Quarterly Company Progress Report March Q1 2017

Welcome to the March 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 were the winner of the gold award for our Cidre Demi-Sec at the world’s most prestigious International Cider Awards held in the UK in the last week of April.
  • Revenue for the quarter ended March 2017 of $550k was up from $540k in the previous quarter, with expenses down to $171k from $188k over the same period, resulting in EBITDA growth from $16k in the quarter ending December 2016 to $38k in the quarter ending March 2017.
  • Volumes continue to grow, selling 86,000 litres in the March 2017 quarter, up from 76,000 litres in the previous quarter.
  • Growth in grocery cider remained strong, with sales up 65% against the same quarter a year ago. This is against a backdrop of market wide growth in grocery cider of 2.3% over the same period.
  • Growth in China has been strong with distribution continuing to ramp up. We now have over 50 taps in market.
  • We released our three reserve range ciders for the year, all of which have sold out from the cidery, however are available via vineonline.co.nz.
  • We are close to locking in our new premises in the Hawke’s Bay and will hold our AGM at this site.

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Roholm develops, markets and distributes the innovative Inverse Hair Conditioning System. Roholm's patented system uses sub-zero temperature (instead of damaging heat and chemicals) to improve the strength, condition and appearance of hair.

  • Sales in March and April were the highest in 8 and 10 months respectively.
  • $53k in March; $79k in April and $80k in May (Forecast).
  • The Business broke even and was cash neutral in April, which is the first time this has happened.
  • E-commerce sales have increased significantly (all be it from a low base) since the launch of our new website in March: 125 units (March to May).
  • Inverse launched in Taiwan, Hong Kong and Austria.
  • We have made the decision to widen our channel penetration (retail strategy) within each market thus moving away from our ‘salon-only’ approach.
  • We are still looking for alternative channels in the UK, after parting ways with our UK Distributor.
  • Our Brazilian Distributor has not been able to secure a successful entry into that market and we have therefore turned our focus to e-commerce.

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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.

  • Completed the $20.50 March 2017 offer and the $15 rights issue, raising new capital of $2.56m.
  • Made investments into Populate, Conqa, Weirdly, Hayload and Vibe Communications, and have made further investments after the end of the quarter into Melon Health and ThisData.
  • Punakaiki Fund fund are assessing further opportunities within and outside the existing portfolio companies.
  • Year-end total assets were valued by the board at $28.4m, giving a Net Asset Value of $26.4m ($20.10 per share).  This was up from $21.3m ($18.44 per share) at the end of the previous quarter.

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Squirrel Group is made up of Squirrel Mortgages, Squirrel Money (P2P Lending), and TenanSee (SaaS platform for property investors). Squirrel raised over $3.4m through Snowball Effect in April 2015 - the largest raise through an equity crowdfunding marketplace in New Zealand to date.

  • Cash received via Trail commissions was up 34% on the previous quarter and 200% on the same quarter last year.
  • Mortgage Settlements were up 6% on the same quarter last year and 27% for the full year with mortgages settled in the year ended 31 March 2017 reaching $1.05 billion (versus $1 billion projected in the Information Memorandum).
  • House sales volumes were down dramatically in the quarter following a period of significant volatility in the local and global economic, political and regulatory environments - adversely impacting mortgage settlement volumes.
  • The Squirrel Money active loan book finishes the year at just over $7 million with over $10 million of total lending since inception reached in early April 2017.
  • Operating Costs are well under control, down 6.5% on the previous quarter.
  • $1 million of additional capital was raised in the quarter.

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Heyrex is a pioneering New Zealand data and technology company that has commercialised a wearable technology for the global veterinary industry capable of managing diet, exercise, monitoring treatment and identifying the potential early signs of illness.

  • The wearable technology space continues to evolve and grow and industry commentators continue to forecast the pet wearable sector being worth over US$2b by 2021.
  • Customers of HeyrexVet have grown to include STEM Cell specialists, veterinarians and rehabilitation centres in the USA.
  • For the year ended March 2017, we produced a Gross Margin of 54%, Revenue of $788k.
  • To date we have sold 1,936 Heyrex units, and 86,654 Torus units.
  • Torus sales continue to grow and with the addition of consumables to the Torus range, we forecast additional growth over the coming year across the 20 countries in which Torus is now sold.
  • We are currently seeking pre-orders from existing and new distributors for new Torus consumable products including animal health supplements.
  • Heyrex is continuing to raise capital in order to support its growth and to take advantage of international market opportunities. Heyrex is currently seeking a further $4.0m that it forecasts will enable the Company to grow to break even in Sept 2018.

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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.

For the quarter ending March 2017:

  • We have generated strong revenue growth year on year of over 500%, and our Gross Profit grew by 863% year on year.
  • Our first quarter investment round was oversubscribed, with new investors bringing considerable FMCG IP to SOS.
  • Revenue for the quarter was 150% ahead of our revenue forecast, and expenses for the quarter were 10% lower than forecast.
  • We signed a new international distribution deal with a key Asian FMCG country.

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WOOP makes slow food fast 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 Snowball Effect in September 2015.

