Hello, and welcome to the EnWave Corporation 2021 Annual General and Special Meeting of Shareholders. It's now my pleasure to turn the call over to John Budreski. Please go ahead.
Thank you very much. Good morning, everyone, and welcome to the 2021 Annual Shareholder Meeting of EnWave Corporation. I'm John Budreski, as mentioned. I'm the Executive Chairman of EnWave. Before we commence the formal business of the meeting, I'd like to provide some opening remarks. Firstly, we'd much rather hold this meeting in person. All of us at EnWave truly enjoy the annual get-together and a chance for first-person conversations. However, we're having a virtual shareholder meeting again this year because of safety concerns related to the ongoing COVID-19 pandemic, because of the concerns and demand that we do so. We thank you for your forbearance and for dialing in or for logging in today. Similar to last year, our shareholder meeting will comply with applicable legislation, followed by a presentation from EnWave CEO, Brent Charleton.
I want to first advise you that on this call is Brent Charleton, EnWave CEO, Dan Henriques, our CFO, and also the newly minted COO of NutraDried, our subsidiary that makes Moon Cheese, and also Christine Gregory, Secretary for the Meeting. Mita Garcia, who is with Computershare, is the scrutineer and is the independent person in charge of the vote counting and all other related responsibilities. It's also on the call. Let's start with an overview of the process for this meeting. Each attendee today should have registered their attendance with a Computershare representative prior to joining this platform for the purposes of registration and record-keeping in order to enable Computershare to prepare their scrutineer's report for this meeting. The primary difference between the virtual format and an in-person meeting is the stratification of shareholders into two groups: being registered and non-registered shareholders.
To be a registered shareholder, your shares need to be registered in your name. Everybody else is non-registered, sometimes called a beneficial shareholder, which means that you almost certainly have your shares held in a book-based system at a bank or a brokerage firm. There's a nuance here. Being on the registry or a registry at your bank or broker's office does not necessarily mean that you are a registered shareholder for the purposes of this meeting. Registered shareholders are almost always those who have their name on an individual certificate. These are a very small subset of the shareholder group. So here's the big difference. Registered shareholders get to speak and, if desirable, enter or change their votes while attending the meeting. Non-registered shareholders are only permitted to listen and watch.
It is expected that non-registered shareholders attending this meeting have already registered voting preferences in advance for the formal business of this meeting through their brokerage firm or bank. If any non-registered shareholder wishes to raise a question or comment during the formal part of this meeting, I'll be pleased to speak with them on a one-to-one basis afterwards. You can call me at 416-930-0914. All shareholders being registered or beneficial in attendance should by now or soon will have spoken directly with Computershare representatives. Any registered shareholders present who have either not voted or wish to revoke a previously cast vote in order to cast their vote at this meeting today should have completed that process with Computershare while registering to join this meeting.
In addition, since voting on this platform cannot be by way of show of hands like we would do in an in-person meeting, for each motion today, valid proxy holders and registered shareholders will have voted in advance. So let's kick things off. With the consent of those present, I will act as chairman of this meeting, and I will now call the meeting to order and call upon Christine Gregory to act as secretary of the meeting. Computershare Investor Services, through its representative Mita Garcia, will act as scrutineer for the meeting. As mentioned, once we have completed the formal business of this meeting, Brent Charleton, CEO of EnWave, will give a brief business presentation, and you can ask questions then.
As would be the case in an in-person shareholder meeting, only registered shareholders and valid proxy holders at the meeting are permitted to comment on any of the proposed motions today, and they can do so by pressing star one on their phone at any time after each of the respective motions have been proposed to the floor, and we will address your comments live on the platform. Let's start out. The notice calling the meeting of shareholders and describing the matters to be considered today was mailed on February 18th to all shareholders of record of EnWave effective February 9th. The declaration of this mailing will be available for inspection by any shareholder who requests it and will be retained with EnWave's records. In accordance with the corporate statutes and bylaws governing EnWave, and to make this simple, I will propose all motions.
Brent Charleton will move these motions, and no seconder will be required. Will someone move that the reading of the notice and the statutory declaration be dispensed with?
I so move.
Okay. We're going to wait a few seconds to see if there's any registered shareholders that want to comment, and they will continue on. We'll have this pattern through all of the motions. So I think we're clear. Since Computershare has tallied the votes for all the motions today in advance, they have advised me that today's vote is in favor of the motion. Accordingly, the motion is carried. I will now ask Computershare to report the results of the preliminary scrutineer's report for today's meeting.
