, we see this compounding into a high-margin revenue stream. Our mission is to build a diversified royalty portfolio, with REVworx serving as a tool to accelerate adoption.
All machines are internet-connected, allowing us to track uptime, power use, and throughput. Agreements also permit audits if misreporting occurs. We have rarely faced issues, as most partners are strong, long-term relationships. With technology monitoring and audit rights, we are comfortable royalty reporting is accurate.
27/08/2021 Are you expecting machine sales to double this year and can you clarify comments on the cannabis opportunity?
Yes, Steve. For Q4, we not only have one but several large-scale sales opportunities. Our fiscal 2021 guidance was five large-scale machines and ten 10-kilowatt units. We already exceeded the 10-kilowatt target and are on track to meet or exceed the large-scale target. Looking ahead to fiscal 2022, our realistic goal is ten large-scale machines, driven by upscaling from current royalty licensees and new partners in both cannabis and food. On the smaller scale, based on the cadence of sales so far, we expect to increase that internal target to fifteen.
In the U.S. cannabis space, we have signed NDAs with companies operating more than 70 facilities. Meeting full demand there would require over 20 large-scale 120-kilowatt machines. While that assumes 100% saturation, it does factor into our fiscal 2022 guidance.
27/08/2021 What milestones do you expect in the Dole relationship to drive machine sales?
I need to keep details high level due to confidentiality, but I believe this partnership could become significantly material for EnWave within 12 months. Dole purchased a 10-kilowatt machine for production trials in several countries.
The goal is to gain confidence that leads to multiple large-scale lines for manufacturing capacity as they enter new markets. Dole is pushing hard to diversify into shelf-stable, better-for-you snacks. Beyond snacks, they are interested in ingredient processing, such as drying B- and C-grade produce or offcuts into functional ingredients. We see massive potential in both snack and ingredient markets through this relationship.
27/08/2021 Can positive EBITDA and net income continue given growth and added investment?
We had a very strong Q3, benefiting fully from cost reductions at NutraDried. We eliminated non-essential expenses and do not plan to add them back, which should sustain strong consolidated performance.
NutraDried also expanded sales channels by selling products in bulk for use as ingredients in snacks and trail mixes. New wins in this channel continue to support the turnaround. While there is still some work to do, we are about 80% through the turnaround, and we expect performance to keep improving without requiring higher spending.
27/08/2021 Can you comment on NutraDried’s performance, Moon Cheese velocity, and margin improvement?
We do not break down results by percentage, but velocities in regular grocery distribution are improving as conditions normalize. Shoppers are returning to multiple stores, which is driving higher units per store per week, back toward pre-COVID levels. The bulk sales channel also contributed, but even excluding that, velocities are trending positively.
Gross margin improved from Q2 to Q3 to about 20%. As operations normalize and capacity increases modestly, we expect margins to reach 30% to 35%. We also secured our first order from Lidl for 10-ounce cheddar, which is encouraging for club-style distribution. The only caveat is the potential impact of another COVID wave, but otherwise we are very optimistic about NutraDried’s continued turnaround.
27/08/2021 Will bulk cheese sales be broken out separately, and is this a stable business or lumpy?
Bulk cheese will remain a permanent channel. Quarterly results may fluctuate depending on order volumes from major customers. In this quarter, four customers accounted for most of the buying, so shifts in their orders can create quarter-to-quarter lumpiness.
Over time, as we add customers, the channel will stabilize and grow. There is significant interest in healthier snack inclusions, as innovation in trail mixes and similar categories has been stagnant. Bulk is just beginning to gain traction and we expect it to expand, even if individual quarters vary.
27/08/2021 How many of the 48 active licenses are paying royalties, and what is the outlook?
Roughly 10 licensees are slow to commercialize, using smaller machinery and still searching for their niche. Another 10 to 11 larger partners are accelerating royalty payments, while the remainder are growing modestly.
We expect three large-scale machines to be commissioned within the next two to three months, which should significantly increase royalty potential. We also aim to secure new large-scale orders before the end of Q4, with deliveries potentially boosting fiscal 2022 royalty revenue further.
27/08/2021 Are Q3 results indicative of performance in Q4 and fiscal 2022?
Our cost structure is stable, and we are optimistic about converting the pipeline into commercial success. If that occurs, results should remain positive and trending upward.
We have reduced expenses at NutraDried and built the tools needed to scale. The task now is execution, but everything is pointing in the right direction.
