EnWave Corporation

EnWave Corporation

Type	Public
Traded as	TSX-V: ENW FWB: E4U
Industry	Drying Equipment
Headquarters	Vancouver, British Columbia, Canada
Key people	Dr. Tim Durance (President & CEO) Mr. John P.A. Budreski (Executive Chairman) Mr. Brent Charleton (Senior Vice President, Business Development)
Revenue	C$5.8 million (2015)
Number of employees	30 (2015)
Subsidiaries	NutraDried LLP
Website	EnWave.net

Founded in 1999, out of the University of British Columbia (UBC), EnWave is an industrial technology company that offers commercial-scale microwave vacuum dehydration machinery for applications in the food and pharmaceutical industries. The company is based in Vancouver, British Columbia.^[1]

EnWave has raised close to $55 million since its inception to develop and commercialize its proprietary Radiant Energy Vacuum (REV) dehydration technology. It generates revenues by selling machinery and by building a royalty stream through the licensing of its technology.

The REV technology was developed by Dr. Tim Durance, who is the company's current Chief Executive Officer. Dr. Durance was previously a professor in the Food, Nutrition and Health program at UBC, where he earned a Ph.D.

The company's mission is to establish its REV technology as a better alternative than freeze drying, air drying and spray drying, the current drying standards.^[2] Several studies with herbs, vegetables, meats, and fruits have demonstrated that flavor, color, nutrient, and other biologically active chemicals that are sensitive to thermal or oxidative degradation typically exhibit better retention after microwave vacuum drying compared to air drying.^[3]

The combination of vacuum and microwave also allows solid food pieces to be dried more rapidly, and thus more cost-effectively, than other drying methods. A study of three drying technologies, in which 3 mm thick carrot slices were dried, illustrated the rapid dehydration rate that can be achieved using microwave vacuum drying. Freeze drying took approximately 3 days to reach the end point of 9.9 percent moisture content, air drying took 8 hours, and microwave vacuum drying only required 33 minutes.^[4]

The company closed its first commercial agreement in February 2008 with CAL-SAN Enterprises, a blueberry producer from British Columbia, Canada.^[5]

To date the company has signed sixteen royalty-bearing licenses, with companies that include Hormel Foods, Bonduelle, Gay Lea Foods, and Sutro Biopharma. In addition, many other companies such as Nestlé SA, Kellogg Co, and R.J. Reynolds have tested the technology.

Next to machine sales and royalties, EnWave also generates income from its subsidiary NutraDried LLP, which develops, manufactures, markets and sells dried cheese snacks under the Moon Cheese brand.^[6]

EnWave has not yet realized profits from its operations. However, in the first quarter of the 2016 fiscal year, which ended December 31, 2015, the company’s revenues quadrupled and it reported positive cash flow from operations for the first time since inception.^[7] The company’s shares trade on both the TSX Venture Exchange (trading symbol: ENW) and the Frankfurt Stock Exchange (trading symbol: E4U).^[8]

Technology

Drying Methods

Drying foods is one of the oldest and simplest methods of food preservation. There are currently three main dehydration technologies that dominate the market: spray drying, air drying, and freeze drying.

Industrial scale spray drying has been around since the second half of the nineteenth century. It can only be used to dry liquids, as they are sprayed into hot air of up to 575 °F. That way, the heated air mixes with the atomized liquid and evaporates the moisture within.^[9] The solids are recovered as powder. The most common application of spray drying is powdered milk. The major disadvantage of spray drying is that the high temperatures being used in the process often compromise the flavor, color, texture and bioactivity of the dried product.^[10]

Air drying, on the other hand, involves the passing of hot air across a product. Similar to spray drying, the process is cost-effective and efficient, but the heated air again compromises the biological and nutritional integrity of the product.