The preliminary scrutineer's report indicates there are present at this meeting in person or represented by proxy 158 shareholders holding a total of 28,997,324 shares. This represents approximately 25.98% of the company's issued and outstanding shares. On the basis of the foregoing, there is a quorum present.
Thank you, Mita. The final report on attendance will be retained with EnWave's records. Notice has been given as required by applicable law, and as a quorum is present, this meeting is properly constituted for the transaction of business. I have been advised by Computershare that the proxies deposited for this meeting have been voted overwhelmingly in favor of all of the formal business matters to be voted on today. Our first item of business will be the approval of the minutes of the last shareholder meeting held on March 20th, 2020. A copy of these minutes shall be available for inspection by any interested shareholder who requests that a copy be provided to them. Will someone move that the reading of the minutes of the shareholder meeting held on March 20th, 2020, be dispensed with and that they be adopted and approved as presented?
I so move.
Okay. We're going to wait another 10 seconds or so for any registered shareholder to comment if they choose. Okay. Computershare is advising that today's vote is in favor of this motion. Accordingly, the motion is carried. I now place before the meeting EnWave's audited consolidated financial statements for the fiscal period ended September 30th, 2020, together with the auditor's report thereof. These financial statements were mailed to each shareholder who requested a copy and were filed on SEDAR. Will someone move that the reading of the financial statements and the auditor's report be dispensed with?
I so move.
Okay. All right. Computershare is advising that today's vote is in favor of this motion. Accordingly, the motion is carried. I'm always grateful for this part. I can't imagine spending an hour and a half reading financial statements to people. Next item. Our next item of business will be the fixing of the number of directors. Will someone move that the fixing of the number of directors of the corporation at seven for the ensuing year?
I so move.
Computershare is advising that today's vote is in favor of this motion. Accordingly, the motion is carried. Next up, election of directors. Our next item will be the business will be the election of the directors of EnWave. Management has nominated the following directors: Brent Charleton, Mary Ritchie, Dr. Stuart Ritchie, Stephen Sanford, Patrick Turpin, Pablo Cussatti, and myself, John Budreski. Will someone move the nomination of these seven persons as directors of EnWave to hold office until the next annual general meeting or until their successors are elected or appointed?
I so move.
Computershare is advising that today's vote is in favor of this motion and that there are no further nominations. Accordingly, the motion is carried. As chairman, there are no further nominations. Will somebody move that the nominations for the election of the directors be closed?
I so move.
Computershare is advising that today's vote is in favor of this motion. Accordingly, the motion is carried. The next matter to be dealt with is the appointment of the auditors of the corporation. Will someone move the appointment of PricewaterhouseCoopers LLP, as auditors of the corporation until the next annual meeting of shareholders and that the directors be authorized to fix the auditors' remuneration?
I so move.
Computershare is advising that today's vote is in favor of this motion. Accordingly, the motion is carried. Next item is the approved stock option plan. EnWave is requesting its shareholders pass an ordinary resolution reapproving its existing rolling 10% stock option plan. As detailed in the circular mailed for this meeting, this plan has previously been approved by shareholders and under TSX Venture Exchange policy, it must be approved and ratified by the shareholders on an annual basis. This plan is available for review under EnWave's profile on SEDAR. The exact text of the shareholder resolution required to be passed today is set out on pages 30 and 31 of the circular. Will someone move the adoption of the full text of the shareholder resolution set out on pages 30 and 31 of the circular approving EnWave's stock option plan?
I so move.
Computershare is advising that today's vote is in favor of this motion. Accordingly, the motion is carried. Approval of amendment and restatement of Bylaw Number One. The shareholders are being asked to approve the amendment and restatement of the company's Bylaw Number One, the purpose of which is to update and modernize it as set forth in detail in the circular. The exact text of the shareholder resolution required to be passed today is set out on page 32 of the circular. Will someone move the adoption of the full text of the shareholder resolution set out on page 32 of the circular approving these matters with respect to EnWave's Bylaw Number One?
I so move.
Computershare is advising that today's vote is in favor of this motion. Accordingly, the motion is carried. As all formal business of the meeting has now been concluded, will someone move to conclude the meeting?
I so move.
