What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2018-02-20 compared with 2017-01-25 · 294 added, 307 removed, 110 unchanged (85% of the section changed)

MARKET FOR REGISTRANT’S

COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED

STOCKHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES.

Market Information

The Company’s Common Stock is currently

traded in the over-the-counter market and quoted under the symbol POIL.

traded in the over-the-counter market and quoted under the symbol FGCO.

The following are the high and low sales prices for the

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without retail mark-up, mark-down or commissions and may not represent actual transactions.

The approximate number of stockholders

of record of the Company’s Common Stock on September 30, 2016 was 1,689.

The approximate number of stockholders of

record of the Company’s Common Stock on February 15, 2018 was 1,689.

The Company has never paid any cash dividends

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Recent Sales of Unregistered Securities

Issuances by Pacific Oil Company

Pursuant to the Merger Agreement, effective

September 30, 2016 we issued to the former stockholders of Financial Gravity Holdings an aggregate of 32,248,183 shares of the

Company’s common stock.

Such securities were not registered under the Securities Act of 1933.

The issuance of these shares

was exempt from registration pursuant to Section 4(2) and Rule 501(a) of Regulation D promulgated by the Commission under the

Securities Act of 1933.

We made this determination based on the representations of each former stockholder of Financial Gravity

who voted with respect to the Merger, which included, in pertinent part, that such stockholder is acquiring the shares of the

Company’s common stock for his, her or its sole account, for investment and not with a view to the resale or distribution

thereof, and that such stockholder either (A) is an “accredited investor,”

as defined in Regulation D of the Securities

Act, (B) has such knowledge and experience in financial and business matters that the stockholder is capable of evaluating the

merits and risks of receiving the shares of the Company’s common stock, or (C) has appointed an appropriate person to act

as the stockholder’s purchaser representative in connection with evaluating the merits and risks of receiving the shares

of the Company’s common stock.

Appropriate legends have been affixed to all shares of the Company’s common stock to

be issued in such transaction.

Issuances by Financial Gravity Holdings

During the year ended September 30, 2015, Financial

Gravity Holdings, a subsidiary of the Company, issued 21,150,000 shares of common stock to the founding members of Financial Gravity

Holdings and also 5,625,000 shares of common stock to a number of accredited investors pursuant to a private placement, for an

aggregate price of approximately $1,875,000.

Also during the year ended September 30, 2015, Financial Gravity Holdings issued 150,000

common shares to two non-employee directors (total of 300,000 shares), in lieu of stock option grants.

Also during the year ended

September 30, 2015, Financial Gravity Holdings acquired 100% of the capital stock of Cloud9 Holdings Company.

In consideration

of such purchase, the Company issued 1,314,477 shares of Company common stock to the selling shareholder (this number of

shares reflects the three-for-one (3:1) forward split effective March 25, 2016).

The selling stockholder in the transaction was

Paul Boyd, then serving as Chief Operating Officer of the Company.

The shares of Company common stock, which served as the

consideration in the transaction, had an approximate value of $438,159.

During the year ended September 30, 2017,

Financial Gravity Holdings issued an additional 785,000 shares of common stock to a number of accredited investors pursuant to

the private placement, for an aggregate price of $535,000.

In January 2016 one of the founding members of Financial Gravity Holdings

forfeited 2,926,294 common shares.

Also during the year ended September 30, 2016, Financial Gravity Holdings acquired 100% of

the capital stock of Tax Coach Software, LLC.

In consideration of such purchase, Financial Gravity Holdings issued 6,000,000 shares

of common stock to the sellers.

Subsequent to September 30, 2016 an aggregate

of 350,000 shares of Company common stock have been sold.

The sales of the securities identified above

were made pursuant to privately negotiated transactions that did not involve a public offering of securities and, accordingly,

the Company believes that these transactions were exempt from the registration requirements of the Securities Act pursuant to Section

4(2) thereof.

Each investor represented that such investor either (A) is an “accredited investor,”

(B) has such knowledge

and experience in financial and business matters that the investor is capable of evaluating the merits and risks of acquiring the

shares of Financial Gravity Holdings common stock, or (C) appointed an appropriate person to act as the investor’s purchaser

representative in connection with evaluating the merits and risks of acquiring the shares of Financial Gravity Holdings common

The investors received written disclosures that the securities had not been registered under the Securities Act and that

any resale must be made pursuant to a registration or an available exemption from such registration.

