What changed in this filing

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Item 1. Financial Statements

2018-08-22 compared with 2018-05-15 · 254 added, 234 removed, 783 unchanged (38% of the section changed)

3 unchanged sentences

CONSOLIDATED BALANCE SHEETS

March 31, 2018

June 30, 2018

September 30, 2017

CURRENT ASSETS

Cash and cash equivalents

7 unchanged sentences

Non-compete agreements, net

Intellectual Property

Total other assets

10 unchanged sentences

$0.001 par value;

35,837,900 shares issued and outstanding as of March 31, 2018 and 35,737,900 shares issued and outstanding as of September 30, 2017.

35,837,900 shares issued and outstanding as of June 30, 2018 and 35,737,900 shares issued and outstanding as of September 30, 2017.

Additional paid-in capital

2 unchanged sentences

TOTAL LIABILITIES AND STOCKHOLDERS’

The accompanying notes are in integral part

The accompanying notes are an integral part

of these consolidated financial statements.

3 unchanged sentences

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

Investment management fees

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Total other (expense) income

LOSS PER SHARE - Basic and Diluted

The accompanying notes are in integral part

$ (1,051,141 )

EARNINGS PER SHARE - Basic and Diluted

The accompanying notes are an integral part

of these consolidated financial statements.

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended March 31,

Nine Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES

$ (1,051,141 )

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

8 unchanged sentences

Deferred revenue

Pre-merger liabilities

Net cash used in operating activities

1 unchanged sentence

Cash paid for purchase of property and equipment

Cash from the sale of investment

Purchases of trademarks

Net cash used in investing activities

Net cash (used in) provided by investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

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Settlement of payables owed by legacy Pacific Oil Company Stockholders

The accompanying notes are in integral part

The accompanying notes are an integral part

of these consolidated financial statements.

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Holdings, Inc., Financial Gravity Operations, Inc., Financial Gravity Tax, Inc., Financial Gravity Wealth, Inc., Financial Gravity

Business, LLC, Financial Gravity Ventures, LLC., SASH Corporation (doing business as Metro Data Processing) and Tax Coach Software,

Business, LLC, Financial Gravity Ventures, LLC., SASH Corporation (doing business as Metro Data Processing) and Tax Master Network,

LLC (formally known as Tax Coach Software, LLC.)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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recorded when received.

The allowance for doubtful accounts was $14,842 as of March 31, 2018 and September 30, 2017.

The allowance for doubtful accounts was $0 as of June 30, 2018 and $14,482 as of September 30, 2017.

In the normal course of business, the Company

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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

part of the TMN 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.

1 unchanged sentence

a four-year estimated life.

During each of the three and six months ended March 31, 2018 and 2017, the Company recorded amortization

During each of the three and nine months ended June 30, 2018 and 2017, 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 March 31, 2018 was $28,062 and $22,450 at

Accumulated amortization at June 30, 2018 was $30,868 and $22,450 at

September 30, 2017.

Proprietary Content

The proprietary content acquired as a part

of the TCS purchase has been recognized in the accompanying consolidated balance sheets at $525,100, the value attributed to such

content on the date of the purchase.

The proprietary content is being amortized on a straight-line basis over an eight-year estimated

During each of the three and six months ended March 31, 2018 and 2017, the Company recorded amortization expense of $16,410

and $32,820 on this intangible asset, which is included in depreciation and amortization expense in the accompanying consolidated

statements of operations.

Accumulated amortization at March 31, 2018 was $164,093 and $131,276 at September 30, 2017.

The proprietary content acquired as

a part of the TMN purchase has been recognized in the accompanying consolidated balance sheets at $525,100, the value

attributed to such content on the date of the purchase.

The proprietary content is being amortized on a straight-line basis

over an eight-year estimated life.

During each of the three and nine months ended June 30, 2018 and 2017, the Company

recorded amortization expense of $16,409 and $49,227 on this intangible asset, which is included in depreciation and

amortization expense in the accompanying consolidated statements of operations.

Accumulated amortization at June 30, 2018 was

$180,503 and $131,276 at September 30, 2017.

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

TMN 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.

