What changed in this filing

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Item 1. Financial Statements

2020-08-27 compared with 2020-05-29 · 570 added, 417 removed, 483 unchanged (67% of the section changed)

1 unchanged sentence

Financial Gravity Companies, Inc.

CONSOLIDATED BALANCE

March 31, 2020

CONSOLIDATED BALANCE SHEETS

September 30,

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Right to use lease asset

Customer relationship, net

Proprietary content, net

3 unchanged sentences

CURRENT LIABILITIES

Accounts payable - trade

Accounts payable –

Related party payables

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300,000,000 shares authorized;

41,524,589 shares issued and outstanding as of March 31, 2020 and 41,436,033 shares issued and outstanding as of September 30, 2019

83,023,048 shares issued and outstanding as of June 30, 2020 and 41,436,033 shares issued and outstanding as of September 30, 2019

Additional paid-in capital

6 unchanged sentences

Consolidated Statements of Operations

For the Three Months Ended

For the Nine Months Ended

Total Revenue

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General and administrative

Salaries and wages

Management fees - related party

Compensation Expense

Total Operating Expenses

Operating Loss

Interest expense

Total other (expense) income

Operating Income (Loss)

Other Income (Expense)

Interest & Other Expense

Loss Per Share - Basic and Diluted

$ (0.01 ) (1)

__________________

(1) Earnings per share amount is rounded

up to $(0.01)

(1) Earnings per share amount is rounded up to $(0.01)

The accompanying notes are an integral part

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STOCKHOLDERS' EQUITY

Number of Shares Issued

and Outstanding

Common Stock Par Value

Number of Shares Issued and Outstanding

Common Stock Par Value Amount

Additional Paid-In-Capital

Accumulated Deficit

Balance at September 30, 2018

1 unchanged sentence

Stock based employee compensation expense

Stock options in lieu of expenses

Debt exchanged for stock

Balance at June 30, 2019

Balance at March 31, 2019

$ (6,095,901 )

Stock based employee compensation expense

Stock options in lieu of expenses

Debt exchanged for stock

Balance at June 30, 2019

$ (6,112,168 )

Balance at September 30, 2019

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Private Placement stock issue

Stock issued in exchange for services

Forta acquisition

Balance at June 30, 2020

$ (6,636,627 )

Balance at March 31, 2020

$ (6,365,456 )

Stock based employee compensation expense

Stock issued in exchange for services

Forta acquisition

Balance at June 30, 2020

$ (6,636,626 )

The accompanying notes are an integral part

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended March 31, 2020

Six Months Ended

March 31,2020

March 31,2019

Nine months Ended June 30, 2020 and 2019

Nine Months Ended

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

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

Depreciation and amortization

Stock based compensation

Right of use lease asset

Stock options issued for services

Impairment of intangible

Changes in operating assets and liabilities

1 unchanged sentence

Accounts receivable - related party

Prepaid expenses

Accounts payable - trade and related party payables

Prepaid expenses and other current assets

Accounts payable - trade, current

Accrued expenses and other liabilities

Lease Liability

Contract Liabilities

Net cash provided by (used in) operating activities

Net cash used in operating activities

Cash flows from investing activities:

Cash acquired from Forta acquisition

Purchases of property and equipment

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Cash flows from financing activities

Borrowings from notes payable

Borrowings from line of credit

Borrowings from notes payable

Payments on line of credit

1 unchanged sentence

Proceeds from sale of common stock

Net cash provided by (used in) financing activities

Net decrease in cash and cash equivalents

Net cash provided by financing activities

Net increase(decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

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Financial Gravity Companies, Inc.

parent company of financial services companies including brokerage, wealth management, estate planning, family office services,

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

Gravity's mission is to bring together financial services companies that create comprehensive customer service synergies for the

clients that we serve.

parent company of financial services companies including brokerage, investment advisor, asset management, estate planning, family

office services, business and personal tax planning, business consulting, and financial advisor services.

Financial Gravity's mission

is to bring together financial services companies that create comprehensive customer service synergies for the clients that we

Financial Gravity Companies, Inc., and

subsidiaries (the “Company”) is headquartered in Austin Texas, with locations in Allen, Texas and Cincinnati, Ohio.

subsidiaries (the “Company”) is headquartered in Austin Texas, with locations in Allen, Texas, Denver, Colorado and

Cincinnati, Ohio.

The currently operating wholly owned subsidiaries of the organization include:

Sofos Investments, Inc.

(formerly, 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.

(“Sofos”,

formerly, Financial Gravity Wealth, Inc.).

Sofos is a registered investment advisor (“RIA”), registered with the Securities

and Exchange Commission, and provides asset management services to individuals and businesses, including money management, financial

planning, and wealth management.

Tax Master Network, LLC, runs the Tax Master

(“TMN”) that provides four primary services including monthly subscriptions to the TMN systems, coaching

and email marketing services.

TMN currently supports over 300 Certified Public Accountants (“CPA”) and Enrolled Agent

professionals, training them to add crucial tax planning services to support clients.

and marketing services.

TMN currently supports over 300 Certified Public Accountants (“CPA”) and Enrolled Agent professionals,

training them to support clients through tax planning services.

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®,

which includes an extensive review of the client’s tax needs.

The initial assessment sets the requirements for a custom Tax

Blueprint®

that includes client

acquisition and retention systems.

TMN also offers tax planning services through the Tax Blueprint®, which includes an extensive

individualized review and assessment of the client’s tax situation.

The initial assessment sets the requirements for a custom

Tax Blueprint®

for each client to use as guide to implementation of the identified tax savings strategies.

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and services to insurance agents or agencies.

Inactive subsidiaries include Financial

Gravity Holdings, Inc.

(dissolved February 13, 2019), Financial Gravity Operations, Inc.

(dissolved February 12, 2019), Financial

Gravity Tax, Inc (a small bookkeeping and payroll service businesses that was sold in October 2019, and SASH Corporation (inactive).

Forta Financial Group, Inc.

(“Forta”)

is a broker-dealer, a registered investment advisor, and a licensed insurance agent.

It primarily operates in Colorado and has

independent advisors and representative in other states.

SEGMENT REPORTING

We manage our business in four reportable

Each of our subsidiaries is treated as a segment.

We evaluate the performance of our operating segments based on a segment’s

share of consolidated operating income, which excludes discontinued operations of Financial Gravity Tax that are shown in the report.

Financial Gravity Tax (discontinued)

Forta Financial Group

Sofos Investments

Tax Masters Network

Unallocated (Financial Gravity Companies, Inc.)

Ordinary Income

Total Service Income

Total Investment Management Fees

Total Compensation Expense

Total Cost of services

Total Depreciation & Amortization

Total General and Administrative

Total Marketing

Total Professional Services

Total Expense

Net Ordinary Income

Other Income/Expense

Total Other Income

Total Other Expense

Net Other Income

$ (1,548,990 )

BUSINESS ACQUISITION

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.

