Operator: Good morning. And welcome to EnWave Corporation's Third Quarter 26 Earnings Conference Call. My name is Melissa, and I will be your operator for today's call. Joining us for today's presentation are the company's President and CEO, Brent Charleton; and Nav Dhami, the company's CFO. As a reminder, all participants are in a listen only mode. And the conference is being recorded. After the presentation, will be an opportunity to ask questions. Finally, I would like to remind everyone that this call will be made available for replay via a link in the Investor Relations of the company's website at www.enwave.net. Now I would like to turn the call over to EnWave's CEO, Mr. Brent Charleton. Please go ahead.
Brent Charleton: Thanks very much, and thanks again to everyone who has joined us today for EnWave's Q3 Fiscal 26 Quarterly Conference Call. Q3 was a much better quarter than the first 2 fiscal 26 quarters given we recognize the revenue tied to the sale of a pre built 120 kilowatt rating energy vacuum machine to Procescir. Our valued Mexican royalty partner, and we continue to see strong royalty growth. Led by Branch Out Foods and Micro Dried. As we continue to work towards securing additional royalty streams and hastening the growth of these carried interests, my team and I are also concurrently planning to reduce internal expenses materially to position the company best for sustainable profitability in the coming years. Consistent with our past quarterly conference calls, the information we will present today, including my introductory statements, 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 EnWave on SEDAR when reviewing this information. Also, all amounts discussed will be in Canadian dollars unless otherwise noted. As we continue to drive the company forward, our priorities remain focused on 4 areas. First, convert our commercial pipeline into equipment sales. that is obvious. it is great to have engagement, but engagement needs to convert into long term commercial agreements, period. Second, expand our installed base of REV machinery and we continue to work closely with current royalty partners to help them develop new products and increase their REV machinery utilization. This effort is designed to lead to many more repeat purchase orders like the 1 recently with Procescir. Third, increased reoccurring royalty revenue generated by our existing partners. Same support mentioned a moment ago will help drive this growth. And lastly fourth, continue building relationships with large food companies capable of deploying REV technology at meaningful commercial scale either themselves directly or by using 1 of our many royalty partners that offer co manufacturing services. Either way, we win. We feel we are well on our way to accomplishing these priorities. In Q3, we yielded superior results as noted to the prior 2 quarters. As quarterly revenue was $3.33 million up 21% year over year and gross margin in the quarter was 25%, up 6 points year over year. Additionally, year-to-date gross margin was 30%, So on target for our traditional gross margin that we approach for machine sales, blended with royalties. Royalties were $536 thousand in Q3, up 24% in the quarter year over year despite an adjustment of $62 thousand tied to an overpayment in Q2 by MicroDried. Which was related to a miscalculation on the amount owed. Without this adjustment, the normalized base royalties, does not include any exclusivity payments collected in Q3 would have been $600 thousand the most base royalties collected in any quarter by EnWave. There is ample opportunity for consistent royalty growth in the coming quarters generated from the increased manufacturing capacity utilization of the installed REV machine base. We have been told that there are many new REV product launches planned in the coming quarters some of which by blue chip food manufacturers using 1 or more of our established royalty partners. Any of these launches, if successful, could meaningfully increase our base royalties. With the information shared with us by current royalty partners, our royalty should push towards $3 million collected in fiscal 27. I am thrilled that EnWave is in a position to reach this level of royalties. it is a direct reflection of the efforts from our leadership group and a huge improvement from past years. Better put this into perspective, 3 years ago we collected a total of $1.5 million in royalties, half of what we anticipate in fiscal 27. Now while our quarterly financial performance continues to be influenced by the timing of large scale REV equipment contracts, made meaningful progress across several areas that we believe are important indicators of the underlying health and future potential of the business. Those areas include the number of active projects with billion dollar revenue companies, the continued sales pipeline expansion across multiple continents and the growing success of many REV-dried products in both the North American, Asian and European markets. Importantly, we are seeing increased engagement from both existing royalty partners and prospective customers and the quality of our commercial pipeline has continued to improve particularly among larger organizations evaluating reps as an alternative to incumbent dehydration technologies. We are also looking to disrupt their respective categories through innovation. From a business development standpoint, we generated 772 new qualified leads in Q3 through strategic targeting and trade show attendance. We held about 120 meetings and sent out about 1.2 thousand nurturing e-mails through our automated sequencing. A big effort from our sales group. In Q3, we exhibited at the pet food forum and the Institute of Food Technologists in The United States as well as FUMA in Japan and Vita Foods in Europe. Also planning to attend FoodTech Mexico and the upcoming supply side west in Las Vegas in the fall. The number of large scale prospective