27/08/2021 When will AstraZeneca proof-of-concept work be completed?
That work is underway this week. We expect it to finish before year-end, though AstraZeneca may request multiple trial iterations.
If successful, we hope they will either acquire their own testing equipment or continue testing with us and our pharma partner GEA Lyophil.
27/08/2021 What is the potential size of the U.S. Army opportunity?
If funding is released as communicated for late fiscal 2022, we expect at least one large-scale machine, possibly two, to support two ration pack components already developed and approved.
Further application development is ongoing at Natick, which could expand opportunities across additional ration pack components. Multiple industry partners may ultimately produce these inclusions, but for now, we can only confirm a minimum of one large-scale machine next year.
16/12/2021 When will consistent positive EBITDA begin, Q1 or later?
Q1 machine sales are lining up more for Q2, Q3, and into Q4, so positive EBITDA should shape up in the second half. The NutraDried turnaround is still underway, and retailer commitments come three to four months before products ship, so that timing also points to the second half. Additionally, we have a fully fabricated 120-kilowatt machine with four suitors close to deciding, plus several partially fabricated machines. Revenue from those sales could be recognized in Q1 or Q2, which would help support results earlier in the year.
16/12/2021 What is the timeline and revenue impact for Crunchy Cheese Sticks?
We expect a 4 million to 6 million lift in revenue from retail growth tied to both Crunchy Cheese Sticks and our baseline snacks. This excludes larger club channel opportunities still in progress. Launch of Crunchy Cheese Sticks is scheduled for spring 2022, with the first marquee distribution at Whole Foods nationally in the U.S. The feedback so far has been stronger than prior Moon Cheese launches since the puff format is familiar to consumers and resonates with buyers.
16/12/2021 Can more than three large machines be sold to new customers outside the base?
Yes, we believe that is feasible, particularly with momentum in the U.S. cannabis industry. Our large-scale line in Illinois is operational, and prospects have seen it firsthand. A second installation will be completed early in Q2, with that partner also endorsing our technology. These references have led to new material engagements, many tied to facilities under construction for next fiscal year. We expect these prospects to move forward in Q2 and Q3.
16/12/2021 When might NutraDried need a third machine?
We expect feedback on larger opportunities by mid-fiscal year, which will guide a decision on capacity needs in the latter half. This ties to both our branded business and bulk opportunities with major dairy companies that would require co-manufacturing capacity at NutraDried or with partners like Gailey Foods.
16/12/2021 Can you provide details on the Dole partnership and upcycling projects?
Dole’s “Sunshine for All” plan targets significant waste reduction by 2025, and they see REV as a key platform to achieve this. We expect several large purchase orders tied to two projects within the next three to four months. The first involves healthier snack products, which we hope will hit the market in fiscal 2022 and generate royalties. The second focuses on upcycling waste material in Southeast Asia. The scale of these opportunities exceeds what we have seen with other CPG partners, and we are helping Dole prepare manufacturing capacity in collaboration with additional service providers. We expect royalties from Dole commercialization this year.
16/12/2021 Will royalties exit fiscal 2022 at materially higher levels?
Yes. Royalties in Q4 were 245,000, up 28% from Q3, driven by additional commissioning and partner ramp-ups. One large-scale machine is already commissioned in U.S. cannabis, and another will be commissioned in six to eight weeks. With more deals closing, we anticipate substantial quarter-to-quarter growth in royalties through next year.
16/12/2021 What is the guidance for machine sales and royalty ramp-up?
Guidance remains unchanged from Q3. We target 10 large-scale purchase orders of 60 kilowatts or greater and 15 sales of 10-kilowatt entry units in fiscal 2022. Most purchase decisions should occur in Q2 and Q3. From a royalty perspective, all 540 kilowatts of machinery purchased in fiscal 2021 should be installed by Q3, leading to a material uptick in royalties compared to fiscal 2021 on a quarter-by-quarter basis.
16/12/2021 What is the background on the PiP International evaluation agreement?
This opportunity came inbound. PiP wanted to reduce drying temperatures to limit protein denaturation in products made via wet fractionation. Initial trials at our Vancouver innovation center produced favorable results, leading to a 10-kilowatt evaluation unit at their Lethbridge facility. They will decide in Q2 or Q3 whether to commit to large-scale machinery after further trials. We are dedicating resources to this project and will only pursue additional business development once PiP proves this is a game changer for the industry.
