Quarterly Company Progress Report March 2018

Welcome to the March 2018 Quarterly Company Progress Report. This report covers details 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 included in the current report due to the timing of their shareholder reports. Updates from these companies will be added when their reports are made available to shareholders.


Veriphi is a New Zealand company that has worked to develop a highly innovative laser-based analyser to verify intravenous drugs and alert clinicians before administration to prevent medication error in hospitals. Veriphi raised over $700k through Snowball Effect in May 2016 and $240,000 in November 2016, following requests from shareholders to be able to invest more money.

  • Our team is in the process of scoping a research agreement with one of the hospitals Veriphi engaged with recently at the Texas Medical Center. The objective of the research is to validate a potential commercial application within the hospital.
  • We successfully completed an $800k capital raise in order to begin commercialising our solution
  • We have recently completed tests that indicate a pathway for significant improvement in analyser precision
  • Exciting progress continues to develop with our US contacts and we will provide more information when we can
  • Our first commercial supply agreement has been drafted and is planned to commence at the end of a trial period, targeted for July 2018
  • We have successfully validated Veriphi’s concentration algorithm in testing to the ICH (The International Council for Harmonisation of Technical Requirements for Pharmaceuticals) compliance standards.
  • We are working with the company responsible for our consumable production to draft a plan for high volume commercial production.

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

Highlights for the quarter included:

  • We had another strong quarter for the 3 months ending 31 Mar 18, with both revenue and volumes up against budget and prior comparable periods. We have finished the financial year on $2.8m in revenue, beating our FY18 forecast by $140k and have grown sales by 70% from the same period last year.
  • We also finished the year on 460,000 litres sold, which was 17,000 litres more than forecasted in our 2017 IM.
  • We have established ourselves as the leading craft cider brand in China with over 200 outlets pouring Zeffer in many of China’s leading bars and restaurants.
  • In our first full year operating in China, we achieved ex cidery sales of $365k and are forecasting this to grow to $630k in FY19.
  • We achieved our 2017 IM forecast of growing our ranging to 35% of all supermarkets in New Zealand and increased our sales on the same quarter the previous year by 72%.
  • Having recently solidified our 3-year strategic plan, the timing is right to on-board additional investment of up to $1.8m. We’re currently in the process of another capital raise, and are looking to capitalise on export opportunities and drive domestic growth.

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Designer Wardrobe

Designer Wardrobe (DW) was founded in 2012 by Donielle Brooke as a New Zealand based fashion marketplace and successfully raised $1.7 million through Snowball Effect in May 2017.

  • We generated record revenue in March 2018, growing 18% month over month since re-launching our new platform and Direct Rental in December 2017.
  • We finished FY18 on 117,000 total registered users and 119,000 listings created.
  • 35k listings were created in Q4 FY18, up 34% on the same period last year, whilst sold items in February were up 28.3% on the same period last year.
  • Since the launch in September 2017, Direct Rentals has seen rapid growth and represented 50% of total revenue for March 2018. We now own 350 rental items and lead the New Zealand market in volume and quality of items available for rent.
  • We are seeing very encouraging 50% repeat rate from Direct Rental customers, indicating that users are having good experiences.
  • We have seen very strong transaction volume growth, new member growth, listing growth and record levels of items sold since our platform rebuild in December. App downloads were also up 51% in January against the same period last year and usage stats continue to perform highly.
  • While under our anticipated target, DW Australia is now up to 17,383 registered members.

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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.