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 sheets to be impaired as of March 31, 2018 and September 30,

of the trade name recorded in the accompanying consolidated balance sheets to be impaired as of June 30, 2018 and September 30,

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

a part of the TMN 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.

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

During each of the three and six months ended March 31, 2018 and 2017,

During each of the three and nine months ended June 30, 2018 and 2017,

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 March 31, 2018

Accumulated amortization at June 30, 2018

was $14,465 and $10,520 at September 30, 2017.

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, 2018 and September

Intellectual Property

The Company accounts for Intellectual

Property in accordance with GAAP and accordingly, Intellectual Property are stated at cost.

Intellectual Property with indefinite

lives is not amortized but are tested for impairment at least annually.

Management has determined that the Intellectual Property

have an indefinite life and do not consider the value of Intellectual Property recorded in the accompanying consolidated balance

sheet to be impaired as of June 30, 2018 and September 30, 2017.

Goodwill represents the excess of the value

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the reporting unit is greater than its carrying value.

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

accompanying consolidated balance sheets to be impaired as of March 31, 2018 and September 30, 2017.

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

accompanying consolidated balance sheets to be impaired as of June 30, 2018 and September 30, 2017.

The fair values of the assets acquired,

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tax benefits as a component of income tax expense.

There was no accrued interest or penalties as of March 31, 2018 and September

There was no accrued interest or penalties as of June 30, 2018 and September

From time to time, the Company is audited

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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 35,837,900 and 34,886,089 for the three months ended March 31, 2018 and 2017, respectively.

Average number of common shares were 35,823,648 and 35,137,625 for the six months ended March 31, 2018 and 2017, respectively.

For the periods ended March 31, 2018 and 2017 3,430,646 and 2,512,346 common stock options and warrants were excluded from diluted

Average number of common shares were 35,837,900 and 34,886,089 for the three months ended June 30, 2018 and 2017, respectively.

Average number of common shares were 35,827,925 and 35,137,625 for the nine months ended June 30, 2018 and 2017, respectively.

For the periods ended June 30, 2018 and 2017, 3,430,646 and 2,340,171 common stock options and warrants were excluded from diluted

loss per share as they were antidilutive.

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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.

Tax Master Network (formally known

as 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 for the three months ended March 31, 2018 and 2017 was $82,307 and $74,591, respectively;

and $142,845 and $176,469 for the six months ended March 31, 2018 and 2017.

Advertising and marketing expense for the three months ended June 30, 2018 and 2017 was $67,783 and $131,508, respectively;

and $206,018 and $307,977 for the nine months ended June 30, 2018 and 2017.

Stock-Based Compensation

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Property and equipment consist of the following at

March 31, 2018 and September 30, 2017:

Service Lives

March 31, 2018

June 30, 2018 and September 30, 2017:

Estimated Service Lives

June 30, 2018

September 30, 2017

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Less accumulated depreciation and amortization

Total Depreciation expense for the three months ended

March 31, 2018 and 2017 was $7,764 and $3,800, respectively;

and $13,062 and $7,600 for the six months ended March 31, 2018 and

2017, respectively.

Trademarks consist of the following:

Trademarks at September 30, 2016

Trademarks purchased at cost

Trademarks at September 30, 2017

Trademarks purchased at cost

Trademarks at March 31, 2018

Total depreciation expense for the three

months ended June 30, 2018 and 2017 was $7,587 and $3,800, respectively;

and $20,699 and $11,400 for the nine months ended June

30, 2018 and 2017, respectively.

Intellectual Property consist of the following:

Intellectual Property at September 30, 2016

Intellectual Property purchased at cost

Intellectual Property at September 30, 2017

Intellectual Property purchased at cost

Intellectual Property at June 30, 2018

LINE OF CREDIT

The Company has a revolving line of credit

with Wells Fargo Bank, N.A.

The Company has a revolving line of

credit with Wells Fargo Bank, N.A.

in the amount of $55,000.

Amounts drawn under this line of credit are due on demand, and monthly interest

and principal payments are required.

Amounts drawn under this line of credit are due on demand, and

monthly interest and principal payments are required.

The interest rate on the line of credit is 7.5%.

