Investment Memorandum

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IntroductionOur storyHow Thankyou Payroll worksThe opportunity

The challenge The change

What we needUse of capital

Becoming a Thankyou Payroll investorDividendsShare specificsSelling sharesShare breakdownConvertible loan note

What we expectWhat we provide

For businessesFor governmentFor social good

Our clientsOur journeyOur team

Board of directorsPhilanthropyEnvironmentMediaThe landscapeOur financials and forecastsRisk factorsImportant informationContact us

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3032343638404246

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$80,000DONATIONS TO COMMUNITY ORGANISATIONS

IntroductionThankyou Payroll is a free, cloud based payroll intermediary service that provides high quality payroll for businesses and charities and donates 25 cents per person, per pay, to community organisations. Since our beginning in 2010, we’ve processed more than $900 million in pays, provided services for more than 4,300 clients and donated more than $80,000 to community organisations.

We’ve been investing in businesses and communities for the last 7 years - now we hope you’ll invest in us.

With a growth rate of 220% over 3 years, a diverse team of talented staff, a dedicated board and thousands of happy clients, we believe that with your support we can accelerate our growth and continue to improve our service offerings.

And this is the moment to do it.In April 2019, the IRD will implement significant changes to PAYE payments and payroll processing. These changes will push an estimated 60,000 businesses into the intermediary space and will mean changes to our business model. It’s an incredible opportunity and one we intend to pursue with vigour.

In order to meet this opportunity, we need investment. We are looking to raise between $400,000 and $600,000, up to 9.375% of the company. Shares will be $1 per share, and the minimum investment is $500.

Please read through this document, ask questions, and think about becoming an investor. Over the next few pages you’ll be able to learn more about our founding, our future, our philanthropy and how you can be a part of what we do.

DUNEDIN

WELLINGTON

140new clients each month

25c

$900m PAYS

7 YEARS OLD DONATES

PER PERSON PER PAY

4,300 CLIENTS GROWTH RATE OF

OVER 3 YEARS220%

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Our storyIn 2008, our founder Hugh Davidson was working as a service designer at the IRD. He realised there was an opportunity to leverage the IRDs payroll intermediary subsidy and create community good.

At the time the IRD was receiving around 150,000 PAYE returns each month, in the mail, on actual pieces of paper. It was a logistical nightmare and the subsidy was put in place to encourage businesses to switch to online filing via registered payroll intermediaries. Hugh figured out that the subsidy was generous enough to support a social business and so, Thankyou Payroll was born.

Thankyou Payroll provides free, cloud based payroll intermediary services to 4,300 businesses and charities around the country. We leverage the IRD subsidy as our primary revenue stream, alongside income from interest, and fast-service fees. Our service sorts and tracks PAYE, leave liability, kiwisaver, student loans, and other obligations. We pay staff, email branded payslips, and have a range of reporting features. Our payroll is highly customizable, has a simple, user-friendly interface, and can be integrated with Xero.

We operate as a social enterprise and our aim is to provide holistic benefits to government, business and community: for the government, we provide accurate, on time payroll and taxation data, reducing their logistical load; for business, we provide high quality, easy to use payroll services, and for community we provide regular community donations. We donate a proportion of the IRD subsidy to the Thankyou Charitable Trust, a non-profit organisation that’s innovating in the philanthropic sector. The trust provides micro-grants up to $3,000 to grassroots community groups in Christchurch, Dunedin and Wellington (with more locations to come!)

Please see: www.thankyoucharitabletrust.org for more details.

Version 1 of our online payroll system emerged from the creative depths of a Port Chalmers garage in 2010, and in 2013 Lani Evans joined the team as growth stage CEO, expanding the team, growing our client base and launching the second version of our proprietary software. Version 2 offered greater versatility, a friendlier, more intuitive user interface and easier integration with services like Xero and WorkflowMax.

Since then we have been steadily improving Version 2, adding a range of client requested features and functionality. Version 3 is scheduled for a 2018 release and while keeping the basic structure of the much loved current system, it will be a fresh build offering a seamless experience across mobile devices and the web, and with added features for custom reporting and payroll management.

In 2015, Lani stepped into a Directors role, and Christina Bellis came on board as CEO. We opened a second office in Wellington, doubling our users and staff numbers in 2016.

Our client base continues to grow at a steady rate, primarily via word of mouth. We have robust, human centred policies and procedures, such as domestic violence and mental health leave, and pay our staff above the living wage. We support a strong philanthropic model, have a skilled and diverse board of directors (60% women), a growing commitment to environmental responsibility, and we are developing a boundary-pushing, high level marketing and communications strategy.

We plan to take the world by storm and we hope you’ll join us.

APRIL 1

IRD NEW RULES2019

PORT CHALMERSHUGH’S GARAGE

VERSION 3 IS SCHEDULED FORA 2018 RELEASE

DUNEDIN

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THANKYOU CHARITABLE TRUST

CHRISTCHURCH

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How Thankyou Payroll worksFor all that work, and because they love getting beautifully formatted, fastidiously correct calculations and data, the IRD pay us $2 per pay, per employee, up to 5 employees as part of the PAYE Intermediary Scheme. That’s how we can make it free to our clients AND contribute to important causes all over New Zealand too! Rad!

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The opportunityIRD has recently proposed changes to how it manages PAYE and payroll processing. The changes will require employers to submit their payroll data to the government after every pay cycle, instead of once per month, which significantly increases business administration. They will also require businesses to only use their online portal, which some employers will find cumbersome, and challenging to navigate.

In 2009, the vast majority of employers were filing PAYE via paper forms. In assuming consistent growth rates from other payroll intermediaries, and the accuracy of published data on client numbers, we have calculated that 50-60,000 employers will be looking for services like ours that simplify their payroll and tax related responsibilities. Our past forecasts have been meeting their anticipated trajectory, and current forecasts estimate we are in a favourable position to pick-up up to 8,000 of these new clients by March 2019.