All of the foregoing securities

are deemed restricted securities for purposes of the Securities Act.

The Financial Gravity Holdings option grants

the Company issued an additional 725,000 shares of common stock to a number of accredited investors pursuant to the private

placement, for an aggregate price of $725,000.

Subsequent to September 30, 2017, an aggregate of 100,000

shares of the Company’s common stock have been sold for $100,000.

Additionally, an aggregate of 50,000 warrants to purchase

the Company’s common stock have been issued in conjunction with the sale of the Company’s common stock.

Subsequent to September 30, 2017, an aggregate of 372,500

options to purchase the Company’s common stock have been granted.

The sales of the securities

identified above were made pursuant to privately negotiated transactions that did not involve a public offering of securities

and, accordingly, the Company believes that these transactions were exempt from the registration requirements of the

Securities Act pursuant to Section 4(2) thereof.

Each investor represented that such investor either (A) is an

“accredited investor,”

(B) has such knowledge and experience in financial and business matters that the investor

is capable of evaluating the merits and risks of acquiring the shares of the Company’s common stock, or (C)

appointed an appropriate person to act as the investor’s purchaser representative in connection with evaluating the

merits and risks of acquiring the shares of the Company’s common stock.

The investors received written

disclosures that the securities had not been registered under the Securities Act and that any resale must be made pursuant to

a registration or an available exemption from such registration.

All of the foregoing securities are deemed restricted

securities for purposes of the Securities Act.

The Company’s option grants

were effected pursuant to Rule 701 promulgated under the Securities Act.

Repurchases of Equity Securities

The Company did not repurchase any of its

equity securities during the years ended September 30, 2016 or 2015.

The Company did not repurchase any of its equity

securities during the years ended September 30, 2017 or 2016.

SELECTED FINANCIAL DATA.

Not applicable.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS .

MANAGEMENT’S DISCUSSION

AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward-Looking Statements

The following Management’s

Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help you understand

our historical results of operations during the periods presented and our financial condition.

This MD&A should be read in

conjunction with our financial statements and the accompanying notes, and contains forward-looking statements that involve risks

and uncertainties and assumptions that could cause our actual results to differ materially from management’s expectations.

See the sections entitled “Forward-Looking Statements”

The following Management’s Discussion

and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help you understand its historical

results of operations during the periods presented and its financial condition.

This MD&A should be read in conjunction with

its financial statements and the accompanying notes, and contains forward-looking statements that involve risks and uncertainties

and assumptions that could cause its actual results to differ materially from management’s expectations.

See the sections

entitled “Forward-Looking Statements”

and “Risk Factors”

Plan of Operations

Gravity Companies, Inc., 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.

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, financial advisory firms.

In fiscal year 2015 the Company acquired two

Cloud9 Holdings Company (and its subsidiary Cloud9b2b) which became Financial Gravity Business and MDP (a Tulsa, OK

payroll processor).

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.

In addition 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.

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

Financial Gravity’s Subsidiaries:

Financial Gravity Holdings,

This entity was created to

engage in the acquisition and integration of financial and other businesses which will deliver a wide range of accounting, tax

planning and management services to high net worth individuals and businesses in the Dallas/Fort Worth region, with further expansion

into other markets in accordance with its long-term growth rate and strategic business plan.

Financial Gravity Operations, Inc.

This entity was created

to raise capital to take the company public, it will be eliminated now that the public transaction is complete.

This entity integrates

the delivery of Financial Gravity Tax, Business, and Wealth Solutions to our growing customer base around the country.

This integration,

impossible to do for the small business marketplace until now, is what sets Financial Gravity apart from our peers.

This integration

will now be handled by Financial Gravity Companies, Inc.

This entity was created to raise capital to

take the company public, and will be eliminated now that the public transaction is complete.

This entity integrates the delivery

of Financial Gravity Tax, Business, and Wealth Solutions to its growing customer base around the country.

