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Quarterly Company Progress Report March 2019

Welcome to the March 2019 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.

UBCO

UBCO develops, markets and distributes Utility Electric Vehicles (UEV) which have three connected products and services: Portable Power, Accessories and Software. UBCO closed a $2.5m capital raise through Snowball Effect in March 2019.

Highlights for the quarter include:

  • UBCO exceeded its budgeted revenue, gross margin and EBIT result, growing revenue 110% for FY19.
  • UBCO continued to make significant commercial developments, including signing ThunderRoad Financial in the US to provide consumer finance to our dealer network, completing and expanding vehicle trials with NZ Post and DX Mail, as well as trials and purchases made from Dominos in New Zealand.
  • Our global dealer network edged up to 97 with an additional 2 service agents appointed in the US market.
  • We delivered our first container shipment to the UK Market into a large events management fleet, as well as a commercial assessment of the Holland market with a distributor.
  • UBCO has seen strong growth in the US market with a 270% increase in demo requests over the last quarter. We are well placed to take advantage of the US opportunity, having appointed our new US sales team lead, Robin Fiore, an eight year veteran of the American Honda Motorcycle Division in California.

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SuiteFiles

SuiteFiles is a SaaS business offering SMEs a specialist cloud-based document management system leveraging Microsoft Office 365 and Azure. SuiteFiles provides an easy to use system for migrating and managing important client files in the cloud with seamless integration to both Microsoft Outlook and File Explorer. SuiteFiles raised $1m through Snowball Effect in November of 2018.

Highlights for the quarter include:

  • Off the back of strong growth in the Australian market, we have now reached over 5,000 total paying users as at the end of FY19, with our full year revenue just $20k shy of our original forecasts during the 2018 capital raise.
  • There are now over 86 million files in SuiteFiles, over 365 million files in SuiteBackUps, and the team have migrated over 34 million files.
  • There has been a focus on driving traffic to the SuiteFiles web site and traffic has steadily increased from 2,000 unique visitors per month at the end of Q3, to 4,700 at the end of Q4.
  • Following the recent move to our own new office, we have grown the team to 12 people with roles in development, support and sales, and have accelerated our marketing and sales activities.
  • This has been a great year of growth for the business, with a full sales pipeline and strong subscription growth. We are anticipating good growth in our average monthly subscription revenue as we add new features in the coming months, and which will only be available to premium customers.

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Zeffer

Zeffer is the largest independent, dedicated cider producer in New Zealand. The company raised $1.2m on Snowball Effect in June 2017 and closed another $2.4m round on Snowball Effect in June 2018.

Highlights for the quarter include:

  • After a successful launch of our new branding, the opening of our Taproom and growth in grocery ranging, we have ended the year with 45% growth in revenue over the previous year.
  • Domestic sales performed very well on the back of our rebrand, flavour and format review. New Zealand grocery ranging grew 22% on last year to 57% coverage.
  • While the Chinese market has been challenging, we have grown sales by 30% on last year and employed a Greater China Sales Manager to continue to develop the market and drive our sales team in the year ahead.
  • Our new cidery facility in Hawke’s Bay handled our rapidly-increasing production volumes, increasing 61% over the previous year.
  • With this rapid increase in production volume, product quality remained a core focus and it was maintained at our high standards as shown by our cider-making team continuing to win many top awards, including; Champion Cider in both of the cider categories at the New World Beer and Cider awards, and Gold Medals at both the Australian and New Zealand Cider Awards.

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Designer Wardrobe

Designer Wardrobe was founded in 2014 by Donielle Brooke as a New Zealand based fashion marketplace and successfully raised $1.7 million through Snowball Effect in May 2017, and a further $912k in June 2018.

Highlights for the quarter include:

  • Ruby Morgan joined Designer Wardrobe as CEO in February 2019.
  • Designer Wardrobe has now achieved six consecutive quarters of growth in total revenue, with the most recent quarter being a record quarter, up 108% on last year and exceeding forecasts by 10%.
  • Overall we had a strong year with final revenue for FY19 exceeding forecasts by 9.5%.
  • Our total marketplace and ancillary revenue increased 85% on the same period last year, driven by an increase in transaction volume and a realignment of our fee structure.
  • Our user base has now grown to over 160,000 members, with the Direct Rental line of business now growing to 1,200 designer label dresses.

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Reefton Distilling Co.

Founded in 2017, Reefton Distilling Co. are a leading producer of premium spirits in Oceania, using the best quality locally sourced ingredients, many foraged locally the morning they distill. Reefton Distilling Co. raised $1.4m via the Snowball Effect platform in February 2018.