The third method is freeze drying which requires the product to be first frozen, then placed in a vacuum whereby the frozen water molecules are extracted from the product. Although freeze drying removes only negligible amounts of nutrients from the food, it is a slow and expensive process.^[11] The first industrial applications of freeze drying occurred in the 1920s.^[12]

The idea to combine fast heating of microwave and low temperature processing of vacuum was investigated by a number of researchers during the past decades. The main purpose of vacuum drying is to remove moisture at lower temperatures. Water boils on 1 bar at 100 °C, but if the pressure is lowered to 40 mbar, then it already boils at 28.96 °C. This is an important feature of the microwave vacuum process as the dried products are not exposed to the high temperatures used in spray and air drying.^[13]

The major limitation for using microwave heating in the dehydration process in the past was the existence of non-uniform temperature distribution, which resulted in cold and burn spots. EnWave has eliminated that issue through the use of polyethylene drums inside the vacuum chamber, which ensure a more uniform temperature distribution.^[14]

Moreover, in microwave drying, the product is heated from within, requiring approximately 75% less energy than conventional drying methods.^[15] The net result is that the speed and efficiency associated with the use of microwave energy is retained, while damaging high temperatures are avoided.

EnWave REV Platforms

EnWave currently has three commercial scale technologies, nutraREV, powderREV, and quantaREV. The company is also working on another technology coined freezeREV, which is in development stage.

nutraREV is designed for the dehydration of fruits, vegetables, herbs, dairy products, meats and seafood. The technology allows for improved product appearance, and substantial retention of flavour, texture as well as nutritional value compared to freeze drying, which is the industry standard for dehydrating many food applications. The nutraREV platform has been built up to 100 kW in power, and is capable of producing as much as 300 kg (660 lbs) of dried product per hour.^[16]

This is EnWave's most popular technology. A few months ago, Hormel Foods Corporation launched Spam Snacks; dried, bite-sized flavored pieces of meat produced with a nutraREV machine.^[17] Gay Lea Foods, the second largest dairy co-operative in Canada, recently started the production of “Nothing But Cheese”, a crunchy cheese snack, on a nutraREV unit.^[18]

powderREV technology is designed to dehydrate a wide variety of materials, including enzymes, probiotics and food cultures, pharmaceuticals, non-regulated biologicals and certain dry food products. It is ideally suited to replace the expensive and time consuming process of both tray freeze and spray drying. These take place in a high heat environment and cause significant damage to sensitive organisms.^[19]

quantaREV is designed for high-volume, low-temperature dehydration of solids, liquids, granular or encapsulated products. It uses a continuous belt design in a controlled vacuum-microwave environment with an eventual target of dehydrating several tonnes of material per hour. This low temperature technology is designed to provide a higher-quality end product than what is currently achieved with spray drying or air drying.^[20]

The best known user of quantaREV is Bonduelle, a leading processed vegetable producer. It recently launched InFlavor, a new category of frozen vegetables produced with EnWave’s REV machinery.^[21]

freezeREV is designed to provide high-speed dehydration for live and active organisms in vials. It has the potential to significantly lower operating costs as opposed to freeze drying. freezeREV is intended for products which must have a minimum moisture content in order to maximize their shelf-life.^[22]

NutraDried LLP

NutraDried LLP develops, manufactures, markets and sells 100% all-natural cheese snacks under the Moon Cheese brand. EnWave USA Corporation, a 100% daughter of EnWave Corp, holds a 51% stake in NutraDried, while ND Creations, controls 49%.

EnWave entered into a royalty-bearing commercial license with NutraDried, which grants the latter the right to use REV technology for the production of its snacks. NutraDried pays EnWave a revenue-based royalty of 5% in return.^[23]

In July 2013, NutraDried began producing cheese snack products in three specific flavors - Gouda, American Cheddar & Pepper Jack - utilizing a small scale REV machine. First sales occurred shortly thereafter to DPI Specialty Foods, which placed Moon Cheese snacks in 192 Kroger locations under both Fred Meyer and Quality Food Center banners.^[24]