  • Farmers have now placed 9 re-orders since launching at Christmas 2017. While the volumes are still low, we are now in 7 stores with discussions around expanding into further stores over the next 6 months
  • We launched in the US in May via ‘The Grommet’ and are selling on average 2 units per day. We had hoped to have finalised the opportunity with the Beauty Systems Group (BSG) who are based in Texas and the world’s biggest beauty supplier by now, but have been held up by an internal re-structure they are undertaking
  • The opening deal currently sits at 5,700 units ($575k) with inverse poised to launch in the second half of 2018 and go into 1,300 stores across the US and Canada
  • We have successfully completed Phase 2 testing with a large MNC and are now well into Phase 3 – consumer trials which are scheduled to finish on the 30th of June 2018
  • If this is successful, discussions related to the company’s interest in the technology will begin at that time
  • We have commenced discussions with 3 other global hair & beauty players, one of which we are likely to have a face to face meeting with in the US in July 2018
  • Japan has launched our product on Amazon and have sold a third of their initial order, although it has slowed down in the last two months. We are working with our Distributor to expand into retail settings and expect their first re-order in the next few weeks
  • Our Taiwanese distributor has had two solid months (April & May) of sales into their market, after a very quiet Christmas/ New Year period
  • We are in discussions with David Jones in Australia who are considering trialing inverse in their stores
  • Inverse achieved ‘Highly Commended’ in finishing runner-up in the Global Pure Beauty Awards for – ‘Best new haircare product’, recently held in Dubai
  • Our 2018 FY revenue is forecasted to finish at $370k, down on expectations as a result of the BSG delays but ahead of last year

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The Ubco 2x2 is the world’s first production Dual Electric Drive Bike. Designed in New Zealand, the Ubco utilises advances in electric motor design and battery technology to deliver a whisper quiet connected utility vehicle that embraces portable energy.

Highlights for the quarter included:

  • 2018 production run #2 of 2x2 currently in process (155 units), with production run #3 being committed (300 units).
  • Demand continues to outstrip supply as 328 2x2 pre-orders are currently secured.
  • Rob Beck brought on-board as CTO as well as increased QC & supply chain support in-market
  • Foundation established for potential combination of Ubco Limited and Ubco USA at Series B, with solid progress on business planning and forecasting to support indicative valuation of the business at Series B this year.

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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:

  • After a successful trial phase, Boots has now expanded our range to large format stores throughout the UK.
  • Our UK presence is growing as Holland and Barrett are now expanding our range.
  • We have had a strong start with our national rollout with Kroger in the US.
  • We completed a successful capital raise at the end of March as we prepare for the future of SOS.
  • We are underway with the launch of a world first new product, ready to drink, which sees a nationwide rollout in major stockists such as Countdown, Z, BP and Mobil and through the Red Bull distributors DKSH.

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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.

Highlights for the quarter included:

  • While mortgage volumes were impacted by the soft Auckland market, we are still growing our market share
  • Loans originated through Squirrel Money grew by 12.0% in the quarter
  • Our trail commission paying loan book is expected to reach $1 billion in the next 12 months
  • Cash received via trail commission up 10% on the previous quarter and 101% on the same quarter last year
  • Full year operating costs were down 5% on the prior year
  • Operating cashflow for the quarter was negative $82,000, a 67% improvement on the previous quarter

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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. Highlights for the quarter included:

  • It has been great to welcome back alumni companies Zeffer and Invivo for another capital raise. Both companies have progressed well since their last raise with us, and they're excellent people to work with.
  • Archipro and Designer Wardrobe completed successful capital raises, collectively raising ~$3m.
  • We have a number of companies in the pipeline who will be shortly be undertaking a mix of capital raises - both public and private placements.
  • Based on our management accounts, we have missed our target revenue range by about 10% for F18. We had a slow third quarter in F18, and while the other 3 quarters were broadly in line with budget we were not able to make our revenue target. While this is obviously disappointing, it has caused us to make some tweaks to our business which have proven to be valuable.
  • Alongside our longer term objectives, our F19 Q1/Q2 strategic priorities were signed off by the board. We revisit these on a monthly basis, and will shortly begin to refine our priorities for Q3/Q4.
  • We are currently in the process of building and testing a prototype secondary market platform to allow private companies to put their shares up for trading at specific times of the year. This will give existing investors the opportunity to sell their shares or buy more.
  • It is great to welcome back Ben Tan to the Snowball team. Ben led the development of our website and branding when we first launched in 2014. Ben is back as Head of Product - expect to see some of his creative output shortly.
  • We are currently in the process of hiring a new developer. Further details on the role can be found via the position description.
  • The company has no capital raising plans at this stage.

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