Executive Summary

Extending pet care beyond the hospital door

Heyrex is an innovative New Zealand data technology company that provides:

• wearable technology services to the global veterinary and food and drug research sectors for the capture and analysis of valuable animal health data.
• a range of unique pet water bowl solutions with health supplement dispensing capabilities for the global pet retail market.

Heyrex has undertaken significant R&D over several years. With its products now commercialised in 10 global markets including the USA, UK, Europe and Asia, Heyrex has proven market demand for its products and is now poised to achieve growth in the fast growing global pet and animal health sectors.

Heyrex is pleased to provide the opportunity to investors to participate in a unique export opportunity involving recurring revenue and big data opportunities.

Heyrex offers solutions to meet the key business drivers within the animal health sector, being valuable objective data for creating a competitive advantage in veterinary hospitals and new revenue streams that complement improved animal care. Heyrex addresses a global opportunity that represents over 30,000 veterinary clinics. However, Heyrex’s key geographical market is the USA which has over 13,000 veterinary hospitals that cater to 140 million domestic dogs and cats. $58bn is spent annually in the US pet sector, a market that is experiencing compound annual growth of 6% pa.

Heyrex is now offering equity capital of up to $2.0m for a 14.8% shareholding. The funds raised will be used as working capital to meet demand represented by Heyrex’s constantly growing order book, as well as marketing and support of products in the US market. Heyrex’s growth pipeline represents a strong opportunity for New Zealand investors to participate in a unique and valuable big data business built upon an innovative global export opportunity.

Product Overview

Heyrex has developed two unique products for the veterinary and pet sector. These are:

HeyrexVet

HeyrexVet is a data collection and analysis service that collects and analyses objective data from individual animals via wearable technology and an innovative online (SaaS model) solution.

HeyrexVet uses its proprietary algorithms and monitors to capture and analyse data from animals and present modular solutions to veterinary professionals, researchers and product manufacturers. Services include managing diet and exercise, monitoring treatment and recovery, activity, fitness, and identifying the potential early signs of illness.

Heyrex is a valuable tool for assisting in the management of farm animal assets, double-blinded research measurement, providing objective data for food and drug development, scheduling of care and the generation of new revenue streams for service providers. This is illustrated by the following examples of how Heyrex has already been used in the global market:

• A commercial clinical trial carried out by Massey University in partnership with a global pet food company to ascertain the effects of different food brands;
• the use of Heyrex in food animal care, Kansas, USA;
• a double-blinded trial to ascertain the efficacy of a new arthritis remedy in Australia;
• the use of Heyrex to monitor diet and exercise by West Towne Vets, Wisconsin, USA;
• the use of Heyrex for post surgery recuperation monitoring at Affiliated Animal Care, Virginia, USA;
• the use of Heyrex by Ecole Nationale Vétérinaire d'Alfort France to measure the performance of sled dogs;
• the use of Heyrex to monitor the improvement of behavior in dogs with dementia following stem cell treatment, NSW University.

The key target customers of Heyrex are veterinary hospitals, animal health researchers, academic institutions and pet food and drug manufacturers.

Heyrex is already providing services to clients within these sectors using Heyrex standard commercial model of the sale of hardware and additional service fees for data and analysis.

Commercial sales commenced in Q1 2015. Sales focus is in the US market where sales continue to grow to all customer types. With approximately 1,000 units in the market to date, Heyrex forecasts considerable growth with the recent establishment of a nationwide contracted sales team for the USA that will recruit hospitals and establish strategic partnerships with researchers, academics and food and drug manufacturers. We have conservatively forecast achieving sales of 5,000 companion animal HeyrexVet units by September 2016 and 10,000 by September 2017.

How Veterinary Professionals access the HeyrexVet service

The HeyrexVet service provides a suite of reports specific to each animal and modules for specific care scenarios such as cage rest compliance, weight management and exercise plans. The veterinarian simply attaches the monitor to the dog's existing collar and registers the collar identifier against the dog's details in the Heyrex portal. The service does not require ongoing veterinary resource for management.

HeyrexVet sends notifications to the veterinary professional when monitoring thresholds specific to the patient are breached, such as a breach of activity during a period of prescribed cage rest or weight loss goals against actual data. The vet can then act on the data to support the prescribed care or to undertake a diagnosis. The following is a screenshot of the Cage Rest module that is available for the veterinary hospitals for managing rest and recuperation from surgery.

What do Veterinary Hospitals pay for the HeyrexVet service?

There are two plans available to veterinary hospitals. These are:

What Pet Owners see from HeyrexVet

The pet owner receives a login to summary activity information, a diary and notifications based on the pet’s care. The pet owner receives information sufficient to engage him or her in the care process, but not sufficient to self-diagnose and challenge professional veterinary care.

The pet owner can add diary entries to improve compliance and document events and recovery. The veterinarian can then use Heyrex to convey instructions to the pet owner but the pet owner cannot contact the vet via Heyrex. All consultancy remains in the hands of the veterinary hospital.

Below is a sample of a notification to a Pet Owner whose dog is on a post surgery Cage Rest program.

What does a Pet Owner pay for the HeyrexVet service?

The pet owner can lease the HeyrexVet service from their veterinarian for short term therapeutic monitoring. The charge for the service is at the discretion of the vet. Whilst the RRP for the service to the pet owner is $39.95 per month, some vets chose to include the service in an operation or treatment fee.

Torus

Torus is a unique range of auto-replenishing water bowls that provide large water storage capacity without the need for a power source.

Torus has been designed to enable water to stay cool and clean, to be filtered through a replaceable activated-carbon filter and to allow for the dispensing of pet health supplements. The filter and supplement functionality provide Heyrex with an additional recurring revenue stream.

Torus is regularly the biggest selling range of water bowls on Amazon and its global distribution is growing monthly. Torus sales are achieved predominantly in partnership with distributors who are granted territories and agree to minimum sales volumes that are tied to exclusivity. Distributors are currently in place for UK, Europe, USA, Singapore, South Korea, Taiwan, Australia and New Zealand and the UAE with agreements under negotiation for new territories. Heyrex is exploring the addition of a new range of bowls that will broaden revenue sources to the mass market.

Approximately 20,000 Torus bowls have been sold to date with approximately 15,000 of those having been sold in the half year to September 2015. The growth trajectory of Torus is increasing and will be underpinned by new unique bowl designs and the addition of health supplements for recurring revenue.

Revenue from Torus is forecast to exceed $400,000 for the year ending March 2016 and $900,000 for the year ending March 2017.

The new Torus Supplement Range

Heyrex is working with a US supplements manufacturer to provide Heyrex with its own range of Torus branded supplements for sale via retail as an additional recurring revenue stream for the Torus bowls. We have not included revenue forecasts in the Heyrex financial model for the purposes of the current capital raising as full costs and distribution margins are yet to be concluded. However, we estimate a minimum 40% margin across the supplement range and the potential to generate significant new revenue in most markets in which Torus is distributed.

The Torus supplement range is due to be launched at the Global Pet Conference, Orlando, USA March 2016.