What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2017-08-21 compared with 2017-05-16 · 497 added, 451 removed, 635 unchanged (60% of the section changed)

2 unchanged sentences

and Subsidiaries

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE

June 30, 2017

September 30, 2016

30 unchanged sentences

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

Investment management fees

14 unchanged sentences

Total other (expense) income

$ (1,156,040 )

EARNINGS PER SHARE - Basic and Diluted

The accompanying notes

are in integral part of these consolidated financial statements.

The accompanying notes are in integral part

of these consolidated financial statements.

Financial Gravity Companies, Inc.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended March 31,

Nine months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES

$ (1,156,040 )

Adjustments to reconcile net loss to net cash used in operating activities

1 unchanged sentence

Write off of fixed assets

Stock compensation for services provided by a third party

Services provided to relieve accounts receivable - other

3 unchanged sentences

Prepaid expenses

Accounts payable - trade

Accounts payable –

Accounts payable - related party

1 unchanged sentence

Deferred revenue

Pre-merger liabilities

Net cash used in operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

Cash from the sale of investment

Cash paid for purchase of property and equipment

2 unchanged sentences

Purchases of trademarks

Net cash (used in) provided by investing activities

Net cash provided by investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from notes payable

Payments on note payable

Borrowings from notes payable

Payments on notes payable

Payments on line of credit

26 unchanged sentences

and Tax Coach Software, LLC.

On September 30, 2016, Financial Gravity Holdings

entered into a reverse merger transaction with Pacific Oil Company (the “Merger”).

Pacific Oil Company was incorporated

in Nevada on December 5, 2005 as Kat Racing, Inc.

On January 4, 2013, the Articles of Incorporation were amended to change the

name of the Company to Prairie West Oil & Gas, Ltd.

On July 26, 2013, the Articles of Incorporation were amended to change

the name of the company to Pacific Oil Company.

On October 31, 2016, following the Merger, the Articles of Incorporation were amended

to change the name of the Company to Financial Gravity Companies, Inc.

On the effective date of the Merger, the business of Financial

Gravity Holdings became the only business of Pacific Oil Company (currently named Financial Gravity Companies, Inc.).

On September 30, 2016, Financial Gravity

Holdings entered into a reverse merger transaction with Pacific Oil Company (the “Merger”).

Pacific Oil Company was

incorporated in Nevada on December 5, 2005 as Kat Racing, Inc.

On January 4, 2013, the Articles of Incorporation were amended to

change the name of the Company to Prairie West Oil & Gas, Ltd.

On July 26, 2013, the Articles of Incorporation were amended

to change the name of the company to Pacific Oil Company.

On October 31, 2016, following the Merger, the Articles of Incorporation

were amended to change the name of the Company to Financial Gravity Companies, Inc.

On the effective date of the Merger, the business

of Financial Gravity Holdings became the only business of Pacific Oil Company (currently named Financial Gravity Companies, Inc.).

Financial Gravity Holdings is now a subsidiary

22 unchanged sentences

FGV does not have any

financial activity through March 31, 2017.

financial activity through June 30, 2017.

Effective January 1, 2015, Cloud9 assigned

1 unchanged sentence

Financial Gravity Tax, Inc.

(“FG Tax”)

formerly Business Legacy, Inc., (“BLI”) was acquired by FGO for no cost effective January 1, 2015 and is located in

Allen, Texas.

BLI is a bookkeeping, tax planning, tax preparation, and payroll service provider to small companies and individuals.

Tax”) formerly Business Legacy, Inc., (“BLI”) was acquired by FGO for no cost effective January 1, 2015 and is

located in Allen, Texas.

BLI is a bookkeeping, tax planning, tax preparation, and payroll service provider to small companies and

Financial Gravity Wealth, Inc.

(“FG Wealth”)

formerly Pollock Advisory Group, Inc., (“PAG”) was acquired by FGO for no cost effective January 1, 2015 and is a registered

investment advisor, located in Allen, Texas.

Wealth”) formerly Pollock Advisory Group, Inc., (“PAG”) was acquired by FGO for no cost effective January 1,

2015 and is a registered investment advisor, located in Allen, Texas.

PAG provides asset management services.

SASH Corporation, an Oklahoma corporation doing

business as Metro Data Processing (“MDP”) was acquired August 12, 2015.

SASH Corporation, an Oklahoma corporation

doing business as Metro Data Processing (“MDP”) was acquired August 12, 2015.

The purchase was made by Cloud9Accelerator,

MDP is located in Tulsa, Oklahoma, and provides payroll services, software, and support solutions to business owners.

Tax Coach Software, LLC, an Ohio limited liability

company (“TCS”), was acquired effective October 1, 2015.

Tax Coach Software, LLC, an Ohio limited

liability company (“TCS”), was acquired effective October 1, 2015.

The purchase was made by FGH.

Located in Cincinnati, Ohio,

TCS provides three primary services including monthly subscriptions to the “Tax Coach”

software system, coaching and

email marketing services.

Located in Cincinnati,

Ohio, TCS provides three primary services including monthly subscriptions to the “Tax Coach”

software system, coaching

and email marketing services.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting polices

consistently applied in the preparation of the accompanying consolidated financial statement in accordance with accounting principles

generally accepted in the United States of America (“GAAP”) is as follows.

A summary of the significant accounting

polices consistently applied in the preparation of the accompanying consolidated financial statement in accordance with accounting

principles generally accepted in the United States of America (“GAAP”) is as follows.

Basis of Consolidation

6 unchanged sentences

Cash and Cash Equivalents

The Company considers all highly liquid investments

with an initial maturity of three months or less, when purchased, to be cash equivalents.

The Company maintains cash balances at

several financial institutions located throughout the United States, which at times may exceed insured limits.

The Company has

not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

The Company considers all highly liquid

investments with an initial maturity of three months or less, when purchased, to be cash equivalents.

The Company maintains cash

balances at several financial institutions located throughout the United States, which at times may exceed insured limits.

Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and

cash equivalents.

Trade Accounts Receivable

Trade accounts receivable are carried at the

invoiced amount less an estimate made for doubtful accounts based on management’s review of outstanding balances.

The collectability

of the Company’s accounts receivable is reviewed on an ongoing basis, using historical payment trends and a review of specific

Accounts receivable are written off after all reasonable collection efforts have been exhausted and when management determines

the amounts to be uncollectible.

Recoveries of receivables previously written off are recorded when received.

There was no allowance

for doubtful accounts recorded as of March 31, 2017 and September 30, 2016.

Trade accounts receivable are carried at

the invoiced amount less an estimate made for doubtful accounts based on management’s review of outstanding balances.

collectability of the Company’s accounts receivable is reviewed on an ongoing basis, using historical payment trends and

a review of specific accounts.

Accounts receivable are written off after all reasonable collection efforts have been exhausted

and when management determines the amounts to be uncollectible.

Recoveries of receivables previously written off are recorded when

There was no allowance for doubtful accounts recorded as of June 30, 2017 and September 30, 2016.

In the normal course of business, the Company

2 unchanged sentences

Prepaid Expenses

Prepaid expenses consist of expenses the Company

has paid for prior to the service or good being provided.

These prepaid expenses will be recorded as expense at the time the service

has been provided.

Prepaid expenses consist of expenses the

Company has paid for prior to the service or good being provided.

These prepaid expenses will be recorded as expense at the time

the service has been provided.

Property and Equipment

3 unchanged sentences

over their estimated service lives by the straight-line method.

Maintenance and repairs are charged to earnings

Maintenance and repairs are charged to

earnings as incurred;

major repairs and replacements are capitalized.

When items of property or equipment are sold or retired, the related

cost and accumulated depreciation are removed from the accounts and any gain or loss is included in operations.

When items of property or equipment are sold or retired,

the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in operations.