Subsequent to

the entering into the agreement, Presidential changed its name to Forta Financial Group, Inc.

into a merger agreement with 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 was approved by FINRA

on April 27, 2020.

Management believes that the acquisition of Forta will be finalized prior to June 1, 2020.

or “FFGI”, formerly, Presidential Brokerage,

Inc.), to acquire 100% of the stock of Forta in exchange for 45,785,879 shares of Company common stock.

Forta is a broker dealer,

registered investment advisor and an insurance brokerage, subject to FINRA, SEC and insurance regulation.

The acquisition transaction

closed on May 21, 2020.

Forta’s financial performance is included in Company’s consolidated statements starting as

of May 21, 2020.

Identification of Company as the Acquirer

The acquisition was primarily effected

by a merger and an exchange of Company’s common stock as the consideration paid to Forta stockholders by Company for their

equity interests in Forta.

We looked at all pertinent facts and circumstances identified in ASC 805-10-25-1, ASC 805-10-05-4 to

be considered in identifying the acquirer in a business combination effected by exchanging equity interests.

The standard recognizes

that the acquirer usually is the entity that issues its equity interests, but that in some business combinations the issuing entity

is the acquiree.

In these situations, the accounting acquiror is different than the legal acquiror.

The guidance provides the following factors

to consider in identifying the accounting acquiror in a business combination like the acquisition that is effected by exchanging

equity interests:

The majority shares ended up being held

by Forta shareholders.

The original calculation was to be an even 50% for Forta and Company shareholders.

However, the calculations

included shares that were granted through the option plan at Company, and it was assumed that each of the option share grants would

be exercised.

As it turned out, the vast majority of the option shares were not exercised, so that ended up skewing the majority

calculation in favor of the Forta shareholders.

There were no other special or unusual voting arrangements, convertible securities

or other financial instruments of the combined Company immediately after the acquisition.

After the acquisition, the largest single

minority interest would be held by a Company shareholder, John Pollock, and members of the Board of Directors and management of

Company, some of whom were shareholders of Forta, would end up owning in excess of 40% of the voting shares of Company.

There is no agreement on the election of

Board members, and neither Forta nor Financial Gravity shareholders have any agreement to elect a majority of the Board.

The composition of the senior management

of the combined entity.

Senior management is from Financial Gravity.

Based upon the above, the Company has concluded that Financial

Gravity will be treated as the acquirer.

Purchase Price Allocation

The purchase price of $7,600,415 was based

upon the share price of Company’s stock as of May 21, 2020.

We have used preliminary fair value estimates for the assets

acquired and liabilities assumed for the acquisition.

We believe significant synergies may arise from

this acquisition, as a result of which the purchase price was in excess of the fair value of the net assets acquired and, as a

result, we have preliminarily recorded goodwill of $7,358,050.

We have not yet finalized estimates that relate to certain tangible

and intangible assets, including customer relationships, trade names, contracts.

Our estimates and assumptions for these acquisitions

are subject to change as we obtain additional information for our estimates during the respective measurement periods (up to one

year from the acquisition date).

Assets Acquired and Liabilities Assumed

Forta Financial Group, Inc.

Assets Acquired and Liabilities Assumed

As of May 21, 2020

PURCHASE PRICE

Current Assets

Accounts Receivable

Other Current Assets

Total Current Assets

Current Liabilities

Total Accounts Payable

Total Other Current Liabilities

Total Current Liabilities

Long-Term Liabilities

Total Long-Term Liabilities

Total Liabilities

The accompanying unaudited pro forma condensed

combined financial statement of Financial Gravity Companies, Inc.

(“Financial Gravity”, “FGCO”

or the “Company”)

is presented to illustrate the estimated effects of the acquisition of 100% of the stock of Forta Financial Group, Inc.

(“Forta”

or “FFGI”), which closed on May 21, 2020 (the “acquisition”

or the “transaction”) on the historical

financial position and results of operations of the Company.

The unaudited pro forma condensed combined statement of operations

is based upon and derived from and should be read in conjunction with Company’s and Forta’s historical audited financial

statements for the year ended September 30, 2019 and the historical unaudited financial statements for the nine months ended June

30, 2020 –

Company will be fling its 8K/A with the financial information.

UNAUDITED PRO FORMA COMBINED FINANCIAL

Forta’s results of operations have been included in the

following financial statement for the nine months ending June 30, 2020 prospectively from the assumed date of acquisition of October

Pro forma results have been prepared by adjusting historical results to include Forta’s results of operations.

unaudited pro forma results presented do not necessarily reflect the results of operations that would have resulted had the acquisition

been completed at the beginning of October 1, 2019, nor does it indicate the results of operations in future periods.

Additionally,

the unaudited pro forma results do not include the impact of possible business model changes, nor does it consider any potential

impacts of current market conditions on revenues, reduction of expenses, asset dispositions, or other factors.

The impact of these

items could alter the following pro forma results:

FINANCIAL GRAVITY COMPANIES, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED

STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED JUNE 30, 2020

Financial Gravity

Investment Management Fees

Service Income

Total Revenue

Compensation Expense

Cost of services

Depreciation & Amortization

General and Administrative

Professional Services

Total Expense

Net Ordinary Income

Other Income/Expense

Total Other Income

Total Other Expense

Net Other Income

Net income (loss) per common share:

Derived from the unaudited statement operations of Forta for the nine months ended June 30, 2020

Derived from the unaudited statement operations of FGCO for the nine months ended June 30, 2020

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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All significant intercompany accounts and transactions have been eliminated on consolidation.

Effective May 21, 2020, Company acquired

100% of Forta in exchange for 45,785,879 shares of common stock of Company.

Forta’s assets and liabilities are included in

Company’s assets and liabilities as of June 30, 2020.

Forta’s results of operations have been consolidated with Company’s

results beginning as of June 1, 2020.

Cash and Cash Equivalents

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The Company maintains cash

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

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

cash equivalents.

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

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

Trade accounts receivable are carried at

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Recoveries of receivables previously written off are recorded when

The allowance for doubtful accounts was $0 as of March 31, 2020 and September 30, 2019, respectively.

The allowance for doubtful accounts was $0 as of June 30, 2020 and September 30, 2019, respectively.

In the normal course of business, the Company

may extend credit to its customers, on an unsecured basis, substantially all of whom are located in the United States of America.

The Company does not believe that it is exposed to any significant risk of loss on accounts receivable.

may extend credit to its customers, on an unsecured basis, substantially all of whom are in the United States of America.

does not believe that it is exposed to any significant risk of loss on accounts receivable.

Prepaid Expenses

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The Company leases

all their office space through an operating lease, which expires at January 31, 2024.

