VANCOUVER, British Columbia, Aug. 28, 2020 (GLOBE NEWSWIRE) -- EnWave Corporation (TSX-V:ENW | FSE:E4U) (“EnWave”, or the "Company") today reports the Company’s consolidated interim financial results for the third quarter ended June 30, 2020.
Consolidated Financial Performance:
($ ‘000s) | Three months ended June 30, | Nine months ended June 30, | |||||||||||||||
2020 | 2019 | Change % | 2020 | 2019 | Change % | ||||||||||||
Revenues | 5,998 | 10,075 | (40 | %) | 22,099 | 26,654 | (17 | %) | |||||||||
Direct costs | 4,441 | 7,217 | (38 | %) | 15,483 | 17,639 | (12 | %) | |||||||||
Gross margin | 1,557 | 2,858 | (46 | %) | 6,616 | 9,015 | (27 | %) | |||||||||
Operating expenses | |||||||||||||||||
General and administration | 1,197 | 1,118 | 7 | % | 4,513 | 3,165 | 43 | % | |||||||||
Sales and marketing | 1,449 | 1,203 | 20 | % | 5,188 | 3,263 | 59 | % | |||||||||
Research and development | 396 | 665 | (40 | %) | 1,412 | 1,375 | 3 | % | |||||||||
3,042 | 2,986 | 2 | % | 11,113 | 7,803 | 42 | % | ||||||||||
Net loss for the period after taxes | (1,166 | ) | (1,322 | ) | 12 | % | (4,442 | ) | (1,561 | ) | (185 | %) | |||||
Adjusted EBITDA(*) | (1,034 | ) | 139 | (844 | %) | (3,239 | ) | 2,304 | (241 | %) | |||||||
Loss per share – basic and diluted | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.04 | ) | $ | (0.02 | ) |
* Adjusted EBITDA is a non-IFRS financial measure. Refer to the disclosure below regarding non-IFRS financial measures and in the Company’s MD&A.
EnWave’s interim consolidated financial statements and MD&As are available on SEDAR at www.sedar.com and on the Company’s website www.enwave.net.
Key Financial Highlights for Q3 (expressed in ‘000s):
Q3 Significant Accomplishments:
Significant accomplishments made during Q3 2020 and to the date of this report include:
REVworxTM Toll Manufacturing Division:
EnWave intends to start a new operating division called “REVworxTM” that will serve as a toll manufacturing facility for companies seeking third-party manufacturing resources to launch new and innovative REVTM-dried products into the marketplace. At present, there are no large-scale REVTM-processing facilities that have flexible toll manufacturing capability in North America, and there is a growing demand from consumer products companies for this service.
With the internal capacity to toll manufacture REVTM products, EnWave expects to accelerate the commercial introduction of REVTM products into the consumer marketplace while building a recurring revenue business through tolling contracts. Management anticipates this service will complement its global machine sales and royalty-licensing business model by enabling access to REVTM machinery for companies that would otherwise not pursue in-house commercial adoption of the technology.
The project is in the initial stages of planning, including identifying a suitable facility locally in Metro Vancouver to install a large-scale REVTM processing line and auxiliary equipment. The Company aims to secure a facility and have it ready for commercial food production in early calendar 2021.
Cost Containment Strategy:
The effects of the COVID-19 pandemic and measures to prevent its spread have had an impact on our operations and financial performance, and as a result, we undertook prudent measures to maintain a strong financial position by reducing expenses and managing short-term liquidity. The steps taken by the Company include:
As a result of these cost containment strategies implemented starting in Q3 2020, the Company has significantly reduced overhead expenses by approximately $1.0 million in Q3 vs Q2 2020. The Company aims to be prudent in managing expenses and liquidity while maintaining the ability to rapidly scale-up when economic conditions improve.
COVID-19 Pandemic:
Since the beginning of the global pandemic, we have and continue to prioritize the health and safety of our employees and their families, and our partners. We continue to follow all of the regulations set by Provincial and State governments and health authorities in all markets in which we operate our business.
The international travel restrictions imposed globally to contain the spread of the virus continues to have an impact on EnWave’s international operations. Our ability to meet with prospective global partners and to complete the installations of additional royalty-bearing REVTM machines have been temporarily impaired due to the pandemic which delays our achievement of billing milestone payments and commencement of commercial production and the related royalties.