16/12/2021 Is NutraDried developing non-cheese products and are any ready to launch quickly?
Yes, we have several internally developed products with positive economic analysis. These are being shopped to potential royalty partners, some already engaged outside North America. If no partner steps up, we expect to launch additional products through NutraDried in fiscal 2022, potentially beyond dairy. One example is a yogurt snack previously tested by Ultima before Agroper chose not to invest in large-scale production. We now have capacity at REVworx and NutraDried to produce it, and will run a line trial in Q2. If successful, a launch could follow in the second half of next fiscal year.
16/12/2021 Why shop new product concepts to partners instead of keeping them in-house?
If a larger brand can establish distribution and sell significant volumes of REV-dried products, that accelerates royalty growth, which is our main objective. Building out a brand internally requires more resources, so where possible we prefer to leverage established players. That said, NutraDried still provides us with a platform to launch select new products directly when the opportunity is compelling.
25/02/2022 What is the expected magnitude of inventory build on machines and products in Q3 with larger programs?
We will not build inventory on the Moon Cheese side, as current levels are sufficient until Costco programs require product buildup. That can take a couple of months of production to prepare for shipments. On the EnWave side, global supply chain challenges and delays from key suppliers have led us to build ahead. We have already started building 220-kilowatt REV systems on spec and ordering components. We expect to sell these systems before they are finished, but in preparation we are committing about $1 million to $1.5 million in additional working capital. The order pipeline is robust, so we anticipate deploying capital efficiently.
In terms of prospects, we have clear sightlines on where these machines will be needed, which is why we are starting to build inventory now.
25/02/2022 How many cannabis machines could be deployed to existing versus new customers?
In cannabis, we could potentially deploy another four machines to our two existing licensees as they expand across multiple states. Regarding our goal of ten large machine purchase orders this year, five to six are likely repeat orders, and in fact, the mix could easily shift toward 100% repeat. It is too early to know for certain, so while the target is aspirational, repeat orders will likely form a significant part of our growth.
25/02/2022 What milestones are needed before Dole can commit to larger machine purchase orders and what is the expected timing?
Dole is actively evaluating the business case for producing several products in a key region and then shipping globally. Their business case analysis should conclude within one to two months. From our perspective, the key milestone is commitment to a first large-scale purchase order. They currently own two 10-kilowatt units, which are being used to accelerate production and conduct market trials.
If we receive their first large machine order, the expectation is that many more will follow to meet the volumes needed for multiple identified markets. A go/no-go decision is likely within the next quarter or two, though final timing will depend on market outcomes.
25/02/2022 How quickly can REVworx capacity be filled and what visibility exists on utilization?
It is still uncertain. Some large supply deals with current royalty partners could alone consume nearly 50% of capacity. Internally, our target is at least 60% utilization by fiscal year-end, with upside possible if deals close sooner.
The facility is only now coming online, and customers need to audit it and confirm quality standards before negotiating pricing. We are optimistic about building meaningful business and using the facility as a key sales tool to sell more machines and drive royalty growth. That said, we must be realistic and take a gradual approach with REVworx.
I am disappointed, of course, it is not economically
applicable, but it's corn. I mean, it's -- even smaller farmers with small amounts of land, employ
natural gas and furnaces to cool or heat to dry that corn.
25/02/2022 Has your REVworx approach changed between targeting new customers and servicing existing ones?
It remains a hybrid approach. REVworx is available to both current and prospective royalty partners. Our sales team is courting new users that may lack capital to buy equipment upfront, but we also see growing opportunities to service current partners. Initially, we focused on new customers, but proximity to raw materials in North America has created opportunities with existing partners that make more sense than processing in regions like Southeast Asia.
25/02/2022 How are royalty top-up payments evolving, and do they indicate stronger client commitment?
Some licensees consistently pay top-ups to preserve exclusivity after investing heavily in their brands. Others experiment with products, then conclude exclusivity is less critical, leading to a mixed outcome. Each year, a few partners repeatedly pay to stay exclusive, while others shift between exclusive and non-exclusive status. All licenses include performance thresholds, with royalty and machine purchase requirements tied to exclusivity. As our license portfolio grows, the number of partners making these decisions increases, so the volume of top-up payments should rise, though trends vary by partner strategy.
25/02/2022 Has the sales cycle changed and can you build a regular production flow despite customization?