projects, some of which that were expected to close earlier in fiscal 26 are numerous. So those products that we thought we would close in Q1 and Q2 have not gone away. They have just been delayed into the quarters to come. The sales pipeline we have created is a direct result, again, of that effort and leadership through Danna Dunnage, our VP of sales, as well as the rest of our team. This heightened level of interest that we have has yet to directly affect our financial performance in terms of large scale machine orders, but those purchase decisions and commercial product launches should transpire within the next few quarters. The sales cycle for these larger organizations can be lengthy as we know, but successful conversion has the potential to materially expand our live installed base and recurring royalty revenue. Currently, we are advancing the sales cycle with several material targets that should convert into long term royalty partners in fiscal 27. 1 of the most important developments in Q3 as noted before is the continued expansion of our relationship with Procescir in Mexico. Following the successful deployment of their initial large scale rev system, Procescir committed to purchasing a second 120 kilowatt REV machine. This is exactly the type of progression we want to see from our royalty partners. A customer initially about REV validates the economics and product quality at commercial scale, builds demand for the resulting products, and ultimately adds additional capacity Repeat machine orders are particularly important because they provide tangible validation of both technology and the customer's underlying business case. Also in Q3 and to the date of this report, we signed 3 new licenses and 2 technology evaluation license option agreements. The first new license was signed with Ryzome, a company led by multiple Michelin star winning chef Dan Barber, Ryzome is focused on the development and commercialization of several food applications that are sustainable, innovative and unique. Part of this deal was the purchase of a pilot scale rev machine and I hope to be able to share more details on the potential commercial launch of these products in coming quarters. The second license was signed with The Dry Hub of Egypt. Our first foray into the African Continent. Who also purchased a pilot scale rev machine at 10-kilowatt unit. They are busy completing their facility to house this machinery along with several upstream and downstream processes. We hope to have the rev equipment delivered for installation in early fiscal 27, if not sooner. And the most recent new license was signed earlier this month with University of Limerick, who purchased the lab-scale REV unit to be used for research and development as well as industry engagement in Ireland and The UK. We hope that this relationship will spawn additional commercial opportunities for EnWave in the future. In regard to the technology evaluation agreement signed, 1 deal was signed with Swiss Cannabis Selection for further exploration into the use of REV technology for the production of various cannabis based products. And the second was signed with General Mills, a top-10 global food conglomerate Both companies are renting 10 kilowatt rev machines to help complete their respective evaluation. Our objective with relationships like the 1 established with General Mills is not simply to sell a piece of equipment. The larger opportunity is to embed REV into commercial manufacturing platforms where the technology can potentially be deployed across multiple products facilities, and geographies. We continue to actively support evaluations with several prospective partners and are working to convert successful product development programs into royalty bearing commercial licenses and equipment purchase agreements. These programs take time and large multinational food companies have rigorous product development engineering and procurement and capital approval processes. But the potential value of converting even a small number of these opportunities is significant. Currently, we are engaged with behemoths in the pet food, seafood, snack, and ingredient industries. Another important part of our strategy is expanding access to REV technology. Over the past several quarters, we have established relationships with commercial processors, research organizations, and innovation centers in most major global markets. These relationships create regional access points where prospective customers can test products, develop processes, and better understand the economic and product quality advantages of REV. This is important because adoption becomes considerably easier when customers can see the technology operating, conduct trials and develop commercial products without immediately committing to large scale capital equipment. We believe these hubs can shorten the path between initial interest and commercial adoption. They also support academic and technical research that can further validate the REV Valley proposition. Our recently established with the University of Limerick highlights the structure. Now our royalty business, remains central to the long term NWave investment thesis. that is no surprise to anybody. Have a broad installed base of royalty partners operating across multiple countries and product categories. The objective is to steadily increase that utilization of this installed base Some partners are quickly expanding distribution and enjoying immense commercial success. Others are introducing new products and several are evaluating additional rep capacity at the moment. This creates operating leverage within our business model. NWave does not need to manufacture another machine to benefit when an existing partner sells more rev drive product. As partner utilization increases, royalty revenue can grow with very little incremental cost to EnWave. That remains 1 of the most attractive aspects of our business model we