What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2020-01-13 compared with 2019-01-15 · 114 added, 225 removed, 170 unchanged (67% 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

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Fourth Quarter

The above prices reflect inter-dealer

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

The above prices reflect inter-dealer prices,

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 December 31, 2018 was 1,689.

of record of the Company’s Common Stock on September 30, 2019 was 74.

The Company has never paid any cash dividends

on its common stock, and it is anticipated that none will be paid in the foreseeable future.

Recent Sales of Unregistered Securities

During the year ended September 30, 2017,

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.

Recent Sales/Issuance of Unregistered Securities

On September 30, 2019, the Company entered into a

merger agreement with Forta, to acquire Forta in exchange for Company stock.

The merger is awaiting FINRA approval.

approved, the Forta shareholders will own more than 50% of the Company.

John Pollock will remain the largest individual

During the year ended September 30, 2018

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

Subsequent to September 30, 2018, an aggregate of 150,000 options

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

During the year ended September 30, 2019

the Company issued 5,598,133 shares of common stock in exchange for $1,007,664 in promissory notes.

The sales of the securities identified

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The Company’s option grants were

affected pursuant to Rule 701 promulgated under the Securities Act.

effected pursuant to Rule 701 promulgated under the Securities Act.

Repurchases of Equity Securities

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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

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Plan of Operations

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.

Financial Gravity is a parent company

of best of breed financial services companies including brokerage, wealth management, estate planning, family office services,

risk management, business and personal tax planning, business consulting, and financial advisor services.

Financial Gravity's

mission is to synergistically bring together companies that create symbiotic advantages to each other in order to bring a complete

financial experience to the clients that we serve.

Financial Gravity’s Subsidiaries:

Financial Gravity Holdings, Inc.

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.

Dissolved February 13, 2019.

Financial Gravity Operations, 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, Inc.

formerly Business Legacy, Inc.

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

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

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 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 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 a 4-8 times multiple to a typical accounting or bookkeeping practice.

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.

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

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 to deliver on the product Bookkeeping with Purpose®, that will help deliver the promised tax

savings and producer actionable real time data.

Financial Gravity Wealth, Inc.

formerly Pollock Advisory

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

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

Dissolved February 12, 2019.

(formerly Financial Gravity Wealth, Inc.)

thousands in taxes, clients are happy to trust us with the management of their wealth, especially when treated to a different

wealth management experience.

Sofos is a Registered Investment Advisory 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

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.

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 Department

of Labor's fiduciary rule is officially dead.

of Labor’s fiduciary rule is officially dead.

The fiduciary rule, also known officially as the “Conflict of Interest”

rule, states advisers have to give conflict-free advice on retirement accounts, putting their clients' needs ahead of their own

potential compensation.

rule, stated advisers have to give conflict-free advice on retirement accounts, putting their clients’

needs ahead of their

own potential compensation.

Although the Department

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as a RIA makes the Company very attractive to the most profitable clients.

Financial Gravity Business, LLC formerly Cloud9b2b, LLC

The complexity of Advanced Tax Planning

next fuels Financial Gravity Business services.

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

product 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, LLC formerly Cloud9Accelerator,

MPath Advisor Resources, LLC (formerly Financial Gravity

Business, LLC) (“MPath”) MPath is an insurance marketing organization and provides insurance products and services

to insurance agents or agencies.

Financial Gravity Ventures, LLC

This entity in the Company’s corporate

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

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

and acquired companies.

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

Tax Master Network, LLC formerly Tax Coach Software,

Tax Coach Software (TCS) was a key acquisition

in fiscal year 2016.

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

to support clients.

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

significant business development opportunities for Financial Gravity Wealth.

The Company developed the Certified Tax Master®

Tax Master Network, LLC

Tax Master Network “TMN”

a key acquisition in fiscal year 2016.

TMN supports over 300 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.

The Company developed the Certified

Tax Master®

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

TMN also provides tax services through its “Tax

Blueprint®”

system which identifies several strategies for lowering the client's taxes.

Financial Gravity Tax, Inc.

no current operations.

It sold its bookkeeping and tax preparation business October 31, 2019, and all other operations are consolidated

Sash Corporation dba Metro Data Processing

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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 business accounts of Sash Corporation dba Metro Data Processing (MDP) were sold to Automatic Data Processing

Subsequent to the sale, MDP filed for dissolution and all financial accounts were closed prior to fiscal year end.

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™

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.

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.

Significant effort and investment capital

have 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.

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.

The client list

was sold to ADP in 2018.

This entity is now inactive and awaiting dissolution.

Results of Operations for the year ended September 30, 2019

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to $4,075,048 from $3,886,993 for the year ended September 30, 2018.

The increase in revenue is primarily due to the

increase of assets under management customers with Financial Gravity.

The principal drivers for this are an increase in insurance

sales commission of $300,773, offset by a decrease in Tax BluePrint sales of $179,800.

Operating Expenses

Professional services expenses include

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

money forfeited.

Professional services expenses decreased $169,845 to $827,272 for the year ended September 30, 2018 from $997,117

for the year ended September 30, 2017.

This decrease is primarily attributable to reduced need of temporary staff members needed

to assist with tax returns.

consulting fees, legal expense, professional fees, and business consulting.

Professional services expenses decreased $683,437

to $141,835 for the year ended September 30, 2019 from $827,272 for the year ended September 30, 2018.

Professional and consulting

expenses decreased by $521,502 in 2019 compared to 2018.

Depreciation and amortization expenses

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$75,948 to $189,070 for the year ended September 30, 2019 from $113,122 for the year ended September 30, 2018.

