November 7, 2017

Happy Tax Investor Letter 2017

Dear Happy Tax Investor,

It is exciting times here at Happy Tax. It’s that time of the year where I will update you on what is happening and what is in our pipeline. We have some nice momentum in the marketplace and are growing our business consistently. Here are some things that I’d like to share.

  • Attached is our Audited Financials for the Fiscal Year ending April 30, 2017. As you can see, our revenue has increased nicely across the board especially when you take into account that the previous year’s revenue included a discontinued operation that we sold during that fiscal year in order to focus on our core business. View Financials Here


  • You will find a link to the Required Annual Disclosure by the SEC that we have filed that includes some narratives about our company’s progress here.


  • We have increased our number of franchisees, Area Representatives, and Independent Contractors this year and are always looking for more. If you know anyone and they purchase a franchise or Area Representative deal, we will pay you a 10% commission on cash received up to $20,000. There is no limit to the number of times you can receive these commissions. Our current numbers of partners are 112 Franchisees, 534 Independent Contractors, and 32 Area Representatives.


  • We have increased our headcount at Happy corporate. We’ve made some key hires to help fill the gaps in our talent. We’ve added a Support Manager, a new Head of Training and Development and a new Tax Department Manager along with two assistant managers. Those team members have already started making an impact and helping us to accelerate growth.

  • Our commitment to providing a convenient and professional service to our tax customers and all the tools, training and support to our partners is our core focus.

  • The commitment has shown in some awards we have won this year, we were awarded 3 awards by Entrepreneur Magazine (Fastest Growing Franchise, Top New Franchise, Top Franchise Brand) and I was named as “One to Watch” on the prestigious Accounting Today Top 100 Most Influential People in Accounting List. We’ve also been featured in Forbes, Franchise Times and many other websites and publications.

  • We’ve closed on the acquisition of another franchisor, Opportunity Tax. Opportunity Tax had a dozen brick and mortar offices at the time we bought it. You might ask, why would Happy Tax, an innovative virtual tax hybrid solution, buy a brick and mortar brand. It’s quite simple, for 2 years we were hearing from independent tax business owners (like I used to be) who wanted to convert their business over to Happy Tax. But we couldn’t. Happy Tax has a brand promise of only having US-based CPA’s to prepare tax returns, and most brick and mortar offices do not staff that way. So we now operate two brands much like Dunkin Donuts and Baskin Robbins. We enable those converting offices to add Happy Tax Independent Contractors to their operation to get into new markets and grow their business. Not only grow their business that way but also by gaining access to the support, tools, and training that we offer. We generally require a tax business to have at least 300 (and more preferably 500) existing tax clients to be considered for the program. We’ve already converted some offices and have a nice pipeline in the works. We’ll be having an informational webinar on 11/9 to start moving more of them towards closing. We’ve sent out 30,000 postcards to independents with over 500 returns in 6 key states that will help us close the year strong with this conversion program.

  • We’ve inked a deal with leading industry bank product provider Santa Barbara (TPG) to set up two lines of credits for our company. The first is a line for working capital for our company of $500,000. The second is a $1,000,000 line for us to lend out to converting Opportunity Tax franchisees who join us. We are very pleased with this relationship.

  • We’ve shipped and sold over 2,000 of my recently released Best-selling book; Taxes Made Happy - The Definitive Guide to Launching and Growing a Tax Business. Our investors, partners, customers, competitors and even the general public have reacted very favorably to the book and we are excited to use it both to prove our industry leadership but also to utilize in our marketing campaigns. It is available on Amazon, iTunes and Barnes & Noble in paperback, eBook, and audiobook. We are also in the final stages of releasing it in Spanish.

  • Speaking of Spanish, I was invited to meet with the Mexican government on behalf of Happy Tax and sign a Memorandum of Understanding with their financial service agency CONDUSEF and others to provide education to Mexican Nationals living in the US. There is an estimated 36 million people that fit that profile. Our partnership with them will be used in marketing materials, and we hope to be able to capture many tax returns as a result of this deal.

  • I’ve traveled our country this summer and fall doing Meet & Greets in 25 cities. Our team implements marketing, connects with our prospective Franchisees and Area Representatives and then arranges for them to meet with me or other team members to see a full, in-person presentation regarding the Happy Tax opportunity. These have been a great success, and we’ve closed quite a number of deals as a result of getting out in front of people. Most of our deals overall are with people who haven’t met with us in person, however some people just want to look you in the eye and shake your hand before buying a going into a business deal with you with investments that range from $20,000 to $250,000 in most cases (the latter being Area Rep deals full price including any promissory notes we have in the deal for them to pay us the balance over time).

  • Late last year, we launched a Happy Tax Accounting Pilot to give our partners the ability to source bookkeeping and accounting work throughout the year to supplement their tax season businesses. I’m pleased to announce that this pilot has started bringing in clients and we look to increase our commitment and resources to it in 2018.