This line of credit is collateralized by

the personal guarantee of the majority stockholder.

No amounts were outstanding under the line of credit at March 31, 2018 or September

This line of credit is

collateralized by the personal guarantee of the majority stockholder.

Line of credit balance was $0 at June 30, 2018 and $0

at September 30, 2017.

NOTES PAYABLE

With the acquisition of Tax Coach Software,

LLC, the Company also acquired a promissory note payable to The Huntington National Bank.

With the acquisition of Tax Master Network

(formally known as Tax Coach Software), LLC, the Company also acquired a promissory note payable to The Huntington National Bank.

The note permits maximum borrowings of $100,000.

Interest is paid monthly at prime plus 1.25% and the balance is due on demand.

The facility matures in February 2018,

is collateralized by substantially all assets of Tax Coach Software, LLC, and is secured by a personal guarantee from Keith VandeStadt,

a significant stockholder of the Company.

The balance outstanding under this note payable was $0 and $92,197 at March 31, 2018

and September 30, 2017, respectively.

The facility matures in February 2018, is collateralized by substantially all assets of Tax Master Network (formally known as Tax

Coach Software), LLC, and is secured by a personal guarantee from Keith VandeStadt, a significant stockholder of the Company.

balance outstanding under this note payable was $0 and $92,197 at June 30, 2018 and September 30, 2017, respectively.

The Company entered into a Business Loan

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

under this note payable was $0 and $7,935 at March 31, 2018 and September 30, 2017, respectively.

under this note payable was $0 and $7,935 at June 30, 2018 and September 30, 2017, respectively.

On July 31, 2017, the Company entered into

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of the Company.

The outstanding balance was $22,949 and $46,461 at March 31, 2018 and September 30, 2017, respectively.

The outstanding balance was $12,949 and $46,461 at June 30, 2018 and September 30, 2017, respectively.

On August 9, 2017 the Company entered into

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accrued interest of this note is due on the maturity date, July 31, 2020.

The outstanding balance was $100,000 at March 31, 2018

The outstanding balance was $100,000 at June 30, 2018

and September 30, 2017.

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and accrued interest of this note is due on the maturity date, August 15, 2020.

The outstanding balance was $100,000 at March 31,

The outstanding balance was $100,000 at June 30,

2018 and September 30, 2017.

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The outstanding balance was

$100,000 at March 31, 2018 and September 30, 2017.

$100,000 at June 30, 2018 and September 30, 2017.

On October 2, 2017 the Company entered

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The outstanding balance was $100,000

and $0 at March 31, 2018 and September 30, 2017.

and $0 at June 30, 2018 and September 30, 2017.

On October 2, 2017 the Company entered

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accrued interest of this note is due on the maturity date, October 20, 2020.

The outstanding balance was $100,000 and $0 at March

The outstanding balance was $100,000 and $0 at June

30, 2018 and September 30, 2017.

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The outstanding balance was $340,000

and $0 at March 31, 2018 and September 30, 2017.

and $0 at June 30, 2018 and September 30, 2017.

On March 15, 2018 the Company entered into

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accrued interest of this note is due on the maturity date, February 15, 2021.

The outstanding balance was $200,000 and $0 at March

The outstanding balance was $200,000 and $0 at June

30, 2018 and September 30, 2017.

The Company’s maturities of

debt subsequent to March 31, 2018 are as follows:

As to the Promissory Notes Payable to

Fourly Enterprises, LLC, Elmer Fink, Mike and Terri Ashby, Heleon Investment Company, Ltd., Indar and Sybil Bally, Paul Frueh,

Michael and Donna Dade, and Helen Janssen, all of such note holders are accredited investors.

In entering into the transactions

with such note holders, the Company relied upon the exemption afforded by Regulation D and Section 4(2) of the Securities Act,

as each holder was required to attest that (i) such note holder is acquiring the note for his, her or its sole account, for investment

and not with a view to the resale or distribution thereof and (ii) such note holder is either (A) is an “accredited investor,”

as defined in Regulation D of the Securities Act, or (B) has such knowledge and experience in financial and business matters that

the note holder is capable of evaluating the merits and risks of receiving the note.