The increase is primarily

due to the addition of computer equipment purchases.

General and administrative expenses increased

$208,303 to $956,784 for the year ended September 30, 2018 from $748,481 for the year ended September 30, 2017.

The increase is

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

Management fees –

related party expenses increased $3,000

primarily due to a one-time charge, in 2019, to amortization related to the impairment of a Trade Name, in the amount of $69,300.

General and administrative expenses decreased

$214,092 to $533,805 for the year ended September 30, 2019 from $747,897 for the year ended September 30, 2018.

Marketing expenses decreased $108,569 to $266,930 for the year

ended September 30, 2018 from $375,499 for the year ended September 30, 2017.

The decrease is primarily due to consolidating outside

vendors used and bringing marketing efforts in-house.

The largest changes

were a decrease in travel of $158,957 and bad debt expense $21,876.

Marketing expenses decreased $135,401 to

$131,529 for the year ended September 30, 2019 from $266,930 for the year ended September 30, 2018.

The decrease is primarily due

to consolidating outside vendors used and bringing marketing efforts in-house.

Salaries and wages expenses increased

$242,248 to $3,501,744 for the year ended September 30, 2019 from $3,259,446 for the year ended September 30, 2018.

During the year ended

September 30, 2018, the increase is primarily attributed to the restructuring of the commission grid which increased payouts to

the sales teams and an increased stock-based compensation expense related to an increase in options granted during the year.

The Company experienced an increased net

is primarily due to an increase in stock option expense of $158,331, and an overall increase in commissions of $149,817.

The Company experienced a decrease in net

loss of $897,147 to a net loss of $623,485 for the year ended September 30, 2019 from a net loss of $1,520,632 for the year ended

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professional services to manage clients’

Revenues are recognized in the period earned.

Services income is recognized as consulting

and other professional services are performed by the Company.

Income is recognized as services are delivered.

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.

The revenue is recognized as received from the insurer, issuer.

Revenue represents gross billings less

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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.

Tax Master Network has 3 types of services

that are charged and collected on a month to month subscription basis (Tax Master Network 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

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

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

the amounts to be uncollectible.

Recoveries of receivables previously written off are recorded when received.

The allowance for

doubtful accounts was $21,876 and $17,014 as of September 30, 2018 and 2017, respectively.

Trade accounts receivable are carried only

for subscription revenues not received in the period they apply to.

The allowance for doubtful accounts was $0 and $21,876 as of

September 30, 2019 and 2018, respectively.

In the normal course of business, the Company

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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 1.49% to 2.55% in 2018 and 0.85% to 1.41%

in 2017, dividend yield of 0%, expected life of 2 years and volatility of 36% - 137%.

period based on the Black-Scholes option pricing model based on a risk-free rate of 1.50% to 2.89% in 2019 and 1.49% to 2.55% in

2018, dividend yield of 0%, expected life of 10 years and volatility of 25.32% to 34.05%.

Liquidity and Capital Resources

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cash and cash equivalents of $36,053.

The decrease of $412,200 in cash and cash equivalents from September 30, 2017 was due to

net cash used in operating activities of $1,097,020, net cash used in investing activities of $60,639, and net cash provided by

financing actives of $745,459.

Net cash used in operating activities was

$1,097,020 for the year ended September 30, 2018, compared to $745,311 net cash used in operating activities for the year ended

The increase of $3,833 in cash and cash equivalents from September 30, 2018 was due to net

cash provided by operating activities of $89,640, net cash used in investing activities of $43,582, and net cash used in financing

actives of $42,225.

Net cash provided by operating activities

was $89,640 for the year ended September 30, 2019, compared to $1,097,020 net cash used in operating activities for the year ended

September 30, 2018.

The net cash used in operating activities for the year ended September 30, 2018 was due to net loss of $1,520,632,

The net cash provided by operating activities for the year ended September 30, 2019 was due to net loss of

$623,485, adjusted primarily by the following:

increases in depreciation and amortization of $13,378, stock based compensation of $206,484,

accounts payable –

trade of $53,621, and decreases in trade account receivable of $72,012, prepaid expenses of $38,946, and

deferred revenue of $95,601.

increases in depreciation and amortization of $75,948, stock based compensation

of $364,814, stock options issued in exchange for services and in Trade accounts receivable, $131,470.

The Net operating loss was

also adjusted for decreases in accounts payable –

trade of $127,997, decrease in accounts receivable related party, $1,791,

decreases in prepaid expenses, $13,647, decreases in accrued expenses, $75,283, and increases in deferred revenue, $33,333.

Net cash used in investing activities

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September 30, 2018.

The Company purchased more equipment and trademarks during the year ended September 30, 2018 compared to September

Net cash provided by financing activities

was $745,459 for the year ended September 30, 2018, compared to net cash provided by financing activities of $1,058,464 for the

year ended September 30, 2017.

Financing activities for the year ended September 30, 2018 consisted primarily of $100,000 in proceeds

from sales of common stock and $817,561 in proceeds from debt offset by $172,102 in payments on debt.

The Company purchased more equipment and trademarks during the year ended September 30, 2018.

Net cash used in financing activities

was $42,225 for the year ended September 30, 2019, compared to net cash provided by financing activities of $745,459 for the year

ended September 30, 2018.

Financing activities for the year ended September 30, 2019 consisted primarily of borrowings from Notes

payable of $202,205 and payments on notes payable of $248,703.

As shown below, at September 30, 2019,

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Less than 1 year

More than 5 years

Notes payable

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

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

FINANCIAL STATEMENTS AND SUPPLEMENTARY

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.

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