EnWave Corporation (TSXV:ENW – $1.13 CAD & OTC:NWVCF – $0.90 USD & Frankfurt:E4U – €0.76) offers industrial-scale dehydration technology for commercial applications in the food and pharmaceutical spaces. The Company’s Radiant Energy Vacuum (“REV”) platforms are becoming the new global dehydration standard, as they are faster and cheaper than freeze drying, and have better end product quality than both air drying and spray drying.
The Company reported revenue of $4.67 million for its third quarter of fiscal year 2017, ended June 30, 2017, compared with $5.22 million in the comparable period last year, a decrease of 11%.
Despite the decline in sales, EnWave’s third quarter was a positive one for the following reasons:
- NutraDried sales (Moon Cheese) were $1.887 million, up 9% versus Q3 2016;
- Equipment rental fees were $334 thousand, up 79% versus Q3 2016; and
- Royalties were $94 thousand, up 25% versus Q3 2016.
The Company’s royalties are most certainly moving in the right direction. Based on the first nine months of FY 2017, EnWave will have close to $700 thousand in royalties this year. Next FY that number could easily reach $1.5 million. A number that goes straight to the bottom line!
During the past quarter, the Company made significant progress with the construction and testing of the first commercial powderREV machine for Sutro Biopharma, a U.S. based pharmaceutical partner. More news is expected shortly. EnWave also commenced the assembly and construction phase for the first scaled-up GMP freezeREV for Merck. If the powderREV and freezeREV platforms prove to yield superior performance to incumbent dehydration technologies, it would be a major breakthrough for EnWave.
As for NutraDried, the transition from Spire to Slant is now complete. Recently, distribution was added in 2,000 Rite Aid pharmacy stores, 1,600 CVS stores, and 440 Targets in the United States. This should be positive for both sales and margins.
EnWave’s newly developed method to rapidly dry and decontaminate cannabis could become a game changer in the worldwide medical cannabis industry. The automated REV drying processes for cannabis are highly efficient and scalable, reducing personnel requirements and increasing overall operational efficiency. Moreover, applying pasteurization to meet medical cannabis’ microbial standards, is ideal to replace the costly and time-consuming ionizing radiation method, which is the only method commonly employed.
We reiterate our buy recommendation for EnWave Corp. with a price target of $3.44, which is 204% above today’s stock price.
|Download the third quarter 2017 EnWave Corp. Company Report.|
|Smallcaps.us Advice: Buy||Price Target: $3.41||Latest Company Report (pdf)|
|For important disclosures, please read our disclaimer.|