are starting to see the real traction. Looking at our total number of active license agreements, 36 companies are actively deploying resources into the growth of REV drive products sales in market, while 16 companies are still either in the product development or testing phase associated with cannabis companies that purchase small 10-kilowatt units and are exploring the technology currently. The vast majority of the rev machine kilowatt deployed are being put to use to produce royalties. Meaning most large scale machines are in action currently. Internally, we have also continued to sharpen our commercial approach. We have become increasingly selective about where we allocate technical and sales resources. Our focus is on opportunities where there is a clearly defined commercial applications, efficient production volume, a credible path to capital deployment and the potential for meaningful recurring royalties. Simply generating more technology evaluation does not be objective. Our objective is converting the right evaluations into commercial licenses and machine purchases. We believe this discipline is beginning to improve the overall quality of our pipeline. Looking towards the remainder of fiscal 26 into fiscal 27 our outlook is constructive. We have several meaningful opportunities progressing and we have existing royalty partners evaluating additional production capacity. We have multinational companies conducting product and evaluations including General Mills and others. And we have a growing international network of REV users, research institutions, and commercial processing hubs supporting the adoption of the technology. Now before I ask Nav to further summarize our financials, I want to reiterate our 4 key priorities moving forward. Conversion of our pipeline opportunities into equipment orders, 1 successful execution on the equipment already under contract. Number 2, help our royalty partners increase utilization, 3 and lastly, maintaining financial discipline while pursuing these opportunities it is inevitable that the timing of large equipment orders will continue to make core revenue uneven, but that is inherent to our business. We driving the underlying indicators that matter. Installed capacity, repeat equipment purchases, partner utilization, royalty generation, and engagement with larger strategic customers. Now before Nav begins her financial statements and offers, I want to congratulate her publicly for her well deserved promotion to CFO. You have earned this opportunity, and I am excited to work closely with you to drive EnWave to the next level of success. Please take it away.
Nav Dhami: Thanks, Brent. Good morning, everyone, and thank you for joining us today. Please note that the figures I will be discussing can be found in our press release from yesterday and in the financial statements and MD&A filed on SEDAR. And all amounts are in Canadian dollars unless otherwise noted. I will make a reference to adjusted EBITDA, which is a non IFRS financial measure please refer to non IFRS financial measures disclosures and reconciliation to GAAP net income, both in the press release and in our MD&A. Also, note that the comparative period I will refer to throughout this presentation is prior year Q3 ended 06/30/2025. Revenue for Q3 were $3.3 million compared to $2.7 million in Q3 25 an increase of $569 thousand or 21%. The increase was primarily related to selling fully fabricated large scale machine to Procescir and increase in base royalties. Base royalty revenue were $536 thousand in Q3 26 compared to $432 thousand in the comparative period. An increase of $104 thousand or 24%. These royalties in Q3 26 were reduced by a 1-time $60 thousand adjustment related to the Q2 overpayment by MicroDried. 1 of the company's larger royalty paying license partners. Royalties due to the increased number of royalty partners, product sales and product production for the quarter. Additionally, as our royalty partners grow their business and increase capacity utilization of installed REV equipment, further REV installations will follow from new sales contracts and material royalty growth should continue in the coming quarters. Gross margin for the company in Q3 26 was 25% compared to 19% in the comparative period. With the increase primarily attributable to large lower fabrication costs from a large scale machines on a contract increased royalties as compared to the prior quarter. SG&A expenses including R&D were $1.2 million for Q3 26. Compared to $1.4 million for the comparative period, a decrease of $205 thousand or 15% with the decrease primarily related to lower personnel and third party commission costs. Adjusted EBITDA is a non-IFRS financial measure, so please refer to our MD&A for the reconciliation from GAAP net income to adjusted EBITDA. The company reported an adjusted EBITDA loss of $93 thousand for Q3 26 compared to adjusted EBITDA loss of $575 thousand for Q3 25, an improvement of $480 thousand over the comparative period. The increase was primarily related to selling a fully fabricated large scale machine and increased royalties and lower operating expenses. We finished Q3 26 with cash and cash equivalents of $2.5 million and a net working capital surplus of $7.1 million as of 06/30/2026. InWave also has a credit facility with Desjardins for growth and working capital purposes as of 06/30/2020 the credit facility had a total authorized limit of $2.3 million at a rate of prime plus 1.5% with $1.9 million drawn and $360 thousand remaining undrawn availability. As at 06/30/2026, inventory was $3 million compared to $1.4 million at a year end, an increase of $1.6 million, or 118%. The increase in inventory is a result of the manufacturing of large scale machines, specifically 100-kilowatt nutraREV machine and 2 small scale machines in aggregate were approximately 90% complete by June 30. 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. Off to you, Brent.