Property and equipment operated under material

5 unchanged sentences

Customer Relationships

The customer relationships acquired as part

of the TCS purchase have been recognized in the accompanying consolidated balance sheets at $44,900, the value attributed to such

relationships on the date of the purchase (see Note 9).

The customer relationships are being amortized on a straight-line basis

over a four-year estimated life.

During each of the three and six months ended March 31, 2017 and 2016, the Company recorded amortization

expense of $2,806 and $5,612, respectively, on this intangible asset, which is included in depreciation and amortization expense

in the accompanying consolidated statements of operations.

Accumulated amortization at March 31, 2017 was $16,837 and $11,225 at

September 30, 2016.

The customer relationships acquired as

part of the TCS purchase have been recognized in the accompanying consolidated balance sheets at $44,900, the value attributed

to such relationships on the date of the purchase (see Note 9).

The customer relationships are being amortized on a straight-line

basis over a four-year estimated life.

During each of the three and nine months ended June 30, 2017 and 2016, the Company recorded

amortization expense of $2,806 and $8,418, respectively, on this intangible asset, which is included in depreciation and amortization

expense in the accompanying consolidated statements of operations.

Accumulated amortization at June 30, 2017 was $19,643 and $11,225

at September 30, 2016.

Proprietary Content

4 unchanged sentences

estimated life.

During each of the three and six months ended March 31, 2017 and 2016, the Company recorded amortization expense

During each of the three and nine months ended June 30, 2017 and 2016, the Company recorded amortization expense

of $16,410 and $49,230, respectively, on this intangible asset, which is included in depreciation and amortization expense in the

accompanying consolidated statements of operations.

Accumulated amortization at March 31, 2017 was $98,456 and $65,637 at September

The trade name acquired as a part of the TCS

purchase has been recognized in the accompanying consolidated balance sheets at $69,300, the value attributed to such name on the

date of the purchase (see Note 9).

Management has determined that the trade name has an indefinite life and does not consider the

value of the trade name recorded in the accompanying consolidated balance sheet to be impaired as of March 31, 2017.

Accumulated amortization at June 30, 2017 was $114,866 and $65,637 at September

The trade name acquired as a part of the

TCS purchase has been recognized in the accompanying consolidated balance sheets at $69,300, the value attributed to such name

on the date of the purchase (see Note 9).

Management has determined that the trade name has an indefinite life and does not consider

the value of the trade name recorded in the accompanying consolidated balance sheet to be impaired as of June 30, 2017.

Prospect List

The prospect list acquired as a part of the

TCS purchase has been recognized in the accompanying consolidated balance sheets at $53,800, the value attributed to such list

The prospect list acquired as a part of

the TCS purchase has been recognized in the accompanying consolidated balance sheets at $53,800, the value attributed to such list

on the date of the purchase (see Note 9).

4 unchanged sentences

Non-compete Agreements

Non-compete agreements entered into as a part

of the TCS purchase have been recognized in the accompanying consolidated balance sheets at $26,300, the value attributed to such

agreements on the date of the purchase (see Note 9).

The non-compete agreements are being amortized on a straight-line basis over

the five-year term of the non-compete clause of the agreement.

During each of the three and six months ended March 31, 2017 and

2016, the Company recorded amortization expense of $1,315 and $2,630, respectively, on this intangible asset, which is included

in depreciation and amortization expense in the accompanying consolidated statements of operations.

Accumulated amortization at

March 31, 2017 was $7,890 and $5,260 at September 30, 2016.

The Company accounts for trademarks in accordance

with GAAP and accordingly, trademarks are stated at cost.

Trademarks with indefinite lives are not amortized but are tested for

impairment at least annually.

Management has determined that the trademarks have an indefinite life and do not consider the value

of trademarks recorded in the accompanying consolidated balance sheet to be impaired as of March 31, 2017.

Non-compete agreements entered into as

a part of the TCS purchase have been recognized in the accompanying consolidated balance sheets at $26,300, the value attributed

to such agreements on the date of the purchase (see Note 9).

The non-compete agreements are being amortized on a straight-line

basis over the five-year term of the non-compete clause of the agreement.

During each of the three and nine months ended June 30,

2017 and 2016, the Company recorded amortization expense of $1,315 and $3,945, respectively, on this intangible asset, which is

included in depreciation and amortization expense in the accompanying consolidated statements of operations.

Accumulated amortization

at June 30, 2017 was $9,205 and $5,260 at September 30, 2016.

The Company accounts for trademarks in

accordance with GAAP and accordingly, trademarks are stated at cost.

Trademarks with indefinite lives are not amortized but are

tested for impairment at least annually.

Management has determined that the trademarks have an indefinite life and do not consider

the value of trademarks recorded in the accompanying consolidated balance sheet to be impaired as of June 30, 2017.

Goodwill represents the excess of the value

13 unchanged sentences

Management does not consider the value of goodwill recorded for TCS in the

accompanying consolidated balance sheet to be impaired as of March 31, 2017, and September 30, 2016.

accompanying consolidated balance sheet to be impaired as of June 30, 2017, and September 30, 2016.

However, goodwill attributed

2 unchanged sentences

the goodwill at acquisition.

The fair values of the assets acquired and

liabilities assumed were determined primarily using the income approach, which determines the fair value for the asset based on

the present value of cash flows projected to be generated by the asset.

The fair values of the assets acquired

and liabilities assumed were determined primarily using the income approach, which determines the fair value for the asset based

on the present value of cash flows projected to be generated by the asset.

Projected cash flows are discounted at a rate of return

that reflects the relative risk of achieving the cash flow and the time value of money.

The fair value of relationships were determined

The fair value of relationships was determined

by projecting expected cash flows and subtracting the portion of the cash flow derived by the relevant contributory assets.

6 unchanged sentences

taxes based on tax effects of differences between the financial statement and tax basis of assets and liabilities.

The Company accounts for all uncertain tax

positions in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)

The Company accounts for all uncertain

tax positions in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)

Income Taxes (“ASC 740”).

3 unchanged sentences

tax benefits as a component of income tax expense.

There was no accrued interest or penalties as of March 31, 2017 and September

From time to time, the Company is audited by

taxing authorities.

There was no accrued interest or penalties as of June 30, 2017 and September

From time to time, the Company is audited

by taxing authorities.

These audits could result in proposed assessments of additional taxes.

The Company believes that its tax positions

comply in all material respects with applicable tax law.

However, tax law is subject to interpretation, and interpretations by

taxing authorities could be different from those of the Company, which could result in the imposition of additional taxes.

The Company believes that its tax

positions comply in all material respects with applicable tax law.

However, tax law is subject to interpretation, and interpretations

by taxing authorities could be different from those of the Company, which could result in the imposition of additional taxes.

Company’s Federal returns since 2014 are still subject for examination by taxing authorities.

2 unchanged sentences

by dividing net losses available to common stockholders by the weighted average number of common shares outstanding for the reporting

Average number of common shares were 34,886,089 and 34,438,494 for the three months ended March 31, 2017 and 2016, respectively.

Average number of common shares were 35,137,625 and 33,208,763 for the six months ended March 31, 2017 and 2016, respectively.

For the three and six months ended March 31,

2017 and 2016, approximately 2,203,813 and 2,420,396 common stock options and warrants, respectively, were not added to the diluted

average shares because inclusion of such shares would be antidilutive.

Average number of common shares were 34,973,013 and 31,990,466 for the three months ended June 30, 2017 and 2016, respectively.

Average number of common shares were 35,383,552 and 32,913,403 for the nine months ended June 30, 2017 and 2016, respectively.

For the nine months ended June 30,

2017 and 2016, approximately 2,340,171 and 2,200,346 shares of common stock underlying options and warrants, respectively,

were not added to the diluted average shares because inclusion of such shares would be antidilutive.

Revenue Recognition

FG Wealth generates investment management fees

for services provided by the Company.

FG Wealth generates investment management

fees for services provided by the Company.

