Subsidiary’s Insolvency Gets EnWave Closer to Being Cash Flow Positive

Hans Binder Maschinenbau, the 86.5% owned German subsidiary of EnWave Corporation (TSXV:ENW – $0.83 CAD & OTC:NWVCF – $0.74 USD), which engineers and builds dehydration equipment, filed for insolvency early this week. The event has little or no negative impact on EnWave though.

Although the subsidiary’s orders and backlog had increased the past quarters, it wasn’t enough to become cash flow positive. In fact, during the first nine months of fiscal year 2015, ended June 30, Binder recorded a net loss of more than $3.3 million.

A receiver will shortly be appointed by a German court, who will work with Binder’s management, creditors, debtors and employees to finish ongoing projects in the coming months. This is important, because over $1.4 million of EnWave’s cash is currently tied up as collateral in regards to the completion of one of Binder’s projects. When the machine is successfully commissioned, part or whole of the restricted funds will be returned to EnWave. We heard the dryer is expected to be installed and running by the end of October 2015.

MIVAP Technology

Even more important to know is that EnWave continues to have the exclusive worldwide licensing rights for the MIVAP vacuum microwave dehydration technology, which is licensed from iNAP GmbH, a company partly controlled by the Binder family, but not included in the insolvency.

MIVAP is a proprietary vacuum-microwave dehydration technology, which is basically the only competitor on the market for EnWave’s Radiant Energy Vacuum (REV) technology.

The nutraREV and MIVAP technologies both produce attractive dried food products with high nutritional retention, improved flavor and appearance, and significant cost savings in labor, energy and capital per ounces of production.

Although both technologies use microwaves as an energy source, EnWave’s continuous rotating basket design and MIVAP’s continuous tray system both offer unique proprietary advantages with limited market overlap for dehydrating a wide range of fruit, vegetable, and meat products for the snack, cereal, soup and baking industries.

In 2010, EnWave signed the first agreement with iNAP to acquire the exclusive right to license and sell MIVAP technology in the Canadian and U.S. markets. In return, the Company agreed to pay iNAP 25% of all license and royalty fees paid by EnWave customers who produce products with MIVAP machinery. And in October 2012, Enwave secured the right to exclusively sell MIVAP machinery in all other global regions. In return, EnWave shares 50% of its MIVAP royalties from those regions with iNAP.

The first MIVAP plant in the United States was sold to Milne Fruits. As recently announced, Milne is ramping up its production to satisfy significant orders from several major food companies.


All in all, the insolvency of Hans Binder has little negative impact on EnWave. The German subsidiary’s core business of manufacturing air drying equipment is highly fragmented and competitive, and as such has lower margins. In addition, EnWave won’t have to fund Binder’s business anymore. That cash can now be put to good use as EnWave’s higher margin royalty licensing business is growing rapidly.

The chance of EnWave becoming cash flow positive on a sustainable basis increases significantly because of the insolvency of its subsidiary.

Investors soon acknowledged this fact. On the day the insolvency was announced, EnWave’s stock price dropped close to 16 percent, but recovered in subsequent days.

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  • If the manufacturer of EnWave’s equipment is insolvent, who will be there replacement? How will this affect orders now on the books?

    • Hi Buhlz_I,

      A very good question, and I’m glad I can totally reassure you.

      EnWave already manufactured its own REV machines. Hans Binder only manufactured traditional dryers. And that’s a very competitive market with lumpy sales. So the insolvency has absolutely no influence on EnWave’s order book.

      It’s an unfortunate event, but at the same time it’s very important to know that EnWave continues to hold the rights to MIVAP, basically the only competitor for REV on the market.

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