Quarterly Company Progress Report June 2017

Welcome to the June 2017 Quarterly Company Progress Report. This report covers details already reported to shareholders on the progress that companies have made since our last update. At the end of the report there’s also an update covering the latest happenings at Snowball Effect.

The information below is provided by the companies themselves, and participation in the report is at each company's discretion. Many companies have chosen to moderate the level of financial / commercial information included below due to sensitivity, with shareholders typically receiving more fulsome detail on company progress. There are a small number of companies not covered in the current report due to timing issues with their own shareholder reports. Updates from these companies will be added as their reports are made available to shareholders.


Zeffer is the largest independent, dedicated cider producer in New Zealand. The company raised $1.2m on Snowball Effect in March 2017.

  • We are now fully operational at the new site in Hawke’s Bay. The new premises are well placed to handle forecast annual volume of 500 - 600k litres for the year, with a current capacity of 1m litres and ample space to grow to 2m+ litres.
  • Volume for Q1 was ahead of budgeted volume and was an increase of 61k litres on the same quarter in the prior year.
  • Revenue up slightly against budgeted revenue and was up 153% against the same quarter in the prior year.
  • Our solid traction in China continues and we now have close to 100 taps in market, up from 50 since our last quarterly update.
  • We have been granted an International Growth Fund to accelerate our China growth strategy. This is a significant 3 year government grant from New Zealand Trade and Enterprise and will allow us greater focus and investment to capitalise on the opportunities we are seeing in China.
  • Our 'Cherry Bomb' cider took out the people's choice award at the GABS festival in Auckland, following on from the success of 'Apple Crumble' last year.

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Punakaiki Fund is one of the most active venture capital investors in New Zealand, with investments in 19 high-growth companies. Punakaiki Fund raised over $3.2m through Snowball Effect, over three separate offers in 2015 and 2016.

Key highlights for the quarter included:

  • The Investor Net Asset Value of the fund was $26.3 million (or $20.08 per share), a slight decrease from the 31 March 2017 Investor Net Asset Value.
  • New investments were made in Melon Health, New Zealand Artesian Water, Populate, ThisData (all new shares) and Vibe Communications (existing shares) during the June quarter.
  • A dividend was received from portfolio company Onceit.
  • Punakaiki Fund continues to assess potential investments in new companies, along with follow up investments in its existing portfolio companies.

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Squirrel Group is made up of Squirrel Mortgages, Squirrel Money, and TenanSee. It is this unique combination of (proprietary) technology working alongside a strong brand and a growing market share of mortgage brokering that puts Squirrel in the right place at the right time to lead market disruption.

  • Cash received via Trial commissions was up 28% on the previous quarter and 221.6% in the same quarter last year. Monthly trial commission payments have also reached a major milestone of $1million on an annualised basis.
  • House sales reportedly down 30% year-on-year, contributing to Squirrel’s mortgage settlement volumes being down 11.3% - this indicates a likely increase in market share for Squirrel.
  • Loans originated through the Squirrel Money platform grew by 25.1% in the quarter. The active loan book finished the first quarter with $8.7million up from $7.1million in the last quarter.
  • Operating costs are down 11.2% on the same period last year.
  • A reported EBITDA of $322,000 for the quarter shows an increase from a loss of $25,000 in the same period last year.
  • Operating cash flows have increased to -$69,000 from -$865,000 in the same period last year.

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Invivo isn’t just a winery; it’s a startup, taking on the world one mouthful at a time. We were founded by a couple of old school friends that liked wine so much they started a winery to make some – whatever it took. Like it says in our ads, our first vintages really were made from “Grapes, time and two maxed out credit cards!” Invivo currently sells in New Zealand and 17 offshore markets. Invivo was the first New Zealand company to raise $2m equity crowdfunded through Snowball Effect in April 2015. A video summary of Invivo activity since the last AGM is avaialble to view here: Invivo AGM.