Investment management fees include fees earned from assets under management by providing

professional services to manage client investments.

FG Tax and MDP generate service income from

consulting and other professional services performed.

Commission revenue is derived from the sale

of annuities and premiums on life insurance policies held by third parties.

The revenue is recognized at the time the policy is

Revenue represents gross billings less discounts,

and is calculated net of sales taxes, as applicable.

Amounts invoiced for work not yet completed are shown as deferred revenue

in the accompanying consolidated balance sheets.

Tax Coach Software has 3 types of services

that are charged and collected on a month to month subscription basis (Tax Coach basic membership, All-Stars coaching, and Wire

Service weekly broadcast email).

None of these programs come with a long-term commitment or contract, and there is no up-front

payment beyond the monthly subscription fee.

Cancellations are processed within the month requested and memberships are closed

at the end of the period for which the most recent payment was made.

Members are not entitled to refunds for unused memberships.

FG Tax and MDP generate service income

from consulting and other professional services performed.

Commission revenue is derived from the

sale of annuities and premiums on life insurance policies held by third parties.

The revenue is recognized at the time the policy

Revenue represents gross billings less

discounts, and is calculated net of sales taxes, as applicable.

Amounts invoiced for work not yet completed are shown as deferred

revenue in the accompanying consolidated balance sheets.

Tax Coach Software has 3 types of

services that are charged and collected on a month to month subscription basis (Tax Coach basic membership, All-Stars

coaching, and Wire Service weekly broadcast email).

None of these programs come with a long-term commitment or contract, and

there is no up-front payment beyond the monthly subscription fee.

Cancellations are processed within the month requested and

memberships are closed at the end of the period for which the most recent payment was made.

Members are not entitled to

refunds for unused memberships.

Advertising costs are charged to operations

when incurred.

Advertising and marketing expense was $74,591 and $75,964 for the three months ended March 31, 2017 and 2016, respectively;

and $176,469 and $191,464 for the six months ended March 31, 2017 and 2016, respectively.

Advertising and marketing expense was $131,508 and $106,922 for the three months ended June 30, 2017 and 2016, respectively;

and $307,977 and $298,385 for the nine months ended June 30, 2017 and 2016, respectively.

Stock-Based Compensation

The Company recognizes the fair value of the

stock-based compensation awards as wages in the accompanying statements of operations on a straight-line basis over the vesting

The Company recognizes the fair value of

the stock-based compensation awards as wages in the accompanying statements of operations on a straight-line basis over the vesting

period based on the Black-Scholes option pricing model based on a risk-free rate from 0.97% in 2016 and 1.15% in 2017, dividend

7 unchanged sentences

Going Concern

The accompanying consolidated financial statements

have been prepared assuming that the Company will continue as a going concern, which contemplates the Company will need to manage

additional asset units under contract and/or additional financing to fully implement its business plan, including continued growth

and establishment of a stronger brand.

The Company is actively seeking growth of its

service offerings, both organically and via new client relationships.

Management, in the ordinary course of business, is trying

to raise additional capital through sales of common stock as well as seeking financing via equity or debt, or both from third parties.

The accompanying consolidated financial

statements have been prepared assuming that the Company will continue as a going concern, which contemplates the Company will need

to manage additional asset units under contract and/or additional financing to fully implement its business plan, including continued

growth and establishment of a stronger brand.

The Company is actively seeking growth

of its service offerings, both organically and via new client relationships.

Management, in the ordinary course of business, is

trying to raise additional capital through sales of common stock as well as seeking financing via equity or debt, or both from

third parties.

There are no assurances that additional financing will be available on favorable terms, or at all.

If additional financing is not

available, the Company will need to reduce, defer or cancel development programs, planned initiatives and overhead expenditures.

The failure to adequately fund its capital requirements could have a material adverse effect on the Company’s business, financial

condition and results of operations.

Moreover, the sale of additional equity securities to raise financing will result in additional

dilution to the Company’s stockholders, and incurring additional indebtedness could involve an increased debt service cash

obligation, the imposition of covenants that restrict the Company’s operations or the Company’s ability to perform

on its current debt service requirements.

The consolidated financial statements do not include any adjustments that might be necessary

if the Company is unable to continue as a going concern.

If additional

financing is not available, the Company will need to reduce, defer or cancel development programs, planned initiatives and overhead

expenditures.

The failure to adequately fund its capital requirements could have a material adverse effect on the Company’s

business, financial condition and results of operations.

Moreover, the sale of additional equity securities to raise financing

will result in additional dilution to the Company’s stockholders, and incurring additional indebtedness could involve an

increased debt service cash obligation, the imposition of covenants that restrict the Company’s operations or the Company’s

ability to perform on its current debt service requirements.

The consolidated financial statements do not include any adjustments

that might be necessary if the Company is unable to continue as a going concern.

Future Accounting Pronouncements

2 unchanged sentences

Balance Sheet Classification of Deferred Taxes, part of the FASB’s simplification initiative.

2015-17 requires companies to classify deferred tax liabilities and assets as noncurrent.

ASU 2015-17 is effective for fiscal years

beginning after December 15, 2018.

The Company does not expect any significant financial impact to the financial statements upon

adoption of this standard.

ASU 2015-17 requires companies to classify deferred tax liabilities and assets as noncurrent.

ASU 2015-17 is effective for fiscal

years beginning after December 15, 2018.

The Company does not expect any significant financial impact to the financial statements

upon adoption of this standard.

In February 2016, the FASB issued ASU Update

11 unchanged sentences

financial impact to the financial statements upon adoption of this standard.

In March 2016, the FASB issued ASU Update No.

In March 2016, the FASB issued ASU Update

2016-07, Investments –

8 unchanged sentences

does not expect any significant financial impact to the financial statements upon adoption of this standard.

In March 2016, the FASB issued ASU Update No.

In March 2016, the FASB issued ASU Update

2016-08, Revenue From Contracts with Customers (Topic 606).

17 unchanged sentences

any significant financial impact to the financial statements upon adoption of this standard.

In March 2016, the FASB issued ASU Update No.

In March 2016, the FASB issued ASU Update

2016-09, Compensation –

Stock Compensation (Topic 718).

The amendments in this Update are to simplify several aspects of

the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either

The amendments in this Update are to simplify several aspects

of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either

equity or liabilities, and classification on the statement of cash flows.

4 unchanged sentences

PROPERTY AND EQUIPMENT

Property and equipment consist of the following at March 31, 2017

Property and equipment consist of the following at June 30,

2017 and September 30, 2016:

5 unchanged sentences

Depreciation expense was $3,800 during each of the three months

ended March 31, 2017 and 2016, respectively;

and $7,600 during each of the six months ended March 31, 2017 and 2016.

ended June 30, 2017 and 2016, respectively;

and $11,400 during each of the nine months ended June 30, 2017 and 2016.

Trademarks consist of the following:

3 unchanged sentences

Trademarks purchased at cost

Trademarks at March 31, 2017

Trademarks at June 30, 2017

LINE OF CREDIT

7 unchanged sentences

the personal guarantee of the majority stockholder.

Line of credit balance was $18,620 and $19,732 at March 31, 2017 and September

Line of credit balance was $18,481 and $19,732 at June 30, 2017 and September

30, 2016, respectively.

7 unchanged sentences

a significant stockholder of the Company.

The balance outstanding under this note payable was $92,798 and $93,397 at March 31,

The balance outstanding under this note payable was $92,498 and $93,397 at June 30, 2017

and September 30, 2016, respectively.

The Company entered into a Business Loan and

Security Agreement to Small Business Financial Solutions, LLC, on October 28, 2016 in the amount of $100,000.

The transaction is

structured as an advance against assets.

The lender has a security interest in all collateral of the Company, and outstanding under

this note payable was $66,932 and $0 at March 31 2017, and September 30, 2016, respectively.