For 10-kilowatt units, we already target building one to two machines per month to meet anticipated demand. These units are primarily for new licensees to validate applications and test minimum viable products before scaling. Larger food-industry units follow the same path, with scale-up happening over a longer timeline.
In cannabis, the 120-kilowatt model is most in demand, and we are currently building two units on spec. These systems are not highly customized, allowing us to create repeatable builds and stay ahead of supply chain delays. With clarity on partner decisions in the next one to two quarters, we expect greater predictability in scaling additional 120-kilowatt units.
25/02/2022 What is your maximum production capacity for large units in the next 12 months?
We can scale production as orders come in. Building eight to twelve large-scale machines annually is achievable. Our third-party suppliers can expand with us, and we have access to skilled labor through contractors or full-time hires to meet demand.
25/02/2022 How prepared are you to meet a potential surge in demand from cannabis and Dole?
We maintain transparent discussions with key executives, giving us clarity on their plans and timelines. With Dole, we have strong visibility into when decisions will be made, allowing us to prepare internally. In cannabis, we have good visibility with existing partners, while with new partners the focus is on closing the first large deal. Once the first machines are commissioned and proven at scale, we anticipate follow-on orders.
25/02/2022 Can you disclose how many units Dole may seek in the next 12–24 months?
I cannot share that, as it is confidential and would require Dole’s consent.
25/02/2022 What is the royalty ramp outlook for 2022 and timing of growth?
We had strong royalty growth in Q1 and expect it to continue into Q2, as we will commission two, possibly three large-scale machines in the coming months. Each new installation adds to our royalty portfolio. In the latter half of the year, we see line of sight on up to eight more large-scale machines, with at least a few deployed before year-end. This will drive a clear ramp into the second half, particularly Q4.
Our guidance remains royalties of CAD1.5 million to CAD2 million for 2022, with most growth in the back half as cannabis machines come online. Cannabis generates royalties faster than food because products are proven and markets already exist. It is a matter of integrating our technology to deliver premium flower quickly, without the market build-out required for food.
25/02/2022 What is the update on the U.S. Army Ration Project?
The last communication from the U.S. Armed Forces confirmed that funding for additional machinery was approved last year. They anticipate releasing funds during this calendar year. We are waiting for confirmation to proceed and are ready to deliver more machines, given the internal progress they have made with applications for their warfighters.
25/02/2022 What is the progress on pharmaceutical applications?
We entered a joint development agreement with Gaya Alpha, a leading freeze dryer equipment provider. This collaboration is bearing fruit, with most of the top ten pharmaceutical companies either scheduling or already conducting trials in Germany on equipment purchased from EnWave.
The next step is more robust trials with the possibility of Gaya delivering larger-scale continuous Vacuum-Microwave GMP equipment. If that occurs, EnWave will earn a percentage of revenues from those machines. This represents a way to monetize our technology in pharmaceuticals with minimal investment, and the current pipeline of interest looks very strong.
27/05/2022 How is revised revenue guidance affected by existing versus new customers?
Thank you for the question, Neil. The large-scale purchases we expected in fiscal 2022 that shifted into fiscal 2023 are mainly tied to existing cannabis partners. Earlier this year, they told us they needed to expand manufacturing capacity. However, more recently, in just the past few weeks, they have communicated delays in constructing new facilities that would house the new units.
Hence the reduction in the number of large-scale machines targeted for this year. That is the primary reason.
23/08/2022 Can you update on Costco, Walmart, and other cheese customers, including inventory builds and sales timing?
So starting with Costco, it is always inherently lumpy. We are working to earn new Costco business, but in Q3 we did not have any sales. There are proposals out that could materialize, more likely in fiscal 2023. The largest stock-up I mentioned came mostly from distributors, not retail customers. They bought ahead of our May price increase since they can carry higher inventory and buy on deal.
That stock-up hurt subsequent month sales, but based on what we know we believe we are through the worst of it. It should shape up better into the fall and is not a permanent effect. We know distributors stocked heavily in April and May, and that will not last forever.
23/08/2022 Should we expect lumpy Walmart orders in Q4 or Q1, and what about Kroger and Whole Foods rollout timing?
We launched into Kroger in the spring, which was Q3, and sticks into Whole Foods also in Q3. In Q4, there are not many new rollouts, so results should look largely comparable to Q3. Looking to the new year, Walmart has confirmed sticks going into 300 stores. We also have a couple of private label opportunities that should start delivery in fiscal Q1.