The Company’s maturities of debt

subsequent to June 30, 2018 are as follows:

ACCRUED EXPENSES

Accrued expenses consist of the following

at March 31, 2018 and September 30, 2017:

March 31, 2018

at June 30, 2018 and September 30, 2017:

June 30, 2018

September 30, 2017

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Accrued operating expenses

For the three months and six-month periods

ended March 31, 2018 and 2017, 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, changes in the federal statutory rate are from 35% to 21%, and an increase

in the valuation allowance associated with the net operating loss carryforwards.

For the three months and nine-month periods

ended June 30, 2018 and 2017, 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, changes in the federal statutory rate are from 35% to 21%, and an increase in

the valuation allowance associated with the net operating loss carryforwards.

Our deferred tax assets related to net operating

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The deferred tax assets and liabilities

in the accompanying consolidated balance sheets include the following components at March 31, 2018 and September 30, 2017:

March 31, 2018

in the accompanying consolidated balance sheets include the following components at June 30, 2018 and September 30, 2017:

June 30, 2018

September 30, 2017

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equipment under operating leases.

Total rent expense for the three months ended March 31, 2018 and 2017 was $31,483 and $22,887,

Total rent expense for the three months ended June 30, 2018 and 2017 was $28,385 and $22,887,

respectively;

and $62,966 and $45,088 for the six months ended March 31, 2018 and 2017, respectively.

and $90,765 and $67,475 for the nine months ended June 30, 2018 and 2017, respectively.

Rent expense is recorded

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Future minimum rental obligations as of

March 31, 2018 are as follows:

June 30, 2018 are as follows:

Contingencies

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.

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 as described in the purchase agreement.

Sellers also retained all rights as shareholders while shares were held in escrow, including the right to vote.

completed the acquisition of Tax Master Network (formally known as Tax Coach Software), LLC, an Ohio limited liability company

("Tax Master Network (formally known as Tax Coach Software)").

The purchase was made by Financial Gravity Holdings, Inc.

Under the terms of the acquisition, the Company acquired 100% of Tax Master Network (formally known as 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 Master

Network (formally known as 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 Master Network (formally known as Tax Coach Software).

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 as described in the purchase agreement.

The Sellers also retained all rights as shareholders while shares were

held in escrow, including the right to vote.

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.

$1.00 threshold and accordingly, the shares were released from escrow and the right to unwind the Tax Master Network (formally

known as Tax Coach Software) acquisition transaction terminated.

At September 30, 2016, Pacific Oil Company

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300,000,000 shares of common stock, par value $0.001 per share.

During the three months ended March 31,

During the three months ended June 30,

2018 and 2017, the Company sold 0 shares and 275,000 shares, respectively, for $0 and $275,000, respectively.

During the six months ended March 31, 2018

During the nine months ended June 30, 2018

and 2017, the Company sold 100,000 shares and 625,000 shares, respectively, for $100,000 and $625,000, respectively.

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The rights and obligations of the preferred stock are as determined by the Board of Directors at the time of

There were no preferred shares issued or outstanding as of March 31, 2018 and September 30, 2017 for Financial Gravity

There were no preferred shares issued or outstanding as of June 30, 2018 and September 30, 2017 for Financial Gravity

As part of the sale of common shares starting

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Outstanding –

March 31, 2018

June 30, 2018

Exercisable –

March 31, 2018

All outstanding 2015 Plan stock options

at September 30, 2016 became immediately vested upon the completion of the reverse merger with Pacific Oil Company.

stock options granted under the 2016 Plan have 2- year vesting periods but there were 45,000 options that vested at issuance.

Total compensation expense, included in salaries and wages, of previously unamortized stock compensation was $54,184 and $0 for

the three months ended March 31, 2018 and 2017, and $94,764 and $0 for the six months ended March 31, 2018 and 2017, respectively.

Unamortized share-based compensation expense as of March 31, 2018 amounted to $224,997 which is expected to recognize over the

next 1.75 years.

June 30, 2018

All outstanding 2015 Plan stock

options at September 30, 2016 became immediately vested upon the completion of the reverse merger with Pacific Oil Company.