Computershare is advising that today's vote is in favor of this motion. Accordingly, the motion is carried. Formal business of the meeting is now concluded. Thank you very much for attending. Now we'll turn it over to Brent Charleton to give a brief presentation of the corporation, and we thank everybody for their forbearance with this process.
Thank you, John, and good morning to everyone. Given that we have begun to hold quarterly earnings calls to detail our financial performance on a more consistent basis, and with the most recent one being held on the 1st of this month, I will use this opportunity to elaborate on the current corporate strategies we are undertaking to grow our business. Before I begin, I would like to make everybody aware that the information that we are about to present contains some forward-looking information. It is based on management's expectations, estimates, and projections. These 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.
EnWave's mission is to disrupt the global food and cannabis industries through the material commercialization of our proprietary radiant energy vacuum, or REV, dehydration technology. Our distinctive excellence is that our company continues to offer the most scalable and reliable vacuum microwave technology in the world. Further, we have accumulated years of processing and operational expertise that enables our licensed royalty partners to accelerate innovation and reduce the time needed to develop manufacturing solutions. We are working to leverage this distinctive excellence by employing a diverse commercialization strategy to monetize our tech. I'm going to first discuss EnWave's core technology business and then provide an update regarding NutraDried, our wholly owned operating subsidiary. Despite our position of strength as the global leader in vacuum microwave, the pandemic and the softness in the Canadian cannabis market in 2020 presented material challenges to the operation of our business.
EnWave responded quickly to the pandemic by reducing expenses by 36% as an effort to preserve cash until the business outlook became more stable. We also developed new sales and marketing strategies. We created remote installation protocols for our machinery to combat the challenge of traveling internationally, and we evaluated, planned, and then committed to adding REVworx, a toll drying service, to our commercialization effort. All of our projects were put on hold from February to September 2020. When business began to pick back up again, we quickly realized that we could operate EnWave successfully with the same lean cost structure and continue to leverage outsourced manufacturing and third-party machine resellers. We're now poised to grow in fiscal 2021, doing more with less by working harder and smarter. A great example of this is our manufacturing/engineering department.
Since the beginning of the pandemic, we've reduced our labor costs across all functions and lowered supply chain costs with improved efficiencies, including moving all engineering and manufacturing personnel to one manufacturing location, leading to improved margins. In regards to our facility improvements this past year, we successfully obtained our Health Canada cannabis R&D license and subsequently built out a controlled lab to engage with prospective partners and collect further data to support the value proposition of REV in the cannabis industry. This was a very important capability to gain. REVworx is the next major facility improvement project, and we feel will act as a major commercialization accelerator for us. I mentioned new sales and marketing efforts employed during the pandemic in an effort to increase engagement.
Some of these tactics included the professionalization of our REV-dried sample packages, as these are often the first impression that we make with potential partners. We also upgraded our collateral, including visuals, and produced over 24 of our Food for Thought podcast episodes, generating north of 3,000 views. We've also stepped up our industry engagement by participating in trending conversations, and we've rolled out strategic advertising programs, the most recent aligned with the publishing of our cannabis white paper, which highlighted third-party data that confirms REV's value proposition. In the past year, we increased the number of international sales representatives, organizations that have technical ability and proven experience, from one to 12 official agreements. four of our 42 current royalty partners were generated by this reseller group, and we anticipate many more in the near future.
EnWave personnel still drive the commercial negotiations in these scenarios, but the collaboration with these qualified groups has been second to none for us. The linchpin of EnWave's business is our intellectual property, including our patents, know-how, and equipment, which is the embodiment of our IP. In the past year, we thoroughly reviewed our IP portfolio with the assistance of our legal counsel to reduce 30% waste in IP maintenance fees and continue the protection of 19 separate patent families in over 40 territories. In the past year, we filed for six additional patents, each displayed on this slide. We are confident that each will widen the moat around our technology and further separate EnWave from its competition. The build-out of REVworx is progressing well, and we anticipate this service offering to begin in the spring. Right now, we are patiently waiting for our construction permit to trigger our contractors.
