Financial Gravity Companies, Inc. 10-K

Item 1. BUSINESS. General Financial Gravity Companies, Inc. (“Financial Gravity” or the “Company”) was incorporated under the laws of the State of Nevada on December 5, 2005. Its principal executive offices are located at 800 N. Watters Rd., Suite 150, Allen, Texas 75013. The Company’s telephone number is 800-588-3893. The Company’s stock symbol is FGCO. 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. Unless otherwise provided in footnotes, all references from this point forward in this Report to “Financial Gravity,” “we,” “us,” “our company,” “our,” or the “Company” refer to the combined Financial Gravity Companies, Inc. entity, together with its subsidiaries. Business Overview On October 31, 2016, following a reverse merger transaction with Pacific Oil Company, the Articles of Incorporation were amended to change the name of the Company to Financial Gravity Companies, Inc. Sofos Investments, Inc. (formerly Financial Gravity Wealth, Inc.), Financial Gravity Tax, Inc., MPath Advisor Resources, LLC (formerly Financial Gravity Business, LLC), Financial Gravity Ventures, LLC and Tax Master Network, LLC, are Company subsidiaries that deliver a wide range of investment and financial advice, support for financial advisors, tax planning and management services to high net worth individuals and businesses nationwide. On September 30, 2019, the Company entered into an agreement to acquire 100% of the shares of stock of Presidential Brokerage, Inc, a California corporation (“Forta”). Subsequent to the entering into the agreement, Forta changed it’s name to Forta Financial Group, Inc. (“Forta”). Upon completion of the acquisition of the Forta stock, Forta will become a wholly owned subsidiary of the Company. Forta is a broker-dealer, a registered investment advisor, and a licensed insurance agent. It primarily operates in Colorado. The merger is subject to FINRA approval and will be finalized upon such approval. The following outline briefly describes Financial Gravity’s various subsidiaries and the products and services they offer: Sofos Investments, Inc. (Financial Gravity Wealth, Inc.) (“Sofos”) Sofos is a registered investment advisor (“RIA”), registered with the Securities and Exchange Commission, and provides asset management services to individuals and businesses, including financial planning, wealth management and money management. Financial Gravity Tax, Inc. Financial Gravity Tax was a tax planning service provider for small companies and individuals. The Tax Operating System, is a system for integrating and executing tax planning strategies. This is offered via subscription for member tax professionals. Financial Gravity Tax had a small bookkeeping and payroll service businesses, but those business lines were either sold or shut down in 2019. The business lines and customers of Financial Gravity Tax was sold in October 2019 and the legal entity isn’t active currently. Tax Master Network, LLC Tax Master Network® provides three primary services including monthly subscriptions to the Tax Master Network systems, coaching and email marketing services. Tax Master Network (“TMN”) currently supports over 300 Certified Public Accountants (“CPA”) and Enrolled Agent professionals, training them to add crucial tax planning services to support clients. TMN has developed the Certified Tax Master® for this group and includes client acquisition and retention systems. TMN also offers tax planning services through the Tax Blueprint®. The process begins with an extensive and comprehensive review of the client’s needs. This assessment sets the requirements for the program that is subsequently developed. The second step is to use the client’s custom Tax Blueprint® to capture the identified tax savings. The Tax Blueprint® is delivered to the client as a guide to implementation of the identified tax savings strategies. 1 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 . Financial Gravity Ventures was established to hold acquired companies and business assets until they are integrated into the mainstream Financial Gravity business structure. Sash Corporation dba Metro Data Processing , based in Tulsa, OK was the Company’s first acquisition and Metro Data Processing was based in Tulsa, OK. The client list was sold to ADP in 2018. This entity is now inactive and awaiting dissolution. Fortan Financial Group, Inc. (formerlyh Presidential Brokerage, Inc.) 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. When approved, the Forta shareholders will own more than 50% of the Company. Forta is a broker dealer, registered investment advisor and an insurance brokerage, subject to FINRA, SEC and insurance regulation. Organic growth has come in three key areas. • Tax Services and financial advisory services, including Tax Blueprint® and ongoing Tax Operating System® services • Brokerage and Wealth Management Services – and brokerage services after the Forta acquisition and money management services. • Other Products and Services (Insurance and other miscellaneous products and services). All future growth is expected to come from these key areas, organic growth, acquisitions, and strategic alliances. Competition The market is comprised of a very large selection of varied suppliers that provide investment advisory and brokerage, financial advisory, accounting, and tax services. These include accounting firms, tax preparers, estate planners, lawyers, wealth management advisors, banks, and large financial institutions. However, many of these firms are not able to provide the customized services that small business owners are seeking, or simply do not have each of the customized services that Financial Gravity offers to meet the needs of small business owners and high net worth individuals at the price that Financial Gravity offers. Financial Gravity’s service delivery model has been proven to work over the past years. Financial Gravity believes that its superior products, services and overall customer service will enable it to achieve sales and revenue growth. Intellectual Property Financial Gravity maintains copyrights or trademarks on all of its printed marketing materials, the financialgravity.com website and other web pages, and proprietary software. Financial Gravity’s goal is to preserve its trade secrets and operate without infringing on the proprietary rights of other parties. To help protect its proprietary know-how, which is not patentable, Financial Gravity currently relies and will in the future rely on trade secret protection and confidentiality agreements to protect its interests. To this end, Financial Gravity requires all its employees, consultants, advisors and other contractors to enter into confidentiality agreements that prohibit the disclosure of confidential information and, where applicable, require disclosure and assignment to Financial Gravity of the ideas, developments, discoveries and inventions important to its business. Employees As of September 30, 2019, the Company had approximately 17 full-time employees. None of the Company’s employees are covered by a collective bargaining agreement. The Company believes that it maintains good relations with its employees. Legal Proceedings From time to time, the Company is a party to or otherwise involved in legal proceedings, claims and other legal matters, arising in the ordinary course of its business or otherwise. It is management’s opinion that there are no legal proceedings the outcome of which will be material to its ability to operate or market its services, its consolidated financial position, operating results or cash flows. 2 Government Regulation The services provided by Financial Gravity, through its subsidiaries, are extensively regulated by federal and state authorities in the United States. Financial Gravity believes it is in compliance with federal and state qualification and registration requirements in order that it may continue to provide services to its clients consistent with applicable laws and regulations.