Most of the stock options granted under the 2016 Plan have 2- year vesting periods but there were 45,000 options that vested

Total compensation expense, included in salaries and wages, of previously unamortized stock compensation was

$47,052 and $0 for the three months ended June 30, 2018 and 2017, and $141,816 and $50,000 for the nine months ended June 30,

2018 and 2017, respectively.

Unamortized share-based compensation expense as of June 30, 2018 amounted to $184,417 which is expected to

recognize over the next 1.50 years.

RELATED PARTY TRANSACTIONS

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related party in the accompanying consolidated balance sheets

was $2,303 and $4,506 as of March 31, 2018 and September 30, 2017, respectively.

was $0 and $4,506 as of June 30, 2018 and September 30, 2017, respectively.

Management fees paid to the majority stockholder

of the entity, included as management fees - related party in the accompanying consolidated statements of operations were $56,250

and $50,000 for three months ended March 31, 2018 and 2017, respectively $113,500 and $103,000 for the six months ended March 31,

2018 and 2017.

and $50,000 for three months ended June 30, 2018 and 2017, respectively $147,250 and $153,000 for the nine months ended June 30,

2018 and 2017, 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 March 31, 2018

and 2017, and $0 and $30,000 respectively, for the six months ended March 31, 2018 and 2017 and were included as general and administrative

Expenses for these services totaled $0 for the three months ended June 30, 2018 and 2017, respectively

and $0 and $9,000 respectively, for the nine months ended June 30, 2018 and 2017 and were included as general and administrative

expenses in the accompanying consolidated statements of operations.

Included in professional fees were consulting

fees paid to a related party as a condition to the TCS acquisition.

fees paid to a related party as a condition to the TMN acquisition.

Two agreements require certain services at a fixed fee of $16,500

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.

$109,500 and $109,500

in professional fees were paid under these 3 agreements for the three months ended March 31, 2018 and March 31, 2017, and $211,460

and $225,600 six months ended March 31, 2018 and March 31, 2017 respectively and were included as professional services in the

accompanying consolidated statements of operations.

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.

$60,000 and $109,500 in professional

fees were paid under these 3 agreements for the three months ended June 30, 2018 and June 30, 2017, and $180,000 and $225,600 nine

months ended June 30, 2018 and March 31, 2017 respectively and were included as professional services in the accompanying consolidated

statements of operations.

Management’s Discussion and Analysis of Financial

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In fiscal year 2016 the Company

acquired Tax Coach Software LLC.

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

acquired Tax Master Network (formally known as Tax Coach Software) LLC.

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.

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.

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(the Company guarantees to find double its initial fee

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

Lowering their personal taxes then fuels insurance,

wealth and business services sales.

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

(the Company guarantees to find double its initial fee in

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

Lowering their personal taxes then fuels insurance, wealth

and business services sales.

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

SBO’s look for two things from a

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

A RIA is an advisor or firm engaged in financial planning

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.

A 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.

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 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 has always done, control advisor fees and reduce one of the biggest “fees”

in a mutual fund and ETF portfolio,

which is “tax friction”.

Rule is a new ruling, was 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 has

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.

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This program was created in Financial

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

Gravity Business but will be sold and build revenue in the Tax Master Network (formally known as Tax Coach Software) platform.

Financial Gravity Ventures, LLC.

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

Tax Coach Software, LLC.

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®

Tax Master Network, LLC (formally known

as Tax Coach Software, LLC.)

Tax Master Network (formally known as Tax

Coach Software) (TMN) was a key acquisition in fiscal year 2016.

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

developed the Certified Tax Master®

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

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service offerings, business support, and marketing materials.

These trademarks/service marks include Financial Gravity®, Tax

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

These Intellectual Property/service marks 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™

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

Results of Operations for the three and six months

ended March 31, 2018 compared to the three and six months ended March 31, 2017

For the three months ended March 31, 2018,

revenue increased $117,373 to $1,085,070 from $967,697 for the three months ended March 31, 2017.

For the six months ended March

31, 2018, revenue increased $264,276 to $2,004,969 from $1,740,693 for the six months ended March 31, 2017.