  • We’ve signed a deal with LegacyShield, a web portal that acts as an aggregator of financial information and contacts to ensure that when someone passes on their financial information is properly provided to their heirs. LegacyShield partners with major insurance companies like TransAmerica, World Financial Group and The Savings Bank Life Insurance Company whose agents sign up their clients on the portal. The portal also features a marketplace with other financial services which a client can purchase, one of which is a Happy Tax CPA prepared return. We anticipate this partnership to increase our return count and give us opportunities to expand into new markets.

  • As an industry leader in innovation, we have announced that we are currently accepting cryptocurrency for franchise and area rep fees as well as finalizing the ability to accept cryptocurrency for tax returns this coming season. We’ve also recently acquired CrytpoTaxPrep.com in order to help the millions of cryptocurrency traders navigate their tax returns in this unprecedented time in digital currency. We will have a full website up by the time tax season comes along with a group of highly specialized tax pros to assist these crypto traders with their taxes.

  • We are having our 1st National Convention and Tax Season KickOff at the end of this week in Dallas. We’ll have 3 days of training, events, team building and some fun as well. Kicking off the Convention will be a Meet & Greet for those prospective franchisees and Area Representatives who want to meet our entire team as well as many of our partners. Please refer some people to us that are interested in being in business for themselves but not by themselves. It is a great way to get some referral fees and help someone get started just in time for tax season. Having the entire team there is anticipated to increase our closing ratio from those in attendance. Our Keynote Speaker at the Convention is Best-selling Author Jon Vroman who will talk about will speak about having A Powerful Mindset, living in an Empowering Environment and creating Authentic Relationships all while living in the Front Row of your life. Our Keynote Trainer will be Milton Pedraza who is a relationship building, sales mastery, and emotional intelligence expert. If you would like to come to the events, please let me know, and we will get you access.

In terms of what is in our current pipeline, some of our initiatives will not be disclosed at this time due to competitive reasons however we will let you know some of what is planned. Know that the above items are all items that happened in 6 months or so and that means that there is much more in the works than we are elaborating on here.

  • We will be rolling out a Do It Yourself Happy Tax online software for those consumers that want to prepare their own tax return themselves. Why might we do this you ask? Many people who start their own return never end up finishing it themselves and instead seek professionals to complete it for them. Having this solution in place will give us the opportunity to ask those online clients if they need the assistance of our Happy Tax Franchisees or Independent Contractors to meet with them to submit their return to our CPA’s. This is an initial roll out, and we are quite aware of the costs involved with marketing in the Direct to Consumer segment, so we hope that this is an evolving segment for us that we are ready to tip our toe into.

  • We are also in the final stages of rolling out a web portal submission tool to enable tax returns to be submitted by our partners from desktop computers as well as our mobile applications. We currently have this ability only through a standard web form and implementing this portal that has a great look and feel should increase our business in this respect.

  • We are about to roll out some exciting national promotions for gaining new tax customers for our partners and some interesting and motivating incentives for our partners. Stay tuned for what they are.

  • We have just announced a follow-on round of crowdfunding along with WeFunder. The round is currently open and gives us the ability to raise an additional $828,000. We have increased the minimum investment on this round to $500 and have made some changes to the perks. Other than that, the terms are the same. Simple Agreement for Future Equity with $10,000,000 valuation cap (meaning that your investment will convert to equity at the amount of our valuation at our next equity liquidity event and is protected by converting the SAFE to equity based on the valuation at that time up to $10,000,000.)

The trajectory of Happy Tax is gaining steam, and we are pleased with our progress. We’ve got much more work to do to truly make our dent in this industry (a big enough dent that we will be satisfied). We are being noticed by the press, the industry, our competitors and most importantly, by our investors, partners, and customers. The future is bright for Happy Tax, and we are glad you are along for this ride with us. As it relates to your investment, we have no current plans on an equity influx prior to possibly considering it after next tax season so there will be no possible conversion of your existing investment to shares just yet. As you know, we’ve structured our investment opportunity as a SAFE to enable you to get the best possible conversion to shares based on our valuation at the time of that future liquidity event. We would, however, love you to help us in this round of fundraising. The more money we can raise, the more we can continue to be prepared for accelerating the growth that we are experiencing and have the capital to invest in new initiatives that will create more revenue and further increase that valuation at our next equity liquidity event. You are more than welcome to invest further in our company at wefunder.com/happytax. Note, this round closes soon as we do not want it to be a distraction to our preparations for tax season.

I’d like to dedicate this investor letter to my friend, my mentor, my business coach, the author of the foreword of my book, and an all-around man’s man, James Budd. James died suddenly on Thursday, October 26. A mutual friend said that James died from a broken heart as his life partner Trish had died a couple of weeks earlier. James was in great shape, didn’t drink, took care of himself mentally, physically and spiritually. He helped me in ways that no other business leader has, and I am eternally grateful for his wisdom, guidance, vision, caring and the brief time we spent being friends. James was one of a kind. If you’ve never had a mentor or business coach, finding someone like James will change your life. Sometimes someone comes into your life for a lifetime and sometimes for just a short period of time. Their impact cannot be measured in days or years but in how they show you support, the connection you feel with them, the mutual respect that you have for them. Although I only knew James for under 2 years, I will never forget him and what he did for me. Thank you, James. Keep Rocking. Love you.

Sincerely and with full confidence,

Mario Costanz, CEO

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