Upon startup, we plan to begin our certification pursuits, including SQF, a critical requirement to work with larger global food companies. The pipeline of interested potential REVworx customers is also building, but we are in a situation where the plant needs to be available before we can confirm these tolling contracts. Once started up, we will have 90 kW of vacuum microwave capacity, as well as auxiliary upstream and downstream equipment, including bulk packaging. We firmly believe that REVworx will facilitate an increased number of REV-dried products in the market and lead to accelerated, meaningful commercialization of REV technology. REVworx will increase the speed to market for REV-dried products, reduce the financial risk for REV adopters, allow for meaningful market testing, reduce the operational burden for many companies, and will provide companies with the ability to scale the production of their products quickly.
We are very excited about the potential of REVworx as the only vacuum microwave tolling facility that we know of globally. EnWave's participation in the cannabis industry began during a phase of the market where due diligence was average at best, to be honest, and we benefited. When we first sold REV equipment to licensed producers in Canada, we knew we could dry cannabis material, but we had little idea on what the qualitative outcome might be when compared to incumbent technologies. Thankfully, our experience working with certain royalty partners and our Health Canada R&D license has allowed us to refine processing protocols that provide material advantages to the end user. In fact, some of our royalty partners have assisted us in the selling process, allowing for tours to be held at their facilities and speaking to prospects about the benefits they see in REV. This has been incredibly helpful.
We see massive opportunities for growth internationally, and we recently sold our first large-scale REV machine to a U.S.-based cannabis producer. Our pipeline of prospective licensees seems to be growing on a weekly basis due to our marketing efforts. Beyond North America, it's critical to offer GMP machinery for processing medical cannabis. Our engineering team has successfully designed both 10-kilowatt and large-scale GMP machinery, and we do expect our first sale of GMP cannabis-related REV equipment in the near term. We still see attractive upside in the Canadian market, but it's still in flux, and we're likely to see further consolidation and maturation in the coming year or two here. In regards to cannabis processing, we've developed two principal protocols.
Terpene Max dries cannabis down to 10%-14% moisture in under two hours while retaining 100% of the cannabinoids, removing hexanols to reduce the harshness of the smoke, and allowing for up to 20% total terpenes to be preserved when compared to room rack drying. I would say more than the room or rack drying. The Rapid Extract method is aimed at cannabis plant material destined for extraction, and that process is quicker at about one hour and will dry the material down to 5% residual moisture. This graph illustrates the difference in terpene preservation between our Terpene Max process and traditional room or rack drying.
As you can see, a material difference, and we were now able to provide prospects with COAs proving this data for multiple strains, multiple test studies, and then, of course, making introductions to the actual commercial users of our technology, which further de-risked potential adoption. Many of our shareholders don't know quite what our machinery looks like, so I took this opportunity to provide a snapshot of one of our 10 kW machines batch units that have been installed at one of our cannabis partners. This is currently being used for commercial production. Next slide illustrates the entry lock portion of a 60 kW continuous unit that's being used commercially today. As you can see, a tray is being filled up with pre-trimmed cannabis material, and it will go into an entry lock, which will equalize the vacuum on the interior of the machine.
That door will then shut, and then an interior door will open as one tray enters into the main chamber. You'll have simultaneously another tray preparing to exit on the opposite end. And as I mentioned, the processing times to dry are maximum two hours, whereas the incumbent technology of room or rack drying can take seven-14 days. The last illustration of the quality of cannabis processing that REV offers are some very close shots of the trichome structures of two specific strains that were dried from 80%-85% moisture down to 14% for combustible use. So on the left of this slide, you see the fresh cannabis, and on the right, the same samples, but dried down to 14%. As you can see, that trichome structure is maintained, and that's something that is critical for the discerning eye in manufacturing of cannabis.
We're hopeful that our commercialization efforts in the cannabis industry will yield significant financial upside for this year and beyond. So I'm going to talk a bit about the pharmaceutical industry now. Many of our audience today have likely read the research article published by Merck, a licensed partner of EnWave, regarding their study showing that our technology reduces the drying time of vaccinations by 80%-90% while offering repeatability, stability, and efficacy on par with the industry standard of lyophilization. This research article stimulated a wave of inbound inquiries from some of the largest pharma companies globally, many of which are contemplating trialing our machinery either in Vancouver or at GEA's facility in Germany and/or procuring their own test equipment to be used in-house.