In February 2015, NutraDried announced that, beginning in June 2015, Cheddar and Gouda Moon Cheese would be launched in 3,400 stores at Starbucks in the United States.^[25] A few months later, the sales distribution in the large international coffee chain was expanded from 3,400 stores to 7,500 corporate stores.^[26] And in November 2015, EnWave announced that also the 1,400 Canadian Starbucks stores would start selling Moon Cheese.^[27]

The distribution of Moon Cheese in other stores also continues to grow. The snacks can now be purchased in up to 20,000 locations across the United States and Canada.^[28]

In addition, as of August 2015, NutraDried started developing protein matrix products, such as sports nutrients, protein bars, complete meal replacement snacks, and dietary products.^[29]

Competition

The market for drying equipment is fragmented with many small companies that tend to have a very regional focus, such as Biopharma Technology Ltd., Cuddon freeze Dry, and Freezedry Specialities Inc. There are a couple of companies that are able to compete globally, such as Thermo Fisher and USIFROID.

Competition in the microwave vacuum dehydration space on the other hand is very limited as this is still a relatively new technology. EnWave is the leader in the sector, both in terms of international footprint and size of business. Competition comes principally from Püschner, Merk Process and Techni Process.

Key Directors

Dr. Tim Durance - President & CEO

One of the founders of EnWave, Dr. Durance has 35+ years’ experience in the processed food industry and is the co-inventor of the Company's Radiant Energy Vacuum technology. As EnWave’s Chairman & CEO, his responsibilities include research and development related to all of the REV technologies, as well as ongoing intellectual property development. Until recently, Dr. Durance was a Professor in the Food, Nutrition and Health Program at the University of British Columbia (UBC), where he has been a member of the faculty since 1987. Dr. Durance is the author of more than 75 peer-reviewed scientific publications, 17 patents, and numerous book chapters, scientific presentations, and invited lectures on technology and food processing.

Mr. John P.A. Budreski - Executive Chairman

Mr. Budreski joined EnWave with over 30 years of extensive capital markets and executive management experience. Mr. Budreski has a professional history of advancing and accelerating businesses, as well as tangible engineering experience. He was formerly a Vice Chairman of Cormark Securities Inc. from 2009 to 2012, and President and CEO of Orion Securities Inc. from 2005 to 2007, prior to its successful sale to Macquarie Bank. He has filled the roles of a Managing Director of Equity Capital Markets and Head of Investment Banking for Scotia Capital Inc. from March 1998 to February 2005 after starting out as a Managing Director of US Institutional Equity Group for Scotia Capital. He also held senior roles in investment banking and equity sales and trading for RBC Dominion Securities.

Mr. Brent Charleton - Senior Vice President, Corporate Affairs

Mr. Charleton has extensive experience working in competitive team-based environments in the public and private sectors. He manages the marketing, investor relations and business development mandates for EnWave Corporation. Mr. Charleton, an ex-professional athlete, is a graduate of the Marketing Management program at the British Columbia Institute of Technology and has earned a Bachelor of Arts degree in Criminology and Communications from Simon Fraser University. Mr.Charleton has completed the Canadian Securities Course, and is a CFA Level 2 candidate.

Mr. Daniel Henriques - CFO

Mr. Henriques is a Chartered Professional Accountant. Prior to joining EnWave,^[30] Mr. Henriques was a manager in the Assurance group at PricewaterhouseCoopers LLP, and supported numerous mid-market companies, including companies listed on the Toronto Stock Exchange, TSX Venture Exchange and the New York Stock Exchange, with financial reporting and compliance. While at PwC, Mr. Henriques provided clients in the manufacturing and technology sectors professional services in the areas of financial audits, financial reporting and tax. Mr. Henriques earned his Bachelors of Science with an Honours Distinction and his Diploma of Accounting at the University of British Columbia. He became a Chartered Professional Accountant in 2012.

References

External links

• TMX Money - EnWave Corp. Company Profile
• EnWave Corporation Company Website
• Moon Cheese Website
• Lucid Capital Website