Moon Cheese Sales Boost EnWave’s Third Quarter Financials

EnWave Corporation (TSXV:ENW – $1.18 CAD & OTC:NWVCF – $0.91 USD & Frankfurt:E4U – €0.78), which offers industrial-scale dehydration technologies for food, pharmaceutical, and cannabis companies, reported revenue of almost $6.78 million in the third quarter of fiscal year 2018, ended June 30, 2018, compared with $4.67 million in the same period last year. This was the Company’s highest quarterly revenue ever.

The strong performance is mainly due to the expanded distribution of Moon Cheese with additional product rotations in a number of Costco divisions. The strongly increased number of distribution points resulted in total Moon Cheese sales of $5.17 million in the third quarter of 2018, up 173% compared with sales in the third quarter of 2017.

The Company also continues to be cash flow positive with cash flow from operations – prior to changes in non-cash working capital – of $1.63 million for the first three quarters of 2018, compared to $284 for the first three quarters of 2017.

Moreover, if EnWave didn’t have to book a one-time impairment charge of $865,000 due to the ending of the collaboration agreement with Sutro Biopharma, the Company would have achieved an awesome net profit of $761,000 in the third quarter.

Business wise, the Company again made solid progress during the past quarter. Late April, Agropur Dairy – doing business as Ultima Foods – successfully launched its iögo Protein Crunch snack products in Quebec and Alberta. These products enable a new, innovative way of enjoying yogurt on-the-go. First royalties from these products are expected shortly.

ENW Moon Cheese assortment

The popularity of Moon Cheese continues to expand among Noth American consumers. Check our, for example, this one website that list hundreds of positive comments to a Moon Cheese blog post.

Early July, the Company signed a royalty-bearing commercial license with Arla Foods, the world’s largest manufacturer of organic dairy products and an innovation leader. The license grants Arla the exclusive right to use REV technology to process dairy products in Denmark, Sweden, Finland and Norway. Arla purchased a 10kW small-scale machine to initiate commercial production.

On April 30, 2018, EnWave and Tilray, a large, well-established Canadian medical cannabis licensed producer, expanded their royalty-bearing license agreement to include rights for processing legalized cannabis in the country of Portugal. In addition, Tilray submitted a third purchase order for a 60kW REV unit to be installed at its new Portugal medical cannabis production facility.

Also in the cannabis space, EnWave entered into a Technology Evaluation and License Option Agreement (TELOA) with one of Canada’s largest licensed cannabis producers (LP) to enable the LP to evaluate EnWave’s REV technology for rapid decontamination and dehydration of cannabis. The TELOA grants the LP the exclusive rights to license REV for processing cannabis in a non-specified country in Europe.

Two more TELOAs were signed during the third quarter. The first one with Fresh Business Consulting, a diversified investment and consulting firm headquartered in Spain, to develop several innovative food products using EnWave’s technology in Peru. And the second one with a major Australian dairy company to evaluate the REV technology for the development of several dehydrated, premium dairy ingredients. Both companies have rented a small scale REV machine.

Third Quarter Financials and Balance Sheet

EnWave generates revenue from two business segments: EnWave Canada and NutraDried. EnWave Canada sells REV machinery to royalty partners, rents REV units to prospective royalty partners, and earns royalties from customers that sell REV dried products. NutraDried, on the other hand, sells Moon Cheese into retail and wholesale distribution channels.


Three Months Ended
June 30
Nine Months Ended
June 30
Amounts in $000’s
Net Sales
Direct Costs
Net Income (Loss)
Earnings (Loss) Per Share
Selected income statement data for the quarters and nine months ended June 30, 2018 and June 30, 2017. Source: Company Filing


EnWave Canada had revenue of $1.61 million for the three months ended June 30, 2018 compared to $2.78 million for the three months ended June 30, 2017, a decrease of $1.17 million. Although during the third quarter of 2018, REV machines were sold to Tilray, Pitalia, Arla Foods, and Bare Foods, EnWave didn’t reach the amount of sales that it did in the third quarter of last year. The revenue decline in the third quarter was also reflected in the nine months sales numbers. Revenue for the nine months ended June 30, 2018 reached $5.50 million, a decrease of $2.27 million compared to revenue of $7.77 million for the nine months ended June 30, 2017.

EnWave Canada earned royalties of $137,000 during the three months ended June 30, 2018 as compared to $94,000 for the three months ended June 30, 2017 a growth of 45%. During the nine months ended June 30, 2018, EnWave Canada earned royalties of $458,000 as compared to $293,000 for the nine months ended June 30, 2017 an impressive increase of 56%.

The increase in royalties is very important. First of all, it indicates that a growing number of EnWave’s clients are selling larger quantities of REV dried products. Moreover, the rise is also important because this revenue go straight to the bottom line. Royalties are expected to continue to go up in 2018 and beyond as new license agreements are signed and additional REV machinery comes online.

Revenue from NutraDried were $5.17 million for the three months ended June 30, 2018 as compared to $1.89 million for the three months ended June 30, 2017. For the nine months ended June 30, 2018, NutraDried generated revenue of $9.97 million, as compared to $4.55 million for the nine months ended June 30, 2017. The increase in revenue for the third quarter was due to NutraDried filling repeat orders for Costco rotations, as well as increased sales volumes to other retailers.