The challengeIRD have also announced they are removing the payroll intermediary subsidy which we have been leveraging to run our business and offer our service free of charge to our clients, and our business model will need to change to reflect this. Our current model has 3 main revenue streams: the IRD subsidy (approx 65-70%), income from interest (approx 20-25%) and fast-service fees (approx 5-10%).

In April 2018, we will be moving to a monthly subscription payment model, with a scaled pricing model determined by the number of employees a business employs. This will be priced competitively for the market, while aiming to continue offering the best value for money: a great product, friendly and supportive help staff, and regular donations through Thankyou Charitable Trust.

Registered New Zealand charities will continue to have free access to all of our services and we’ll make every dollar go further into the community because social good, and its impact, will always be a strong component of our business model.

The changeIf we continued under business as usual, we would be on track to clear $1.3m in revenue at the end of the 2018 financial year, with over $200,000 in profit. The changes presented, and the reconfiguration of our business model and forecasts, are now offering a great opportunity for us to grow well beyond our original trajectory in the next 2 years.

Under our new business model, which includes the monthly subscription and an increase in client uptake, our forecasted revenue in 2018-19 financial year is estimated at $3.38million, and clearing $5million in 2019-20. We’ve invested our 2016-2017 profits into this equity crowdfunding campaign, which means we’ll show a loss this year, and a loss next year because we’re investing in positioning ourselves for 2018-19 where expected profits sit between approximately $500-$750,00 depending on the capital raised in this campaign. Our forecasts show by the end of March 2020, profits sit between $1.2 and $2m after charitable donations. We are raising a minimum of $400,000 and maximum of $600,000 to be able to meet the demand the government changes are likely to make on our business, and to market our services much more widely in order to take advantage of this opportunity.

OUR FORECASTS SHOW BY THE END OF MARCH 2020, PROFITS SIT BETWEEN

$1.2 — $2mAFTER CHARITABLE DONATIONS.

BUSINESS WILL BE LOOKING FOR SERVICES LIKE OURS

WE HAVE CALCULATED THAT

8,000

50-60,000

WE ARE IN A FAVOURABLE POSITION TO PICK-UP UP TO

NEW CLIENTS BY MARCH 2019.

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What we need

We currently have over 4300 clients on word of mouth alone - that’s strong testimony - but we’ll need greater brand awareness and name recognition, before the IRD switch-over, in order to position Thankyou Payroll at the forefront of potential clients minds. We are constructing a high-level marketing and communications strategy, and hiring a Communications and Marketing specialist to deliver it. We’ll be leading with our strong point of difference, and building a team that will be ready for thousands of employers looking for a payroll solution.

We need to bring forward the release of our newest version of the software and will be bringing on expert coders and front-end designers. Version 3 will still keep the basic structure of the much loved current system, and will simplify complex areas of the user interface. It will be a fresh new build that will offer a seamless experience across mobile devices and the web with a focus on usability at every step.

We also plan to engage a couple of sales staff who share our values and the social model that drives us. These skilled and personable people will work with the Communications and Marketing to reach those businesses and organisations that will be looking for a simpler solution for their payroll. Along with sharp advertising, we expect this will enable us to reach our intended audience.

Use of capital

Marketing push

$215,000

$150,000

$235,000

Sales staff

Development and design

We are raising $400,000 to $600,000 in investment for marketing, design, sales, and the development of our newest version of the software.

We will also be expanding our excellent Help Desk team who support and assist our clients to navigate their payroll accounts.

With the minimum $400,000 investment we believe we will still be successful in attaining our goals, and our forecasts predict we will still be turning a significant profit in 2018-19, however we would need to reduce the marketing budget, delay a developer hire, and possibly only hire one sales staff. A reduction in marketing and sales could result in a lower client pickup without the wider reach of our brand and product.

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Our share offerOur initial goal was to become a commercially sustainable business, and based on trends, forecasts and assumptions, we believe we are in a position to be a profitable organisation, while continuing our philanthropic activities. Shareholders will have the potential to share in the portion of profits, while also enabling valuable community activities.

We are issuing a minimum of 400,000 and a maximum of 600,000 shares, at $1 per share with a minimum investment of $500. This represents up to 9.375% of the business. People that invest less than $50,000 will receive investor shares with limited voting rights, and those that invest more than $50,000 will receive ordinary shares with full voting rights.

We are about enabling growth and prosperity in Kiwi businesses and organisations, and embodying a social enterprise model by supporting social good. We have chosen equity crowdfunding because it offers an opportunity to our supporters and our clients to be impact investors and to share in Thankyou Payroll’s successful journey. We also chose to use PledgeMe’s equity crowdfunding platform as they share our values, are a social enterprise, and strive for positive community impact.

Our valuationThankyou Payroll has assessed the opportunity around IRD’s upcoming changes and believe we are well positioned to grow as a result. We’ve followed the Saas-Capital valuation methodology, and found we were positioned for a 4.9 multiplier on annualised revenue of $1,189,380 (annualised based on our February 2017 results, with a churn rate of 2.5% per annum). We believe we have the team, the track record, the technology and the opportunity to justify a pre-money valuation of $5.8million.

DividendsInvestor shares will be entitled to equal distribution of dividends, and an equal share in distribution of any surplus assets (any money leftover after the company pays all debts and sells or closes the business). We will be working hard to derive strong profits within 3 years. Decisions on dividend payments will be made when those profits are realised.