Many of the lease agreements obligate the

Company to pay real estate taxes, insurance and certain maintenance costs, which are accounted for separately.

The Company’s

lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company determines

if an arrangement is an operating lease at inception.

Leases with an initial term of 12 months or less are not recorded on the

balance sheet.

All other leases are recorded on the balance sheet as right-of-use assets and lease liabilities for the lease term.

Lease assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease

term and include options to extend or terminate the lease when they are reasonably certain to be exercised.

The present value of

lease payments is determined primarily using the incremental borrowing rate based on the information available at lease commencement

The Company’s operating lease expense is recognized on a straight-line basis over the lease term and is recorded in

general and administrative expenses.

their office space through an operating lease in Denver Colorado, which expires at May 31, 2021, and non-material offices leases

in Cincinnati, Ohio and Loveland, Colorado.

Company’s lease agreements obligate the Company to pay real estate taxes, insurance,

and certain maintenance costs, which are accounted for separately.

The Company’s lease agreements do not contain any material

residual value guarantees or material restrictive covenants.

The Company determines if an arrangement is an operating lease at

Leases with an initial term of 12 months or less are not recorded on the balance sheet.

All other leases are recorded

on the balance sheet as right-of-use assets and lease liabilities for the lease term.

Lease assets and lease liabilities are recognized

at commencement date based on the present value of lease payments over the lease term and include options to extend or terminate

the lease when they are reasonably certain to be exercised.

The present value of lease payments is determined primarily using the

incremental borrowing rate based on the information available at lease commencement date.

The Company’s operating lease expense

is recognized on a straight-line basis over the lease term and is recorded in general and administrative expenses.

Proprietary Content

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

During each of the three months ended March 31, 2020 and 2019, and the six months ended March 31, 2020 and 2019, the Company

recorded amortization expense of $16,410 and $32,818 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, 2020

was $295,368 and $262,550 at September 30, 2019.

During each of the three months ended June 30, 2020 and 2019, and the nine months ended June 30, 2020 and 2019, the Company

recorded amortization expense of $16,320 and $49,138 for 2020 and $16,410 and $49,228 for 2019, respectively, on this intangible

asset, which is included in depreciation and amortization expense in the accompanying consolidated statements of operations.

amortization at June 30, 2020 was $311,688 and $246,140 at September 30, 2019.

Non-compete Agreements

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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, 2020 and 2019,

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

amortization expense in the accompanying consolidated statements of operations.

Accumulated amortization at March 31, 2020 was

$23,670 and $21,040 at September 30,2019.

During each of the three and nine months ended June 30, 2020 and 2019,

the Company recorded amortization expense of $1,308 and $3,938 for 2020 and $1,315 and $3,945 for 2019, respectively on this intangible

asset, which is included in depreciation and amortization expense in the accompanying consolidated statements of operations.

amortization at June 30, 2020 was $24,978 and $19,725 at September 30, 2019.

Intellectual Property

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Intellectual property with indefinite lives are 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 sheets to be impaired as of March 31, 2020 and September 30, 2019.

Goodwill represents the excess of the value

of the purchase price and related costs over the identifiable assets from business acquisitions.

The Company conducts an annual

impairment assessment, at the reporting unit level, of its recorded goodwill.

The Company assesses qualitative factors in order

to determine whether it is more likely than not that the fair value of a reporting unit is less than it is carrying amount.

qualitative factors evaluated by the Company include macro-economic conditions of the local business environment, overall financial

performance, and other entity specific factors as deemed appropriate.

If, through this qualitative assessment, the conclusion is

made that it is more likely than not that a reporting unit’s fair value is less than it is carrying amount, a two-step impairment

test is performed.

Management determined, by assessing the qualitative factors, that it is more likely than not that the fair value

of the reporting unit is greater than it carries value.

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

the accompanying consolidated balance sheets to be impaired as of March 31, 2020 and September 30, 2019.

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 sheets to be impaired as of June 30, 2020 and September 30, 2019.

Goodwill represents the excess of the

value of the purchase price and related costs over the identifiable assets from business acquisitions.

The Company conducts

an annual impairment assessment, at the reporting unit level, of its recorded goodwill.

The Company assesses qualitative

pertinent factors to determine whether it is more likely than not that the fair value of a reporting unit is less than it is

carrying amount.

The qualitative factors evaluated by the Company include macro-economic conditions of the local business

environment, overall financial performance, and other entity specific factors as deemed appropriate.

If, through this

qualitative assessment, the conclusion is made that it is more likely than not that a reporting unit’s fair value is

less than it is carrying amount, a two-step impairment test is performed.

Management determined, by assessing the qualitative

factors, that it is more likely than not that the fair value of the reporting unit is greater than it carries value.

Management does not consider the value of goodwill recorded for TMN in the accompanying consolidated balance sheets to be

impaired as of June 30, 2020 and September 30, 2019.

Goodwill related to the acquisition of Forta was recognized in the

amount of $7,358,050, being the difference between the value of Forta’s net assets and the market value of

Company’s stock at the time of the acquisition of Forta.

The Company records federal and state income,

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differences between the financial statement and tax basis of assets and liabilities.

The Company accounts for all uncertain tax positions in accordance

with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740 –

The Company accounts for all uncertain

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

Income Taxes (“ASC 740”).

ASC 740 provides guidance on de-recognition, classification, interest and penalties and

disclosure related to uncertain income tax positions.

ASC 740 provides guidance on de-recognition, classification, interest and penalties

and disclosure related to uncertain income tax positions.

The Company recognizes accrued interest and penalties related to unrecognized

tax benefits as a component of income tax expense.

There was no accrued interest, penalties or uncertain tax positions as of March

There was no accrued interest, penalties or uncertain tax positions as of June

30, 2020 and September 30, 2019.

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

Average number of common shares were 41,524,589 and 35,837,900 for the quarters ended March 31, 2020 and 2019, respectively.

Average number of common shares were 41,495,070 and 35,837,900 for the six months ended March 31, 2020 and 2019, respectively.

For the three and six months ended March 31, 2020, approximately 6,512,035 common stock equivalents were not added to the diluted

average shares because inclusion of such equivalents would be antidilutive.

For the three and six months ended March 31, 2019,

approximately 3,940,326 common stock equivalents were not added to the diluted average shares because inclusion of such equivalents

would be antidilutive.

The average number of common shares for the three months ended June 30, 2020 and 2019 respectively were 72,018,838 and

The average number of common shares for the nine months ended June 30, 2020 and 2019, respectively, were 51,669,659

and 36,949,650.

For the three and nine months ended June 30, 2020, 1,351,323 approximately common stock equivalents were not added

to the diluted average shares because inclusion of such equivalents would be antidilutive.

