Q4 2025 EnWave Corp Earnings Call

Operator for today's call.

Joining us for today's presentation, are the company's president and CEO Brent Charlton and Dylan Murray.

And wave CFO.

As a reminder, all participants are in listen-only mode. And the conference is being recorded after the presentation. There will be an opportunity to ask questions.

If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Finally, I'd like to remind everyone that this call will be made available for replay via a link in the investor relations section of the company's website at www.nw.org to end with CEO Mr. Brent Charlton. Please go ahead, sir.

Thank you and a very good morning to everyone who has joined us today. For end waves, Q4 fiscal 2025 quarterly conference call Q4 yielded outstanding Financial results. And I'm very pleased to summarize our performance details today and discuss our business outlook for the upcoming fiscal year. Now, as always the information, we will present today contains forward-looking information that is based on our Management's, expectations, estimates and projections.

Our statements are not a guarantee of future performance and involve a number of risks, uncertainties and assumptions. Please consider the risk factors in the filings made by nwave on Sedar. When reviewing this information, also all amounts discussed today will be in Canadian dollars unless otherwise noted

So again, our performance in Q4 was very strong as we reported revenues of 6.2 million which was up 71% year-over-year, net income from continuous operations of 928,000 which was up 58% year-over-year and addressed at Eva of 1.4 million, an increase of almost 1 million dollars year-over-year. These excellent Q4 results helped us to achieve fiscal year, revenues of 13.8 million. A 69% Improvement year-over-year and the highest fiscal year revenue generated by and waves licensing, royalty business, as a standalone, entity.

In Q4 we continue to build 2, 60 kilowatt rev machines, purchased by Milly Micro Drive for their new Dairy Co manufacturer facility in Washington state. We resolve a high margin 120 kilowatt rev machine to Branch out foods and we also commissioned 6, 10 kilowatt machines

Now, in regards to our quarterly and fiscal year, royalty performance, most important to me is that our base royalties which are royalties generated through the sales or production of rev. Dr. Products were 418,000 in Q4 which is the highest quarterly third-party based royalties ever generated and up 31% year-over-year.

Here, we also generated 1.8 million in base, royalties for the full fiscal year, 2025, which was up 228k year-over-year.

To royalties year-over-year were flat and that was due to this to the excuse me, to the decision of 1 existing royalty, partner deciding not to pay an annual exclusivity royalty to maintain rights to produce, certain Tropical Fruit Products in a Central American country and rather use those proceeds as part of their capital expenditure, to acquire 260 kilowatt machines, during fiscal 2025. Overall, our royalty growth is trending in the right direction and the fact that all 4 large-scale rev sales in fiscal 25 will repeat orders from existing royalty Partners, it's likely that we'll see faster based royalty growth in future quarters in regards to Deals, getting done in Q4. And to the date of this call, we confirmed the sale of the second 60, kilowatt quantity, rev machine and 2 10 kilowatt, rev machines to microdried in 2026, Micro Drive will be operating a total of 5 large-scale. Rev machines and 2, 10 kilowatt units, producing the largest portfolio of rev Dr. Products available from a single royalty partner of NWS.

We also sold 2. Additional 10, kilowatt units to Dairy Concepts Ireland, in Q4 to support their growing market. Demand for their premium shelf, stable Dairy, snacks in the United Kingdom in Europe. They Now operate 5, 10 kilowatt units for commercial production.

The most material transaction in Q4 was the resale of the 120 kilowatt machine taken back from a US cannabis company and resold to Branch out Foods. This machine is scheduled for installation in Peru during the upcoming month of January and Branch out will then have a total of 4 large scale. Rev units and 1 10 kilowatt unit commission for their growing production needs in 2026 Branch out Foods outlook for sales growth and subsequent royalty payments. And wave is incredibly bullish.

Just a large scale, rev machine on or before March 31st 2026.

Their strategy will be a blend of direct consumer and co-manufacturing contracts.

Now, subsequent to Q4 and prior to this call, we signed 2 additional commercial licenses 1 with the US snack company that will first establish production in Mexico.

And the second with a company called shiny way of New Zealand, a cannabis drying company. The US snack company, purchased, a 10 kilowatt unit and is expected to acquire additional Revenue units in fiscal 2016 to expand production.

Although we can't be certain. When every deal will close, we have numerous new license, agreements evaluation agreements and machinery sales. Both first time and repeat, that we are. Actively pursuing for fiscal 26, across our royalty partner ecosystem. We are seeing most Partners increase their capacity utilization and some have already communicated in imminent. Need for more Machinery, this year we are targeting superior machine sales performance in fiscal. 26, both in the number of large scale units and 10 kilowatt sales and of these prospective sales. We anticipate at least half of these potential orders to come from existing royalty partners.