This integration, impossible

to do for the small business marketplace until now, is what sets Financial Gravity apart from its peers.

This integration will

now be handled by Financial Gravity Companies, Inc.

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

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.

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

which identifies several strategies

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

This is called their 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.

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.

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.

Financial Gravity designs a unique "Tax Blueprint®"

which identifies several strategies for lowering the client's

The second step is to use the client’s

custom Tax Blueprint®

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

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.

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”

in all our offerings.

No company has ever successfully married tax, wealth and business solutions together for Small Business Owners

(SBOs) and high net worth individuals.

(we guarantee to find double our initial

in all its offerings.

No company has ever successfully married tax, wealth and business solutions together for Small Business Owners (SBOs) and high

net worth individuals.

(the Company guarantee’s to find double its initial

fee in tax savings), clients are quick to sign up for proactive tax planning.

Lowering their personal tax expenses then fuels insurance,

Lowering their personal taxes then fuels insurance,

wealth and business services sales.

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, 1.

SBO’s look for two things from a typical

CPA and bookkeeping firm, (1).

Lower personal income taxes;

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.

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 an P/L or Balance Sheet and even when the can the data is 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, asking them to produce unique data to each client is outside the factory mentality of the industry.

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

Numbers that help them run/grow their business better.

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

Its tax planning sets us apart from typical accounting and tax

preparation firms.

The Company looks forward to setting up a client’s business to be tax efficient.

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 profession.

The average tax

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

Financial Gravity Tax is pursuing several M&A and/or partnership opportunities

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Financial Gravity Wealth

After saving thousands

in taxes, clients are happy to trust us with managing their wealth, especially when treated to a different wealth management experience.

Financial Gravity Wealth is a Registered Investment Advisory (RIA) firm.

An RIA is an advisor or firm engaged in financial planning

and wealth management business and is registered either with the Securities and Exchange Commission (SEC) or state securities authorities.

After saving thousands in taxes, clients are

happy to trust us with the management of their wealth, especially when treated to a different wealth management experience.

Gravity Wealth is a Registered Investment Advisory (RIA) firm.

An RIA is an advisor or firm engaged in financial planning and wealth

management business and is registered either with the Securities and Exchange Commission (SEC) or state securities authorities.

An RIA has a fiduciary duty to his or her clients, which means that he or she has a fundamental obligation to provide suitable

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

The recent regulatory

changes where the Department of Labor was given power over retirement accounts enhances the RIA’s fiduciary model over the

traditional Broker/Dealer suitability standard.

While the status of this Department of Labor rule is uncertain following the election

we are positioned to do what we have always done, control advisor fees and reduce one of the biggest “fees”

fund and ETF portfolio, which is “tax friction”.

The Department of Labor’s Fiduciary

Rule is a new ruling, scheduled to be phased in April 10, 2017 –

1, 2018, that will automatically elevate all financial

professionals who work with retirement plans or provide retirement planning advice to the level of a fiduciary, bound legally

and ethically to meet the standards of that status.

While the impact of this rule is uncertain, the Company is positioned to do

what it have always done, control advisor fees and reduce one of the biggest “fees”

in a mutual fund and ETF portfolio,

which is “tax friction”.

These taxes erode about 1% per year in performance.

Only 5% of all financial

planners are RIAs.

95% prefer the higher fees and commissions paid to brokers and broker/dealers.

The advantage of the RIA model

is lower cost to the client.

Also, since RIAs are not compensated by commissions on financial products, their advice is considered

less biased and more accurate.

Coupled with tax savings, this makes our firm very attractive to the most profitable clients.

Only 5% of all financial planners are RIAs.

The advantage of the RIA model is lower cost to the client.

Also, since RIAs are not compensated by commissions on financial products,

their advice is considered less biased and more accurate.

Coupled with tax savings, its status as an RIA makes the Company very

attractive to the most profitable clients.

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, 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 we are the most experienced with and then roll it out 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

our Partner Programs that teach financial advisors how to serve an underserved community, the Small Business Owner.

Financial Gravity

Business is the only non-product centric business system for financial advisors that helps them serve the needs of the small business

owner without needing to sell a financial services product like a life insurance policy or a 401k.