NutraDried reported net income of $1.91 million in the third quarter of 2018 as compared to net income of $167,000 in the third quarter of 2017, a staggering increase of more than 1,000%!

Also interesting to know is that EnWave achieved a gross profit of $2.93 million in the third quarter of 2018, compared with $1.62 million in the same quarter of 2017 an increase of $1.31 million. Gross margin as a percentage of revenue was 43% for Q3 2018 compared to 35% for Q3 2017.

Finally, as a testament of the Company’s strong cost control achievements, despite its solid rise in revenue, EnWave succeeded in reducing its G&A expenses from $548,000 in Q3 2017 to $510,000 in Q3 2018, a reduction of over 9%.


Amounts in $000’s
June 30, 2018
June 30, 2017
Cash and Cash Equivalents
Restricted Cash
Trade Receivable
Due from Customers on Contract
Total Current Assets
Property and Equipment
Intangible Assets
Total Assets
Accounts Payable
Total Current Liabilities
Long Term Debt
Total Liabilities
Total Stockholder Equity
Selected balance sheet data for the periods ended June 30, 2018 and June 30, 2017. Source: Company Filing


A couple of items stand out on the balance sheet. First, on June 30, 2018 the cash and cash equivalents number was $7.08 million compared to $2.21 million on June 30, 2017 an increase of $4.88 million. The rise is primarily due to the equity financing of almost $9 million in November 2017. In February 2018, the Company spent $2.28 million to acquire the 49% non-controlling interest in NutraDried. The Company had net cash outflows from operating activities of $74,000 for the first three quarters of 2018.

In addition, Trade Receivables were $4.12 million on June 30, 2018 compared with $1.67 million on June 30, 2017. This was mainly due to NutraDried’s significant rise in Trade Receivables from $842,000 a year ago to $3.24 million in 2018.

Brent Charleton Promoted to President & CEO

In other news, Mr. Brent Charleton was promoted to President and Chief Executive Officer of EnWave. Since joining EnWave in 2010, he has been promoted on six separate occasions. During that period he has been a major contributor to the Company’s commercialization success and has been leading the proactive licensing strategy and deployment of EnWave’s REV technology. Dr. Tim Durance, the former CEO, will be leaving the Company to pursue other interests.

We will soon conduct an update interview with Brent Charleton. In case you have a question for the Company’s brand new CEO, don’t hesitate to let us know. We will consider including it in our interview.


While EnWave continues to increase its worldwide presence in the food, pharmaceutical, and rapidly growing legalized cannabis sectors, NutraDried is performing exceptionally well with its crunchy cheese snacks.

In early fall, NutraDried’s production capacity of Moon Cheese will more than double thanks to the installation of a second 100kW nutraREV machine and a 10kW REV machine. This is a very necessary investment, as the current machine is running at full capacity.

Thanks to NutraDried’s solid performance, EnWave is now cash flow positive and would also have been net profitable if it hadn’t been for the one-time impairment charge. The stock continues to trade well below its actual value. We expect this to change in the near future. Recommendation: BUY.

For important disclosures, please read our disclaimer.Latest Company Report (pdf)

  • Why would Durance quit when Enwave is finally starting to take off? It does not make sense. Is he going to stay in the same business and compete with Enwave in some way? I think shareholders deserve clarification on why he’s leaving and all implications it may have.

    • John Peters (editor)

      The departure of Tim Durance will certainly come up in the interview. Thank you for your suggestions.



  • Congrats to Brent who has worked tirelessly to achieve these results. I also think there should be a more transparent explanation of Dorrance’s exit

  • Extreme clarity with respect to the Durance departure. No softball questions or pussyfooting with respect to this topic.

    What is the timeline for implementation of the tech for the US Army? Can investors assume an expedited timeline seeing as the US Army purchased a 10kW REV? And what might that look like?

    A detailed answer with respect to the current status of the TEOLA with the unknown Cannabis LP? When might we here a yea or nay?

    • John Peters (editor)

      Hi Theitz,

      Thank you for the additional set of questions. We will make sure to include questions about these topics as well.



  • Hi John, and thanks for the reply.
    I did have another question which was erased from the comment list.
    With respect to Enwave signing a major deal with what is now considered to be one of the largest cannabis companies globally, in Tilray.. I’m a long time share holder am baffled how the share price has languishished in light of this signing. I’m sure you’re aware of Tilray’s meteoric rise since IPO-ing a short while ago. $6000/month and 100,000 options are being dolled out to Adelaide Capital Markets to broaden the awareness of EnWave’s investment case throughout the retail and institutional market in Canada and i’d like to know how this is going? All signings to date have resulted in very little movement in share price,, which is frustrating,, and I believe the Tilray signing and lack of promote reflects a glaring issue either with management, Adelaide Capital Markets or both? As a longtime shareholder I’ve never felt more vulnerable to a take out of the company. I’ts my hope that you will hold the CEO’s feet to the fire and ask some tough questions.

Leave a Reply

Your email address will not be published.