Share specificsThe Investor Shares (if investment is less than $50,000) have limited voting rights and do not give the holder the right to vote at meetings of shareholders. In very limited circumstances (to ensure the shareholder’s core rights are protected) each Investor Share gives the holder the right to one vote. This only occurs where there is a proposal or resolution:• That will affect the rights attached to the Investor Shares• To put the company into liquidation• For the disposal of the whole, or substantially all, of the property, business and undertaking of

Thankyou Payroll Limited

Investor Shares will also give the holders:• The right to an equal share in dividends and other distributions made by Thankyou Payroll

Limited• The right to an equal share in the distribution of surplus assets of Thankyou Payroll Limited.

Limited voting Investor Shares do not have the right to vote on appointment or removal of Directors, or strategic operations. All shareholders are welcome to be part of the Annual General Meetings and will be issued annual reports on the company’s financial position and business activities. There may also be opportunities for the right shareholders to sit on the Board of Directors.

Pledgers who invest more than $50,000 will receive ordinary shares with full voting rights.

10%OF

SHARES WILL BE

$1 PER SHARE $500 MINIMUM INVESTMENT

Becoming a Thankyou Payroll investor

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Convertible loan noteThankyou Payroll entered into a $75,000 convertible loan with Rosey McConnon for cash flow flexibility. This convertible loan has a 5% interest rate, and repayments will commence in June 2017 at a rate of $2000 per month (plus interest for that month) until paid in full. The noteholder can elect to convert any remaining balance into shares at any time. The Company can also convert the balance into shares if it experiences or anticipates solvency issues. The conversion price is fixed at the same price as shares are being offered under this offer. If the loan is converted into shares, this would create a minimal dilution in current shares.

Selling sharesWe appreciate that shareholders may want to sell their shares in the future and we will do our best to facilitate these transactions. Shareholders are asked to inform us when they wish to sell shares and periodically we will try to match anyone interested in buying with those interested in selling. It’s also possible there will be other opportunities to sell shares and shareholders will be kept up to date on any developments.

Pre Equity crowdfunding

Post Equity Crowdfunding(if fully subscribed)

Shareholder Number of Shares % Number of

shares %

Hugh Davidson 2,372,200 40.900% 2,372,200 37.07%

Helena Kate Stevens 725,000 12.500% 725,000 11.33%

Carolyn Timms 401,650 6.925% 401,650 6.28%

Blair Boswell 355,250 6.125% 355,250 5.55%

Thomas Bond 290,000 5.000% 290,000 4.53%

Lani Evans 155,150 2.675% 155,150 2.42%

Susan Davidson 145,000 2.500% 145,000 2.27%

Tom Mulder 145,000 2.500% 145,000 2.27%

Duncan and Rosemary Boswell 137,750 2.375% 137,750 2.15%

Seonaigh Stevens 137,750 2.375% 137,750 2.15%

Lewis Stevens 130,500 2.250% 130,500 2.04%

Sue Clarke 116,000 2.000% 116,000 1.81%

Nicola Bould 108,750 1.875% 108,750 1.70%

Rosey McConnon 104,400 1.800% 104,400 1.63%

Rhys Evans 72,500 1.250% 72,500 1.13%

Jennifer McMahon 65,250 1.125% 65,250 1.02%

Stephen Walker and Liana Machado 65,250 1.125% 65,250 1.02%

Lucy Clark 58,000 1.000% 58,000 0.91%

Jonathon Clearwater 58,000 1.000% 58,000 0.91%

Amanda Burgess 58,000 1.000% 58,000 0.91%

Andrew Kilsby 58,000 1.000% 58,000 0.91%

Rob and Ngaire Tigeir 40,600 0.700% 40,600 0.63%

Crowd Investors - - 600,000 9.375%

TOTAL 5,800,000 100% 6,400,000 100%

Share breakdown

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What we expectBeing a part owner of a business can be an important role, no matter how small your share. We all want Thankyou Payroll to do well, and the more help we can get, the better.

As an investor, we would hope that you would become an advocate for our organisation, the work we do, and the value we bring. This doesn’t need to take up much time, or be a big part of your week

- but word of mouth and social media are excellent ways to spread the word. We would love it if you would talk about us when you get the chance and share our good news stories on social media. The more positive stories people hear about us, the more clients we get, the more profit you make, and the more the community benefits. It takes most people three interactions with a company or an idea before they adopt it.

If you hear of any good opportunities for us to get out and about, please let us know! We’re keen to take advantage of speaking opportunities, networking events, and media promotion possibilities to communicate the story of our service.

Currently we provide a free, cloud based payroll intermediary service to over 4,300 businesses and charities around the country. We leverage an IRD subsidy as our primary revenue stream (approx 65-70% of revenue), alongside income from interest (approx 20-25%) and fast-service fees (approx 5-10%). The fast-service fees are: $0.50 for 1-day processing per employee, and $0.75 for overnight processing per employee.

This revenue model is shown in our historic financials below.

But IRD is changing how they operate. Our forecasts have been calculated with the upcoming changes in mind:• From April 2018 the IRD is removing the payroll intermediary subsidy, so our business model will

need to change.• From April 2019 employers will be required to file payroll information online to the IRD after every

pay cycle (is currently once per month). Due to this, there is an expected increase in the number of employers using payroll providers, as our calculations show over 50,000 businesses will be looking for a simpler way of managing payroll responsibilities.

• We believe our social enterprise model offers added value for our clients.

When the subsidy is removed, we will move to a monthly subscription payment model, with a scaled pricing model determined by the number of employees an organisation employs. This cost will be competitive with the market, and we are establishing a price clients should be able to afford based on the size of their organisation. Registered charities will continue to have free access to all of our services and regular donations from revenue will still go to Thankyou Charitable Trust. We’ll make every dollar go further into the community because social good, and its impact, will always be a strong component of our business model.

We believe the changes presented, and the reconfiguration of our business model and forecasts are now offering a great opportunity for us to grow well beyond our original trajectory in the next 2 years.