To solve the industry

problem discussed in the Financial Gravity Tax section we have created the Certified Tax Master®

designation and partner program

for CPA’s and EA’s.

We expect to roll this out in early 2017.

There is no business like this of its kind.

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

The complexity of Advanced Tax Planning next

fuels Financial Gravity Business services.

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

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

The Company intends to test the service offering

/ coaching program with the first two markets where it has 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”.

The Company has also developed its Partner

Programs that teach financial advisors how to serve an underserved community, the Small Business Owner.

Financial Gravity Business

is the only non-product centric business system for financial advisors that helps them serve the needs of the small business owner

without needing to sell a financial services product like a life insurance policy or a 401(k) plan.

To broaden the skillset of CPAs, the Company

has created the Certified Tax Master®

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

To its 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

Employs our M&A

strategy to acquire talent and build wealth for Financial Gravity Companies, Inc.

This entity in the Company’s corporate

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

and acquired companies.

As mentioned earlier,

Financial Gravity is pursuing several opportunities.

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 its 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

Tax Master®

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.

The Company developed the Certified Tax Master®

for this group and rolled out new client systems in mid-2016.

Sash Corporation

Sash Corporation dba

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

The company has

been a fixture in payroll processing in the Tulsa area for years and should prove to be a compelling storefront to begin selling

additional tax services.

We go to market primarily

via Financial Advisors and accountants.

Our Partner Program is proven to provide financial professionals with recognized trademarked

service offerings, business support, and marketing materials.

These trademarks/servicemarks include Financial Gravity®, Tax

Blueprint®, Tax Operating System®, Bookkeeping with Purpose®, Diversity Trinity®, Investor Peace University®,

Factor Based Investing™, Fractional Family Office®, TaxCoach™, Certified Business Strategist™

allowing them to add additional value to their clients and their business.

Significant effort

and investment capital has been incurred by the Company over the past few years in order to attract and maintain a qualified and

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

on a large scale.

Given the short time frame this current market opportunity has existed and due to the complexity of the model

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

Sash Corporation dba Metro Data Processing,

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

The Company has been

a fixture in payroll processing in the Tulsa area for years and should prove to be a compelling storefront to begin selling additional

tax services.

The Company goes to market primarily via Financial

Advisors and accountants.

Its Partner Program is proven to provide financial professionals with recognized trademarked service

offerings, business support, and marketing materials.

These trademarks/servicemarks include Financial Gravity®, Tax Blueprint®,

Tax Operating System®, Bookkeeping with Purpose®, Diversity Trinity®, Investor Peace University®, Factor Based

Investing™, Fractional Family Office®, TaxCoach™, and Certified Business Strategist™

offerings, allowing

financial professionals in its 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 and capable staff, develop

proprietary solutions, and implement systems, procedures, and infrastructure to execute the business plan on a large scale.

the short time frame this current market opportunity has existed and due to the complexity of the model, the Company has a significant

competitive advantage over others who may try to execute the same business plan.

Significant effort and investment capital has

been incurred by the Company over the past few years in order to attract and maintain a qualified and capable staff, develop proprietary

solutions, and implement systems, procedures, and infrastructure to execute the business plan on a large scale.

Given the short

time frame this current market opportunity has existed and due to the complexity of the model, the Company has a significant competitive

advantage over others who may try to execute the same business plan.

Results of Operations for the year ended September 30, 2017

compared to the year ended September 30, 2016

For the year ended September 30, 2016, revenue

increased $1,447,198 or 110.5% to $2,756,999 from $1,309,801 for the year ended September 30, 2015.

The increase in revenue reflects

increase in service income, primarily new customer product and service sales, which more than doubled over the same period.

from Tax Services increased over 90%, while the acquisition of Tax Coach Software, LLC added revenues of $394,814.

For the year ended September 30, 2017,

revenue increased $773,500 or 28% to $3,530,499 from $2,756,999 for the year ended September 30, 2016.

The increase in

revenue reflects increase in service income and investment management fees primarily due to new customer product and service

sales and increased assets under management.

Operating Expenses

Cost of services activity remained relatively

stable for the years ended September 30, 2017 and 2016.

Professional services expenses include

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money forfeited.