For the three and nine months ended

June 30, 2019, approximately 3,430,646 common stock equivalents were not added to the diluted average shares because inclusion

of such equivalents would be antidilutive.

Revenue Recognition

The Company derives its revenues primarily

Investment Management Fees, TMN subscriptions, Financial Advisor subscriptions, Tax BluePrint sales, Insurance Sales and

Marketing Programs, and Tax Operating System subscriptions.

Sofos generates investment management fees

by providing professional services to manage client investments.

Investment management fees are calculated as a percentage of assets

under management for the period.

Investment management fees Revenue is recognized as earned, at the end of each period.

withdrawn from investor accounts monthly, in arrears.

investment management fees, brokerage commissions, TMN subscriptions, financial advisor subscriptions, Tax BluePrint sales,

insurance sales and marketing programs, and Tax Operating System subscriptions.

Company generates investment management

fees by providing management services for client investments (through Sofos and Forta).

Investment management fees are calculated

as a percentage of assets under management for the period.

Investment management fees Revenue is recognized as earned, at the end

of each month that management services were performed.

Fees are withdrawn from investor accounts monthly, in arrears, or in the

case of Forta, investment management fees may be withdrawn quarterly in advance from investor accounts.

These advance payments

are recognized, equally, over the three months of the applicable quarter.

Company generates brokerage commissions

through Forta by providing brokerage services to clients.

Commissions are calculated based upon the value of the securities that

are bought or sold for the client.

Fees are paid as part of the purchase and sale transaction.

Depending upon the securities bought

or sold, recognition is either on the trade date or the date when the purchase contract is accepted.

Revenue is also derived from the sale of

annuities and premiums on life insurance policies issued by insurance companies to investment clients, and from insurance marketing

programs (through MPath Advisor Resources, LLC.).

The revenue is recognized after the insurance polies are issued and in force.

annuities and premiums on life insurance policies issued by insurance companies to clients (through Forta), and from insurance

marketing programs (through MPath Advisor Resources, LLC.).

The revenue is recognized after the insurance policies are issued and

Revenue represents gross billings less

2 unchanged sentences

in the accompanying consolidated balance sheets.

TMN has several levels of subscription

TMN provides several levels of subscription

services that are charged and collected on a month to month basis.

None of these services comes with a long-term commitment or

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

Subscription income is billed to client credit

card monthly, on the monthly anniversary of client sign-up.

Cancellations are processed within the month requested and subscriptions

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

Members are not entitled to refunds for unused

Any subscription fees paid for a future period are deferred in the financial statements.

The client subscribers are tax advisors that provide tax advice

to their customers.

None of these services comes with a long-term commitment or contract, and there is no up-front payment beyond

the monthly subscription fee.

Subscription income is billed to client credit cards monthly, on the monthly anniversary of client

Cancellations are processed within the month requested and subscriptions 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.

Any subscription fees paid for a

future period are deferred in the financial statements.

TMN also sells Tax Blueprint®.

These are tax planning strategies guides, to save customers taxes through the implementation of the recommended tax strategies.

After an initial assessment, the customers pay half of the year one tax savings, up to $10,000.

Revenue is deferred until the customer

reviews and accepts the final Tax Blueprint®

These are customized tax plans to save

clients’

customers taxes through the implementation of the recommended tax strategies.

After an initial assessment, the customers

pay half of the year one tax savings, up to $10,000.

Revenue is deferred until the customer reviews and accepts the final Tax Blueprint®

document and returns an executed delivery agreement.

Tax Blueprint®

are billed to the client after a preliminary assessment and client approval to move forward.

Revenue recognized in 2020 that is

included in Contract Liabilities as of September 30, 2019 is $61,400.

Advertising costs are charged to operations

when incurred.

Advertising and marketing expense were $13,472 and $29,971 for the three months ended March 31, 2020 and 2019, respectively

and $34,585 and $61,615 for the six months ended March 31, 2020 and 2019 respectively.

sales are billed to the client after a preliminary assessment

and client approval to move forward.

Advertising and Marketing

Advertising and marketing costs are charged

to operations when incurred.

Stock-Based Compensation

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grants, and stock appreciation rights grants, on a straight-line basis over the vesting period, using the Black-Scholes option

pricing model, which is based on risk-free rate of 1.56% in the quarter ended March 31, 2020 and 1.49% to 2.55% in 2019, dividend

pricing model, which is based on risk-free rate of 0.59% in the quarter ended June 30, 2020 and 1.49% to 2.55% in 2019, dividend

yield of 0%, expected life of 7 years and volatility of 100% in 2020 and volatility of 35% to 40% in 2019.

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with the audited consolidated financial statements of the Company for the fiscal year ended September 30, 2019, included in its

Annual Report on Form 10-K.

Annual Report on Form 10-K/A.

Going Concern

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growth and establishment of a stronger brand.

On May 8, 2020, the Company received a

Paycheck Protection Program (“PPP”) loan in the amount of $283,345.

Additionally, on May 15, 2020, Forta received a

PPP loan in the amount of $377,700.

PPP loans bear a fixed interest rate of 1% over a two-year term, are guaranteed by the federal

government, and do not require collateral.

The loans may be forgiven, in part or whole, if the proceeds are used to retain and

pay employees and for other qualifying expenditures.

The Company expects that the full proceeds of the PPP loans will be eligible

for forgiveness, which would result in an increase in capital of $661,045.

On May 23, 2017, the Company and GHS Investments,

2 unchanged sentences

filed as an exhibit to a registration statement on Form S-1, filed with the Securities and Exchange Commission on September 18,

The Agreement contemplates a series of transactions, pursuant to which the Company will “put”

shares of its common

stock to GHS in consideration of the payment to the Company of eighty percent (80%) of the “Market Price”

of such shares.

“Market Price”

shall mean the average of the two lowest trading prices of the Company’s Common Stock during the

ten (10) consecutive trading days preceding the receipt of the applicable put notice.

Accordingly, on each instance the Company

exercises a put option, the Company will know in advance, both the number of shares issuable upon exercise of the put option, and

the dollar amount of the purchase price for such shares.

The maximum purchase price for shares to be purchased by GHS Investments

under the Agreement is $11,000,000.

To facilitate the sale of the shares so purchased by GHS Investments, the Company agreed to

file a registration statement with the Securities and Exchange Commission.

The Company also entered into a Registration Rights

Agreement with GHS Investments, pursuant to which the Company has agreed to provide certain registration rights under the Securities

Act of 1933, the rules and regulations promulgated thereunder, and applicable state securities laws.

The Agreement will terminate

(i) when GHS Investments has purchased an aggregate of $11,000,000 of the common stock of the Company, or (ii) 36 months after

the effective date of the Agreement, or (iii) at such time that the registration statement is no longer in effect.