Our financials and forecasts

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What we provide

For businessesOur cloud based payroll provides a core service for businesses and charitable trusts. We take care of payroll complexities offering an affordable, easy-to-use system with a friendly user interface. We stay on top of legislative changes, manage leave and communicate with the IRD on behalf of employers. We have customisable reporting, including leave liability and group administration abilities for multiple client management.

We provide on time and accurate filing data to the IRD for PAYE and payroll related tax obligations, relieving employers of this responsibility, thus reducing stress, and freeing up time to concentrate on growing and managing their business.

For governmentWe provide accurate, online reporting and timely payments to the government on behalf of thousands of employers for PAYE, kiwisaver, child support, student loan, and other obligations. We make certain the government receives the necessary calculations and breakdown for each individual employee. Our system helps businesses comply with New Zealand’s payroll regulations.

This saves government auditing costs on individual businesses, and ensures that they are receiving the correct taxation percentage from employees each month. It has also meant a reduction in paper filing, which government employees had to transmit into online documents, and a considerable amount of savings in time and money.

For social goodWe believe businesses have a responsibility to support the communities that support them. Thankyou Payroll has donated $325,000 in in-kind services to community organisations and we donate a percentage of the IRD subsidy to the Thankyou Charitable Trust. So far, we’ve donated more than $80,000, which gives grants to community organisations around the country. By using Thankyou Payroll, our clients are part of an organisation creating greater social impact. We strive to foster generosity, and our pay-it-forward model waives fees for fast-processing plans if a client chooses to make monthly charitable donations. We also make payroll giving simple, and when any employee gives to their charity of choice, we administer an instant tax rebate. Everybody wins.

What’s more...On top of this, we are made and operated in New Zealand. We have an excellent and responsive customer support team, and great reporting functionality. Our system saves businesses time, money, and effort, and makes payroll a breeze for people who might normally find it a struggle. We have proven our product with over 220% revenue growth and 700% client based growth in the last 3 years.

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Our clients Over 80% of our clients have fewer than 10 employees, and 12.5% are not-for-profit organisations. Our clients are wide ranging, from tradespeople to sports centres, law firms to construction companies, religious institutions to restaurants. Our product meets the needs of most Kiwi businesses and organisations, and client feedback is consistent - they find the software easy to use, and our staff are described as friendly, supportive and responsive. But don’t take our word for it!

“In short, Thankyou payroll has been amazing to work with. We have been using them for a number of years and find that their ethos is brilliant and it works well with our own values at Kapai. The Thankyou Payroll team is helpful and any queries always receive a prompt response. They’ve also been able to accommodate us as we’ve grown from 10 employees to more than 50.

Thank you, Thankyou Payroll, we love what you’re doing.”

JUSTIN LESTER Kapai Director and current Wellington Mayor

“I have been involved and had dealings with Thankyou Payroll for at least 3 years. I was first introduced to Thankyou by assisting clients of mine who run the Aussie Butcher in Tauranga. I hadn’t used a payroll system for some years and was relieved to find that not only was Thankyou Payroll user friendly, the support behind the scenes was brilliant. I have since registered other clients of mine to Thankyou Payroll and process their weekly pay run.”

SUE CALLAGHANOffice Sidekick Bookkeeping and Administration

“Have just used Thankyou Payroll for the first time on behalf of a client. So easy to use and very responsive when I needed assistance. Will definitely recommend to other clients who have employees.”

TRACYAdmin Assist Ltd

“You guys are just doing such a marvellous job in there. A great system and the best Help Desk I have ever encountered. Thankyou!”

MARGETTEPure Dance Ltd

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140new clients each month

Our journey

Client growthNumbers as at April 1

NEWWELLINGTON

OFFICE

APRIL 1

IRD NEW RULES2019

20182019

20172016

20152014

20132012

20112010

Launch out of garage in Port Chalmers, Dunedin

186C L I E N T S

492C L I E N T S

1526C L I E N T S

2782 C L I E N T S

4350C L I E N T S

6220 C L I E N T S

11,300 C L I E N T S

Staff growthPermanent Staff

$7,600 $27,650 $44,60016 GRANTS 44 GRANTS 19 GRANTS

Annual donations to Thankyou Charitable Trust, philanthropic arm of Thankyou Payroll

2014-2015 2015-2016 2016-2017

(thus far)

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Christina Bellis - CEOChristina joined Thankyou Payroll in 2015, with a focus on growing and scaling the business, while ensuring solid foundations and processes are in place as Thankyou Payroll doubled its staff and clients. She brings twelve years of management, leadership, and strategic planning, and has extensive experience building effective teams, and in consolidating and growing social enterprise. In 2013, she managed the transformation of a windowless carparking building hidden down a potholed lane into a national award winning environment centre. She is the founding Chair of Environment Hubs Aotearoa, a network of community and social enterprises working collaboratively across the country, and is a trustee of Frocks on Bikes Aotearoa, helping increase sustainable transportation. She also sits on the board of Thankyou Charitable Trust.

Hugh Davidson - Director & CTOHugh Davidson is a service designer by trade, a technology fanatic at heart, and a fanatical coder. He has degrees in Design for Technology (1st Class honours) and Philosophy and is passionate about creating elegant, technology-driven solutions to problems. In 2008, Hugh identified a gap in the payroll service market and decided to build a useful, free-to-user payroll service that has the advantage of being a holistically useful service for New Zealand that is also capable of providing enough revenue for his personal entrepreneurial projects and the projects of community groups around Aotearoa.

Hugh taught himself how to write code that securely and accurately manages the calculation of highly complex payroll scenarios. He has an extensive knowledge of tax and leave legislation, enabling him to design software that can keep track of hundreds of payments and transfers for thousands of employees and employers. The systems he created are scalable and designed to be easily integrated with both information providing systems (such as time-keeping services) and data end user systems such as Xero. Hugh’s claim to fame is his seven-year streak winning the Alexandra Blossom festival Trolley Derby. Hugh is focused on refining our current proprietary software development for Version 3 of Thankyou Payroll. He is also focused on his puppy, Hale-Bopp.