In the past 3 months, from a sales and marketing perspective, we attended 6, International Food, Tech trade shows including the ppma and the UK food Tech, Mexico supply side Global aftt in Singapore fee Europe. And the plma show in Vegas. That's a lot of travel and as we head into the New Year we're preparing to attend 3 additional shows in Q2 including Expo West and Anaheim Pro sweet. And

Europe and the North American Pet Food Forum. I'm overall very pleased with the efforts of our sales and marketing team to date.

We've begun to put that million dollar gross proceeds, generated from the life, offering close in Q4 to use.

We're building 2, large scale, machines, 1 100, kilowatt, Nutri and 1. 120 kilowatt quantv along with 2 additional 10. Kilowatt units, for our inventory and perspective demand.

This will allow us to deploy large scale, Machinery, more expeditiously in the new year. And there are numerous active discussions regarding Machine Sales opportunities that we hope to be able to discuss in the near term.

Now, as I summarize update complete, I'll now ask Dylan to summarize and waves. Detailed quarterly financial performance. All right, are we going

Thanks Brent. Good morning, everyone and thank you for joining us today. Please note that the figures. I'll be discussing can be found in our press release from this morning and in the financial statements and mdna filed on Cedar.

All amounts are in Canadian dollars, unless otherwise noted.

I will make reference to adjusted ibida, which is a non-ifrs financial measure. So please refer to the non-ifrs financial measure disclosures and Reconciliation to gaap. Net income, both in the press release and in our mdna.

Also, please note that the comparative period. I'll refer to throughout this presentation is the prior year Q4 ended September 30th 2024

Revenues for Q4 were 6.2 million compared to 3.6 million in the comparative period. An increase of 2.6 million, or 71% the increase in revenue, for the period was primarily results of the sale and commissioning of 6, small-scale machines, the ongoing fabrication of 2 large scale machines and the resale of a higher margin large scale machine during the quarter,

On the year, the company reported revenues of 13.8 million compared to 8.2 million in fiscal 2024, an increase of 5.6 million or 69%.

During the year, the company sold 8 small scale machines and 4 large scale machines, including a high margin 120 kilowatt machine. That had repurchased from a Canada's multi-state. Operator in 2024 the company sold only 3, small scale machines and 2. Large scale machines including a repatriated 100 kilowatt machine from neuter Drive.

Third party base royalty, Revenue was 481, K, and Q4 2025 compared to 381 K in a comparative period, an increase of 113, K or 31%.

Base royalties for the year ended September 30th 2025 or 1.8 million compared to 1.6 million. For the year. Ended 2024 an increase of 228k or 14%

Royalties grew to the increased number of royalty partners and machine capacity utilization for a quarter.

Total royalties inclusive of of exclusivity payments, were down 1, 6, 1. 4 4,

As Brent mentioned the decrease, in exclusivity payments was related to an existing royalty partner that committed to multiple large scale machines during the year to decide, not to continue with exclusivity in an unspecified Central American country.

This partner redeployed Capital to a different strategic area to house the recently acquired large-scale machines.

And as a royalty Partners grow their businesses and increase capacity, utilization of insult rev equipment further revance delays. It rev installations will follow from new sales, contracts and material base royalty growth should continue in the coming quarters.

In fiscal 2026. And as of the date of this call 2 of these large scale. Machines have been commissioned are in the process of being commissioned.

Gross margin for the company. In Q4, 2025 was 41% compared to 40% in Q4 2024. The increase in margin, a result of the production, mix of large and small scale machines, at various stages of production.

Sgna expenses, including R&D were 1.5 million for Q4 2025 compared to 1.3 million for Q4 2024. I think increase of 223 or 17%

The increased primarily related to sales, personnel and increased trade, show attendance, the company will continue to further invest in sales and marketing activities, in the coming quarters to drive further, sales growth,

Adjusted e, but as a non-irs financial measure. So please refer to our mdna for the reconciliation from gaap. Net income to adjust the de

the company recorded adjusted, EA of 1.4 million for Q4 2025 compared to 450k in the comparative period. An increase of 950k, the increase in adjustability but uh was primarily driven by Machine Sales and the production sales mix relative to the comparative period.

We finished Q4 2025 with cash and cash, equivalents of 6.4 million and the networking Capital, surplus of 9.7 million, as of September 30th.