Company has not had to use this as a source of funding and expects it to expire with no impact on the

Company’s operations.

See Subsequent Events - Paycheck Protection Program.

Additionally, the Company is also actively

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

Management, in the ordinary course

of business, will pursue raising additional capital through sales of common stock as well as seeking financing via equity or debt,

or both from third parties.

The Agreement will terminate (i) when GHS Investments has purchased an aggregate of $11,000,000 of the common stock of the

Company, or (ii) 36 months after the effective date of the Agreement, or (iii) at such time that the registration statement is

no longer in effect.

Company has not had to use this as a source of funding and expects it to expire with no impact on the Company’s

Management, in the ordinary course of business,

will pursue raising additional capital through sales of common stock as well as seeking financing via equity or debt, or both from

third parties.

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

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

and overhead expenditures.

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

Company’s business, financial condition and results of operations.

Moreover, the sale of additional equity securities to

raise financing will result in additional dilution to the Company’s stockholders and incurring additional indebtedness could

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

the Company’s ability to perform on its current debt service requirements.

The consolidated financial statements do not include

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

If additional

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

expenditures.

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

business, financial condition, and results of operations.

Moreover, the sale of additional equity securities to raise financing

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

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

to perform on its current debt service requirements.

The consolidated financial statements do

not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Future Accounting Pronouncements

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Since the Company currently uses

an expected losses from customers method, the Company does not anticipate the adoption of ASU 2016-13 will have a material impact

an expected loss from customers method, the Company does not anticipate the adoption of ASU 2016-13 will have a material impact

on the Company's financial condition or results of operations.

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the Company beginning October 1, 2020.

The Company does not anticipate the adoption of ASU 2017-04 will have a material impact

on the Company's financial condition or results of operations.

PROPERTY AND EQUIPMENT

Property and equipment consist of the following at March 31,

Property and equipment consist of the following at June 30,

2020 and September 30, 2019:

Estimated Service Lives

March 31, 2020

September 30, 2019

Furniture, fixtures and equipment

Internally developed software

Less accumulated depreciation and amortization

Less accumulated depreciation and amortization depreciation

* The value of the assets has not been finalized and may be

adjusted based upon purchase price allocations.

Depreciation expense was $21,009 and $9,967

during the three months ended March 31, 2020 and March 31, 2019, respectively, and $12,359 and $18,239 during the six months ended

March 31, 2020 and March 31, 2019, respectively.

during the three months ended June 30, 2020 and June 30, 2019, respectively, and $33,367 and $27,943 during the nine months ended

June 30, 2020 and June 30, 2019, respectively.

INTELLECTUAL PROPERTY

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Intellectual property purchased at cost

Intellectual property at March 31, 2020

has conducted some of its operations from leased premises.

At March 31, 2020, the remaining lease term and weighted average discount

rate for operating leases was 3.8 years and 10%, respectively.

For the three and six months ended March 31, 2020, the Company's

cash paid for the operating lease was $32,771, and $ 64,692, respectively.

In April 2020, the

Company tendered its main leased premises back to the landlord, and does not contemplate occupying the property in the future,

nor will there by a replacement property as the Company successfully operates remotely –

see Subsequent Events discussion.

The undiscounted annual future minimum lease payments

consist of the following at:

March 31, 2020

Intellectual property at June 30, 2020

The Company has traditionally conducted

some of its operations from leased premises.

On June 16, 2020, the Company entered

into a lease termination agreement with its landlord on the premises located in Allen, Texas.

The landlord accepted termination

of the lease, and Company’s remaining obligation is limited to issuing shares of its common stock if the landlord’s

efforts to re-lease the premises results in a loss, but not to exceed $66,000.

The Company leases premises in Denver Colorado.

The Denver ends on May 31, 2021, and Company will be leasing other space at the end of the term.

The remaining lease obligations

In addition, the Company has small locations in Allen, Texas, Austin, Texas and Cincinnati, Ohio.

The undiscounted annual future minimum lease payments consist

of the following at:

Total lease payments

Present values of lease liabilities

Present value of lease liabilities

LINE OF CREDIT

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This line of credit is supported by the personal

guarantee of the majority stockholder.

Line of credit balance was $60,185 and $63,919 at March 31, 2020 and September 30, 2019,

respectively.

guarantee of John Pollock.

Line of credit balance was $58,985 and $67,005 at June 30, 2020 and September 30, 2019, respectively.

NOTES PAYABLE

On April 19, 2019 the Company entered into

a Promissory Note Payable with Charles O’Banon (“O’Banon”), a customer, in the amount of $32,205.

is in settlement of tax penalties and interest he incurred, that were proximately caused by the Company’s actions.

principal and interest payments are $623, with a balloon payment of $14,048 in April 2022.

The note is being repaid over 36 months

and bears an interest rate of 6%.

The outstanding balance on March 31, 2020 and September 30, 2019 was $26,511, and $29,401 respectively.

On April 19, 2019, the Company entered

into a Promissory Note Payable with Charles O’Banon (“O’Banon”), a customer, in the amount of $32,205.

The note is in settlement of tax penalties and interest he incurred, that were proximately caused by the Company’s actions.

The monthly principal and interest payments are $623, with a balloon payment of $14,048 in April 2022.

The note is being repaid

over 36 months and bears an interest rate of 6%.

The outstanding balance on June 30, 2020 and September 30, 2019 was $26,511, and

$29,401 respectively.

The Company entered into and received a Paycheck Protection

Program (“PPP”) loan in the amount of $283,345 on May 8, 2020.

Additionally, on May 15, 2020, Forta received a PPP

loan in the amount of $377,700.

PPP loans bear a fixed interest rate of 1% over a two-year term, are guaranteed by the federal

government, and do not require collateral.

The loans may be forgiven, in part or whole, if the proceeds are used to retain and

pay employees and for other qualifying expenditures.

The Company expects that the full proceeds of the PPP loans will be eligible

for forgiveness, which would result in an increase in capital of $661,045.

On April 12, 2019, the Company entered

into a loan agreement with John Pollock, Executive Vice President of the Company.

The note bears interest at 2.76%, and is due

on December 1, 2020.

The note bears interest at 2.76% and is due on

December 1, 2020.

See Related Party Transactions.

The Company’s maturities of debt

subsequent to March 31, 2020 are as follows:

subsequent to June 30, 2020 are as follows:

ACCRUED EXPENSES

Accrued expenses consist of the following

at March 31, 2020, and September 30, 2019:

March 31, 2020

September 30, 2019

Accrued payroll

Accrued operating expenses

SAR liability

Credit card payable

Deferred rent

For the three and six months ended March

Accrued expenses increased by $230,699

for the nine months ending June 30, 2020, to $358,994 from $128,295 as of September 30, 2019, due to inclusion of Forta’s

advisor commission accruals ($86,879) that are paid with payroll on the 15 th of the following month, taxes ($25,072),

accrued vacation pay ($42,808), stock appreciation rights liability ($41,703), and credit card balances ($17,555).