Our team

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Lesleigh Romond - Client Happiness SpecialistLesleigh is a colourful individual, with tremendous warmth, a quirky sense of humour and a genuine affinity with people. She brings considerable experience to Thankyou Payroll after working with many other forward thinking agencies both here and in her former US based work. Lesleigh is also firmly of the opinion that business expansion starts with staff waistlines, regularly arriving with sublime baking. She adores spending time with her family including her 3 SPCA fur babies - Pixie, Poppy and Tuck!

Elliot Ashton-Stretch - Client Happiness SpecialistElliot is a telephonic charmer, going the extra mile with patience and consideration with every client that ring ups. He’s our office speedster with hands that blur when wielding keyboard and mouse. He is also a creative animal, enjoying writing in various forms. Elliot also diligently helps to eat Lesleigh’s baking and distributes office dog cuddles despite the inherent dangers.

Letisha Nicholas - Environment SpecialistLetisha moved from warm, sunny Northland to chilly ol’ Dunedin 6 years ago to study a BSc in Zoology. She joined the Thankyou Payroll team in 2014 and is currently working part-time so she can concentrate on completing her Masters of Science (‘Landlord decision making about the energy performance of rentals’). Recently she moved to Wellington and is working to build TYP a stronger environmental strategy, keeping track of our carbon emissions, and making changes that improve environmental outcomes. In her spare time, Letisha likes to fish, is a staunch defender of equality, is busy solving climate change and developing a social enterprise to improve rental housing in New Zealand.

Carolyn Timms - Captain of process Caro makes sure our now considerable batch processes run like they should. She is a sharp cookie, and must operate across all areas to make sure people get paid and PAYE gets filed. She also knows an awful lot about rocks. Caro is also a new Mum, likes to paddle board, walk around, and climb over and wade through the wild places, which is one of the many attractions of living in the South.

Thomas Bond - Front End DesignerThomas Bond is a designer and front-end developer and is primarily responsible for brand management and user experience (UX) within the Thankyou Payroll team He brings a wide range of creative and technical experience to the fore with well over 15 years in web related work both in New Zealand and the UK. He is also one of the first Thankyou Payroll employees and has a wealth of knowledge of the system and helps our larger clients to navigate the software. Tom is also an avid and excellent Ultimate Frisbee player, having represented New Zealand three times in international competition. He also represented Scotland once. Tom’s all round experience is a unique asset in our dynamic business.

Saima Ali - System Happiness SpecialistSaima moved to Wellington from Christchurch to be with the team (formerly worked remotely). She joined us in 2015 in her very capable capacity as a developer and is driving the considerable increase of new features and system updates.Outside of work, Saima loves hanging out with her family, friends and exploring wonderful Wellington! Saima is a delight to work with, bringing warmth humour and sharing a strong desire to make the TYP experience even better for our clients.

Bjorn Gronberg - System Happiness SpecialistBjorn means bear apparently, but we know, Bjorn is really a Ninja. He be like a bear-ninja. A Beanja. Bjorn is clever. He has degrees, diplomas and certificates in ninja’ing and is always up for adventures in codeland. At home, he continues to be a busy bear ninja: TV/movie marathons, gaming, building computers and flying robot (ninja) suits, keeping the Ninja den clean and drinking more tea and coffee than non-ninja people.

Heather Allott - Team Leader: Client Happiness SpecialistHeather kayaks across the Cook Strait for fun in the weekends, so you know, in terms of sanity she fits right in here! She also comes to us with considerable banking experience, payroll knowledge and has a long history of involvement with not-for-profit groups and sports clubs. Heather is a very active person, regularly taking groups out on the water and loves Wellington for it’s proximity to our wonderful, wild coastline.

Our team

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Thankyou Payroll has five directors who meet every second month. They help to set the strategy and direction for the business

Steve Walker - ChairSteve has lived in Port Chalmers since 2003 and is serving his fourth term on the West Harbour Community Board (three previous terms on the Chalmers Community Board). Prior to settling down in Dunedin’s West Harbour he worked in London from 1988-1994 for a small import company as their sales and marketing director. His interests include golf, tramping, cycling and football (he refuses to call it soccer!)

Steve is Chairperson of the West Harbour Community Board, and is a member of the Dunedin Red Cross’s executive committee, a trustee at the Thankyou Charitable Trust, Deputy Chair of Keep Dunedin Beautiful, a member of the Institute of Directors, a notorious quiz master and he is a committee member of the Rothesay News where he writes regular columns. Steve also established and Chairs the West Harbour Beautification Trust which helps to enhance what he describes as “the most beautiful place on earth”.

Lani Evans - Director and Former CEOIn 2010, Lani signed up as the very first client of Thankyou Payroll. She was an enthusiastic proponent of the service and it’s holistic business model and stepped into the CEO role from 2013-2015.

Lani now heads the Vodafone New Zealand Foundation and is an advocate for generosity in all its forms. She has a background in leading regional and national organisations. She was a 2015 Winston Churchill Fellow, was awarded a National Geographic Grant in 2013, was a finalist for the Emerging Business Leader award in 2014 and received the World of Difference Award. She has a strong history of governance, with past roles including The Generosity Hub, Philanthropy New Zealand and the steering committee of Kia Tutahi - The Government Community Relationship Agreement. Lani is currently the co-chair of Action Station, Chair of the Thankyou Charitable Trust and on the board of the West Harbour Beautification Trust and the JR McKenzie Trust Peter McKenzie Project. When she’s not thinking about generosity, business or citizen engagement, she can usually be found running around in the mountains.