The Company entered into a Business Loan

and Security Agreement to Small Business Financial Solutions, LLC, on October 28, 2016 in the amount of $100,000.

The transaction

is structured as an advance against assets.

The lender has a security interest in all collateral of the Company, and outstanding

under this note payable was $39,910 and $0 at June 30 2017, and September 30, 2016, respectively.

ACCRUED EXPENSES

Accrued expenses consist of the following at

March 31, 2017 and September 30, 2016:

Accrued expenses consist of the following

at June 30, 2017 and September 30, 2016:

September 30, 2016

2 unchanged sentences

Deferred rent

For the three and six months ended March 31,

For the three and nine months ended June

30, 2017 and 2016, the effective tax rate of 0% varies from the U.S.

federal statutory rate primarily due to state income taxes, net

losses, certain nondeductible expenses and an increase in the valuation allowance associated with the net operating loss carryforwards.

federal statutory rate primarily due to state income taxes,

net losses, certain nondeductible expenses and an increase in the valuation allowance associated with the net operating loss carryforwards.

Our deferred tax assets related to net operating loss carryforwards remain fully reserved due to uncertainty of utilization of

11 unchanged sentences

and income tax recognition of NOL carry-forwards.

The deferred tax assets and liabilities in

the accompanying consolidated balance sheets include the following components at March 31, 2017 and September 30, 2016:

The deferred tax assets and liabilities

in the accompanying consolidated balance sheets include the following components at June 30, 2017 and September 30, 2016:

September 30,

10 unchanged sentences

equipment under operating leases.

Total rent expense for the three months ended March 31, 2017 and 2016 was $22,887 and $19,481,

Total rent expense for the three months ended June 30, 2017 and 2016 was $22,887 and $19,481,

respectively;

and $45,088 and $39,717 for the six months ended March 31, 2017 and 2016, respectively.

and $45,088 and $39,717 for the nine months ended June 30, 2017 and 2016, respectively.

Rent expense is recorded

4 unchanged sentences

leases will be renewed or replaced by other leases.

Future minimum rental obligations as of March

31, 2017 are as follows:

Future minimum rental obligations as of

June 30, 2017 are as follows:

Contingencies

Pacific Oil Company has outstanding payables

that the previous owners are in process of liquidating.

These liabilities have been recorded but are expected to be settled by

the previous owners.

However, shares of the Company are being held in escrow to cover the chance that these liabilities will ultimately

have to be settled by the Company.

Prior to the merger, Pacific Oil Company

had approximately $75,000 outstanding payables.

A stock pledge from prior management has been earmarked to pay down the balance.

Management believes the amount is sufficient to pay the balance in full.

Legal Proceedings

From time to time, we are a party to or otherwise

involved in legal proceedings, claims and other legal matters, arising in the ordinary course of our business or otherwise.

of the Company is currently involved in one legal proceeding, the outcome of which will not be material to our ability to operate

or market our services, our consolidated financial position, results of operations or cash flows.

From time to time, we are a party to or

otherwise involved in legal proceedings, claims and other legal matters, arising in the ordinary course of our business or otherwise.

A subsidiary of the Company is currently involved in one legal proceeding, the outcome of which will not be material to our ability

to operate or market our services, our consolidated financial position, results of operations or cash flows.

BUSINESS ACQUISITIONS

Business Acquisition –

Tax Coach Software,

Effective October 1, 2015, the Company completed

the acquisition of Tax Coach Software, LLC, an Ohio limited liability company (“Tax Coach Software”).

was made by Financial Gravity Holdings, Inc.

Under the terms of the acquisition, the Company acquired 100% of Tax Coach Software’s

membership interests, for shares of common stock of the Company.

The total number of shares of common stock issued to the owners

of Tax Coach Software was 6,000,000 shares (as amended), at par value of $0.00001 per share, in exchange for 100% of the membership

interests of Tax Coach Software.

Software, Inc.

Effective October 1, 2015, the Company

completed the acquisition of Tax Coach Software, LLC, an Ohio limited liability company (“Tax Coach Software”).

purchase was made by Financial Gravity Holdings, Inc.

Under the terms of the acquisition, the Company acquired 100% of Tax Coach

Software’s membership interests, for shares of common stock of the Company.

The total number of shares of common stock issued

to the owners of Tax Coach Software was 6,000,000 shares (as amended), at par value of $0.00001 per share, in exchange for 100%

of the membership interests of Tax Coach Software.

Goodwill, as a result of this acquisition, is not deductible for tax purposes.

Certificates representing the shares of common

stock which served as the purchase price, were required to be deposited in escrow as of the effective date of the acquisition.

Certificates representing the shares of

common stock which served as the purchase price, were required to be deposited in escrow as of the effective date of the acquisition.

As part of the purchase agreement documentation, the Sellers maintained the right to unwind the transaction under certain conditions

16 unchanged sentences

be deemed to meet the $1.00 benchmark.

On November 11, 2016, the parties to the escrow

agreement agreed (in a Company Distribution Notice) that the average daily closing price of the shares had exceeded the $1.00 threshold

and accordingly, the shares were released from escrow and the right to unwind the Tax Coach Software acquisition transaction terminated.

Three employment agreements were entered into

as a condition to the acquisition.

Each agreement has an effective date as of November 1, 2015 and is effective for a period of

On November 11, 2016, the parties to the

escrow agreement agreed (in a Company Distribution Notice) that the average daily closing price of the shares had exceeded the

$1.00 threshold and accordingly, the shares were released from escrow and the right to unwind the Tax Coach Software acquisition

transaction terminated.

Three employment agreements were entered

into as a condition to the acquisition.

Each agreement has an effective date as of November 1, 2015 and is effective for a period

of three years.

Two employment agreements include a base salary of $42,000 per year, per employee.

11 unchanged sentences

to the three employees totals an aggregate amount of $49,150.

In addition to the referenced employment agreements,

three consulting agreements were entered into as a condition to the acquisition.

Two agreements require certain services at a fixed

fee of $17,000 per month, per agreement, commencing on November 1, 2015 with a 90-day termination clause.

One agreement requires

certain services at a fixed fee of $3,500 per month, commencing on November 1, 2015 with a 90-day termination clause.

In addition to the referenced employment

agreements, three consulting agreements were entered into as a condition to the acquisition.

Two agreements require certain services

at a fixed fee of $17,000 per month, per agreement, commencing on November 1, 2015 with a 90-day termination clause.

One agreement

requires certain services at a fixed fee of $3,500 per month, commencing on November 1, 2015 with a 90-day termination clause.

$444,650 in professional fees were paid under these three agreements in the year ended September 30, 2016.

3 unchanged sentences

coaching revenue and email marketing services for customers.

The transaction resulted in a fair value of the acquisition of $1,094,702

The transaction resulted in a fair value of the acquisition

of $1,094,702 as follows:

Common stock issued in stock exchange at a value of $0.25 per share (as amended)

11 unchanged sentences

Total intangible assets

The tangible assets acquired and liabilities assumed were as follows:

The tangible assets acquired and liabilities assumed were as

Assets acquired:

7 unchanged sentences

Net acquired assets

The primary asset acquired from Tax Coach Software

is the proprietary content which includes a comprehensive platform of tax planning strategies including marketing and instructional

TCS will provide the Company with expertise in areas of service which expand beyond the Company’s current service

The Company believes they will also be able to leverage the use of the proprietary content in maximizing the benefits of

consulting with customers.

The acquisition of this entity increases the additional services the Company can provide to high net

worth individuals and business in accordance with its strategic business plan.

The primary asset acquired from Tax Coach

Software is the proprietary content which includes a comprehensive platform of tax planning strategies including marketing and

instructional guides.

TCS will provide the Company with expertise in areas of service which expand beyond the Company’s current

service areas.

The Company believes they will also be able to leverage the use of the proprietary content in maximizing the benefits

of consulting with customers.

The acquisition of this entity increases the additional services the Company can provide to high

net worth individuals and business in accordance with its strategic business plan.