For the three and nine months ended June

30, 2020 and 2019, the effective tax rate of 0% varies from the U.S.

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The deferred tax assets and liabilities

in the accompanying consolidated balance sheets include the following components at March 31, 2020 and September 30, 2019:

March 31, 2020

September 30, 2019

in the accompanying consolidated balance sheets include the following components at June 30, 2020 and September 30, 2019:

Net non-current deferred tax assets:

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

During the six months ended March 31, 2020

During the nine months ended June 30, 2020

and 2019, the Company sold 75,757 shares and 0 shares, respectively, for $25,000 and $0, respectively.

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

Stock option activity is summarized as

Stock option and stock appreciation rights

activity is summarized as follows:

Shares Under Option

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Canceled or expired

Outstanding - March 31, 2020

Exercisable - March 31, 2020

Outstanding - June 30, 2020

Exercisable - June 30, 2020

Unamortized share-based compensation expense

as of March 31, 2020 amounted to $773,410 which is expected to be recognized over the next 5 years.

as of June 30, 2020 amounted to $424,496 which is expected to be recognized over the next 4.6685 years.

Total compensation expense, included in

salaries and wages, of previously unamortized stock compensation was $11,030 and $44,091 for the three ended March 31, 2020 and

2019, respectively, and $16,251 and $92,345 for the six months ended March 31, 2020 and 2019, respectively.

salaries and wages, of previously unamortized stock compensation was $50,885 and $41,370 for the three ended June 30, 2020 and

2019, respectively, and $67,136 and $133,714 for the nine months ended June 30, 2020 and 2019, respectively.

On November 27, 2019, the 2016 Plan was

amended to allow grants of other equity related rights, including Stock Appreciation Rights.

During the three and six months ended

March 31, 2020, 4,350,000 options and SARs and 4,850,000 were granted respectively.

During the three and nine months ended

June 30, 2020, 500,000 and 5,350,000 options and SARs were granted, respectively.

SARs are recorded as a liability because there

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RELATED PARTY TRANSACTIONS

Company entered into an agreement to purchase

100% of the stock of Forta.

The transaction was valued at $9 million.

Scott Winters, Gary Nemer (a former board member) and William

own, in aggregate, in excess of 80% of the shares of stock of Forta.

On May 21, 2020, the Company completed

the purchase of 100% of the stock of Forta.

As a result, Scott Winters, William Nelson, Jr., and Gary Nemer (a former board member)

now own, in aggregate, in excess of 39% of the shares of stock of Company.

As a result of the acquisition of the TMN

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board member), each month totaling $16,500.

The total paid under these agreements in the three months ended March 31, 2020 and

2019 respectively, were $49,500 and $49,500, and for the six months ended March 31, 2020 and 2019 were $99,000 and $99,000.

On April 12, 2019 the Company entered into

a loan agreement with John Pollock, Executive Vice President of the Company.

The note bears interest at 2.76%, and will be repaid

in six equal installments of $2,520, beginning July 1, 2019.

The balance of the loan at March 31, 2020 was $5,092 and at September

30, 2019 was $7,526.

The total paid under these agreements in the three months ended June 30, 2020 and 2019

respectively, were $49,500 and $49,500, and for the nine months ended June 30, 2020 and 2019 were $148,500 and $148,500.

On April 12, 2019, the Company entered

into a loan agreement with John Pollock, Executive Vice President of the Company.

The note bears interest at 2.76% and will be

repaid in six equal installments of $2,520, beginning July 1, 2019.

The balance of the loan at June 30, 2020 was $5,116 and at

September 30, 2019 was $7,526.

On February 28, 2020 and March 5, 2020,

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SUBSEQUENT EVENTS

On March 27, 2020, the U.S.

federal government

enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), which includes provision for a Paycheck

Protection Program (“PPP”) administered by the U.S.

Small Business Administration (“SBA”).

The PPP allows

qualifying business to borrow up to $10 million calculated based on qualifying payroll costs.

PPP loans bear a fixed interest

rate of 1% over a two-year term, are guaranteed by the federal government, and do not require collateral.

The loans may be forgiven,

in part or whole, if the proceeds are used to retain and pay employees and for other qualifying expenditures.

The Company has applied

for a PPP loan in the amount of $283,345.

The loan was funded on May 8, 2020.

The Company expects to use the full proceeds of the

PPP loan in accordance with the provisions of the CARES Act.

In April 2020, the Company tendered its

main leased premises back to the landlord, and does not contemplate occupying the property in the future, nor will there by a replacement

property as the Company successfully operates remotely.

Management believes that the landlord will be able to re-lease the property,

and the remaining exposure to the Company under the lease is not material.

In December 2019, a novel strain of coronavirus, referred to

as COVID-19, was reported to have surfaced in Wuhan, China.

Since then, COVID-19 has spread to other countries, including the United

In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic.

Further, the President of the United

States declared the COVID-19 pandemic a national emergency.

States in which we operate declared states of emergency related to

the spread of COVID-19 and issued executive orders directing individuals to stay at their place of residence for an indefinite

period of time.

The financial markets demonstrated significant volatility in

reaction to the virus outbreak.

There has been considerable strain on companies in many sectors of the economy.

Investors suffered

significant decreases in the value of their investment portfolios, and the economy has significantly shut down.

It is unclear when

the economy will start up again, and the lingering effects are not known.

During periods of high volatility and uncertainty many

investors choose to stop ongoing investment activity and sit on the sidelines until the markets become more stable.

The Company’s revenues are adversely affected when investors

reduce their investment activities.

In addition, part of Company’s revenues is based upon the value of assets under management.

If the investment portfolios of clients decrease in value, the fees charged for investment advice also decreases.

The Company could be affected by lack of access to its offices,

although that seems to have had little short term impact as employees have succeeded in maintaining productivity while working

The long term effects, however, may present significant issues.

Any significant shutdown of the economy for a sustained period

will affect the Company’s revenue which could lead to losses.

On July 20, 2020, the Company issued to

Gary Nemer 250,000 in employee stock options vesting over a three-year period and 500,000 in stock appreciation rights vesting

over five years

On August 14, 2020, one of the advisors

at Forta in Denver resigned to join a smaller firm.

The departure will affect future headcount and revenue in the Denver office.

A total of 4,670,352 shares that will be

issued to Forta shareholders have not yet been issued due to lack of shareholder paperwork.

When issue, the total issued shares

will be 87,693,400.

Management’s Discussion and Analysis of Financial

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

See the sections entitled “Risk Factors”

See the sections entitled “Risk Factors and Uncertainties”

Plan of Operations

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Financial Gravity’s clients include small businesses, small business owners and high and middle 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 pursue acquisitions.