Anchali Anandanayagam - DirectorAnchali is a senior commercial lawyer and business advisor with specialist expertise in technology, media and intellectual property. She helps creative people who have come up with great new ideas or new technology to achieve their full potential. Anchali has a unique set of skills that she brings to the board developed through 14 years of practice in the legal services industry. She has advised businesses both as an external advisor (here and in London) and as in-house counsel on corporate governance matters. Anchali is currently a Principal at Hudson Gavin Martin, a boutique corporate and commercial firm with a particular focus on telecommunications, technology, media and intellectual property. She also sits on the boards of Women in Film and Television New Zealand, the New Zealand Software Association and the Asylum Seekers Support Trust.

Rosey McConnon - DirectorRosey is a philanthropist and an investor, she comes from a local business family and lives between Dunedin and Melbourne. A mentor to many, she is a motivated individual who says she is just fortunate to work alongside some great young minds! Rosey contributes to projects around the Dunedin community sector as time allows.

Favorite project: Ignite Consultants - A truly visionary student run organisation and one of her favourite success stories. Rosey currently sits on the Thankyou Payroll Board, the Otago Polytechnic Foundation and recently stepped away after 10 years from the Dunedin Arts Festival in order to create a better work - life balance! As former CEO at the Malcam Charitable Trust she has a developed a strong understanding of the local community sector. Rosey also spent 18 years of her career in Melbourne, Australia working for two major companies in the hairdressing industry. Time spent within the Australian corporate world developed Rosey’s skills in sales training, business development, strategy and negotiation. She describes her network as varied and diverse.

Hugh Davidson - DirectorHugh retains his place on the Board of Directors

Board of directors

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PhilanthropyThankyou Payroll has been developed as a social business and we put approximately 10% of our income into the Thankyou Charitable Trust.

The Thankyou Charitable Trust (TYCT) is an independent, registered charity (CC50391) that launched in 2013. TYCT was founded by Lani and Hugh as a mechanism for effectively distributing the donations generated by Thankyou Payroll. TYCT aims to help communities grow their resilience, connectedness, well-being and sustainability by giving out grants of $100-$3000. The trust aims to address some of the challenges of philanthropy through their funding model.

The application process is fast and easy, and all online, and accountability is a potluck dinner party. TYCT doesn’t want organisations spending time on reporting; instead, they’ve designed an accountability process that is informal and personal, including the community and their peers. Healthy relationships play a role in creating successful change interventions and this accountability model provides opportunities for cross sector community leaders to meet and hear about each others projects and ideas. TYCT hopes this will contribute to greater system fitness and more collaboration.

TYCT also operates on a “Pay-It-Forward” funding model. Successful applicants of each grant round make decisions on the next lot of grant recipients in their area. TYCT believes that this grant making method creates greater connection among community leaders and organisations by providing a space for them to meet and engage in collaborative decision-making and values the knowledge that is within communities. Who understands the need of a local community better than the people who are actively working for its betterment? The Thankyou Charitable Trust wants to break down the power imbalance between fund giver and fund receiver by role modeling high-trust relationships, handing over power and using more devolved, user-centric decision making processes. This is as an opportunity for intervention within communities, an opportunity for growing connection, collaboration, leadership and for providing funding for projects.

Profile of Newtown Playcentre

Newtown Playcentre is a parent-led early childhood education centre situated on Harper Streetin central Newtown. We are a diverse group of parents, who share in common that we areall raising preschool aged children. We work together to learn, nurture, grow and love eachother’s children. Newtown playcentre is a group of around 20 families, and our centre isentirely run by volunteers.

With the money from the Thankyou Charitable Trust we were able to purchase two greatnew purpose made sandpit covers, to protect our sandpit from the Wellington weather andanimals using it as a litter tray. Our sandpit is a key part of our centre, facilitating play andlearning, real-life mathematical challenges, mixing, tipping and digging. The sandpit coversmake a real difference to our sandpit and the well-being of our children using the sandpit.We feel excited and grateful for this financial contribution. As well as sandpit covers, thegift of this money is also a symbol of encouragement to our families through theknowledge that the voluntary contribution that we give to our local community is supported and endorsed by others.

EMMANewtown Playcentre

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Environment Thankyou Payroll believes that businesses should take responsibility for the effects we have on our environment. We calculate our carbon emissions and have an annual carbon-offsetting event where our team, our board, and our friends help plant hundreds of trees alongside local environmental stewards to help minimise the carbon we’ve used in our business activities. We have recently started working with Catalyst in Wellington, who will help us to design and implement an improved carbon calculation and mitigation strategy.

The majority of our computers and monitors are purchased second hand, and we are looking to engage with a community composting initiative to turn our organic waste into nutrient rich soil. Our environmental plan also includes purchasing electric bikes for office meetings, and we encourage staff to use sustainable transport to commute. We are currently investigating putting beehives on the roof of our Wellington office.

470 trees PLANTED OVER

CARBON OFFSETTING

two years

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2014 OBIZ Award Winner (Otago Chamber of Commerce): Ethics Award Sponsored by Combined Rotary Clubs of Dunedin Finalist in the Emerging Business person of the year award

Media

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The landscapeWe believe we are quite different from our competition in New Zealand.

First off, we are a social enterprise. We provide a great service and support the wider community by giving a proportion of our revenue to community groups via Thankyou Charitable Trust.

Secondly, our churn rate is low which we think is down to our great people, and the continual feedback we get is that our Help Desk support is exceptional. Even though the IRD landscape is changing, we will still be price competitive to our clients, and still provide our services to charities and community groups for free. We believe we will always offer the best value for money over our competitors.

Competitor How we’re different

MYOBThey’re a more traditional provider, and we believe we can move quicker and provide more personalised service to our customers.

Xero They’re still new in this space, and we believe our customer service is a great point of difference.

iPayroll, Smart Payroll, Netpay We’re competitive on price, and according to their published numbers we’re currently growing more quickly.

Other smaller payroll providers We believe we’re competitive on price.