Results of Operations for the three and nine months ended

June 30, 2018 compared to the three and nine months ended June 30, 2018

For the three months ended June 30, 2018,

revenue increased $269,550 to $1,088,969 from $819,419 for the three months ended June 30, 2017.

For the nine months ended June

30, 2018, revenue increased $772,884 to $5,332,997 from $2,560,113 for the nine months ended June 30, 2017.

The increase in revenue

is due in part to the restructure of services offered.

is due in part to the onboarding of new clients.

Operating Expenses

Cost of services activity decreased $16,628

to $4,079 for the three months ended March 31, 2018 from $20,707 for the three months ended March 31, 2017.

The decrease is primarily

related to a decrease in trimming all unnecessary expenses and cost of services activity decreased $27,753 to $13,211 for the six

months ended March 31, 2018 from $40,964 for the six months ended March 31, 2017.

The decrease is primarily related to a decrease

in trimming all unnecessary expenses.

Cost of services activity increased

$1,651 to $13,570 for the three months ended June 30, 2018 from $11,919 for the three months ended June 30, 2017.

increase is primarily related to more clients signing up, cost of services activity increased $12,357 to $65,237 for the nine

months ended June 30, 2018 from $52,883 for the nine months ended June 30, 2017.

The increase is primarily related to more

clients signing up.

Professional services expenses decreased

$176,975 to $182,582 for the three months ended March 31, 2018 from $359,557 for the three months ended March 31, 2017.

services expenses decreased $271,014 to $358,637 for the six months ended March 31, 2018 from $629,651 for the six months ended

March 31, 2017.

$178,577 to $145,719 for the three months ended June 30, 2018 from $324,296 for the three months ended June 30, 2017.

services expenses decreased $328,241 to $625,706 for the nine months ended June 30, 2018 from $953,947 for the nine months ended

June 30, 2017.

This decrease is primarily due to changes of outside representation.

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Depreciation and amortization expenses increased

$3,528 to $28,295 for the three months ended March 31, 2018 from $24,767 for the three months ended March 31, 2017.

and amortization expenses increased $4,680 to $54,124 for the six months ended March 31, 2018 from $49,444 for the six months ended

March 31, 2017.

The increase is primarily due to assets purchased during the quarter ended March 31, 2018.

$3,856 to $28,803 for the three months ended June 30, 2018 from $24,947 for the three months ended June 30, 2017.

and amortization expenses increased $7,850 to $82,241 for the nine months ended June 30, 2018 from $74,391 for the nine months

ended June 30, 2017.

The increase is primarily due to assets purchased during the fiscal year 2018.

General and administrative expenses increased

$576,114 to $731,096 for the three months ended March 31, 2018 from $154,982 for the three months ended March 31, 2017.

and administrative expenses increased $695,197 to $972,005 from $276,808 for the six months ended March 31, 2018 and 2017.

$467,508 to $575,177 for the three months ended June 30, 2018 from $107,669 for the three months ended June 30, 2017.

administrative expenses increased $1,324,464 to $1,708,941 from $384,477 for the nine months ended June 30, 2018 and 2017.

increase is primarily due to an increase in costs associated with independent agent’s commissions and consulting cost.

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expenses increased

$13,500 to $63,500 for the three months ended March 31, 2018 from $50,000 for the three months ended March 31, 2017 and increased

$10,500 to $113,500 for the six months ended March 31, 2018 from $103,000 for the six months ended March 31, 2017.

This increase

$6,250 to $56,250 for the three months ended June 30, 2018 from $50,000 for the three months ended June 30, 2017 and decreased

$5,750 to $147,250 for the nine months ended June 30, 2018 from $153,000 for the nine months ended June 30, 2017.

This decrease

is due to changes in the contract with Fourly, LLC.

Marketing expenses increased $7,716 to

$82,307 for the three months ended March 31, 2018 from $74,591 for the three months ended March 31, 2018 and decreased $33,624

to $142,845 for the six months ended March 31, 2018 from $176,469 for the six months ended March 31, 2017.