The primary acquisition targets currently include investment marketing and financial advisory and broker

dealer firms.

In fiscal year 2019, the Company entered into a purchase agreement with Forta, which management believes will be

consummated by June 1, 2020, or before.

The Company is actively identifying additional potential acquisition candidates to fuel

more rapid growth.

The Company’s services are focused on helping clients make more money and build wealth, most often with investment advice,

tax savings, lowering costs and improving efficiency.

In addition to expanding through client procurement and organic growth, Financial

Gravity intends to pursue acquisitions.

The primary acquisition targets currently include investment marketing and financial advisory

and broker dealer firms.

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

Financial Gravity’s Subsidiaries

The following outline briefly

describes Financial Gravity’s active subsidiaries and the products and services they offer:

and Reportable Segments:

The following outline briefly describes

Financial Gravity’s active subsidiaries and the products and services they offer:

Sofos Investments, Inc.

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management services to individuals and businesses, including financial planning, wealth management and money management.

Tax Master Network, LLC through

Tax Master Network, LLC (“TMN”) through

the Tax Master Network®

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Forta Financial Group, Inc.

(“Forta”) On

September 30, 2019, the Company entered into a merger agreement with Forta, to acquire Forta in exchange for Company stock.

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.

(“Forta”)

Forta is a broker dealer, registered investment advisor and an insurance brokerage, subject to FINRA, SEC and insurance regulation.

Growth comes from the following reportable

Tax services and financial advisory services,

including Tax Blueprint®

and ongoing Tax Operating System®

services that are under development.

and Tax Operating System®

services through TMN.

Brokerage and wealth management services

and brokerage and investment advisory services after the Forta acquisition and money management and investment advisory

services through Sofos.

Other Products and Services (Insurance and other miscellaneous products and services).

All future growth is expected to come from

through Forta and money management and investment advisory services through Sofos.

Other products and services include insurance

and other miscellaneous products and services.

Future growth is expected to come from

these key areas, organic growth, acquisitions, and strategic alliances.

Results of Operations for the three and six months ended

March 31, 2020 compared to the three and six months ended March 31, 2019

For the three months ended March 31, revenues decreased $544,576

to $616,680 from $1,161,256 for the three months ended March 31, 2019.

For the six months ended March 31, 2020, revenues decreased

$746,766 to $1,308,755 from $2,055,521 for to the six months ended March 31, 2019.

The principal components of the decrease in

revenue for the six months was the sale Financial Gravity Tax ($117,000), reduction in revenue from the sale of TBPS ($48,500),

reduction in the sale of insurance and commission products ($265,880), TMN subscriptions also fell ($169,000), as did referral

commissions ($37,570).

Results of Operations for the three and nine months ended

June 30, 2020 compared to the three and nine months ended June 30, 2019

RESULTS OF OPERATIONS

As described in Notes to Consolidated Financial

Statements, “Segment Reporting”, we evaluate the performance of our operating segments based on net income.

For the three months ended June 30, 2020

revenues increased $20,950 to $947,491 from $926,541 for the three months ended June 30, 2019.

For the nine months ended June 30,

2020, revenues decreased $837,483 to $2,249,580 from $3,087,063 for to the nine months ended June 30, 2019.

The principal components

of the variance in revenue for the three months and nine months included the decrease in revenue from the sale of Company’s

tax and accounting subsidiary in the amount of $97,485 and $267,748, respectively;

reduction in insurance sales of $77,263 and

$343,144, respectively;

reduction of investment management fees of $117,549 and $60,034, respectively;

reduction of TMN membership

revenue for the nine months in $247,204 through membership reduction, and reductions in other revenue generating activities of

close to $150,000 in 2019.

$417,142 in investment management revenue was generated by Forta in April through May 21, 2020 that

is not reflected in the revenue during the three-month period because the acquisition of Forta is not included in revenue until

May 21, 2020.

Operating Expenses

Cost of services decreased by $859 to $14,646

for the quarter ended March 31, 2020 from $15,505 for the three months ended March 31, 2019, and decreased by $2,653, to $26,657

from $29,310 for the six months ended March 31, 2020 and March 31, 2019, respectively.

The decrease is primarily related to decreased

credit card processing fees.

Cost of services increased by $2,187 to

$17,659 for the quarter ended June 30, 2020 from $15,473 for the three months ended June 30, 2019, and decreased by $440, to $44,317

from $44,783 for the nine months ended June 30, 2020 and June 30, 2019, respectively.

The variance in expenses for the three month

and nine-month periods arises from decreased credit card processing fees due to disposal of the Financial Gravity Tax line of business.

Professional services expenses include

legal expense, professional fees, and business consulting.

Professional services expenses increased $43,821 to $70,646 for the

three months ended March 31, 2020 from $26,825 for the three months ended March 31, 2019.

Professional services increased $186,866

to $186,979 for the six months ended March 31, 2020 from $113 for the six months ended March 31, 2019.

The variances are comprised

of increases in legal fees of $15,765 for the three months ended March 31, 2020 and $61,620 for the six months ended March 31,

2020, and increases in “Professional Services –

of $24,825 for the three months and $102,076 for the six

months, respectively, related to implementing new technology offerings.

Professional services expenses decreased $57,524 to $61,681 for the

three months ended June 30, 2020 from $119,205 for the three months ended June 30, 2019.

Professional services decreased $35,117

to $234,881 for the nine months ended June 30, 2020 from $278,998 for the nine months ended June 30, 2019.

The variances are principally

comprised of a decrease of $63,750 for the three months and $148,000 for the nine months, respectively, related to reclassing related

party consulting fees to compensation, offset by costs of implementing new technology offerings.

Depreciation and amortization expenses

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

Depreciation and amortization expenses decreased

$77,715 to $21,785 for the three months ended March 31, 2020 from $99,500 for the three months ended March 31, 2019.

is principally due to a charge of $69,300 in the three months ended March 31, 2019, to amortization, for the full impairment of

Depreciation and amortization decreased $80,793 to $47,807 for the six months ended March 31, 2020, from $128,600 for

the six months ended March 31, 2019.

The principal difference is the same charge to amortization for full impairment of Trademarks.

General and administrative expenses decreased

$38,538 to $85,903 for the three months ended March 31, 2020 from $124,441 for the three months ended March 31, 2019.

administrative expenses decreased $89,654 to $181,812 for the six months ended March 31, 2020 from $271,466 for the six months

ended March 31, 2019.

The decreases in costs are across the board.

Marketing expenses decreased $16,499 to

$13,472 for the three months ended March 31, 2020 from $29,971 for the three months ended March 31, 2019.

Marketing expenses decreased

$26,988 to $34,585 for the six months ended March 31, 2020 from $61,573 for the six months ended March 31, 2019.