And during the quarter, the company closed, a fully subscribed private placement of 7.5 million, common shares of the company at a price per share of 40 cents for aggregate. Gross, proceeds of dollars. And as Brent mentioned, the company is using the funds to increase inventory Levels by manufacturing 2, large scale machines, the manufacturing and Fabrication process takes approximately 6 months per machine to complete this investment combined, with an expanded marketing, presence, through increased trade, show, attendance and sales Personnel is designed to ensure faster order, fulfillment and support prospective future Machine Sales.

And we have has a credit facility with dejar Dan for growth and working capital purposes, the amounts available to the company. Under the credit facility is calculated as lesser of $5 million and a function of royalties receivables and inventory.

As of the date of our quarterly filings approximately 1.2 million is available to the company at a at a rate of Canadian, prime plus 1, and a half percent, and the facility remains undone to date.

With our cash on hand and amount available in the company's day. Jordan and credit facility, we believe in wave as well. Capitalized to accelerate the execution of its strategic growth initiatives, given the current opportunity pipeline

Thanks very much, Dylan. I think it's evident that our base royalties are growing. We're seeing commercial momentum with our current royalty Partners given the number of repeat rev machine or as we confirmed in fiscal 25. And we have the liquidity to speed up the deployment of new Machinery, which would lead to faster royalty growth.

Precise timing to close each of those Machine Sales is unknown, but the sheer number of opportunities gives me confidence in the fiscal year. 26 Outlook,

And with that, I'd like now to open up the call for your questions. Operator, please provide the appropriate instructions.

Thank you.

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If there are any outstanding questions at the end of the call, the company will be happy to take them by email at IR.

Nwave.io.

Our first question comes from the line of Noah Atkinson with Clara Securities. Please proceed with your question.

Hi, good morning. Brandon Dillon uh, really well done in in Q4. Um,

Congratulations on that.

Uh, a few questions from me just uh, firstly.

Are there any product areas of strength that you're seeing in your machine order?

Uh pipeline.

Thanks for the question. Also, referring to Market verticals, where we see the most opportunity for fiscal 26. That's

We will be able to do so in the next quarter.

Great.

Uh, and then maybe could it is a follow-on just

What are you seeing in terms of pipe?

Relative to where you were kind of this time last year.

What are you seeing in terms of your overall pipeline for large, large scale machines?

Um, better pipeline than last. Let's put it that way. So as, you know, we we confirm 4 large scale on fiscal 25. Um, we hope to improve upon that this fiscal 2026 and, you know, I think somewhere in the range of 6 to 8 machines is is possible. But of course, it comes down to the timing of these decisions from both our current license, royalty partners, and the new business that we're driving, of course, there's many, many many, many more opportunities, but from history, uh, providing some teaching lessons, of course. Some of them. It's not all, you know, get sort of staggered out on a, on a more um less lumpy basis. So we're hopeful that that's going to be the case here for physical 26.

Uh, and then just finally, for me, just on your tolling activities. So that's been something that, you know, has has been a, a help to the business in, in, you know, a few years back and it could slow down a little bit last year. I think,

Are you seeing opportunities to?

To ramp the tolling, back up again. And what, what kind of how do you see tolling as a part of your overall strategy?

A great question, the establishment of our rev Works toll manufacturing facility was primarily to act as a Launchpad for companies to bring certain amount of product to Market, justify their business case and invest themselves in internal manufacturer buying equipment from us and paying royalties long term. We never will intend that part of our business to grow much more than a million and a half to 2 million dollars in Revenue per atom, and that's at full utilization. We also see it as a solution for some of our current royalty Partners Who start to experience material growth in Market, needing more volume and simply don't have the Machinery available at that time. So they will use rev works as a Band-Aid processing solution until their new Machinery arrives and then take on that increased volume. Um in regards to new companies using the facility right now we've got you know about dozen different companies. Evaluating the timing on creating some new products through this particular tool. And again hopeful of converting, those companies into full-fledged royalty Partners in the future.

Thanks a lot.

Thank you as a reminder. If you'd like to ask a question, via the telephone please press star 1 on your telephone keypad. Our next question, comes from line of Bart Gore with bears tips. Please receive with your question.

Good morning, gentlemen. Congratulations on the results. I have a few questions. Uh, first of all in your balance sheet, I see that. There's a huge increase in the long-term portion of a lease liabilities. Can you explain me that

Hey, thanks Bart. Yeah, so in uh, Q4, we entered into a new manufacturing lease, uh, that's closer to our head office. So that's where we manufacture all our small and large scale machines. And it's closer to where our, uh, overall head office R&D. And rev Works facility are located. No change to the actual manufacturing capacity from our old lease location to our new lease location.