Paper based / online do it yourselfYou need to have historic information to do leave calculations. Doing it yourself can be tedious, time consuming and prone to error.

Outsourced consultants (eg. Bookkeepers)

They manage on behalf through the likes of IMS. This is a desktop solution. We’ve believe we’re typically cheaper than these options, and the customer has more control and visibility.

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Our financials and forecasts

FY 14(Actual)

FY 15 (Actual)

FY 16(Actual)

FY 17(Current)

FY 18(Forecast)

FY 19(Forecast)

Revenue $ 69,954.04 $ 300,373.04 $ 607,154.83 $ 1,011,871.97 $ 1,468,000 $ 3,308,000Operating expenses $ 92,069.10 $ 255,907.68 $ 484,646.51 $ 988,241.40 $ 1,817,000 $ 2,561,000EBITDA $ (20,615.06) $ 46,465.36 $ 125,508.32 $ 26,630.57 $ (344,800) $ 827,600Net Profit $ (77,965.96) $ (11,385.54) $ 66,657.42 $ (32,220.33) $ (404,600) $ 741,000

The forecasts include a switch to a subscription model in 2018 and are based on our pricing proposals. We have included options to our pricing plans, which include full and partial intermediary services. Our forecasts include presumptions that, over time, more clients might move to the cheaper and more basic do-it-yourself online version of our service (partial intermediary) in place of the full service intermediary option.

Our assumptions underpinning the forecast include: • The inclusion of sales staff will grow our customer base. • Increased marketing activity will grow our customer base. Our growth so far has been mainly

organic as we have spent almost nothing on marketing historically. We believe our social enterprise model offers added value for our clients.

• A 25% increase nationally in the number of employers looking for payroll services by the end of the 2018 financial year due to wider awareness of the coming IRD changes.

• Our churn rate (currently 2.5%) won’t increase significantly once we move to a subscription model as our price will be competitive, and clients likely won’t want the administrative and cumbersome task of navigating the MyIR site, nor deal with increasing payroll legislative complexities. Our charitable model makes our clients part of a positive impact, which will make them feel good.

They also assume a significant increase in the numbers of employers looking for payroll services during the 2019 financial year, and increasing rapidly as we near the date it becomes a requirement to file payroll information online to the IRD with every pay cycle.

We’ve invested what would have been our 2016-2017 profits into this equity crowdfunding campaign.

Our current balance sheet (as at March 2017)

* See page 14 for a description of the $75,000 convertible loan note.

Please also see the disclaimer “Important Information” at the end of this document for an important note on forecasts.

Financial year 2017ASSETSTotal cash assets $66,035

Total current assets $70,645

Total non current assets $14,824

Total assets $151,504

LIABILITIESCurrent liabilities $16,119

Non current liabilities $75,000*

Total liabilities $91,024

Total Net Assets $60,480

EQUITYShare Capital $123,667

Retained earnings ($63,187)

Total Equity $60,480

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Risk factorsCompetition: There are other commercial payroll companies that exist, and we have outlined a few of them in the landscape section and how Thankyou Payroll is different. We have an established brand, and an excellent reputation with both our clients and with a network of professional accountants and bookkeepers who help us grow extensively through word of mouth. We sign up approximately 140 new clients every month without any paid advertising. A high-profile marketing campaign, our social enterprise impact, and our premium cloud based payroll software, will make us well positioned as a favourable payroll services company. No other payroll company has our social enterprise and philanthropic model, which is a key point of difference. If another business adopted this model, we’d be thrilled as we believe it’s the business model we should all be championing, however Thankyou Payroll has had this model since inception.

Loss of key staff: Performance planning and regular feedback is sought and given to enable staff retention. We have documentation and training modules in process to help induct new staff quickly. We also ensure that any one task can be conducted by at least two different staff members. In addition, our staff all earn above the living wage, they receive 5 weeks of paid holidays per year, and have access to human centred policies like mental health leave and family violence leave.

Slow uptake of new clients: We have a great reputation with current clients and a large network of professionals that continue to sell our business via word of mouth. We are creating a high level communications and marketing strategy, and hiring a Communications and Marketing Specialist to drive it, along with sales people to follow up leads. We will be putting money into paid advertising to increase our brand and name recognition. With the changes IRD is making to legislation, we predict a large number of SMEs will be looking to outsource their payroll needs. We are planning a great promotional marketing campaign, using current client testimonials to help secure new clients, and we are building a database of potentials. Our product is known by thousands of business owners as a reputable, seamless, and user-friendly payroll software.

Increased churn rate: With the introduction of a monthly user-pays subscription, replacing our free service, there is the possibility that we could lose a few more clients than our current 2.5% churn rate. Cost conscious clients might need to leave due to affordability, and our system has a few dormant accounts that are ‘live’ but not active. Our forecasts assume many of these will cancel but believe we will retain the vast majority of current clients. Many will not want the added administration of the IRD requirements, and will offset that cost against the monthly subscription. Our cost will be competitive with other payroll service providers, our platform and service are exceptional, and we have the added benefit of social good for clients to be proud of.

Security: We are a low priority target for hackers, and our internal auditing system looks at accounts daily and matches money in for money out. We have the usual two authorisation step, and if a server is compromised, we have a back-up that can be activated within hours to restore the latest data and system operation. Staff getting ‘phishing’ attacks is more of a concern, and we have regular discussions with staff on phishing, security, and procedures. We also have basic cyber security insurance.

Underfunded (not reaching maximum $600K raise): We believe that with the minimum amount of $400K we will still be able to meet the majority of our targets. In this event, we might need to postpone the launch of the newest software for a few more months as we would delay hiring a developer. We might also reconsider and only hire one sales staff. In this forecast, we still expect good profitability in the 2019-2020 year.

