March 30, 2009

Dear Investor,

Over the past few months, EnWave's management team has been congratulated by a number of shareholders, relieved that our stock price has not been “hammered” as badly as many other micro caps in this unprecedented economic crisis. While we appreciate the encouragement, and recognize the shares are trading close to the June 2008 private placement issue price, I believe EnWave shares have actually been affected as much as many other micro cap companies. At the moment, the shares are still trading significantly below the Company’s inherent value based on the substantial accomplishments we have achieved over the past few quarters.

Since last summer, we have made tremendous progress towards achieving our mission of replacing freeze drying as the new industry standard for dehydrating food and biomedical applications. These accomplishments include:

• the sale of our first commercial nutraREV™ technology for dehydrating blueberries and cranberries;
• the development of a new powderREV prototype capable of converting a continuous stream of liquid into powder for food and biomedical products such as probiotics and enzymes;
• the creation of freezeREV, a high-speed microwave-assisted dehydration process for pharmaceuticals which require very low moisture content for extended shelf-life;
• extremely positive shelf-life results from our Rotavirus vaccine dehydration testing program; and,
• multiple patent applications supporting these technology advancements.
  

The Company has now proven that we can translate engineering and scientific R&D into commercial products with nutraREV™. Using this first platform to build sustainable cash flow, our investors’ technical risk exposure is reduced, as is our reliance on expensive equity issues for primary financing.

We have also made excellent progress in generating test data to prove the concept of our earlier stage powder and vial dehydration prototypes. We are now creating commercial designs for these methods, and are searching for collaboration opportunities with larger established industry partners to help us achieve commercial success in these areas.

It is a great time to be an EnWave shareholder.


Update: nutraREV™ technology

The announcement of the first commercial sale of nutraREV™ food dehydration technology in early March 2009 represents a great leap forward for EnWave because it proves the technology has an exciting future in the global food processing industry. Using nutraREV™, CAL-SAN Enterprises, Ltd. of Richmond, B.C., one of B.C.’s largest blueberry producers, has developed a new dried blueberry snack, along with a baking and cereal ingredient product line for sale throughout Asia and North America.

The reasons why CAL-SAN chose our technology over other dehydration methods are the same reasons we believe that nutraREV™ will ultimately replace its competitor, freeze drying, for berries and many other food applications:

• Faster – nutraREV™ reduces food dehydration time by more than 95%, from days to minutes.

• Better – nutraREV™ puffs berries for improved appearance, and retains excellent colour, flavour and texture with similar nutrients and shelf-life to freeze drying.

• Cheaper – nutraREV™ is a continuous process, capable of reducing energy consumption by as much as 70% and capital costs per-unit-dried by more than 80% by increasing overall throughput.

The food dehydration sector represents a significant market opportunity for EnWave as more than 400 fruits, vegetables and meats are currently freeze-dried throughout the world. Almost $2 billion worth of freeze drying equipment is sold on a global basis per year, with the food industry representing the largest market followed by the pharmaceutical industry. Offering new technology with such substantial advantages will provide EnWave with an excellent opportunity to build a significant market position in the dehydrated food sector.

With this first sale, the Company has also made a major financial step forward in cash generated by the sale, along with a royalty of up to 10% of gross revenues derived from the use of the technology which is estimated at $300,000 to $500,000 each year the machine is in operation. The ability to establish such a significant re-occurring royalty stream is a reflection both of the advantages of nutraREV™ over freeze drying, along with EnWave’s extensive patent protection.

We are now working to sell a second nutraREV™ machine in 2009, and 3 to 4 additional machines by the end of 2010. If we meet our sales objectives, the revenue from the sale of the technology, combined with associated royalties, could provide ongoing cash flow sufficient to cover current overhead requirements by Q4 2010. At the same time, we also plan to build an international marketing and equipment supply network to aggressively expand and support the global sale of nutraREV™ technology, providing the capacity to deliver 20 to 25 machines per year by 2012.


Update: powderREV Bulk Liquid Dehydration

In 2008, EnWave developed a new technology platform called powderREV for dehydrating a continuous stream of liquid into powder to enable longer shelf-life and more efficient delivery for consumer products containing live or active ingredients. powderREV technology is being designed as a high-speed alternative to large-tray freeze drying equipment which is slow and expensive. In addition, tray freeze dryers are used today for many powdered food products requiring high nutritional retention or superior flavour such as freeze-dried coffee.

Other powder drying methods such as spray drying are faster and less expensive than freeze drying, but unable to handle sensitive materials without reducing the efficacy of the active ingredients, or altering the flavour. EnWave’s goal is to introduce powderREV as a method for drying sensitive materials that is at least as effective as a freeze dryer, but with the speed of a spray dryer. We believe this will create a new market standard for processing sensitive high-value bulk powders.

We recently tested soy milk and skim milk using the current powderREV prototype, and have now initiated an expanded testing program with a variety of other materials including food cultures, probiotics and fine biochemicals such as enzymes. These products are currently used as healthy additives to cereals, snack foods, yoghurt and other dairy products, or as starter cultures to affect the growth of other organisms.

In 2009, EnWave plans to build a larger prototype with the goal of collaborating with an industry partner to complete the commercial evaluation and scale-up of this technology. The food culture industry is not subject to the extensive regulatory approvals which makes the ultimate commercialization process faster and less costly than is expected for regulated pharmaceuticals. The base technology might also be transitioned to other food and pharmaceutical industries where freeze-dried bulk powder is currently the norm.


Update: bioREV™ & freezeREV Pharmaceutical Dehydration

In 2008, EnWave successfully demonstrated that the prototype single-vial bioREV™ technology could produce a viable, shelf-stable vaccine using a proprietary Rotavirus formulation supplied by our partner, Aridis Pharmaceuticals. We have now conducted additional testing on a Salmonella typhi bacterial vaccine called Ty21a. This vaccine is known for being difficult to freeze dry due to the sensitivity of the organism, and neither bioREV™ nor freezeREV were able to improve upon freeze dried results. EnWave will continue to use these two technologies to build our database using a wide variety of live organisms in order to determine where the technology can provide the most value-added to the pharmaceutical sector.

In the summer EnWave began collaboration discussions with a multi-national pharmaceutical manufacturing company and, through meetings with their operational and technical group, we created the conceptual design for a commercial scale freezeREV technology, intended to replace large conventional batch freeze drying systems. In early 2009, before completing the collaboration agreement and initiating the first stage testing program, the potential partner regrettably put new technology development activities on hold due to the uncertain economic conditions. Despite this set-back, we were very encouraged by the level of interest in our technology at the corporate, research, and operational levels of that company, and we will continue to search for new collaborations in 2009 to support commercialization of this technology.


Final Thoughts

Corporately, we are now focused on the marketing & sales cycle for nutraREV™, and on developing relationships with industry partners and customers to expand the market and build a successful high growth business for this technology. For the earlier stage platforms we are actively pursuing a number of partnerships to help us commercialize these opportunities. In addition, we continue to evaluate a number of national and international grant opportunities to support the development of our prototypes. 

I want to thank the EnWave team and our many stakeholders for their continued belief and support in our Company. Despite the challenging times, we remain committed to keeping a tight handle on spending, and will stay focused on investing our capital in projects which create the most value for our shareholders.

Best regards,

John McNicol
President & Co-CEO
EnWave Corporation

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