Okay, thank you and uh, regarding uh, the verticals. Uh, something I didn't hear was Cannabis and you sold 1 machine of an existing cannabis partner. But uh, last week there was some interesting comments from president Trump regarding the Cannabis Market.

Do you still see potential there?

Absolutely Bart. We do. Um and but as I've got many discussions throughout the past, several quarters. The majority of our resources from a sales and marketing perspective have been put towards the food industry and and that's honestly where the majority of our research will continue to to lie. However, we are engaged with a few licensed producers here in Canada as well as the number in Europe and Australia who are considering the technology for their future expansion. And there was a time where we were receiving any calls and I think that was, you know, so that that flux in the market. And now things are starting to stabilize with the better operators. And so we do see opportunity for cannabis transactions, and fiscal 26, and and more. So, um, the Canadian company using the large scale, 120 kilowatt machine. Now there is the possibility that they may wish to expand their production capacity using rev, um, sometime during the fiscal year based on the results that they're getting, so working towards it. Um, but obviously no guarantee yet,

Okay, thank you. And 1 last question, can you comment a bit on the efforts in the pharmaceutical industry with your partner in Germany? I think.

Sure, um, so gay allow for those who are familiar, is in a joint partnership with nway Corporation, and they have a, uh, pilot scale GMP vacuum microwave dryer that they've been using for product development with a number of the globe's leading pharmaceutical companies and that particular situation Remains the Same as it was. Um, speaking about in maybe past few quarters where they're still looking for a singular company and or Consortium of pharmaceutical companies to commit to the development of a specific drug going through. Multi-stage process, for ultimate commercialization using vacuum microwave rather than lithium from the beginning. And that's critical, uh, because that drying method needs to be incorporated into their application. And of course, stage gate process for approval and so still working on it. Um, other pharmaceutical activity that we've seen lately has been through, uh, biotechnique which is a tool manufacturing company out of the United States whom have engaged us for paid trials at our facilities in Vancouver. Um, what we've seen the results have been very encouraging.

But again, it comes back to the brass tacks of which company. Or again, a Consortium of companies will step up and invest several million dollars, plus the cost of developing, a new drug using vacuum microwave. So we continue to push, but that needs to be the next material, step forward. If we're going to take this into, uh, the broader pharmaceutical Market,

Okay, thank you and good luck in this fiscal year.

Thanks Mark.

Thank you at this time. We have no other phone questions. I'll turn the floor back for any web questions.

Okay, thanks so much. Um first questions quite straightforward. When do you expect to become profitable? Um so let's just talk about like our our our cash flow Break Even scenario with nwave currently with our expense structure of about 4 and a half to 5 million dollars. If we are able to recognize the revenue of 4 large scale machines per atom with our historical royalty run rate, we're about a break even business. We're hoping to

Perform better than we did in fiscal 25, which was 4 large scale machines. And, of course, there are about 2 million bucks. Just they're under of the royalties. So if we're able to improve upon our fiscal, 25 numbers, we should be in a better position to get closer to profitability. Second question, um, is based on existing machine sales and assuming similar usage volumes in 2026 with existing machines. What would royalties be next year, trying to figure out the base rate, assuming no other Machine Sales, if you can provide an estimate at this time. So for us, our Target what we think can happen based on the number of large scale machines, we're currently delivering. So the first machine for building Micro Drive is being started up this month.

The 120 kilowatt is planned to be installed and started up for branch out Foods in January.

The 120 kilowatt machine that went to process here in Mexico. Only started up about, you know, 2/3 through the year of physical.

25. So there still is a material opportunity for capacity utilization and help to rise the tide of royalties. So I think conservative estimate for fiscal. 26 would be somewhere in the range of call. It 2.3 million um would be sort of a conservative Target based on the machines that we've already sold and the increase in capacity utilization and then it will come down to when and how we deliver the next wave of large-scale purchases that we're expecting to hopefully confirm in the coming months.

Okay, and with that, I do not see any further questions submitted through the, um, web frame. So, I'd like to thank again, everybody, for joining the call today, exciting times and good momentum at nwave. And if you have any further follow-up, please do reach out to Dillon or myself, um, in the coming week. Thanks, everybody. You may now disconnect

Thank you, this. Conclusive based conference call, you may disconnect your lines at this time. Thank you for your participation.