Brent Charleton: Thanks, Nav. Now, I mentioned at the beginning of our call that we are also working towards further significant expense reductions. Our goal is to reduce our expense base by more than $1 million by fiscal 28. I will be disclosing the details of this plan in the coming weeks So stay tuned. Before opening the call to questions, I want to leave shareholders with 1 final thought. EnWave has spent many years developing REV from an innovative drying technology into a proven commercial platform. Today, our technology is being used commercially across multiple countries, industries and product categories. The opportunity in front of us is increasingly about scale. Scaled installed base, scale our successful royalty partners, scale our relationships with major food companies, and ultimately scale the recurring royalty revenue generated from technology. The second 120 kilowatt machine order for Procescir is a good example of what that model can look like when a partner succeeds. We have cast a massive number of folks into the pond, have many fish on the line currently, and now we are reeling them in. We appreciate the continued support of our shareholders, employees, partners and customers Now with that I would be happy to open the call to questions. If you have any questions specific to Royalty Partner progress please ask. Thank you.
Operator: Thank you. At this time, we will be conducting a question and answer session. Before pressing the star key. If there are any outstanding questions at the end of the call, the company will be happy to take them by email at ir@enwave.net. 1 moment, while we poll for questions. Thank you. Our first question comes from the line of Noel Atkinson with Clarus Securities. Please proceed with your question.
Noel Atkinson: Hi, Brent and Nav. Well done on a much improved quarter for fiscal Q3. Nice to see that. First off, just in terms of this planned OpEx reduction or expense reduction that you are planning to do over the next months or so, I guess. Where does that kind of get you in terms of an overhead? Like, do you do you get to the point if you think you are gonna do $3 million of royalties in fiscal 27? Do you kind of get to the point where royalties are almost covering all your cash operating costs?
Brent Charleton: Yeah. You nailed it, Noel. We want to be faster to that particular scenario, and we think that we can get our base expenses down to about $3.5 million from the changes that we are contemplating. And of course, again, like I said, those details will be shared with the markets investor shareholders within the next couple weeks. With our royalty expected to reach about $3 million in fiscal 27, we are getting ever close to that scenario. And so by 2028, we think that we should be generating royalties well above what our base expenses are to run this business.
Noel Atkinson: Okay. Brent. Secondly okay. So it sounds like there is now as you said, multiple new product lines that could launch with the blue chip companies. Like, I presume that is blue chip CPG companies and in 2027. Can you talk at all about you know, to the extent that you know or the extent you can disclose, like, geographies, is it human? Is it pet? Is it snacks ingredients? Like, what is it that like, really driving the interest on from the blue chips right now?
Brent Charleton: So, yeah, your assumption is correct, and that is blue chips CPG companies in both the pet and human space. And so we are knowledgeable of several of these launches. Information has been shared with us by our partners who are co manufacturers for these larger organizations. And those larger organizations were also directly working with on the product development side so we have insight. Those should be primarily North American launches. Albeit some of the co manufacturers that will be participating in these opportunities may be based outside of North America, say, in Europe, in certain cases. To help support some of these new products being introduced to market.
