Record Sales For EnWave Corp In 2019 – Much More To Come In 2020

EnWave Corporation (CA:ENW – $1.56 & US:NWVCF – $1.19 & GER:E4U – €1.05) filed financial results for its fiscal year 2019, ended September 30. And what a year it was. Most of the data reported could be construed with positive implications for the future. When compared with results achieved in the previous quarter or year, a trend of improving financial strength is evident.


Three Months Ended
September 30
Fiscal Year Ended
September 30
Amounts in $000’s
Net Sales
Direct Costs
Net Income (Loss)
Earnings (Loss) Per Share
Selected income statement data for the quarters and fiscal year ended September 30, 2019 and September 30, 2018. Source: Company Filing


Many investors choose to briefly scan the financial numbers however, and focus on the bottom line. As a result, the stock dipped close to 5% on the day the results were announced. The positive trend however is clear from a review of the other salient information in the report.

The reasons for the higher loss are really straightforward. First, it is very common for an emerging technology company to post losses during the early phases of a product rollout. The restructuring of the NutraDried Food Company subsidiary has probably been the most significant corporate development during the past fiscal year. A priority was placed on attracting strong personnel to lead marketing and product development. This included the recruitment of a Chief Marketing Officer and Senior Vice-President of Sales. Regional full-time sales positions were also filled.

In addition, improved branding and promotional events were geared towards building market share for the Moon Cheese line. Greater emphasis on product distribution enabled a wider reach to high-volume retailers and expansion across a wider territorial range. This in turn led to faster sales growth for the popular cheese snack.

Of note, much of the cost burden for this transformation has been accounted for in the recently completed fourth quarter. However, gains in sales will be realized in 2020 and beyond.

Next to additional costs for NutraDried, the increased overall loss was also related to the investment to scale up production capacity so that the Company could deliver on the rapid flow of new orders achieved by the sales team.

During the past fiscal year, the combined production capacity of sold REV units more than tripled compared with 2018. Each REV unit sold contributes high margin royalty growth in the future.

Record Revenues Achieved in 2019 Easily Surpass Previous Results

EnWave reported record revenues for 2019 with $42,842 compared to $22,825 for 2018, an increase of $20,017 or 88%. Growth in revenues was attributable to expanded sales and distribution of Moon Cheese® during the year as well as the highest ever number of REV machine sales contracts secured.

The top line number of $42,842,000 reported for the year easily established a new record, representing an 88% increase over that achieved in 2018. Gross profits increased by 53% as EnWave continued to post strong operating margins.

Among the financial highlights presented, royalty revenue from the NutraDried Food Company amounted to $1,830,000, an increase of more than 122% over the $821,000 reported in 2018. Meanwhile, total royalty income from all commercial license agreements surged by 84% overall for the year.

EnWave appears to be well-positioned to support this exceptional growth rate as,
• Investment continues in research and development initiatives to sustain the technology advantage;
• Facilities have been expanded to enable greater production; and
• Talented individuals have been added to the technological development, manufacturing and sales teams.

Perhaps the most attractive consideration for future growth objectives, the balance sheet remains extraordinary strong. During the fiscal year EnWave managed to increase its cash-equivalent balance to $18,665,000. This is even more important given that the Company has no long term debt. Despite reporting a superb year that enabled EnWave to smash its own sales objectives and corporate guidance, this growth has not been funded through higher debt that could compromise future performance.

EnWave also remained cash-flow positive for the year, reporting Adjusted EBITDA of $3,168,000, an 8% improvement over the prior year. Much of this performance was a result of the stronger cash flow generated by sales of Moon Cheese products.

Commercial Licenses and Machine Sales

Longer term growth objectives for the Company will be powered by royalty-bearing commercial license agreements for REV technology. EnWave reported a total of 14 new royalty agreements in 2019. Several of these agreements have already expanded in scope, including additional REV machine sales. The NutraDried subsidiary also announced another purchase for a 120kW REV machine following the end of the quarter.

In particular, the rapid expansion for REV processing in the cannabis/hemp sector was a strong driver of growth. The importance of the sector was highlighted by the announcement of a strategic investment by Aurora Cannabis Inc. The deal advanced more than $10 million in working capital to EnWave through a financing arrangement.

The REV rollout continues, with leverage to multiple sectors. Success has been achieved through individual corporate partnerships and for the production of specific product lines. New applications are currently being developed for REV technology even as sales from established partnerships continue to build. The outlook for additional growth is therefore very strong even after the breakout achieved during this record year of sales.


Amounts in $000’s
September 30,
September 30,
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 September 30, 2019 and September 30, 2018. Source: Company Filing


International Commercial License Agreement Reported

As if in confirmation to the successful financial results reported for 2019, EnWave also announced yet another new commercial license agreement this week. Helius Therapeutics Ltd., the largest licensed medical cannabis company active in New Zealand, has purchased a 10kW REV machine to enable commercial production of dehydrated cannabis. As part of this arrangement, Helius has been granted exclusivity for the processing of cannabis in New Zealand using REV technology. In addition, Helius may in turn grant a sublicense to third party cannabis companies in the country.

Under the terms of this license agreement, Helius must pay a royalty to EnWave based on the dried weight of cannabis processed using REV technology. To maintain its exclusivity option in New Zealand, Helius has also agreed to purchase another REV machine with rated capacity of 60kW or larger by June 2021.

It is notable that the agreement expands the international presence for REV technology as a premium processing option in the cannabis sector. This represents the 7th such license agreement for cannabis producers, and the first within New Zealand.

Focused on medical cannabis applications, Helius is well positioned to supply the domestic market through its state-of-the-art indoor growing facility, extraction and manufacturing operations, and the investment in research and development. The partnership with Helius thus represents an attractive opportunity for further growth.


While progress was achieved on multiple fronts during the year, the majority of sales and royalty income was generated from partnerships in the food products vertical and the cannabis/hemp vertical. The additional license agreement achieved with Helius following is just further evidence that a positive growth trend continues at EnWave.

EnWave has proven the effectiveness of REV processing to create additional efficiency in several established sectors. Entirely new products have been created, made possible from investigation of the benefits of REV technology. EnWave has also demonstrated the competency to achieve compliance with strict quality performance guidelines as part of the protocol for international certification standards. This ambitious Company has matured quickly and now stands as an established development story with a growing roster of high-profile international partners.

The financial performance achieved by EnWave during the year is the result of the many individual breakthroughs for the Company. An effective sales strategy powered astonishing growth. At the same time, an internal restructuring was completed to enable more balanced expansion and greater operating efficiency through 2020 and beyond. With a superb balance sheet, boasting more than $18 million in cash with no outstanding debt, EnWave is fully funded to address challenges that are typically encountered following a year of rapid growth.

Suffice to state that the market performance for shares of EnWave was justified by the financial results. As one of the fastest growing technology stocks in Canada, EnWave shows no signs of slowing down. The Company is now working towards the longer term goal to achieve net profitability.

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

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