STOCKHOLDERS’

4 unchanged sentences

authorization in its articles of incorporation.

Financial Gravity Holdings, a subsidiary of

the Company, has authorized the issuance of up to 10,000,000 shares of preferred stock, by action of the Board of Directors.

preferred stock authorization has not been formalized via the filing of an amendment to the certificate of formation of Financial

Financial Gravity Holdings, a subsidiary

of the Company, has authorized the issuance of up to 10,000,000 shares of preferred stock, by action of the Board of Directors.

The preferred stock authorization has not been formalized via the filing of an amendment to the certificate of formation of Financial

Gravity Holdings.

1 unchanged sentence

For each of the Company and Financial Gravity

Holdings, its subsidiary, no preferred shares are issued or outstanding as of March 31, 2017 and September 30, 2016, respectively.

Holdings, its subsidiary, no preferred shares are issued or outstanding as of June 30, 2017 and September 30, 2016, respectively.

As part of the sale of common shares starting

18 unchanged sentences

Gravity Holdings

On October 31, 2014, Financial Gravity issued

a private placement memorandum (“PPM”) for stock purchases of up to 2,000,000 shares of common stock at a cost of $1.00

and a par value of $0.00001, with a minimum purchase level of $50,000 per investor.

The subscription period initially expired June

30, 2015, however, the Board of Directors extended the offering period indefinitely, and increased the number of shares authorized

for sale under the PPM incrementally to accommodate additional investor interest.

During the years ended September 30, 2016 and

2015, 785,000 shares and 5,625,000 shares, respectively, were issued under the PPM for $535,000 and $1,875,000 of additional paid-in

capital at September 30, 2016 and 2015, respectively.

On October 31, 2014, Financial Gravity

issued a private placement memorandum (“PPM”) for stock purchases of up to 2,000,000 shares of common stock at a cost

of $1.00 and a par value of $0.00001, with a minimum purchase level of $50,000 per investor.

The subscription period initially

expired June 30, 2015, however, the Board of Directors extended the offering period indefinitely, and increased the number of shares

authorized for sale under the PPM incrementally to accommodate additional investor interest.

During the years ended September 30, 2016

and 2015, 785,000 shares and 5,625,000 shares, respectively, were issued under the PPM for $535,000 and $1,875,000 of additional

paid-in capital at September 30, 2016 and 2015, respectively.

Additional Common Stock Issuances, Financial

Gravity Holdings

During the year ended September 30, 2016, one

of the founding members of Financial Gravity Holdings forfeited 2,926,294 common shares, in addition to the issuance of shares

During the year ended September 30, 2016,

one of the founding members of Financial Gravity Holdings forfeited 2,926,294 common shares, in addition to the issuance of shares

sold under the PPM and common shares issued in connection with the Tax Coach Software, LLC acquisition.

During the three and six months ended March

31, 2017, Financial Gravity Holdings has sold 275,000 and 625,000, respectively, shares of common stock for $275,000 and $625,000,

respectively.

Additional Common Stock Issuances, Financial

Gravity Companies, Inc

On April 1, 2017, the Company entered into

an agreement with FMW Media Works Corp (“FMW”), wherein FMW would provide television, production, and media analysis

to the Company.

The Company issued 50,000 shares of common stock, worth $50,000, to FMW along with $3,500 cash as payment for services.

During the nine months ended June 30, 2017, the Company sold 675,000 shares of common stock for $625,000.

Stock Split, Financial Gravity Holdings

6 unchanged sentences

STOCK OPTION PLAN

Effective February 27, 2015, the Company established

the 2015 Stock Option Plan (the “Plan”).

The Board of Directors of the Company has the authority and discretion to

grant stock options.

The maximum number of shares of stock that may be issued pursuant to the exercise of options under the Plan

is 9,000,000.

Eligible individuals include any employee of the Company or any director, consultant, or other person providing services

to the Company.

The expiration date and exercise price are as established by the Board of Directors of the Company.

No option may

be issued under the Plan after February 27, 2017.

Effective November 22, 2016, the Company established

the 2016 Stock Option Plan (the “2016 Plan”).

Effective February 27, 2015, the Company

established the 2015 Stock Option Plan (the “Plan”).

The Board of Directors of the Company has the authority and discretion

2 unchanged sentences

Plan is 9,000,000.

Eligible individuals include any employee of the Company or any director, consultant, or other person

providing services to the Company.

Eligible individuals include any employee of the Company or any director, consultant, or other person providing

services to the Company.

The expiration date and exercise price are as established by the Board of Directors of the Company.

option may be issued under the Plan after February 27, 2017.

Effective November 22, 2016, the Company

established the 2016 Stock Option Plan (the “2016 Plan”).

The Board of Directors of the Company has the authority and

discretion to grant stock options.

The maximum number of shares of stock that may be issued pursuant to the exercise of options

under the 2016 Plan is 20,000,000.

Eligible individuals include any employee of the Company or any director, consultant, or other

person providing services to the Company.

The expiration date and exercise price are as established by the Board of Directors of

No option may be issued under the Plan after ten years from the date of adoption of the 2016 Plan.

8 unchanged sentences

Exercisable - March 31, 2017

Canceled or expired

Outstanding - June 30, 2017

Exercisable - June 30, 2017

All outstanding stock options at September

2 unchanged sentences

of $22,129 for these options was included in salaries and wages in the year ended September 30, 2016.

There were 37,600 stock options granted from

the 2016 stock option plan in the three months ended March 31, 2017.

There were 19,800 stock options granted

from the 2016 stock option plan in the three months ended June 30, 2017.

There were 37,600 stock options cancelled from the 2016

stock option plan in the three months ended June 30, 2017.

The unamortized value of these stock options is $0.

were 12,000 stock options granted from the 2016 stock option plan in the three months ended December 31, 2016.

The unamortized

value of these stock options is $11,532 at March 31, 2017.

There were 32,000

stock options granted from the 2016 stock option plan in the three months ended December 31, 2016.

The unamortized value of these

stock options is $11,532 at June 30, 2017.

RELATED PARTY TRANSACTIONS

Accounts receivable due from the majority stockholder

of the entity, included in accounts receivable –

related party in the accompanying consolidated balance sheets was $4,506

and $4,506 as of March 31, 2017 and September 30, 2016, respectively.

Accounts receivable due from the majority

stockholder of the entity, included in accounts receivable –

related party in the accompanying consolidated balance sheets

was $4,506 and $4,506 as of June 30, 2017 and September 30, 2016, respectively.

Management fees paid to the majority stockholder

of the entity, included as management fees - related party in the accompanying consolidated statement of operations were $50,000

and $50,000 for the three months ended March 31, 2017, and 2016, respectively;

and $103,000 and $113,333 for the six months ended

March 31, 2017, and 2016, respectively.

A board member who is also a stockholder provided

services to the Company.

Expenses for these services totaled $15,000 and $15,000 for the three months ended March 31, 2017, and

2016, respectively;

and $30,000 and $30,000 for the six months ended March 31, 2017, and 2016, respectively, and were included

and $50,000 for the three months ended June 30, 2017, and 2016, respectively;

and $153,000 and $163,333 for the nine months ended

June 30, 2017, and 2016, respectively.

A board member who is also a stockholder

provided services to the Company.

Expenses for these services totaled $0 and $15,000 for the three months ended June 30, 2017,

and 2016, respectively;

and $9,000 and $40,000 for the nine months ended June 30, 2017, and 2016, respectively, and were included

as general and administrative expenses in the accompanying consolidated statement of operations.

6 unchanged sentences

$109,500 in professional fees

were paid under these 3 agreements for each of the three months ended March 31, 2017 and March 31, 2016, respectively.

in professional fees were paid under these 3 agreements for each of the three months ended March 31, 2017 and March 31, 2016, respectively.

were paid under these 3 agreements for each of the three months ended June 30, 2017 and June 30, 2016, respectively.

professional fees were paid under these 3 agreements for each of the nine months ended June 30, 2017 and June 30, 2016, respectively.