There is a list of additional distributors that the team is working to secure, but until they are confirmed we cannot disclose details.
23/08/2022 Can you update on REV unit rollouts and key customers like Dole?
The U.S. cannabis market is contracting, similar to Canada, and higher dairy prices have delayed scale-up decisions by international dairy partners. These delays should ease as prices normalize, hopefully leading to conversions in fiscal 2023.
As the fiscal year ends, we have tangible leads on both large and small machines to hopefully confirm soon. Dole bought a 120-kilowatt machine for its snack program, with potential opportunities in the ingredient division. Their traction in the market could drive increased manufacturing capacity. Dole, along with partners like Calbee, could scale quickly if demand builds. We are committed to supporting their R&D group to bring new products to market in the coming quarters.
23/08/2022 Will you announce new deals before fiscal year end to meet guidance?
We aim to close large deals with current royalty partners who have smaller scale machines already in market. As their products gain data and traction, they can commit to larger scale machinery, making these partnerships more material.
23/08/2022 Has there been any change to U.S. Army Rations machinery purchases, and what is causing delays?
We have been told that funding was approved to introduce a cheesecake ration in 2023 and should be released this calendar year. The U.S. government operates on its own timelines, so we are waiting for release before moving forward.
Concurrently, we are working with other U.S. Army industry partners to develop additional ration inclusions. These could represent the next wave of products and support further funding opportunities.
16/12/2022 What is the 2023 sales pipeline guidance for REV?
We are not providing formal guidance this year, other than to say we intend to do better than last year. As I mentioned earlier, two macroeconomic factors affected our ability to meet guidance last year.
Our pipeline remains robust, and we will work to close as many deals as possible under current circumstances.
26/05/2023 When could EnWave realistically reach 60 commercial licensees tied to future royalty growth?
We believe that within this fiscal year there is a possibility of adding multiple additional commercial license partners and reaching the 60 mark. We are not holding ourselves to a specific number, but focusing on the quality of the companies we partner with and the scale of machinery deployed, including repeat orders from established partners. These relationships are most likely to succeed, as their products are already in the market and consumer uptake has been positive.
26/05/2023 Is there any news on pharmaceutical prospects or partners?
Yes, but this is being managed through our joint partnership with GEA Lyophil, a leading OEM in pharmaceutical freeze-drying equipment. Together we have positioned a microwave-assisted lyophilization process and built a pilot plant in Germany, where several top-tier global pharmaceutical companies have conducted trials. The goal is to progress this into a meaningful commercial project, though there are no further details to share at this time.
15/12/2023 Do you have internal measures for defining material royalty growth, and should investors expect single or double-digit growth?
We still forecast double-digit royalty growth in the coming periods. Our last quarter had about CAD400,000 in royalties, which we view as a baseline for 2024.
In terms of products already going to market, there is no lag in volumes from business-to-consumer channels. Distribution is filling quickly, and we should see immediate royalty growth from partners like Dole and others.
15/12/2023 How predictable is royalty growth given partnerships and machine commissioning?
It is always difficult to predict royalty growth because it depends on machine commissioning and partner success. That said, we continue to project strong royalty growth as more machines come online.
15/12/2023 Do you emphasize the royalty portfolio and growth potential when communicating with capital markets?
Absolutely. We highlight the royalty portfolio, intellectual property strength, and projected royalty growth from blue chip partners in all our communications. With the divestiture of our loss-making subsidiary earlier this year, EnWave is in a stronger position, and we want to ensure markets recognize that as we deliver operationally.
23/02/2024 Overview of U.S. cannabis market outlook
Brent Charleton: The opportunity for us in the U.S. cannabis market is not just about favorable federal legislation. More importantly, it depends on engaging with competent operators who have the capital to conduct trials and test work. We shifted strategy by offering 10-kilowatt units to major multi-state operators, but many were too focused on stabilizing their businesses and cutting expenses.
Brent Charleton: In the past three to four months, we have seen more feedback and interest. Recently, we announced Aurora, a U.S.-based cannabis company, will trial our product. We anticipate additional projects this fiscal year, including with larger companies, as the industry begins to stabilize and operators see calmer waters ahead.
23/08/2024 What is the targeted royalty rate for next year?
It would be premature to provide guidance for next year. Timing depends on when purchase orders are received and when customer facilities are ready to accept machines. Even if we can build a unit in six months, installation and product development can delay royalty growth.