Professional services expenses increased $785,073 or 173.6% to $1,237,221 for the year ended September 30, 2016

Professional services expenses decreased $240,104 or 19% to $997,117 for the year ended September

30, 2017 from $1,237,221 for the year ended September 30, 2016.

This 173.6% increase is primarily attributable to the acquisition of TaxCoach

Software, LLC which added $493,484 in expenses.

Depreciation and amortization expenses

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

Depreciation and amortization expenses increased

This decrease is primarily attributable to reduced legal fees

incurred and reduced merger costs.

Depreciation and amortization expenses include

depreciation on fixed assets and amortization of definite lived intangibles.

Depreciation and amortization expenses decreased $53,803

to $99,744 for the year ended September 30, 2017 from $153,547 for the year ended September 30, 2016.

The increase is primarily

due to the acquisition of Tax Coach that gave rise to an additional $1,094,702 in goodwill, $583,478 in intangible assets and $141,080

in fixed assets.

These intangible and fixed assets had a corresponding depreciation and amortization expense in the year ended

September 30, 2016 of $151,122.

Impairment of goodwill of $662,967 was made

of the impairment of goodwill from the acquisitions of Cloud9B2B and MDP.

General and administrative expenses decreased

The decrease is primarily

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

Impairment of goodwill of $662,967 for the

year ended September 30, 2016 was a result of the impairment of goodwill from the acquisitions of Cloud9B2B and MDP.

General and administrative expenses increased

$339,944 or 83% to $748,481 for the year ended September 30, 2017 from $408,537 for the year ended September 30, 2016.

Administrative activity remained relatively stable from fiscal 2015 to fiscal 2016.

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

Management fees –

related party expenses

increased $57,676 or 37.1% to $213,333 for the year ended September 30, 2016 from $155,657 for the year ended September 30, 2015.

During the year ended September 30, 2015, the Company entered into a consulting agreement with BW3, LLC, which is owned by John

BW3, LLC services include, but not limited to, providing weekly Podcasts, radio interviews, public speaking, conference

contribution, biweekly blogs, content for the newsletters, and other services.

The variance is primarily because the fees were

paid for the twelve months ended September 30, 2016 vs only nine months for the year ended September 30, 2015.

Marketing expenses increased $169,498

related party expenses decreased $13,333

or 6.25% to $200,000 for the year ended September 30, 2017 from $213,333 for the year ended September 30, 2016.

During the year

ended September 30, 2016, the Company began doing Press Releases and advertising on Facebook.

In addition, the Company engaged

several consultants to assist leadership and build new business funnels in an effort to continue to grow revenue streams.

Marketing expenses decreased $26,903 or 7% to $375,499 for the year

ended September 30, 2017 from $402,402 for the year ended September 30, 2016.

During the year ended September 30, 2016, the Company

began doing Press Releases and advertising on Facebook.

In addition, the Company engaged several consultants to assist leadership

and build new business funnels in an effort to continue to grow revenue streams.

Salaries and wages expenses increased $230,848

4 unchanged sentences

increased in 2016 as sales representatives moved from salary plus commission to 100% commission.

The Company experienced a decrease in

its bottom line of $1,191,255 or 126.2% to a net loss of $2,135,139 for the year ended September 30, 2016 from a net loss of $943,884

The Company experienced an increase in its

bottom line of $1,159,164 or 54% to a net loss of $975,975 for the year ended September 30, 2017 from a net loss of $2,135,139

for the year ended September 30, 2016, primarily attributable to the reasons noted above.

Significant Accounting Policies

Certain critical accounting policies affect

the more significant judgments and estimates used in the preparation of Financial Gravity’s consolidated financial statements.

Certain critical accounting policies

affect the more significant judgments and estimates used in the preparation of the Company’s consolidated

financial statements.

These policies are contained in Note 1 to the consolidated financial statements.

Use of Estimates and Assumptions.

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.

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.

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

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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.

TaxCoach Software has 3 types

of services that are charged and collected on a month to month subscription basis (TaxCoach 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.

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

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Recoveries of receivables previously written off are recorded when received.

The allowance for doubtful accounts was $17,014 and $-0- as of September 30, 2017 and 2016, respectively.