The decrease is

due to the Company shutting down some previous marketing channels, while new channels have yet to be fully identified and implemented.

and wages expenses decreased $ 558,861 to $ 570,209 for the three months ended March 31, 2020

from $1,129,070 for the three months ended March 31, 2019, and decreased $841,426 to $ 1,149,020 for the six months ended March

31, 2020 from $1,990,446 for the six months ended March 31, 2019.

The decrease was principally due to decreases in Commissions,

$244,700, and Stock based compensation, $136,814 for the three months ended March 31, 2020.

The decrease was principally due to

decreases in Commissions of $340,829, stock based compensation of $177,983 for the six months ended March 31, 2020.

The Company experienced a decrease in its

net loss of $153,916 to a net loss of $162,107 for the three months ended March 31, 2020 from a net loss of $316,023 for the three

months ended March 31, 2019.

The Company experienced a decrease in its net loss of $348,919 to a net loss of $171,352 for the six

months ended March 31, 2020 from a net loss of $520,271 for the six months ended March 31, 2019.

The decreases are primarily attributable

to the reasons noted above, and the proceeds from the sale of the FG Tax unit for $150,000.

Depreciation and amortization expenses increased

$8,401 to $38,636 for the three months ended June 30, 2020 from $30,235 for the three months ended June 30, 2019.

is due to accelerating the depreciation of computers and software, reducing the useful lives over which they are depreciated to

three year lives.

Depreciation and amortization decreased $72,392 to $86,443 for the nine months ended June 30, 2020, from $158,835

for the nine months ended June 30, 2019.

The principal difference is a charge to amortization for full impairment of Trademarks,

General and administrative expenses increased

$28,854 to $168,084 for the three months ended June 30, 2020 from $139,220 for the three months ended June 30, 2019.

administrative expenses decreased $62,705 to $348,158 for the nine months ended June 30, 2020 from $410,863 for the nine months

ended June 30, 2019.

The variance in expenses for the three month and six-month periods related to Company discontinuing its tax

and accounting subsidiary.

Marketing expenses increased $8,504 to $56,865 for the three months ended June 30, 2020 from $48,330

for the three months ended June 30, 2019.

Marketing expenses decreased $18,526 to $90,999 for the nine months ended June 30, 2020

from $109,945 for the nine months ended June 30, 2019.

The variance in expenses for the three month and six-month periods from

reflects a change in marketing efforts influenced by Covid 19 restrictions that shut down some previous marketing channels, while

new channels are just starting to open up.

Compensation Expense expenses increased

$364,106 to $867,330 for the three months ended June 30, 2020 from $503,224 for the three months ended June 30, 2019 and decreased

$337,578 to $2,014,413 for the nine months ended June 30, 2020 from $2,351,991 for the nine months ended June 30, 2019.

for the three months ended June 30, 2020 was principally driven by Forta salaries ($85,000) and commissions ($86,000) being included

in compensation.

The decrease for the nine months was principally due to termination of advisors ($250,000) and decreases in stock-based

compensation ($145,000).

The Company experienced an increase in

its net loss of $254,299 to a net loss of $271,170 for the three months ended June 30, 2020 from a net loss of $16,941 for the

three months ended June 30, 2019.

The Company experienced a decrease in its net loss of $99,027 to a net loss of $437,512 for

the nine months ended June 30, 2020 from a net loss of $536,538 for the nine months ended June 30, 2019.

The variance in loss

for the three months ended June 30, 2020 reflects the impact of the Covid-19 reduction in marketing and sales, which impacted

revenue, and the reduction of non-recurring revenue from the sale of the tax unit ($150,000).

The decrease in the net loss for

the nine months was primarily due to the sale of the tax unit.

Significant Accounting Policies

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professional services to manage clients’

Certain revenue generated by Forta is paid quarterly, in advance, and

recognized each month.

Services income is recognized as consulting

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

period, using the Black-Scholes option pricing model, which is based on risk-free rates of 1.56% in the quarter ending March 31,

period, using the Black-Scholes option pricing model, which is based on risk-free rates of 0.59% in the quarter ending June 30,

2020 and 1.49% to 2.55% in 2019, dividend yield of 0%, expected life of 10 years and volatility of 100% in 2020 and 35% to 40%

Liquidity and Capital Resources

As of March 31, 2020, the Company had

cash and cash equivalents of $22,579.

The decrease of ($13,474) in cash and cash equivalents during the six months ended March

31, 2020 was primarily due to net cash used in operating activities and the sale of Financial Gravity Tax, Inc.

Net cash used in operating activities was

$29,415 for the six months ended March 31, 2020.

The net cash used in operating activities was due to net loss of $171,352 adjusted

primarily by the following:

(1) depreciation and amortization of $47,807, stock based compensation of $16,251, and an increase

in Accounts payable –

trade and related party payables of $125,286.

Net cash provided by financing activities

was $18,375 for the six months ended March 31, 2020.

This was principally due to payments on the line of credit ($6,996) and notes

payable ($2,890), offset by the sale of common stock ($25,000) option and SAR grant activity.

As shown below, at March 31, 2020, our

contractual cash obligations totaled approximately $460,010, which consisted of operating lease obligations and debt principal.

As of June 30, 2020, the Company had cash

and cash equivalents of $629,322.

The increase of $593,269 in cash and cash equivalents during the nine months ended June 30, 2020

was primarily due to net cash used in operating activities ($407,842), the purchase of Forta, ($332,454, net of Forta PPP loan),

and the receipt of funding of the PPP loans, (Financial Gravity $283,345 and Forta $377,700).

The aggregate PPP loans are expected

to be forgiven.

As shown below, at June 30, 2020, our contractual

cash obligations totaled approximately $466,402, which consisted of operating lease obligations and debt principal, excluding the

PPP loan balances.

Payments due by period

Contractual obligations

Less than 1 year

Notes payable

2 unchanged sentences

Total contractual cash obligations (1)

(1) This includes an estimate of $25,000 for shares issued to the Allen TX landlord pursuant to the

termination agreement.

The accompanying consolidated financial

17 unchanged sentences

Off Balance Sheet Transactions and Related Matters

Other than operating leases discussed in

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

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

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

expenditures or capital resources of the Company.

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.

On March 11, 2020, the World Health

Organization designated the spread of COVID-19 as a pandemic.

As of the date of this Quarterly Report on Form 10-Q, COVID-19 has

had a significant impact on global financial markets, and we continue to monitor its effects on the overall economy and our operations.

We are not yet able to determine the full impact of the pandemic;

however, should it continue for an extended period, there could

be a material and adverse financial impact to our results of operations.

For more information about the risks associated with COVID-19,

see Part II, “Item 1A.

Risk Factors and Uncertainties”

of this Quarterly Report on Form 10-Q.

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