In a best-case scenario, if products are already in market and the machine simply adds capacity, royalty ramp-up can be faster. For now, we are only providing guidance for the current fiscal year and will reevaluate after next quarter.
24/02/2025 When do you expect EnWave to breakeven?
We expect to reach breakeven or better this fiscal year. Results vary quarter to quarter. If we close multiple large-scale sales, we can generate significant profitability, as opposed to a slower quarter like Q1. Based on current opportunities, profitability could return within the next couple of months.
22/05/2025 Why were there no exclusivity-related royalties paid for Q2?
The majority of our exclusivity top-up royalty payments, which occur when a company pays a minimum royalty to retain exclusive rights over the technology for a product in a certain geography, are typically paid in Q1 at the end of the calendar year. That is why we usually see the top-up then. Last year, one of our royalty partners signed a contract for exclusivity in a separate country, and that payment was made in Q3.
We expect a similar timing this year, with a payment in Q4 as well as in Q1, consistent with past exclusivity payments.
22/05/2025 What is the status on the pharmaceutical front?
We continue to operate our joint partnership with GEA Lyophil in Germany, who purchased a pilot-scale unit from us to showcase to their large pharmaceutical company partners. Several evaluations are ongoing with the goal of attracting a consortium or a single pharmaceutical company to invest in scaling up a continuous GMP-certified vacuum microwave dryer to displace lyophilization. This requires both CapEx and a commitment by a pharmaceutical company to select a drug under development for the process.
In parallel, we announced a master service agreement with Bio Technique. They visited our facilities last week to conduct trials using a derivative of a flu vaccination, and initial results were favorable. These results will now be shared with Bio Technique’s client, and if they move forward, the next likely step would be for Bio Technique to purchase their own pilot-scale equipment for ongoing trials. This is the current status of our pharmaceutical efforts.
22/08/2025 Can we expect an acceleration in REV machine sales from existing or new customers?
Yes, I expect acceleration in REV machine sales through the rest of this quarter and into fiscal 2026, given the strength of our sales pipeline. About 50% of opportunities appear to come from existing royalty partners purchasing additional machines because they have exceeded current manufacturing capacity due to growing demand. These repeat orders are important because, once machines are operational, they tend to accelerate royalty growth faster than new projects where adopters still need to build marketing, distribution, and product integration. This puts the company in an exciting position.
22/08/2025 What is the biggest obstacle to faster growth for EnWave, and how is it being addressed?
The technology is mature, and the economic models are attractive enough to commercialize products across multiple verticals. There is not one single obstacle, but rather a range of challenges that arise at different points in projects, such as management turnover, counterparty restructuring, or decisions on product strategy, whether commoditized goods or premium offerings. These discoveries happen during dialogue, and success depends on addressing each issue quickly to convert projects into growth faster.
Risks & Macro
11/12/2019 Are cannabis partner delays affecting royalties or manufacturing?
Some machine installations tied to cannabis partners have been delayed due to infrastructure build-outs, which will slow royalty uptick. However, all partners intend to use the equipment they purchased. While the Canadian cannabis market has slowed, international opportunities remain strong. For example, we signed a new license in New Zealand this morning.
11/12/2019 Are delays limited to one partner and relatively minor overall?
Yes. With Aurora, we continue building machines around expected timelines. For TGOD, given financing challenges, we are prudently managing builds and cash collection, having collected more cash than spent on their three machines. Their 60-kilowatt unit for Ancaster has already been delivered and should start up in Q2.
01/03/2021 How is COVID still impacting your business, and what should ease in the next six months?
We believe travel restrictions will continue to ease, making it much easier to send employees for commissioning and training. We recently had staff in Peru and Costa Rica, but access to Europe and Australasia is critical for near-term purchase order opportunities.
Other than that, the pipeline sentiment is very positive. Companies are becoming more comfortable operating in these circumstances. Unlike mid-2020, we are now very bullish on the next year of growth for EnWave.
01/03/2021 Could your technology improve vaccine production during the pandemic?
It is too early to target such a goal. We are collaborating with Merck and GEA on scaling machinery used for vaccine testing. Merck will provide robustness test results later this year, and if successful, we will work with GEA to deliver a larger unit for potential Phase 1 clinical trials.
16/12/2021 Did recent severe storms in Vancouver impact operations?