In the normal course of business, the Company

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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 a risk-free rates of 0.70% thru 0.94%

in 2016 and 2015, dividend yield of 0%, expected life of 2 years and volatility of 1.00.

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 0.85% to 1.41% in 2017 and 0.97% in 2016,

dividend yield of 0%, expected life of 2 years and volatility of 43% - 137%.

Liquidity and Capital Resources

As of September 30, 2016, the Company had cash and cash equivalents

The decrease of $668,739 in cash and cash equivalents from September 30, 2015 was due to net cash used in operating

activities of $1,291,503, offset by net cash provided by investing activities of $44,541 and net cash provided by financing activities

As of September 30, 2017, the Company had

cash and cash equivalents of $444,420.

The increase of $311,617 in cash and cash equivalents from September 30, 2016 was

due to net cash used in operating activities of $745,311, net cash used in investing activities of $1,536 and net cash provided

by financing activities of $1,058,464.

Net cash used in operating activities was

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adjusted primarily by the following:

(1) increases in depreciation and amortization of $153,258, goodwill impairment of $662,967,

a forfeiture of deposit for $50,000, trade account receivable of $22,420, prepaid expenses of $16,136 and deferred revenue of $32,739,

(2) offset by decreases in accounts receivable –

related party of $2,300, accounts payable –

trade of $55,474 and accrued

expenses of $12,230.

Net cash provided by investing activities

was $44,541 for the year ended September 30, 2016, compared to net cash used in investing activities of $96,605 for the year ended

(1) increases in depreciation and amortization of $99,744, common stock transactions

of $163,273, accounts payable –

trade of $24,585, accrued expenses of $18,898, and deferred revenue of $62,862, (2) offset

by decreases in trade account receivable of $30,952, prepaid expenses of $32,364, and pre-merger payables of $75,382.

Net cash used in investing activities was

$1,536 for the year ended September 30, 2017, compared to net cash provided by investing activities of $44,541 for the year ended

September 30, 2016.

The Company paid a deposit of $50,000 in the year ended September 30, 2015 that was returned in the year ended

September 30, 2016 and there was less trademark activity as $17,755 less was spent on trademarks in 2016 compared to 2015 and

purchase of fixed assets for $7,942 compared to $66 in fiscal 2016.

Additionally, in fiscal 2015, $75,800 was used as part of

the consideration for the purchase of a subsidiary.

The Company purchased more equipment and trademarks during the year ended September 30, 2017 compared to September

30, 2016, but in 2016, $57,025 of cash was acquired from acquisition of subsidiaries.

Net cash provided by financing activities

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Financing activities for the year ended September 30, 2017 consisted primarily of $725,000 in proceeds

from sales of common stock and $43,223 in proceeds from sale of notes payable.

from sales of common stock and $450,000 in proceeds from notes payable.

As shown below, at September 30, 2017,

our contractual cash obligations totaled approximately $269,131 all of which consisted of operating lease obligations and debt

its contractual cash obligations totaled approximately $520,693 all of which consisted of operating lease obligations and debt

Payments due by period

Contractual obligations

Line of credit

Less than 1 year

More than 5 years

Notes payable

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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.

has a backlog of fees under contract in addition to the Company’s accounts receivable balance.

The failure to adequately

fund its capital requirements could have a material adverse effect on our 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 the imposition of covenants that restrict our operations.

in the normal course of business, is trying to raise additional capital through sales of common stock as well as seeking financing

from third parties, via both debt and equity, to balance the Company’s cash requirements and to finance specific capital

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

receivable balance.

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

of covenants that restrict its operations.

Management, in the normal course of business, is trying to raise additional capital

through sales of common stock as well as seeking financing from third parties, via both debt and equity, to balance the Company’s

cash requirements and to finance specific capital projects.

Off Balance Sheet Transactions and Related Matters

Other than operating leases discussed in

Note 9 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.

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.

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.

The Company’s

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 its financial condition and ability to continue as a going concern.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The financial statements required by this item

are included in this report in Part IV, Item 15.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING

AND FINANCIAL DISCLOSURE.

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-K

Item 5. Market for Registrant’s Common Equity