Noel Atkinson: Okay. Brent. Then finally so, you know, this might be a very similar question here, but as you are going out over, like, the next 12 months or so and you are seeing royalty growth, like, we see from, BranchOut Foods talking about like, tripling or quintupling their ingredient production, you know, for, like, dried pieces that are going into CPG products, for, you know, flavoring and color and that sort of thing. And we see them, you know, doubling their production for new listing wins and US retailers for their own branded products. Like, are you seeing this fairly broadly across, you know, the partners that you are working with? Is it hey. We have got a couple partners that are just blowing the doors off and are just leading the way for everybody, or are you act are you also starting to see some of those other commercial licensees that you have had for a while starting to say, okay. This is really starting to pick up, and we are really starting to get going with this.
Brent Charleton: Good question, Noel. So across the board, I would say the majority of royalty partners are seeing a rising of ties in overall royalty payments coming through, which is great indicatively that RevDrive products are further displacing other alternative in market. In terms of leading the way, branch out foods and microdried are by far showing the most growth in terms of royalty generation. We saw, like, a 265% increase year over year for BranchOut Foods as they are ramping up their facility and then landing those deals you have you have talked about. And then in terms of market share, saw very healthy growth, like, in the 24, 25 percentile growth year over year for them. And from past discussions in the last month, like, last month, again, we are quite confident with that expectation of 3 million in royalties based on machine utilization that is been shared with us tied to specific projects. And some of these larger royalty pairs. And the potential for, again, additional repeat per service from these folks some time in the latter half of fiscal 27. So we do have better clarity to provide confidence behind that assumption, given, again, the information that was to share with us.
Noel Atkinson: Okay. And then just 1 more for me before I get back in the queue. So, okay. So this always sounds, you know, pretty exciting for 2027 if all this all the stars kind of align here. Are you seeing that like, the c like, the quote, unquote blue chip CPG companies that are now looking to do these product launches. Like, what is been the sales cycle of them working with you or working with your co packer partners in terms of getting to the point to say, hey. You know what? I think we wanna go launch with this. Has it been, like, a 2 year cycle or a 1 year cycle? And then for the newer ones that are coming in, are you seeing an acceleration of that decision to say, okay. Let's just get going. Like, the that there is been again, I am I am leading this a bit. Is there validation that you are seeing in the market that is driving these blue chip companies to say, okay. Like, vacuum microwave is now something that we can really kinda latch onto.
Brent Charleton: So I will start with the timing. So, typically, the like, the forthcoming meaningful launches from large billion dollar CPG companies are through 1 to 1.5 years of development. So in the product development, matching them up with co manufacturers. Thankfully, many of our roles partners are already approved suppliers for many of these large CPGs. So you skip that headache because they have to do facility audits and all of those things. And so, yeah, 1 to 1.5 years to the point where we are at now where there is planned launches in calendar 27 or fiscal 27 for us which is great. And then, obviously, additional success in market is driving faster decisions. So, 1 example of that would be some of the, existing relationships in pet that some of our co manufacturers have, and they have already supplied them with a certain type of product, which is doing really well in market. And then they show a better version of it at slightly less cost. i.e., not freeze-dried, but vacuum microwave dried. And so that really gets an exciting move faster because they already know there is demand in markets for these types of formats. But they could provide a better product at lower cost. So, that scenario is really driven some of the decision points more quickly than maybe, they would have been in times past. Okay. Brent. Alright. Thanks very much, Noel.
Operator: Thank you. As a reminder, if you would like to ask. Our next question comes from the line of Bart Gomera with Baird. Please proceed with your question.
Bart Gomera: Hi, Brent. This is Bart from Belgium. Interesting quarter. Can you give me an idea on the number of machines that have not been sold that are in inventory right now.
Brent Charleton: Currently, we have a pretty much fully built 100-kilowatt REV machine in inventory and then we have several 10-kilowatt units in inventory as well, which we always carry. So we can readily deploy them for different evaluation projects. So the majority of the inventory number in our financial statements is primarily the 100-kilowatt nutraREV machine. And I did have another webcast question that kinda ties into this question from you, Bart. he is like, you know, where were the large opportunities earlier in the year? And I will say that 3 of them are still very active. Were looking to close before the end of this calendar year, and only 1 of them went away. So we had a closed, Procescir. So if we had closed, obviously, 3 out of the 4 that at the time we assumed, we hopefully would have had 4 machines closed year to date, but that just has not been the case. They are still in the pipeline, and we expect that to transpire sometime in the next quarter into fiscal 27.