EnWave has developed a remote installation program for 10kW machines, which has allowed certain willing partners to collaborate remotely with EnWave’s engineers to commission a 10kW REVTM machine. During Q3 2020, we had one partner successfully complete a remote installation and we are currently working with others to complete this task. The option to remotely install machines is dependent upon our partners’ technical capacity and willingness, and some partners have chosen to wait until EnWave staff can be sent to their site for installation. The timing of these installations is highly dependent on international travel restrictions that are in place and prolonged international travel restrictions will impact our ability to conduct our business.
COVID-19 caused distribution challenges for NutraDried’s products with retail store closures and many retailers pausing new product evaluations. Early in the pandemic, many states imposed shelter-in-place orders that caused a decrease in demand for on-the-go snack products, and many of our retail customers closed entirely for an extended period of time, negatively impacting sales. As the retail environment has now improved in most states, the Company is optimistic that this impact was temporary and should improve over the coming quarters.
Additionally, many retailers in the U.S. that the Company was targeting for new distribution temporarily halted adding new products due to the pandemic, which challenged our ability to secure meetings with buyers to gain new points of distribution for Moon Cheese®. Despite the challenges of the pandemic, NutraDried’s sales and distribution have improved since the start of the pandemic, with June 2020 revenues being the highest monthly shipments in the quarter. Management is optimistic for improved distribution for Moon Cheese® products over the coming quarters as retailers continue to re-open safely and retail supply chains stabilize.
The extent to which COVID-19 may impact our financial and operational performance will depend on future developments, including the duration and severity of COVID-19 in the markets in which we operate. We cannot presently forecast the full duration and magnitude of COVID-19’s impacts on our business over time, or the pace of recovery from the pandemic across our end markets, operations, and supply chains.
(*) Non-IFRS Financial Measures:
Adjusted EBITDA is not a measure of financial performance under IFRS. We define Adjusted EBITDA as earnings before deducting amortization and depreciation, stock-based compensation, foreign exchange gain or loss, finance expense or income, income taxes, non-recurring impairment and restructuring charges and government grants. This measure is not necessarily comparable to similarly titled measures used by other companies and should not be construed as an alternative to net income or cash flow from operating activities as determined in accordance with IFRS. Please refer to the discussion included in the Company’s interim MD&A for the nine months ended June 30, 2020.
About EnWave
EnWave Corporation, a Vancouver-based advanced technology company, has developed a Radiant Energy Vacuum (“REV™”) – an innovative, proprietary method for the precise dehydration of organic materials. EnWave has further developed patented methods for uniformly drying and decontaminating cannabis through the use of REV™ technology, shortening the time from harvest to marketable cannabis products.
REV™ technology’s commercial viability has been demonstrated and is growing rapidly across several market verticals in the food, and pharmaceutical sectors, including legal cannabis. EnWave’s strategy is to sign royalty-bearing commercial licenses with innovative, disruptive companies in multiple verticals for the use of REV™ technology. The company has signed over thirty royalty-bearing licenses to date. In addition to these licenses, EnWave established a Limited Liability Corporation, NutraDried Food Company, LLC, to manufacture, market and sell all-natural dairy snack products in the United States, including the Moon Cheese® brand.
EnWave has introduced REV™ as a disruptive dehydration platform in the food and cannabis sectors: faster and cheaper than freeze drying, with better end product quality than air drying or spray drying. EnWave currently offers two distinct commercial REV™ platforms:
EnWave is also active in the pharmaceutical industry through a joint development agreement with GEA Lyophil, a leader in GMP drying machinery.
More information about EnWave is available at www.enwave.net.
EnWave Corporation
Mr. Brent Charleton, CFA
President and CEO
For further information:
Brent Charleton, CFA , President and CEO at +1 (778) 378-9616
E-mail: bcharleton@enwave.net
Dan Henriques, CA, CPA, Chief Financial Officer at +1 (604) 835-5212
E-mail: dhenriques@enwave.net
Safe Harbour for Forward-Looking Information Statements: This press release may contain forward-looking information based on management's expectations, estimates and projections. All statements that address expectations or projections about the future, including statements about the Company's strategy for growth, product development, market position, expected expenditures, and the expected synergies following the closing are forward-looking statements. All third party claims referred to in this release are not guaranteed to be accurate. All third party references to market information in this release are not guaranteed to be accurate as the Company did not conduct the original primary research. These statements are not a guarantee of future performance and involve a number of risks, uncertainties and assumptions. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.
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