  • 1.79 million bottles of wine were sold, with total sales growing 70% to $9.5m and generating net profit of $743k.
  • Invivo sales have increased 171% since the 2015 equity crowdfunding campaign.
  • In 2016, we partnered with Lion, and this support has seen 29% growth in the domestic market sales over the past 12 months.
  • In February 2017 Invivo launched in the US after signing with a distribution partner based in New York and have quickly picked up some great listings and coverage across the US.
  • UK sales grew 92% - following the signing of a distribution partnership with Conviviality, and secured a key listing with the largest retailer in the UK, Tesco.
  • Recently, we found ourselves in Kiev, Ukraine as the official wine of Eurovision (European Song Contest). With over 180 million viewers worldwide this was a huge event for Invivo.
  • Successfully launched Graham Norton Shiraz and Rose in Ireland, UK, Australia and New Zealand - 381,000 bottles have sold since November 2016.
  • Partnered with Paul Henry to launch his own Pinot Noir. Glengarry general manager Liz Wheadon said it was their most successful launch of a single wine ever.
  • Nigel Barker, former model, judge and photographer on America’s Next Top Model was appointed as Invivo’s US Glambassador.
  • Paul Schaafsma, former CEO of the world's fifth largest wine company has been appointed as a director of the company.

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WOOP makes cooking dinner easy and is a world leader in the pre-prepared food-kit delivery space. Founded by Thomas Dietz in 2015, WOOP is answering to the demands of busy professionals who are time poor but still looking to cook delicious healthy dinners. WOOP raised $800k through the Snowball Effect in September 2015.

Highlights for the quarter ending June 2017:

  • We have had strong revenue growth with +120% year on year growth and +60% on the previous quarter.
  • WOOP is now available in Auckland, Wellington, Hamilton, Tauranga, Mount Maunganui & Papamoa.
  • We have managed to re-write a lot of recipes to maintain customer prices and secure a 40% gross margin, despite an unusual weather pattern resulting in vegetable shortages and price rises.
  • We expanded our community of foodies with the launch of a new Foodie Guest Series featuring the chefs Nici Wickes, Ann Thorpe, Niki Bezzant, Jess Granada and Tamara Jonson.

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SOS is a medically formulated hydration drink mix that’s as effective as an IV drip. SOS raised over $250k through Snowball Effect in January 2016.

Highlights for the quarter ending June 2017:

  • National role out with Kroger underway. Kroger is US’s largest supermarket chain.
  • Roll out with Whole Foods and Sprouts confirmed for 2018.
  • 4,500 store roll out in USA planned for 2017 and through 2018.
  • SOS is now the world's first organic oral rehydration company. Non GMO product coming off production line in September.
  • 235% Gross Profit growth on the same period last year.

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Breathe Easy

Breathe Easy is developing Citramel, an inhaled medicine for the treatment of cystic fibrosis (CF) a chronic genetic illness affecting the lungs and digestive systems of approximately 75,000 people worldwide.

  • Breathe Easy received regulatory approvals and commenced a Phase IIa trial to test Citramel on cystic fibrosis (CF) subjects in New Zealand in early 2016. The double-blind cross-over clinical trial of up to 24 subjects commenced in two sites, Christchurch and Auckland, in May 16. In early 2017, the trial was expanded to a further two sites – Hamilton and Dunedin.
  • The Trial has progressed well with the last of the 23 CF subjects having completed their three-month commitment to the testing regime on 4 Aug 17. The results currently being processed are expected by the end of September 2017. These results will determine the future trial program, however in anticipation, the Company has commenced planning for a more expansive trial programme.
  • To fund the trial and additional in-vitro testing, in 2015 Breathe Easy conducted in parallel a wholesale and a crowdfunding capital raise, which in aggregate raised over $2m. In 2016 the company raised a further $560,000 through a private placement to existing shareholders. Depending on the outcome of the present trial, further capital raising may be required.

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