Bart Gomera: Okay. And do you have anything planned in terms of a new big rev machine where you are anticipating an order, or are you waiting for the 100-kilowatt machine to be sold?
Brent Charleton: I would state that there several projects that are getting to decision points. More near term. Than long term. And the difference in starting to prebuild another large scale machine versus getting order through our traditional 40% deposit, 3 months into the fabrication, 20% before shipment, so we can manage out the cap appropriately is de minimis. So from our standpoint, strategically, we are just gonna push forward to try and close these deals. And then once we receive deposits, start building the next machines.
Bart Gomera: Okay. Thank you. And can you give me some sort of feeling how the utilization rate across the different client base is meaning is it close to 50%? Is it close to 95%? How close are we to full capacity utilization that in fact the clients are forced to buy a new rev dryer.
Brent Charleton: Totally varies. From royalty partner to royalty partner. So some are closing in on, like, 90, 95% capacity utilization. For certain large scale equipment. Others are in the range of like 40% to 50%. Some that were maybe operating at 80% of using that, but 1 presses a large dairy company who is actually down year over year, like, close to 90% in royalties. And that is because they lost a industrial buyer of it as an ingredient. Is expected to return in October of this year. So we even though we had very good royalties this quarter, that is also including a large reduction in that particular royalty payer, which is expected to rebound. Later in the year. So ebbs and flows across the board but overall as I alluded to in an earlier response, there is an overall rise in the tide, I would say, in terms of capacity available in the installed base, there is probably another, like, 25 to 30% available in the installed base. Do you like to generate further royalties for EnWave?
Bart Gomera: Okay. Well, thanks and good luck this and the next quarters. Thank you.
Brent Charleton: Okay. Seeing that there are no other dialing questions at this moment, there are 2, again, web questions that were posed. 1 was in that why were some of the larger machines delayed at the same time earlier this year. I can give you sort of high level details in the 3 that have been delayed. 1 went away for, alternative protein company who decided to go with a cheaper air drying option, but the other 3 that are very much in play currently as well as a potential 4th here that hopefully be talking about in a month or so. It is in the pet industry for new facility that is being built original idea was that the machine was gonna go into an existing facility, but then they the operations folks rejig the plan on that. So that is a 2027 delivery, potentially. The second was to do with a product launch that got delayed. that is now launched currently, and we are hoping that the metrics tied to that product launch support the investment in large scale piece of equipment in the short term. And then lastly, there was a partner that had an exclusivity requirement to a large scale piece of equipment before March 31. Indications were that they were gonna move forward up until about a week before the end of March, and they said they were going to delay their decision. And now we are talking to them again about increased capacity as their business has grown since that time. So very much also in play, those 3 other large scale opportunities. Various reasons to calculate and out of our control. But we have to continue to soldier on and continue to pursue closing those deals. The second question came in was about the royalty pipeline indications for fiscal 27. I think we covered that off with responses to Noel and Bart. We do have great clarity in terms of some of these product launches, expected utilization some of our larger royalty payers. And, some of the publicly disclosed forecast like, the company like Branch Out Foods, does, again, support a quicker path to $3 million in royalties. In the next fiscal, given the information and the wins that they have been able to share publicly.
Operator: And with that, I got 1 more question down below. So for the delayed machine sales, a year ago, they were close to the decision point, and now they are close to a decision point. What has transpired over the year, what turned around a year ago when they were not close to decision point? Yes. I mean, the explanation I just gave for the 3 different reasons for those projects is that it had to do with operations that infrastructure has changed, had to do with product launch delays, which is now taking place. And in the case of the other, it was more so getting to a critical point with business success to justify the CapEx to purchase a large-scale piece of equipment. Even though they perhaps lost their exclusive rights in their license because of this delayed decision. Okay. So with that, I would like to thank everybody who is joined on our Q3 conference call today. And if you have any further questions pertaining to the company, please feel free to reach out to Nav or me. At this time, you may disconnect. Thank you. Thank you. Concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.