November 21st, 2012
Since the last stakeholder newsletter in May, EnWave has made significant progress in a number of important areas. The company continues to focus on increasing the commercialization of its Radiant Energy Vacuum (“REV™”) technology suite with both Tier 1 and Tier 2 partners and has strengthened its ability to deliver turn-key industrial REV™ machine orders with the acquisition of German machine builder, Hans Binder Maschinenbau GmbH.
It is important for EnWave’s stakeholders to understand that the company is well positioned to deliver significant milestones over the next 8 months. Three Tier 1 collaborators have completed initial research and developed new product concepts with REV™ technology. Each company has entered a marketing evaluation phase, expected to be completed next year, with commercial decisions by the first half of 2013. Milne Fruit Products is getting closer to major sales contract announcements for a variety of berry applications and emerging EnWave customer projects in areas as diverse as cheese snacks to enzymes are creating new near term commercial opportunities.
More specifically, the company has targeted the completion of 1-2 new Tier 2 commercial opportunities within the next 3 months and 1-3 Tier 1 royalty-bearing commercial licenses in the first half of 2013. Associated with this guidance, EnWave expects to potentially receive 3-5 REV™ commercial machine orders in that same timeframe.
The levels at which the stock is currently trading is frustrating for both shareholders and EnWave management alike. Regardless of the way the stock has traded recently, the consolidation of shares over the past 14 months in the primary trading range of $1.20 - $1.50 has provided the opportunity for a number of large, long term, institutional and high net worth investors to position themselves for value appreciation as general financial markets improve and the company is able to deliver on its commercial guidance.
EnWave has never been better positioned to deliver a commercial breakout for REV™ technology supporting our mission to be a disruptive force in the global dehydration industry.
Binder Acquisition Importance
The importance of the recent acquisition of Hans Binder Maschinenbau GmbH cannot be understated. Binder’s unique knowledge of industrial-scale vacuum-microwave engineering, project management expertise and proven track record provides our potential Tier 1 customers with greater confidence that EnWave can deliver customized commercial turn-key plants. This has been reinforced by five of our Tier 1 collaborators visiting the Milne operation to see the technology first hand.
Binder’s industrial design experience will also be applied to support the next stage of development for EnWave’s commercial REV™ platforms. The combination of their strengths with EnWave’s technological innovations, product development acumen and expansive patent suite has created an entity that is a global leader in vacuum-microwave technology; fully integrated to support the commercialization and delivery of multiple REV™ platforms.
EnWave has also significantly strengthened its human capital by solidifying the services of several key individuals who will be working directly with the company’s core Canadian engineering team. In addition to the Binder family, Mr. Fred Hoen a key inventor of MIVAP™ technology and the project consultant responsible for the design and delivery of the Milne plant will take on the role of Co-Managing Director; Mr. Guido John, an experienced engineer with operational expertise will adopt the role of Technical Director and will contribute to the management of future commercial REV™ orders; and Sven Jagoschinski, an accountant who has worked in the manufacturing industry will become Binder’s new Senior Controller.
As part of the transaction EnWave also secured the global rights to the MIVAP™ technology, strengthening the company’s overall position in controlling license negotiations and plant deliveries with interested customers throughout the world.
Finally in 2013 and beyond Binder should provide a growing revenue and cash flow stream for EnWave shareholders. In addition to a steady order book of conventional dryers, the ramp up of higher margin vacuum-microwave plant orders should add to the overall value to the acquisition. We expect the 2013 calendar year revenues to be in the range of CDN$10 to CDN$12 million based on the achievement of the lower end of our order guidance.
Commercialization Pipeline Momentum
Since 2010, EnWave has signed 11 R&D agreements with market leading companies, which have focused on the development of REV™ technology and the creation of new and innovative nutraDRIED™ products. Of these companies, three that generate multi-billion dollar annual revenues have entered into comprehensive market evaluations for specific products that they have developed using EnWave’s REV™ platforms. Moreover, two of these companies, possibly all three, are expected to make commercial decisions in the first half of 2013.
The signing of a royalty-bearing commercial license for EnWave’s REV™ technology by a Tier 1 company would be the most impactful milestone for the company yet. It would further validate the royalty business model, establish a growing future royalty revenue stream and further the acceptance of REV™ as a disruptive technology that offers an alternative to the industry standard dehydration methods.
In addition to these Tier 1 opportunities, EnWave has two pending Tier 2 commercial negotiations ongoing, which the company could potentially close in the next two months. Supplementary commercial processing lines established through successful Tier 2 start-ups would greatly increase EnWave’s ability to showcase the REV™’s capabilities to potential Tier 1 customers.
Lastly, EnWave continues to conduct introductory testing with a number of unannounced companies with the goal of solidifying additional R&D agreements over the coming quarters. The effort spent on these developments will continue; however, the company’s main focus is the conversion of its existing R&D agreements into commercial licenses.
Milne Fruit Production Update
Milne is an extremely experienced organization that is fully committed to the success of their Microdried™ product line. Up to this point, Milne has been producing four specific products including fruit powders, fruit fragments, low-moisture snacks and high-moisture snacks. The powders are attracting interest as a replacement for liquid purees and as a snack & baking ingredient; the fragments provide the ability to create very high piece counts in baking products; and the snack products have the potential to be sold individually or as ingredients.
Milne’s intentions are to secure large sales orders with a list of targeted U.S. & international food and beverage companies over the next 60-90 days. If their sales prospects are confirmed, the launch of these products will occur via numerous brands through significant distribution channels in 2013. EnWave believes there is the potential for additional REV™ machine orders by Milne over the coming quarters to ensure appropriate production capacity for their potential order book.
Over the past year, EnWave has developed its capabilities to satisfy the needs of its larger collaborators. The acquisition of Binder was extremely important; it provided EnWave with the infrastructure to deliver turn-key commercial processing lines and should help alleviate any possible concerns arising from operational executives with respect to our industrial capacity. The Tier 1 companies currently conducting market evaluations are expected to reach decision points over the coming months and if they decide to pursue widespread commercialization, REV™ technology will be further validated as a tangible alternative to the current industry standard dehydration processes.
These potentially positive milestones are what many of our stakeholders have been waiting for. To reiterate our guidance, EnWave has targeted the completion of 1-2 Tier 2 commercial licenses in the next 3 months and 1-3 Tier 1 commercial licenses in the first half of 2013. Additionally, EnWave believes there is the potential to secure 3-5 REV™ machine orders in the same time frame.
If you have any questions relating to our guidance or the company in general, please contact Brent Charleton, Director of Marketing & Corporate Affairs via phone at 778-378-9616 or email at firstname.lastname@example.org.
Dr. Tim Durance Mr. John McNicol
Chairman & Co-CEO President & Co-CEO
EnWave Corporation EnWave Corporation