Highlights for the quarter include:

  • We are delighted to announce that each of our products secured a silver and/or bronze medal at the prestigious San Francisco World Spirits Competition (SFWSC), and the inaugural New Zealand Spirits Awards this year.
  • We launched our new Reefton Distilling Co. Blueberry Liqueur recently with a number of exciting new products developed that we will share in the near future.
  • Reefton Distilling Co. are happy to appoint Jo Bransgrove as a Director to the company. As well as one of our shareholders, Jo has a strong background in finance and as a professional director in other reputable businesses. Jo has assumed the Chair role.
  • The team have been attending multiple gin festivals, food shows and private events to grow Reefton Distilling Co.’s presence in market. We have been attending gin festivals, hosting product tastings and have a calendar of opportunities throughout this year. The team will be attending the Auckland Food Show in July, and continue to accept Tourism West Coast invitations to host trade famils for high-end tour operators.

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Squirrel

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. Squirrel Group raised $3.4m through Snowball Effect in April 2016.

Highlights for the quarter include:

  • Mortgage settlement volumes for the March quarter were up 10.3% on the same period last year with the total mortgage settlements for the financial year finishing 5.1% up on the prior year.
  • Our trail commission cash income continued its upward trajectory with the trail paying loan book closing out the year at a little over $1 billion. Trail commission receipts for the quarter increased 3.6% on the previous quarter and 45.6% on the same quarter a year ago.
  • To support our strategy of expanding our revenue streams within the Mortgages business, we developed two new service offerings during the year; An exclusive Home-build product aimed at ‘buy off the plan’ home purchasers and Commercial lending capability, an area we had not previously been strong in.
  • Total loans originating through the Squirrel Money platform grew by a further 10% in the latest quarter.
  • The first stage of our strategic re-positioning for Squirrel Money was the launch of the Homeowners loan product in July last year. In the current quarter, that product accounted for circa 40% of our new lending from the P2P platform.
  • We expect to see growth in brokering commercial lending and our new P2P lending products. The new year has started strongly for both offerings, particularly brokering of commercial lending where the settlement volumes achieved in the first two months of the new financial year have already exceeded the volumes settled for the entire 2019 financial year.
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Veriphi

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 $240k in November 2016, following requests from shareholders to be able to invest more money. A further $803k was raised in April 2018.

Highlights for the quarter include:

  • We began drug testing trials at Palmerston North Hospital in this quarter. We are testing eye injection drugs and drops in Palmerston.
  • Following the positive response from pharmacists at the NZ Hospital Pharmacists Association Conference in Wellington last November, we have broadened our approach to multiple hospitals moving forward. We plan to grow our test base to four hospitals, with discussions continuing with three other hospitals who expressed interest.
  • Veriphi's manufacturing facility was inspected in March for international regulatory compliance approvals. The factory approvals are part of the international compliance approval process for Veriphi's IV drug verification analyser.
  • Following successful discussions with the Hawke's Bay Hospital pharmacy team, we plan to commence a three-month trial after the end of June.

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CarbonScape

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.

Highlights for the quarter include:

  • Through a series of simpler, cheaper and more efficient microwave processes, we are excited to announce that we have produced a higher value Graphite of 99.99% purity.
  • We have significantly upgraded the sophistication of our equipment and processes as we have invested heavily in our operations. We are now operating with state of the art reactor equipment, some of which is leading-edge in New Zealand, and have upgraded our chemical laboratory.
  • CarbonScape now has a team of 11 full-time permanent staff at Riverlands which continues to grow in strength.
  • Our international Trade Mark applications continue to be granted in various jurisdictions and our patent portfolio continues to build with our current focus on the national phase of our second patent, ‘Graphite Production from Biomass’.
  • CarbonScape is making significant progress in our plan to develop our first commercial Graphite production plant in 2021 in New Zealand.

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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 include:

  • $2.30 million was raised during the quarter, including portions of a $1.40m raise for CHAPTER2, as well as a portion of the $2.5m raise for UBCO. A total of $48m million has been raised as at the end of March 2019.
  • Average investment this quarter was $13k from around 173 investors. Overall, the average investment amount to date is around $8.2k from 3,523 investors.
  • The wholesale investor database has grown to over 1,767 members. Around 765 members have completed their Investor Profile and 301 have indicated an interest in becoming a director or advisor to growth companies.
  • We have released case studies on three of our capital raises last year; LINK, Reefton and ArchiPro. If you are interested in learning more about everything that Snowball Effect does, you can read about it on the Case Study Section.
  • We launched our share registry services to all New Zealand companies that want to more efficiently manage their company holding information: Share Registry Services
  • Snowball Effect is looking to expand our energetic and growing team. We are currently hiring for a number of roles within the business. Further details on the roles can be found via the careers page.

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