Risks Specific to Happy Tax
Our business is seasonal in that we assist CPAs and tax preparers prepare tax returns from January through April and sell franchises, area representative agreements and independent contractor agreements from May through December. As a seasonal business, additional financial risks are present that are not present in non-seasonal businesses where cashflow is consistent throughout the year.
2. As a high growth company, we may not be able to sustain the rapid growth we are currently experiencing as we scale. As a growing business, we need to be able to retain our current executives and attract additional talented professionals in order to continue to operate and grow our business.
3. Our franchisees, independent contractors and we experience competition from many providers of tax preparation services, including do-it-yourself software services and forms in the industry. As an industry innovator, our concept is new and up against many established choices to consumers of our services. We utilize some software from third party providers and if their software doesn't preform it could affect our results.
4. We own trademarks and patents to protect our brand and inventions. If others infringe, we would have to protect against the infringement as we have in the past. Doing so could be expensive and impact our profitability.
5. As a business that has field representatives, their actions could impact our reputation. Franchisees, area representatives, or independent contractors could have disagreements with our staff or our agreements which could affect our results from their operations. As a system of doing business that teaches our franchisees, independent contractors how to operate, should they not follow our direction and implement our marketing, our results from their operations could be impacted.
6. Because of the nature of this business involving many franchisees, independent contractors and/or area representatives, we may be named in lawsuits from time to time. If we were unsuccessful in any of these lawsuits, such losses could adversely impact our cashflow. From time to time, we issue promissory notes to franchisees or area representatives for a portion of their franchise fees. If they default, that could impact our projected cash-flows. The actions of our field representatives, franchisee and independent contractors could affect our reputation. As well, certain independent contractors or franchisees that maintain certain licenses could lose their licenses for their independent actions, which might further affect our reputation.
7. Government changes to the current regulations or tax simplification could impact our operations and profitability.
8. As a non-public startup company, there may be little or no market to dispose of any position you hold in our company should you want to sell your interests in the Company prior to any future Company buyback, sale or public offering. We guarantee our filings prepared by our CPAs so that if our CPAs commit an error, any refunds could impair our cash-flows.
9. Two patents were filed to the United States Patent and Trademark Office which will be used by Happy Tax. Although this pending patent will be used entirely towards the success of Happy Tax, and there are perpetual licensing agreements in place with the company, it should be noted that the patent is not specifically assigned to the company.