May 31, 2012
In recent weeks EnWave stock value has felt the pressure from declining global macroeconomic conditions, ongoing commercial negotiations and negative investor sentiment associated with the said decline. EnWave remains focused on fulfilling its mission to establish REV as a new global dehydration standard: faster and more economical than freeze drying, with better quality than air or spray drying.
The successful commercial start-up of the new Milne Fruit Products Inc. plant represents a major step forward for EnWave and reinforces the validity of our business model as we will begin generating our first royalties from this license in the second quarter this year. Today, Milne's distribution network is introducing new tasty, healthy berry snacks and powders across the United States and Eastern Canada. Furthermore, while the timing and outcome of our Tier 1 collaborations are more difficult to predict, we have at least six of our current partners scheduled or in the process of arranging visits to the Milne facility to evaluate the industrial scale REV plant. We see this as a positive indicator their R&D projects are making progress.
We continue to concentrate on the execution of our guidance for 2012, which includes the signing of our first Tier 1 royalty-bearing license (potentially multiple before year end) and the procurement of additional REV machine orders. If accomplished, these prospective milestones would take the company to the next stage of revenue development. With eight announced Tier 1 R&D agreements, each with the potential to convert into commercial licenses over the next 1-3 years, and several additional opportunities in the pipeline, EnWave remains an investment opportunity with diversified risk and a promising upside.
Milne Fruit Products Inc. Commercial Plant
In April 2012, EnWave announced that Milne Fruit Products Inc. successfully began producing commercially saleable products for distribution through their extensive food broker network, which covers approximately 90% of the United States, as well as Ontario and Quebec. Since the turn-key REV technology plant started up, Milne has been steadily producing dried blueberries and blackberries in the whole fruit and powdered form with raspberries expected to be introduced later in the year.
The feedback from Milne's customers has been very good in regards to the quality of their dried products. The "puffed" appearance combined with the full flavour, color, texture and nutritional value have provided their food broker network with a number of features, advantages and benefits to relay to the end consumers. Also, the powders have received extraordinary feedback as a potential replacement for purees. As a replacement for purees, the powders are much lighter to ship, with longer shelf-life eliminating the need for expensive cold-chain management which is very attractive to industrial customers. Simply said, there are no products on the market that possess the characteristics of Milne's Microdried™ product line.
Milne's initial plant in Idaho is a very large facility designed to handle multiple REV machines. Based on the strong feedback from Milne, we are already reviewing new product opportunities to expand their market range. As they are able to secure product orders and contracts we believe that there is the potential for additional machine orders in 2012 as well as the expansion of their operations into addtional states as early as next year.
Market Momentum & Opportunities
The success of the Milne product launch and introduction of unique healthy snacks into the market has proven the commercial viability of our REV technology and inspired intense interest from other vertically integrated fruit producers in both Canada and the United States. As the overall fruit and vegetable market is quite fragmented in North America, regional producers and co-packers care less about controlling the entire market and are more focused on the dominance of their niche. EnWave is able to grant exclusivity based on smaller geographic regions and specific products, which allows the company to potentially sign multiple licenses for the same product area as long as there is no overlap with previously existing agreements. We are currently vetting the companies to pursue the most attractive opportunities going forward.
In addition to the attention we have received in the dried fruit, vegetable and puree replacement markets, several Tier 1 companies have shown interest in the dehydration of meat products, enzymes, probiotics, dairy products and beverage ingredients using REV technology. Significant initial testing is currently taking place, with the goal of formally entering into official collaborations. Needless to say, our pipeline is very full.
The interest shown in REV technology has never been so strong and we plan to capitalize on that interest by exhibiting at the Institute of Food Technologists Trade Show, which takes place at the end of June in Las Vegas, for the fourth year in a row. This venue provides a key opportunity to conduct multiple face to face meetings with current and potential collaborators.
REV Technological Developments
REV technology continues to develop via the ingenuity and execution of our engineering and scientific teams. We have been able to scale up our patented vacuum-microwave (VM) dehydration technology platforms to offer throughput levels that were previously unattainable using VM technology.
nutraREV™ has been scaled up to a fully-automated 150kW design (pictured right) capable of producing approximately 150-250kg of dried product per hour. Currently the MIVAP™ platform only produces between 75-100kg of dried product per hour, but its tray system is more appropriate for more structurally sensitive materials. Both platforms are commercial in scale and can be delivered to potential commercial licensees after a lead time of about 6 months.
quantaREV™ is the most exciting platform as the next generation 300kW design (pictured right) could potentially produce between 200-500kg of dried product per hour. This potential throughput level has attracted the attention from numerous Tier 1 multi-national food companies. EnWave plans to begin building the 300kW machine later in 2012 with the goal of completion in early 2013.
As each REV platform advances, the company continues to file new intellectual property claims through the International PCT process. Recently, EnWave received a favorable review from the Patent Cooperation Treaty Examiner for its REV patent application that protects the technological fundamentals used in both the quantaREV™ and continuous powderREV™ designs. Also, EnWave recently was granted the patent for drying biological materials using REV technology in China and Hong Kong, strengthening the company's already solid portfolio.
Over the past few years, we have worked hard to raise the awareness of EnWave's investment case amongst retail and institutional investors throughout Europe, North America and more recently the Middle East. We know that numerous investment professionals are watching ENW as we received the 2012 TSX Venture "Pick of the Street" award, which is voted on by over 200 investment industry professionals. If successful in obtaining additional machine orders and securing Tier 1 commercial licenses in 2012, EnWave will have achieved milestones that further support the validity of the company's business model and will establish revenue opportunities that will take the company closer to profitability.
As the year progresses, we encourage you to be proactive and reach out for an update. If you have specific questions about EnWave's ongoing collaborations, technological developments or Milne's commercial operation please contact Brent Charleton, Director of Corporate Affairs, at email@example.com or (778) 378-9616.
Dr. Tim Durance Mr. John McNicol
Chairman & Co-CEO President & Co-CEO
EnWave Corporation EnWave Corporation