Marketing expenses decreased $63,725 to

$67,783 for the three months ended June 30, 2018 from $131,508 for the three months ended June 30, 2017 and decreased $101,959

to $206,018 for the nine months ended June 30, 2017 from $307,977 for the nine months ended June 30, 2017.

This overall decrease

is from eliminating and consolidating marketing tools.

Salaries and wages expenses increased $231,468

to $635,178 for the three months ended March 31, 2018 from $403,710 for the three months ended March 31, 2017 and increase $453,307

to $1,234,736 for the six months ended March 31, 2018 from $781,429 for the six months ended March 31, 2017.

Salaries and wages expenses decreased $251,412

to $278,713 for the three months ended June 30, 2018 from $530,125 for the three months ended June 30, 2017 and increased $187,394

to $1,498,948 for the nine months ended June 30, 2017 from $1,311,554 for the nine months ended June 30, 2017.

Salaries and wages

increase is due to larger employee commissions being paid out, restructuring of staff members (hiring and separating of employees),

and hiring of temporary staff to assist with special projects.

The Company experienced a decrease in its

bottom line of $545,085 to a net loss of $682,030 for the three months ended March 31, 2018 from a net loss of $136,945 for the

three months ended March 31, 2017, and for the six months ended March 31, 2018 an increase in loss of $600,240 to $945,452 from

a net loss of $345,212 for the six months ended March 31, 2017, these losses are primarily attributable to the reasons noted above.

decrease are due to restructuring of staff members (hiring and separating of employees).

The Company experienced a decrease in

its bottom line of $271,213 to a net loss of $104,078 for the three months ended June 30, 2018 from a net loss of $375,291 for

the three months ended June 30, 2017, and for the nine months ended June 30, 2018 an increase in loss of $323,228 to $1,051,141

from a net loss of $720,502 for the nine months ended June 30, 2017, these losses are primarily attributable to the reasons noted

Significant Accounting Policies

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consolidated balance sheets.

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.

Tax Master Network (formally 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

Trade accounts receivable are carried at

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Liquidity and Capital Resources

As of March 31, 2018, the Company had cash

As of June 30, 2018, the Company had cash

and cash equivalents of $160,510.

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Net cash used in operating activities

was $890,594 for the six months ended March 31, 2018, compared to $421,045 net cash used in operating activities for the six months

ended March 31, 2017.

The net cash used in operating activities for the six months ended March 31, 2018 was due to net loss of

$945,452 adjusted primarily by the following:

(1) depreciation and amortization of $54,124, Stock based compensation $94,764,

trade accounts receivable of $22,920, accounts receivable –

related party of $2,303, and accounts payable –

of $68,744, (2) offset by decreases in prepaid expense of $36,766, accrued expenses of $55,630 and deferred revenue of $95,601.

was $934,274 for the nine months ended June 30, 2018, compared to $646,936 net cash used in operating activities for the nine

months ended June 30, 2017.

The net cash used in operating activities for the nine months ended June 30, 2018 was due to net

loss of $1,051,141 adjusted primarily by the following:

(1) depreciation and amortization of $82,241, and accounts payable

trade of $66,612, and the increase in G&A of $467,508.

Net cash provided by financing activities

was $716,356 for the six months ended March 31, 2018, compared to net cash provided by financing activities of $690,221 for the

six months ended March 31, 2017.

Financing activities for the six months ended March 31, 2018 consisted primarily of $740,000 in

borrowings and $100,000 of proceeds from the sale of common stock;

offset with payments made to reduce the Company’s debt

obligations in the amount of $123,644.

As shown below, at March 31, 2018, our

contractual cash obligations totaled approximately $1,113,349, all of which consisted of operating lease obligations and debt principal.

was $706,356 for the nine months ended June 30, 2018, compared to net cash provided by financing activities of $662,760 for the

nine months ended June 30, 2017.

Financing activities for the nine months ended June 30, 2018 consisted primarily of $740,000

in borrowings and $100,000 of proceeds from the sale of common stock;

offset with payments made to reduce the Company’s

debt obligations in the amount of $133,644.

As shown below, at June 30, 2018, our contractual cash obligations totaled approximately $1,103,349 ,

all of which consisted of operating lease obligations and debt principal.

Payments due by period

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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