  • We are continuing on our growth trajectory with a revenue for the quarter ending March 2017 up 90% against the March 2016 quarter.
  • In this first quarter we had great success with our Golden Box campaigns. Every week one lucky customer won a golden box with a special foodie prize.
  • Street food series - we collaborated with some amazing street food chefs, and our Foodie customers were able to taste one of the creations of Judge Bao, John Coreano and Puha & Pakeha.
  • We have doubled the surface of our operations and are very excited to announce that we are now in a position to expand geographically: WOOP is now available in Wellington, Hamilton, Tauranga, Mount Maunganui & Papamoa.

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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 has received regulatory approvals and is currently undertaking a Phase IIa trial to test Citramel on up to 24 CF subjects in New Zealand.
  • Breathe Easy is continuing on with the trial across four NZ sites and to date over half of the CF subjects have completed their three-month programme.
  • We expect to have analysed results by the end of September 2017.

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CarbonScape is an award winning cleantech company with technology that converts waste biomass into valuable Carbon products. CarbonScape raised over $750k through Snowball Effect in December 2014.

  • The engagement of Beca Ltd, has given CarbonScape a sound footing. We now have a much more complete in-house engineering capacity. A $1m private investment in CarbonScape Ltd last December enabled this engagement.
  • We now have eight keen, talented and committed staff, globally recognised intellectual property and $843,000 in cash and cash equivalents at 30th April.
  • The pilot plant is now progressing well, we are currently commissioning and focused on quickly delivering product.
  • Next month the eligible wholesale investors who were issued share options in the June 2016 investment round will be offered the opportunity to exercise those options.

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Aeronavics designs and manufactures high quality industrial aerial robots (drones), and has been an industry innovator since 2010 with clients such as NASA, Dreamworks, and Disney.

  • We made progress in seeking development partners to help fund our BVLOS (Beyond Visual Line of Sight) development roadmap, and we have continued to develop commercial opportunities for sales of our current (next generation) product line.
  • We have secured the commitment from one energy company in New Zealand and are working towards adding to this in the next quarter.
  • We have secured a supply contract with the world’s largest mining company. We are now preparing the delivery of their first aircraft, in a staged roll-out over several of their sites.
  • We have partnered with a company in Australia who has designed an RF Measurement payload for measuring radio frequencies. This solution was presented at the NAB in Las Vegas in late April and the first order has been secured – with several leads to further progress.
  • We have supplied a Navi to a customer in Indonesia, who has a large survey company and potentially requires several more aircraft.
  • We have secured an order from a company in Australia who is setting up a division for asset inspection primarily in the oil and gas industry, in which they are already active. Repeat orders can be expected over time.
  • We progressed our application for 102 certifications by the CAA (Civil Aviation Authorities) in a quest to further develop industry standards for the manufacturing of unmanned aircraft. Mid-May a team of 4 people from the CAA visited Aeronavics to discuss the application and review our processes. They were impressed with what they saw and plans were discussed for Aeronavics to head a working group to further progress the establishment of manufacturing standards.
  • We are fully up and running with our Callaghan Innovation funded development project, which is a first step of the BVLOS roadmap, with all reporting structures in place to satisfy Callaghan Innovation’s terms and conditions.

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From the creators of Once Were Warriors comes a Kiwi film based on Witi Ihimaera's novel Bulibasha.

  • Mahana was nominated for 12 awards at the Moa’s, the New Zealand Film awards. Mahana won Best Editor for Mike Horton and Jonno Woodford-Robinson's work.
  • Just prior to the Christmas break, Mahana had a limited two week release in two Sydney theatres. We got great reviews.
  • The Riverside Theatre followed up with a special screening and an interview with Lee.

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Snowball Effect

Snowball Effect is an online investment marketplace. Our mission is to simplify investment into high growth Kiwi companies. We’ve been funded by existing shareholders and cashflow to date to support the continued growth and development of the equity capital market for early-mid stage New Zealand growth businesses.

  • Over $25m has been raised through the Snowball Effect platform to date - a mix of public and private offers.
  • Ubco, Zeffer and Designer Wardrobe have been the successful public offers so far in 2017. In the private space we have been raising capital across a number of sectors including food and beverage, hi-tech, software, and tourism.  
  • We have recently released a share registry service for companies so that they can manage and track their investor base. Investors can also use the registry to check their current shareholdings. The registry integrates with our website and can be used by all companies whether they have raised capital with us or not. 
  • Our investor profile feature has also been released. This allows investors to provide us with information about their investment preferences, and the companies that they invest in with details that the company may find useful in the future. The investor profile also includes the ability for those with an interest in becoming a director to provide us with information about their background. 
  • Our F17 results were slightly down on our budgeted range for revenue, but on track for EBITDA. 
  • Former banker Bill O'Boyle has joined the team as Head of Growth Capital. Bill will be responsible for working with companies throughout the capital raising process.
  • At the Hi-Tech awards Snowball Effect was one of the finalists in the Innovative Services category. It was a great night, and an excellent turnout. The award was won by RedShield.
  • There are no firm capital raising plans at this stage.

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