SUBSEQUENT EVENTS

On July 31, 2017, the Company entered into

a Promissory Note Payable to Fourly Enterprises, LLC (“Fourly”) in the amount of $50,000.

The interest rate on the

The note matures on August 16, 2018.

Fourly is owned by the majority stockholder of the Company.

On August 9, 2017 the Company

entered into a Promissory Note Payable Elmer Fink (“Fink”) in the amount of $100,000.

The interest rate on the

The note matures July 31, 2020.

Subsequent to June 30, 2017,

the Company has issued 100,000 common shares for $100,000.

As part of the common stock issuance, the Company has issued

25,000 warrants excisable at an exercise price of $1.25 per share and having a 1-year term, plus an additional 25,000

warrants at an exercise price of $1.50 and having a 2-year term.

Rick Johnson, Chief Operating Officer

of Financial Gravity Companies, Inc., has tendered his resignation effective August 4, 2017.

Management’s Discussion and Analysis of Financial

9 unchanged sentences

Plan of Operations

Financial Gravity Companies,

Financial Gravity

Companies, Inc.

(“Financial Gravity”, “We”

or the “Company”), based in Allen, Texas, was formed specifically

to be the parent company of several subsidiaries that provide integrated tax, business, and financial solutions.

Financial Gravity’s

clients include small businesses, small business owners and high net worth individuals.

The Company’s services are focused

on helping clients make more money and build wealth, most often with tax savings, lowering costs and improving efficiency.

to expanding through client procurement and organic growth, Financial Gravity intends to make a number of acquisitions.

acquisition targets currently include accounting, bookkeeping, and financial advisory firms.

In fiscal year 2015 the Company acquired

Cloud9 Holdings Company (and its subsidiary Cloud9b2b) which was renamed Financial Gravity Business and Sash Corporation,

doing business as Metro Data Processing (a Tulsa, OK payroll processor).

In fiscal year 2016 the Company acquired Tax Coach Software

The Company is actively identifying additional potential acquisition candidates to fuel more rapid growth.

or the “Company”), based in Allen, Texas, was formed

specifically to be the parent company of several subsidiaries that provide integrated tax, business, and financial solutions.

Gravity’s clients include small businesses, small business owners and high net worth individuals.

The Company’s services

are focused on helping clients make more money and build wealth, most often with tax savings, lowering costs and improving efficiency.

In addition to expanding through client procurement and organic growth, Financial Gravity intends to make a number of acquisitions.

The primary acquisition targets currently include accounting, bookkeeping, and financial advisory firms.

In fiscal year 2015 the

Company acquired two firms:

Cloud9 Holdings Company (and its subsidiary Cloud9b2b) which was renamed Financial Gravity Business

and Sash Corporation, doing business as Metro Data Processing (a Tulsa, OK payroll processor).

In fiscal year 2016 the Company

acquired Tax Coach Software LLC.

The Company is actively identifying additional potential acquisition candidates to fuel more rapid

Financial Gravity’s Subsidiaries:

9 unchanged sentences

Financial Gravity Tax

Financial Gravity has

developed a precise procedure that has proven to be very successful in delivering lower taxes, higher profit, and greater wealth

Financial Gravity

has developed a precise procedure that has proven to be very successful in delivering lower taxes, higher profit, and greater wealth

for small business owners.

The process begins with

an extensive and comprehensive review of the client’s needs.

This assessment sets the requirements for the program that is

subsequently developed.

The process begins

with an extensive and comprehensive review of the client’s needs.

This assessment sets the requirements for the program that

is subsequently developed.

Next, Financial Gravity designs a unique "Tax Blueprint®"

1 unchanged sentence

for lowering the client's taxes.

The second step is to

use the client’s custom Tax Blueprint®

to build that business entity and documentation that captures the identified savings.

The second step is

to use the client’s custom Tax Blueprint®

to build that business entity and documentation that captures the identified

This is called the Tax Operating System®

This process is repeated as required and tuned for optimal efficiency thus

ensuring that the client receives the best service and optimal solutions in the phases of the business cycle during the year.

continue to pay a monthly or weekly subscription fee as part of their TOS service for ongoing tax planning, tax return preparation,

payroll and bookkeeping services.

This business unit promises

clients they’ll pay the lowest legal, moral and ethical taxes possible.

This process is repeated as required and tuned for optimal efficiency

thus ensuring that the client receives the best service and optimal solutions in the phases of the business cycle during the year.

Clients continue to pay a monthly or weekly subscription fee as part of their TOS service for ongoing tax planning, tax return

preparation, payroll and bookkeeping services.

This business unit

promises clients they’ll pay the lowest legal, moral and ethical taxes possible.

Tax savings is the “tip of the spear”

8 unchanged sentences

These multi-tiered sales provide a 4-8 times multiple to a typical accounting or bookkeeping

SBO’s look for

two things from a typical CPA and bookkeeping firm:

SBO’s look

for two things from a typical CPA and bookkeeping firm:

(1) Lower personal income taxes:

and (2) Numbers that help them run/grow their

business better.

and (2) Numbers that help them run/grow

their business better.

There is no national firm that provides these two services at any level.

Our tax planning sets us apart from typical

accounting and tax preparation firms.

Our tax planning sets us apart

from typical accounting and tax preparation firms.

We look forward to setting up a client’s business to be tax efficient.

service model employed by CPA firms is oriented more toward compliance, which is the recording of historical data.

These providers

work on historical records instead of looking forward to proactively plan.

SBOs are growing more and more frustrated with accountants

who “put numbers in boxes”

when what’s truly needed is a partner to help advise them in how to be more efficient

in their business.

Many SBOs can’t read a P/L or Balance Sheet and even when they can, the data is often too old to act on.

The typical service model employed by CPA firms is oriented more toward compliance, which is the recording of historical data.

These providers work on historical records instead of looking forward to proactively plan.

SBOs are growing more and more frustrated

with accountants who “put numbers in boxes”

when what’s truly needed is a partner to help advise them in how

to be more efficient in their business.

Many SBOs can’t read a P/L or Balance Sheet and even when they can, the data is often

too old to act on.

As technology speeds up the pace of business, real time data is becoming more important.

Most CPAs don’t even calculate tax

savings for their clients, as asking CPA’s to produce unique data to each client is outside the factory mentality of the

Most CPAs don’t

even calculate tax savings for their clients, as asking CPA’s to produce unique data to each client is outside the factory

mentality of the profession.

Our average tax savings is over $20,000 per year per business owner.

Financial Gravity Tax is pursuing several M&A

and/or partnership opportunities to deliver on the product Bookkeeping with Purpose®, that will help deliver the promised tax

savings and producer actionable real time data.

Financial Gravity Tax is pursuing

several M&A and/or partnership opportunities to deliver on the product Bookkeeping with Purpose®, that will help deliver

the promised tax savings and producer actionable real time data.

Financial Gravity Wealth

6 unchanged sentences

suitable investment advice and always act in the clients' best interests.

The Department of

Labor’s Fiduciary Rule is a new ruling, scheduled to be phased in April 10, 2017 –

The Department

of Labor’s Fiduciary Rule is a new ruling, scheduled to be phased in April 10, 2017 –

1, 2018, that will automatically

13 unchanged sentences

Financial Gravity Business

The complexity of Advanced

Tax Planning next fuels Financial Gravity Business services.

The first product that was developed with a partner is Advisor Architect.

The complexity of

Advanced Tax Planning next fuels Financial Gravity Business services.

The first product that was developed with a partner is Advisor

This product is designed to help financial advisors and accountants run their businesses better.

We intend to test the service

offering / coaching program with the first two markets where we have the most experience and then roll out the service offering

to other industries at a later date.