Interest rates decrease: Currently bank interest is approximately 20% of our revenue. We have been keeping a close eye on the interest rates as they have been steadily decreasing over the past year. We have been carefully managing the money we hold and investing in higher growth, short term deposits.

Regulatory risks: The changes IRD is making pose a risk on our business as they disrupt our current business model, and our trajectory. However, we are also able to see the opportunity this new legislation offers because we have a great software, and an excellent reputation, to meet the demand of employers looking for payroll solutions. New legislation can also be built into our cloud based business reasonably easily, and legislation doesn’t usually change overnight, which gives businesses like ours time to meet the new demands.

Business continuity in the event of natural disaster: Unless a meteor hits Aotearoa (and in that event, payroll might be a lesser priority!) we have offices in both Wellington and Dunedin and staff in both areas that can conduct all the necessary day to day business functions to ensure continued service. Our servers are off-site and in controlled zones. Our servers in ChCh were not affected at all in the 2010-11 earthquakes. In the unlikely event of issues, Thankyou Payroll has a backup server that can be activated within a couple of hours to retrieve latest data and run the system. For our office in the shaky capital, a high NBS rating (New Building Standard) was an important factor to help keep our employees and our business safe.

The apocalypse: payroll is canceled for today.

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Important informationThis document has been prepared by Thankyou Payroll Limited. The purpose of this document is for information in relation to the Thankyou Payroll Limited share offer on PledgeMe. All efforts have been made to ensure the accuracy and reliability of the content as of the date of this document.

PledgeMe is licensed and regulated by the Financial Markets Authority, and the share offer made by Thankyou Limited will only be available for acceptance through the PledgeMe website.

Disclaimer

This document may include forward-looking statements which reflect various judgements and assumptions which:

• may or may not prove to be correct, reasonable or reliable;• are subject to the emergence of new risk factors and to unexpected impacts of known risks;

and• may be affected by subsequent events. Neither the Company nor any of its shareholders or directors will have any liability for, nor do any of them give any representation or warranty (express or implied) as to:

• the accuracy, completeness, reliability, adequacy or reasonableness of any statements, opinions, information or matters (express or implied) contained in this document or subsequently provided to anyone; nor as to

• the reasonableness of any assumption, estimates, projections, targets, forecasts or forward looking statement contained in the document or otherwise made available.

No audit or independent verification of this document has been conducted and this document does not have regard to the investment objectives, financial situation or particular needs of anyone. Any reliance by anyone on any information contained in this document is a matter for that person’s own judgement. To the maximum extent permitted by law, neither the Company nor any of its shareholders, or directors will be liable to compensate any person for any liabilities, costs, losses or expenses incurred by anyone in connection with their review, investigation, evaluation or analysis of this document and the Company. All amounts, unless otherwise stated, are denominated in NZD. This document is governed by, and is to be construed in accordance with the laws of New Zealand.

Equity Crowdfunding

Equity crowdfunding is risky. Issuers using this facility include new or rapidly growing ventures. Investment in these types of business is very speculative and carries high risks. You may lose your entire investment, and must be in a position to bear this risk without undue hardship. New Zealand law normally requires people who offer financial products to give information to investors before they invest. This requires those offering financial products to have disclosed information that is important for investors to make an informed decision. The usual rules do not apply to offers by issuers using this facility. As a result, you may not be given all the information usually required. You will also have fewer other legal protections for this investment.

Ask questions, read all information given carefully, and seek independent financial advice before committing yourself.

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Calculations for numbers of employers likely to seek out new systems for processing payroll:

In 2008 our founder, Hugh Davidson, worked for the IRD on a project aimed at moving employers that filed paper based returns to them each month to electronic filing. The project team recognised that there were over 170,000 registered employers filing returns every month and approximately 85% of those filed their returns on paper. Using this figure and the information published on provider total client numbers as below we can derive a good approximation of the number of employers in New Zealand that are yet to start using online payroll solutions and approximate the number that will be looking to sign up to one over the next 2 years.

Payroll providers have on several occasions made their total client numbers available showing steady growth rates allowing us to estimate the total number of clients changing to online payroll solutions over time. For our key source on client numbers see NZ Business Magazine’s annual payroll edition published in February (link to most current one here) .

Only two providers have not provided solid data on client numbers: MYOB and Xero. MYOB provides predominantly desktop payroll solutions but have launched a cloud payroll platform recently. Desktop solutions will become undesirable as the gap between the time burden of using them versus online systems widens with the new changes. Xero’s payroll platform has been available in NZ for just on two years. They will be one of the strongest growing providers in the market between now and the changes as they have the greatest reach and most resources.

Providers other than Xero will likely grow at a slightly elevated rate due to more employers looking for online solutions with the upcoming changes. Providers like MYOB will have to convince their many desktop solution clients that when they look to upgrade they should consider staying with them over the many alternatives.

From this reasoning we predict that there are currently over 80,000 employers in NZ not using cloud based service providers for payroll. Based on the limited data that New Zealand’s major provider of desktop payroll solutions MYOB makes public our understanding is that about half of these are using a desktop solution and that the rest are using informal systems (spreadsheets and wage books). We predict around 50,000 of these will be in the market for a new cloud based system before April 2019.

APPENDIX

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Contact usThank you for considering investing! Our equity crowdfunding officially opens at 6pm on Friday, 7th April and you can pledge your investment here: http://pldg.me/thankyou

If you have any questions, we are more than happy to answer them. Please send us an email to: invest@thankyoupayroll.co.nz

If you’re interested in using Thankyou Payroll please sign up at www.thankyoupayroll.co.nz. If you have questions about it, we have a customer service desk open from Monday to Friday, 10am - 5pm. You are welcome to give us a call on our freecall number 0800 895 146 or email help@thankyoupayroll.co.nz

Contact our CEO Christina directly.

M. 021 150 3536E. christina@thankyoupayroll.co.nz W. www.thankyoupayroll.co.nz