Merck continues to test the GMP REV equipment EnWave supplied to them, and we hope to provide an update on that project and commercial path later this year. We continue to collaborate closely with GEA Lyophil, our joint development partner, to design scalable GMP pharma equipment. This slide highlights some of the great commercial progress that we've seen year to date in fiscal 2021. So far, we've been able to confirm nine 10 kW orders and three large-scale purchase orders, one of which tied to NuWave, who are developing a bake product, and we would still need to receive the requisite deposit to confirm that particular sale. But of course, we mentioned the Illinois-based cannabis company and Patatas Fritas, who's a partner of ours in Spain working on the commercialization of a dry cheese snack. They scaled from a 10 kW to a 100 kW.
Other exciting projects that we pushed forward this year include the U.S. Army purchasing their second 10 kW unit for the development of Close Combat Assault Rations. That project is very active right now, and I'm working closely with them to definitively agree with a third-party industry partner to take that 10 kW , start producing combat rations with the path towards larger-scale commercialization within the next year or two. We've also recently installed two large-scale 100 kW lines, one in Peru and one in Costa Rica, which will certainly aid in the growth of our royalty generation throughout this fiscal year and beyond. Our goal for fiscal 2021 is to confirm five large-scale orders, which is 60 kW or greater, and 12 small-scale 10 kW units. If we're successful in achieving that goal, then we should be cash flow positive as a business unit.
2020, it was a tough year for NutraDried as the business unit encountered difficulties in meeting with new grocery distribution during the pandemic, and Costco business softened up. There were, however, several good points of progress. They completed a rebrand with a world-class external organization. They improved the consumer messaging and certainly improved the products in the portfolio in an effort to drive velocity and sales on a go-forward basis. They also professionalized the in-house sales function, developed new product formats that eventually graduated from the innovation pipeline to commercial launch, i.e., the P rotein blitz mix, which you see on this slide, which is now available on mooncheese.com. And in terms of online sales, it was up approximately 200% year-over-year, and that now makes up almost 20% of our monthly revenue. Great progress with online sales and marketing tactics.
Now, despite these positive steps forward, EnWave's board decided to restructure the business unit in early 2021 to address the significant increases in fixed overhead expenses that were not supported by the core business, i.e., non-club business, and now put measures in place for more effective inventory management and budgeting. We are now active in our search for a new senior leader to join our team and lead NutraDried back to sustained material growth. We have interviewed several candidates already and expect to make a hire within the next few months, if not sooner. I encourage all of you participating on the call today to put your orders in for a protein blitz mix at mooncheese.com. The new products are delicious, I assure you. In regards to our goals for NutraDried in fiscal 2021, we aim to confirm significant new distribution in the grocery and C-store channels.
Several opportunities are still being negotiated and pursued near-term, as well as win back meaningful club opportunities. We also have a keen focus on expanding our co-manufacturing and private label projects to use more manufacturing capacity and generate additional contribution margin. We are currently using about 30% capacity and are targeting a minimum of 60% capacity utilization by year-end minimum. We will continue to invest prudently into the business unit and be vigilant controlling fixed costs on a go-forward basis. It is imperative that we return to profitability as soon as possible. So today, I was able to touch upon the important areas of our business that we feel will contribute to improved commercial success in the future. For the remaining portion of fiscal year 2021, we are hyper-focused on generating positive EBITDA in both business units.
We plan to smartly invest funds to build out our internal capabilities, and we will continue to leverage our third-party supplier, reseller, and outsource manufacturing relationships for mutual benefit. We aim to successfully start up REVworx and win at least two anchor customers. We must confirm planned repeat orders from our existing commercial licensees, and if so, we will smash our targets. Lastly, we have a massive opportunity to dominate the cannabis drying industry if we execute the right sales and marketing strategies. We have the data. We know that it works, and now it's a matter of commercializing it efficiently. I'm confident in our growth prospects and believe we have the right team in place to generate significant shareholder value. Now, with my presentation complete, I'd like to open up the line to field any questions if there are any.
Thank you.
We're now conducting a question and answer session. If you'd like to be placed in the question queue, please press star one on your telephone keypad. One moment, please, while we pull for questions. Once again, that's star one to be placed in the question queue. If there are no questions at this time, I'll turn the floor back over for any further or closing comments.
Okay. So I'd like to thank everyone for dialing in today to participate in the AGM and to listen to the presentation. If anyone has further questions, they're free to contact either John, myself, or Dan Henriques directly, and we'd be happy to address any comments or concerns that you have about the business operations. And with that, thanks very much.
Thank you, everybody.
Thank you. That does conclude today's teleconference and webcast.
You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.