Clients spend some of their tax savings from Financial Gravity Tax planning for these services,

rendering them “cost neutral”.

We intend to test the

service offering / coaching program with the first two markets where we have the most experience and then roll out the service

offering to other industries at a later date.

Clients spend some of their tax savings from Financial Gravity Tax planning for these

services, rendering them “cost neutral”.

We have also developed

6 unchanged sentences

designation and partner program for CPA’s and Enrolled Agents (“EA’s”).

We will roll out this program in late May 2017.

To our knowledge, there is no program offering like this of its kind available

This program was created in Financial Gravity Business, but will be sold and build revenue in the Tax Coach Software

To our knowledge, there is no program offering like this of its kind available elsewhere.

This program was created in Financial

Gravity Business, but will be sold and build revenue in the Tax Coach Software platform.

Financial Gravity Ventures

This entity in our corporate

family employs our M&A strategy to acquire talent and build wealth for Financial Gravity Companies, Inc.

and acquired companies.

This entity in our

corporate family employs our M&A strategy to acquire talent and build wealth for Financial Gravity Companies, Inc.

As mentioned earlier, Financial Gravity is pursuing several acquisition opportunities.

Tax Coach Software

Tax Coach Software (TCS)

was a key acquisition in fiscal year 2016.

TCS supports over 550 CPA and Enrolled Agent professionals, training them to add crucial

tax planning services to support clients.

Not only did this acquisition bring high-end tax planning to Financial Gravity, but the

TCS customer base adds significant business development opportunities for Financial Gravity Wealth.

Tax Coach Software

(TCS) was a key acquisition in fiscal year 2016.

TCS supports over 550 CPA and Enrolled Agent professionals, training them to add

crucial tax planning services to support clients.

Not only did this acquisition bring high-end tax planning to Financial Gravity,

but the TCS customer base adds significant business development opportunities for Financial Gravity Wealth.

We developed the Certified

2 unchanged sentences

Sash Corporation

Sash Corporation dba

Metro Data Processing, based in Tulsa, OK was the Company’s first acquisition.

Sash Corporation

dba Metro Data Processing, based in Tulsa, OK was the Company’s first acquisition.

The Company has been a fixture in payroll

8 unchanged sentences

allowing financial professionals in our Partner Program to add additional value to their clients and their business.

Over the past few years

the Company has undertaken significant effort, and invested considerable capital, in order to attract and maintain a qualified

Over the past few

years the Company has undertaken significant effort, and invested considerable capital, in order to attract and maintain a qualified

and capable staff, develop proprietary solutions, and implement systems, procedures, and infrastructure to execute the business

2 unchanged sentences

model we have a significant competitive advantage over others who may try to execute the same business plan.

Results of Operations for the three months and six months ended

March 31, 2017 compared to the three months and six months ended March 31, 2016

For the three months ended March 31, 2017,

revenue increased $354,504 or 57.8% to $967,697 from $613,193 for the three months ended March 31, 2016.

For the six months ended

March 31, 2017, revenue increased $500,207 or 40.3% to $1,740,693 from $1,240,486 for the six months ended March 31, 2016.

increase in revenue reflects increase in service income, primarily due to significant growth in partner programs, which resulted

in an increase in customer sales, and an increase in investment management fees because of significant growth in wealth clients.

Revenues from Financial Gravity Tax alone increased by more than 47%, while revenues from Financial Gravity Wealth increased by

more than 74%.

Results of Operations for the three months and nine months

ended June 30, 2017 compared to the three months and nine months ended June 30, 2016

For the three months ended June 30, 2017,

revenue increased $124,395 or 17.9% to $819,419 from $695,024 for the three months ended June 30, 2016.

For the nine months ended

June 30, 2017, revenue increased $624,602 or 32.3% to $2,560,113 from $1,935,511 for the nine months ended June 30, 2016.

in revenue reflects increase in service income, primarily due to significant growth in partner programs, which resulted in an increase

in customer sales, and an increase in investment management fees because of significant growth in wealth clients.

Operating Expenses

Cost of services activity remained relatively

stable for the three months and six months ended March 31, 2017 and 2016.

Professional services expenses include merger

costs, legal expense, professional fees, contract labor, business consulting, computer and internet expense, and earnest money

Professional services expenses increased $68,875 or 23% to $359,557 for the three months ended March 31, 2017 from $290,682

for the three months ended March 31, 2016.

This increase is primarily due to significant grown in our wealth management and partner

program which resulted in an increase in commissions paid.

Professional services expenses remained consistent for the six months

ended March 31, 2017 from the six months ended March 31, 2016.

Depreciation and amortization expenses include

depreciation on fixed assets and amortization of definite lived intangibles.

stable for the three months and nine months ended June 30, 2017 and 2016.

Professional services expenses include

merger costs, legal expense, professional fees, contract labor, business consulting, computer and internet expense, and earnest

money forfeited.

Professional services expenses increased $86,048 or 36.1% to $324,296 for the three months ended June 30, 2017

from $238,248 for the three months ended June 30, 2016.

This increase is primarily due to significant growth in our wealth management

and partner program, which resulted in an increase in commissions paid.

Professional services expenses remained consistent for the

nine months ended June 30, 2017 from the nine months ended June 30, 2016.

Depreciation and amortization expenses

include depreciation on fixed assets and amortization of definite lived intangibles.

Depreciation and amortization expenses decreased

to $24,767 for the three months ended March 31, 2017 from $38,127 for the three months ended March 31, 2016.

Depreciation and amortization

expenses decreased $27,849 to $49,444 for the six months ended March 31, 2017 from $77,293 for the six months ended March 31, 2016.

The decrease is primarily due to the fact that the Tax Coach Software prospect list was fully amortized by September 30, 2016.

$13,180 to $24,947 for the three months ended June 30, 2017 from $38,127 for the three months ended June 30, 2016.

and amortization expenses decreased $41,029 to $74,391 for the nine months ended June 30, 2017 from $115,420 for the nine months

ended June 30, 2016.

The decrease is primarily due to the fact that the Tax Coach Software prospect list was fully amortized by

September 30, 2016.

General and administrative expenses activity

remained relatively stable for the three months ended June 30, 2017 and 2016.

General and administrative expenses increased $93,214

$29,554 or 23.6% to $154,982 for the three months ended March 31, 2017 from $125,428 for the three months ended March 31, 2016.

General and administrative expenses increased $92,390 or 50% to $276,808 for the three months ended March 31, 2017 from $184,418

for the three months ended March 31, 2016.

The increase is primarily due to an increase in costs associated with the growth of

the partner program.

or 32% to $384,477 for the nine months ended June 30, 2017 from $291,263 for the nine months ended June 30, 2016.

is primarily due to an increase in costs associated with the growth of the partner program.

Management fees –

related party expenses

activity remained relatively stable for the three months and six months ended March 31, 2017 and 2016.

activity remained relatively stable for the three months and nine months ended June 30, 2017 and 2016.

Marketing expenses activity increased $24,586

or 23% to $131,508 for the three months ended June 30, 2017 from $106,922 for the three months ended June 30, 2016.

is primarily due to an increase in expenses related to growing the partner program.

Marketing expenses activity remained relatively

stable for the three months and six months ended March 31, 2017 and 2016.

Salaries and wages expenses activity remained

relatively stable for the three months and six months ended March 31, 2017 and 2016.

The Company experienced an increase in its

bottom line of $249,333 or 64.5% to a net loss of $136,945 for the three months ended March 31, 2017, from a net loss of $386,278

for the three months ended March 31, 2016, and an increase in its bottom line of $468,644 or 57.6% to a net loss of $345,212 for

the six months ended March 31, 2017 from a net loss of $813,856 for the six months ended March 31, 2016, primarily attributable

stable for the nine months ended June 30, 2017 and 2016.