The storms did not affect our company’s core functions. Some suppliers experienced delays in providing basic components, but we relied on backup suppliers to cover needs. We remain focused on building more robust redundancy in our supply chain, since extreme weather events like this can occur at any time.
25/02/2022 What is the status of litigation against former employees?
The injunction hearing took place about five weeks ago, with submissions presented to Justice Bazrin. He has not yet ruled on whether to uphold the injunction. As of today, the injunction remains firmly in place, preventing defendants from pursuing their efforts further.
27/05/2022 Are cheese prices stabilizing or inflating, and can you pass increases to partners?
Yes, we monitor cheese prices constantly since it is NutraDried’s number one input cost. Compared to last year, prices are up 30% to 35% in many cases. Futures are lower than today’s spot prices, which gives us hope that prices will decline toward year end. Of course, the world is changing quickly, and any shock could reverse that trend. But based on current futures, we expect relief later this year, even though spot prices remain high today.
In terms of passing pricing through, the consumer packaged goods industry only allows limited increases, otherwise consumption suffers if you fall out of line with competitors. We implemented a 6% increase this month, which we feel is appropriate for now. We will continue watching pricing and competitors, and we will take further action if necessary. If futures align, we should be in a better place.
16/12/2022 Are energy prices a problem for customers?
In some parts of Europe, rising energy prices add cost since electricity is a major input. However, electricity typically accounts for less than 7% to 8% of the cost of goods sold for primary food products. It is a consideration, but not materially significant in most cases.
23/02/2023 What is the cost of the legal challenge with former directors and how much is budgeted?
We budgeted several hundred thousand dollars but expect to spend less based on current developments. The defendants recently changed counsel after multiple setbacks. We remain confident in defending EnWave’s business, protecting our intellectual property, and holding these individuals accountable.
25/08/2023 Any news on the lawsuit against former employees?
Brent Charleton: There has been progress in settlement discussions. Some agreements will soon become public, though not with all parties. Through these settlements, we will gain access to communications that will further strengthen our position.
15/12/2023 Any updates on the civil litigation with former management employees?
We have settled with two primary defendants not tied to EnWave and received substantial new evidence to support our case. The primary defendants, former EnWave employees, remain under injunction and recently changed counsel, delaying the court date to 2025. We are continuing preparations and remain committed to pursuing justice.
24/02/2025 What is the potential impact of tariffs, especially with U.S. partners?
Thanks for the question, Donangelo. Potential tariffs would not directly impact the imminent machine sales in our pipeline, as the two companies involved are domiciled outside of the United States. What could be more impactful is how our royalty partners manage their ability to import snacks and ingredients into the U.S. for their customers. That remains to be determined depending on the scope of any future tariffs the U.S. may or may not implement.
23/04/2025 What tariffs apply to your machinery?
Our machinery falls under the United States-Mexico-Canada Agreement (USMCA), so tariffs are 0%. Our most recent large-scale sale was into the U.S. without any penalty to the buyer.
Personal Questions
23/04/2025 What is insider ownership?
Insider ownership is just under 2%. I grew up in this business, joined 15 years ago as a marketing coordinator, worked in capital markets, began selling machines, and was promoted to CEO in 2018. I am heavily compensated through adoption programs. Our chairman also invested significantly during developmental years and holds about 2.5 million shares. We would like to own more, but Vancouver is expensive, and raising a young family while buying more stock is challenging.
Other
27/08/2021 Do you plan to improve access for U.S. retail shareholders to trade EnWave stock?
Yes. We are conducting due diligence on the best option to improve access for U.S. retail investors beyond the current over-the-counter structure. Updates will follow in the coming months.
23/08/2022 Do you have any closing comments for the audience?
I want to thank everyone who joined our Q3 conference call. If there are questions that were not addressed today, please reach out to Dan or me in the coming days. Thanks very much.
23/02/2023 Will you provide ongoing updates on NutraDried’s wind down or only quarterly?
We will announce all material developments as they occur. I referenced some of these earlier in the presentation and expect more near-term updates during this process.
Disclaimer:
The following transcript and Q&A have been generated with the assistance of Artificial Intelligence (AI). While we strive for accuracy, completeness, and clarity, the content may contain errors, inaccuracies, or misinterpretations. Neither the company featured in this document nor ValueBridge assumes any responsibility or liability for the accuracy, reliability, or completeness of the information presented.
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Sources
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