Salaries and wages expenses activity increased

$53,248 or 11.2% to $530,125 for the three months ended June 30, 2017 from $476,877 for the three months ended June 30, 2016.

increase is primarily due to an increase in investment management commissions.

Salaries and wages expenses activity remained relatively

stable for the nine months ended June 30, 2017 and 2016.

The Company experienced a decrease in its

bottom line of $33,107 or 9.7% to a net loss of $375,291 for the three months ended June 30, 2017, from a net loss of $342,184

for the three months ended June 30, 2016, and an increase in its bottom line of $435,538 or 37.7% to a net loss of $720,502 for

the nine months ended June 30, 2017 from a net loss of $1,156,040 for the nine months ended June 30, 2016, primarily attributable

to the reasons noted above.

4 unchanged sentences

Use of Estimates and Assumptions .

The preparation of consolidated financial statements

in conformity with accounting principles generally accepted in the United States of America requires management to make estimates

and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the

date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported period.

results could differ from those estimates.

Revenue Recognition and Accounts Receivable .

Investment management fees are recognized as

services are provided by the Company.

The preparation of consolidated financial

statements in conformity with accounting principles generally accepted in the United States of America requires management to make

estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities

at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported period.

Actual results could differ from those estimates.

Revenue Recognition and Accounts

Investment management fees are recognized

as services are provided by the Company.

Investment management fees include fees earned from assets under management by providing

2 unchanged sentences

and other professional services are performed by the Company.

Commission revenue is derived from the sale

of premiums on life insurance policies held by third parties.

Commission revenue is derived from the

sale of premiums on life insurance policies held by third parties.

The revenue is recognized at the time the policy is issued.

Revenue represents gross billings less discounts,

net of sales tax, as applicable.

Revenue represents gross billings less

discounts, net of sales tax, as applicable.

Amounts invoiced for work not yet completed are shown as deferred revenue in the accompanying

consolidated balance sheets.

Trade accounts receivable are carried at the

invoiced amount less estimate made for doubtful accounts based on management’s review of outstanding balances.

Trade accounts receivable are carried at

the invoiced amount less estimate made for doubtful accounts based on management’s review of outstanding balances.

The collectability

7 unchanged sentences

Stock-Based Compensation.

The Company recognizes the fair value of stock-based

compensation awards as wages in the accompanying statements of operations on a straight-line basis over the vesting period, using

the Black-Scholes option pricing model, which is based on risk-free rates of from 0.97% in 2016 and 1.15% in 2017, dividend yield

of 0%, expected life of 2 years and volatility of 1.00.

The Company recognizes the fair value of

stock-based compensation awards as wages in the accompanying statements of operations on a straight-line basis over the vesting

period, using the Black-Scholes option pricing model, which is based on risk-free rates of from 0.97% in 2016 and 1.15% in 2017,

dividend yield of 0%, expected life of 2 years and volatility of 1.00.

Liquidity and Capital Resources

As of March 31, 2017, the Company had cash

As of June 30, 2017, the Company had cash

and cash equivalents of $154,468.

The increase of $266,965 in cash and cash equivalents from March 31, 2016 was due to net cash

used in operating activities of $421,545, offset by net cash provided by financing activities of $690,721.

The increase of $21,665 in cash and cash equivalents from June 30, 2016 was due to net cash used

in operating activities of $648,884, offset by net cash provided by financing activities of $662,760 and net cash provided by investing

activities of $7,789.

Net cash used in operating activities was

for the six months ended March 31, 2017, compared to $721,811 net cash used in operating activities for the six months ended March

The net cash used in operating activities for the six months ended March 31, 2017 was due to net loss of $345,212, adjusted

primarily by the following:

(1) increases in depreciation and amortization of $49,444, accounts payable –

trade of $22,727,

and deferred revenue of $47,249, (2) offset by decreases in trade accounts receivable of $166,902, prepaid expenses of $24,742,

and accrued expenses of $3,609.

Net cash used in investing activities was $2,211

for the six months ended March 31, 2017, compared to $24,134 net cash provided by financing activities for the six months ended

March 31, 2016.

Investing activities for the six months ended March 31, 2017 consisted of purchases of trademarks of $50 and equipment

Net cash provided by financing activities was

$690,221 for the six months ended March 31, 2017, compared to net cash provided by financing activities of $242,427 for the six

months ended March 31, 2016.

Financing activities for the six months ended March 31, 2017 consisted primarily of $625,000 in proceeds

from sales of common stock, and $100,000 in proceeds from note payable.

As shown below, at March 31, 2017, our contractual

$648,884 for the nine months ended June 30, 2017, compared to $1,005,705 net cash used in operating activities for the nine months

ended June 30, 2016.

The net cash used in operating activities for the nine months ended June 30, 2017 was due to net loss of $720,502,

adjusted primarily by the following:

(1) increases in depreciation and amortization of $72,443, stock compensation for services

provided by a third party, accounts payable –

trade of $4,203, accrued expenses of $27,378, and deferred revenue of $30,148,

(2) offset by decreases in trade accounts receivable of $66,985, prepaid expenses of $26,723, and pre-merger liabilities of $18,845.

Net cash provided by investing activities

was $7,789 for the nine months ended June 30, 2017, compared to $26,883 of net cash provided by investing activities for the

nine months ended June 30, 2016.

Investing activities for the nine months ended June 30, 2017 consisted of purchases of trademarks

of $50 and equipment of $2,161 offset by cash acquired for the sale of investments of $10,000.

Net cash provided by financing activities

was $662,760 for the nine months ended June 30, 2017, compared to net cash provided by financing activities of $398,131 for the

nine months ended June 30, 2016.

Financing activities for the nine months ended June 30, 2017 consisted primarily of $625,000 in

proceeds from sales of common stock, and $100,000 in proceeds from notes payable.

As shown below, at June 30, 2017, our contractual

cash obligations totaled approximately $242,089, all of which consisted of operating lease obligations and debt principal.

Payments due by period

Contractual obligations

3 unchanged sentences

Total contractual cash obligations

The accompanying consolidated financial statements

have been prepared assuming that the Company will continue as a going concern, which contemplates the Company will need additional

financing to fund additional material capital expenditures and to fully implement its business plan.

There are no assurances that

additional financing will be available on favorable terms, or at all.

If additional financing is not available, the Company will

need to reduce, defer or cancel development programs, planned initiatives and overhead expenditures as a way to supplement the

cash flows generated by operations.

The accompanying consolidated financial

statements have been prepared assuming that the Company will continue as a going concern, which contemplates the Company will need

additional financing to fund additional material capital expenditures and to fully implement its business plan.

There are no assurances

that additional financing will be available on favorable terms, or at all.

If additional financing is not available, the Company

will need to reduce, defer or cancel development programs, planned initiatives and overhead expenditures as a way to supplement

the cash flows generated by operations.

The Company has a backlog of fees under contract in addition to the Company’s accounts

9 unchanged sentences

Off Balance Sheet Transactions and Related Matters

Other than operating leases discussed in Note

8 to the consolidated financial statements, there are no off-balance sheet transactions, arrangements, obligations (including contingent

obligations), or other relationships with unconsolidated entities or other persons that have, or may have, a material effect on

financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures

or capital resources of the Company.

Other than operating leases discussed in

Note 8 to the consolidated financial statements, there are no off-balance sheet transactions, arrangements, obligations (including

contingent obligations), or other relationships with unconsolidated entities or other persons that have, or may have, a material

effect on financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital

expenditures or capital resources of the Company.

Quantitative and Qualitative Disclosures About Market

Interest Rate Risk.

Our business is

leveraged and, accordingly, is sensitive to fluctuations in interest rates.

Any significant increase in interest rates could have

a material adverse effect on our financial condition and ability to continue as a going concern.

is leveraged and, accordingly, is sensitive to fluctuations in interest rates.

Any significant increase in interest rates could

have a material adverse effect on our financial condition and ability to continue as a going concern.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements