Financial Gravity Companies, Inc. 10-Q

Item 1 - Financial Statements Financial Gravity Companies, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS 30-Jun-21 30-Sep-20 (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 438,790 $ 482,854 Trade accounts receivable, net – 114,970 Right to use lease asset 78,048 259,645 Prepaid expenses and other current assets 526,753 238,324 Total current assets 1,043,590 1,095,793 OTHER ASSETS Property and equipment, net 42,821 81,712 Proprietary content, net 98,502 143,643 Right to use lease asset 133,716 – Intellectual property 53,170 53,170 Goodwill 1,094,702 8,475,305 TOTAL ASSETS $ 2,466,502 $ 9,849,624 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable – trade $ 33,697 $ 107,674 Accrued expenses 1,318,062 1,067,392 Contract liabilities 58,858 76,470 Deferred rent 99,742 – Line of credit 38,830 54,112 Lease liability – current 83,432 259,645 Related Party Payables 48,894 69,838 Notes payable 42,788 23,596 Total current liabilities 1,724,303 1,658,727 Notes payable - net of current 439,503 712,982 Lease liability - non-current 170,044 – Total non-current liabilities 609,547 712,982 COMMITMENTS AND CONTINGENCIES – – STOCKHOLDERS’ EQUITY Common stock, $ 0.001 par value; 300,000,000 shares authorized; 83,618,412 shares issued and outstanding as of June 30, 2021 and 83,618,412 shares issued and outstanding as of September 30, 2020. 83,618 83,618 Additional paid-in capital 14,446,063 14,385,086 Accumulated deficit ( 14,397,029 ) ( 6,990,790 ) Total stockholders’ equity 132,653 7,477,914 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,466,502 $ 9,849,624 The accompanying notes are a n integral part of these consolidated financial statements. 3 Financial Gravity Companies, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS For the three months and nine months ended June 30, 2021 and 2020 (Unaudited) For the For the For the For the Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended June 30, June 30, June 30, June 30, 2021 2020 2021 2020 Total Revenue Broker Dealer Income $ 244,470 $ – $ 767,284 $ – Investment Management Fee 1,068,885 581,430 2,901,543 1,329,146 Service Income 363,304 366,061 1,397,504 920,433 Total Revenue 1,676,659 947,491 5,066,332 2,249,580 Operating Expenses Cost of services 29,166 17,659 87,396 44,317 Professional services 123,077 61,681 352,881 243,881 Depreciation and amortization 21,594 38,636 89,098 86,443 General and administrative 342,023 168,084 896,438 348,158 Marketing 23,249 56,865 56,029 90,999 Salaries and wages 1,535,930 867,330 4,271,396 2,014,413 Total Operating Expenses 2,075,039 1,210,254 5,753,239 2,828,211 Operating Loss ( 398,381 ) ( 262,763 ) ( 686,907 ) ( 578,631 ) Other income (expense) 661,045 ( 20,747 ) 661,045 129,253 Loss on impairment of Goodwill ( 7,380,603 ) – ( 7,380,603 ) – Interest expense ( 1,538 ) 12,341 ( 3,808 ) 11,867 Total other (expense) income ( 6,721,096 ) ( 8,406 ) ( 6,723,366 ) 141,120 Net Loss before Income taxes ( 7,119,477 ) ( 271,169 ) ( 7,410,273 ) ( 437,511 ) Income Taxes ( 7,634 ) – ( 4,034 ) – Net (Loss) $ ( 7,111,843 ) $ ( 271,170 ) $ ( 7,406,240 ) $ ( 437,511 ) Loss Per Share - Basic $ ( 0.09 ) $ ( 0.01 ) $ ( 0.12 ) $ ( 0.01 ) Loss Per Share - Diluted $ ( 0.08 ) $ ( 0.08 ) The accompanying notes are an integral part of these consolidated financial statements. 4 Financial Gravity Companies, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY For the three and nine-month periods ended June 30, 2021 and 2020 (Unaudited Number of Shares Issued and Outstanding Common Stock Par Value Amount Additional Paid-In Capital Accumulated Deficit Total Balance at September 30, 2019 41,436,033 $ 41,436 $ 7,391,592 $ ( 6,199,115 ) $ 1,233,913 Stock based employee compensation expense – – 36,147 – 36,147 Stock options exercised 12,799 13 170 – 183 Private Placement stock issue 75,757 76 24,924 – 25,000 Stock issued in exchange for services 382,932 383 49,617 – 50,000 Forta acquisition 41,115,527 41115 6,784,021 – 6,825,136 Net loss – – – ( 437,512 ) ( 437,512 ) Balance at June 30, 2020 83,023,048 $ 83,023 $ 14,286,471 $ ( 6,636,627 ) $ 7,732,867 Balance at March 31, 2020 41,524,589 $ 41,525 $ 7,425,269 $ ( 6,365,456 ) $ 1,101,337 Stock based employee compensation expense – – 27,564 – 27,564 Stock issued in exchange for services 382,932 383 49,617 – 50,000 Forta acquisition 41,115,527 41,115 6,784,021 – 6,825,136 Net loss – – – ( 271,170 ) ( 271,170 ) Balance at June 30,2020 83,023,048 $ 83,023 $ 14,286,471 $ ( 6,636,627 ) $ 7,732,867 Balance at September 30, 2020 83,618,412 $ 83,618 $ 14,385,086 $ ( 6,990,790 ) $ 7,477,914 Stock based employee compensation expense – – 60,978 – 60,978 Net loss – – – ( 7,406,240 ) ( 7,406,240 ) Balance at June 30, 2021 83,618,412 $ 83,618 $ 14,446,063 $ ( 14,397,030 ) $ 132,653 Balance at March 31, 2021 83,618,412 $ 83,618 $ 14,451,172 $ ( 7,285,186 ) $ 7,249,604 Stock based employee compensation expense – – ( 5,107 ) – ( 5,107 ) Net loss – – – ( 7,111,844 ) ( 7,111,844 ) Balance at June 30,2021 83,618,412 $ 83,618 $ 14,446,063 $ ( 14,397,030 ) $ 132,653 The accompanying notes are an integral part of these consolidated financial statements. 5 Financial Gravity Companies, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended June 30, (Unaudited) Nine Months Ended June 30,2021 Nine Months Ended June 30,2020 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ ( 7,406,240 ) $ ( 437,511 ) Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization 89,098 86,443 Stock based compensation 97,463 12,228 Stock options issued for services – 50,000 Right of use of lease asset 64,962 – Loss on impairment of Goodwill 7,380,603 – Forgiveness of PPP loans ( 661,045 ) – Changes in operating assets and liabilities: Receivables 114,970 87,259 Prepaid expenses and other current assets ( 288,430 ) ( 168,835 ) Accounts payable – trade ( 73,976 ) ( 40,215 ) Accrued expenses and other liabilities 239,818 27,454 Related Party Payable ( 20,944 ) – Deferred revenue ( 14,007 ) ( 24,664 ) Deferred rent 91,136 – Notes payable - current 19,192 – Lease liability ( 45,410 ) – Net cash provided by (used in) operating activities ( 412,807 ) ( 407,842 ) CASH FLOWS FROM INVESTING ACTIVITIES Cash acquired from Forta acquisition – 710,154 Cash paid for purchase of property and equipment ( 3,540 ) ( 829 ) Net cash used in investing activities ( 3,540 ) 709,325 CASH FLOWS FROM FINANCING ACTIVITIES Borrowings from lines of credit Proceeds from notes payable 422,900 283,614 Payments on notes payable ( 35,335 ) ( 11,893 ) Payments on line of credit ( 15,282 ) ( 4,935 ) Proceeds from the sale of common stock – 25,000 Net cash provided by financing activities 372,283 291,786 TOTAL INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ( 44,064 ) 593,269 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 482,854 36,053 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 438,790 $ 629,322 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 1,538 $ 5,624 Taxes $ – $ – The accompanying notes are in integral par these consolidated financial statements 6 Financial Gravity Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. NATURE OF BUSINESS Financial Gravity Companies, Inc., and 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 Company include: Sofos Investments, 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 money management, financial planning, and wealth management. Sofos commenced its money management services in late 2020, and by June 30, 2021 had in excess of $ 150,000,000 in assets under management. Tax Master Network, LLC, runs the Tax Master Network® (“TMN”) that provides four primary services including monthly subscriptions to the TMN systems, coaching 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® 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. Finally, TMN offers the Tax Operating System, which is a system for integrating and executing tax planning strategies. TMN also provides CPAs, Enrolled Agents, and other tax professionals a system for marketing, selling, and fulfilling tax-planning engagements. The system rests on two proprietary SAAS-based applications, the Tax Ninja software, which uses non-technical language in written reports introducing clients to tax-saving concepts and strategies; and the Tax Operating System®, which automates implementation of tax strategies. The system also includes: 1) marketing and practice-management tools and resources; 2) access to the Technical Training Center and the Sales Training Center to support members; 3) the monthly Fueled program which promotes personal development education; 4) the weekly Tax Beat client newsletter (a client newsletter); and 5) the Certified Tax Master® designation (which identifies members as offering special training not usually available to clients). TMN membership also includes the option to participate in the Financial Advisor Technical Education (FATE) program, which serves two goals: 1) it helps tax planners do a better job helping clients manage tax exposure in their investment portfolios; and 2) it gives members a proprietary "done for you" path into the investment advisory business. MPath Advisor Resources, LLC (“MPath”) MPath is an insurance marketing organization and provides insurance products and services to insurance agents or agencies. This is a new venture that will be focused upon insurance marketing and will capture business synergies in the sale of insurance products by financial advisors with TMN and with Forta. 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 representatives in other states. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A summary of the significant accounting policies consistently applied in the preparation of the accompanying consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) is as follows. Basis of Consolidation The consolidated financial statements include the accounts of its subsidiaries. All significant intercompany accounts and transactions have been eliminated on consolidation. 7 Cash and Cash Equivalents The Company considers all highly liquid investments with an initial maturity of three months or less, when purchased, to be cash equivalents. The Company maintains cash balances at financial institutions located throughout the United States, which at times may exceed insured limits. The 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. Cash does not include the net capital deposit of approximately $ 100,000 at First Clearing, which is recorded on the balance sheet with prepaid expenses and other current assets. Noncash financing and investing activities on the Statement of Cash Flows includes $ 661,045 of debt forgiveness related to PPP loans for the three and nine months ended June 30, 2021. Receivables Trade accounts receivable are carried at the invoiced amount less an 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 a review of specific accounts. 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 $ 0 as of June 30, 2021 and September 30, 2020, respectively. In the normal course of business, the Company may extend credit to its customers, on an unsecured basis, substantially all of whom are in the United States of America. The Company does not believe that it is exposed to any significant risk of loss on accounts receivable. Prepaid Expenses and other current assets Prepaid expenses consist of expenses the Company has paid for prior to the service or good being provided. These prepaid expenses will be recorded as expense at the time the service has been provided. This asset group also includes an accrued income asset, for Investment Management Fees, which are billed and collected in arrears. The Accrued Income balance as of June 30, 2021 is $ 285,175 . This accounting is pursuant to recently revised accounting policies, which improve reporting accuracy, and as such, there are no prior meaningful comparative balances. The Company will report comparative balances when available. Property and Equipment Property and equipment are stated at cost, less accumulated depreciation. Depreciation is provided in amounts sufficient to relate the cost of depreciable assets to earnings over their estimated service lives by the straight-line method. Maintenance and repairs are charged to earnings as incurred; major repairs and replacements are capitalized. When items of property or equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in operations. Proprietary Content The proprietary content acquired as a part of the TMN purchase has been recognized in the accompanying consolidated balance sheets at $525,100, the value attributed to it on the date of the purchase. The proprietary content is being amortized on a straight-line basis over an eight- year estimated life. During each of the three and nine Months ended June 30, 2021 and 2020, the Company recorded amortization expense of $ 16,364 and $ 16,320 for the three months, and $ 49,903 and $ 49,138 for the nine months, respectively, on this intangible asset, which is included in depreciation and amortization expense in the accompanying consolidated statements of operations. Accumulated amortization at June 30, 2021 was $ 426,598 and $ 377,505 at September 30, 2020. 8 Future amortization of proprietary content is estimated to be as follows for the years ended September 30: Schedule of future amortization 2021 $ 16,185 2022 64,740 2023 17,577 Future amortization $ 98,502 Non-compete Agreements Non-compete agreements entered into as a part of the TMN purchase have been recognized in the accompanying consolidated balance sheets at $ 26,300 , the value attributed to such agreements on the date of the purchase. The non-compete agreements are being amortized on a straight-line basis over the five-year term of the non-compete clause of the agreement. During each of the three months ended June 30, 2021 and 2020, the Company recorded amortization expense of $ 0 and $ 1,308 respectively. During each of the nine months ended June 30, 2021 and 2020, the Company recorded amortization expense of $ 0 and $ 3,938 respectively on this intangible asset, which is included in depreciation and amortization expense in the accompanying consolidated statements of operations. Accumulated amortization was $ 26,300 at September 30, 2020. This asset is fully amortized and written off, at September 30, 2020. Intellectual Property The Company accounts for intellectual property in accordance with GAAP and accordingly, intellectual property is stated at cost. Intellectual property with indefinite lives are not amortized but are tested for impairment at least annually. Management has determined that the intellectual property has an indefinite life and does not consider the value of intellectual property recorded in the accompanying consolidated balance sheets to be impaired as of June 30, 2021 and September 30, 2020. Goodwill The Company conducts ongoing annual impairment assessments, 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 its carrying amount. The qualitative factors evaluated by the Company include: macroeconomic 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 its carrying amount, an impairment test is performed. Management determined, by assessing the qualitative factors, that it is more likely than not that the fair value of the Forta reporting unit is less than its carrying value and that the goodwill associated with the Forta reporting unit has been fully impaired. As such, Management has written off the full amount, $ 7,380,603 , of the recorded goodwill associated with the Forta reporting unit as of June 30, 2021. The factors that Company considered included the loss of investment advisors to competitors or to retirement resulting in substantially reduced revenue and lowered prospects for growth, and the number of claims by former clients that will divert assets away from operations. Goodwill consists of the following: Schedule of goodwill June 30, 2021 September 30, 2020 TMN Goodwill $ 1,094,702 $ 1,094,702 Forta Goodwill – 7,380,603 Total Goodwill $ 1,094,702 $ 8,475,305 9 Income Taxes The Company records federal and state income, which requires an asset and liability approach for financial accounting and reporting for income taxes based on tax effects of 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 – Income Taxes (“ASC 740”). 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 June 30, 2021 and September 30, 2020. From time to time, the Company is audited by taxing authorities. These audits could result in proposed assessments of additional taxes. The Company believes that its tax positions comply in all material respects with applicable tax law. However, tax law is subject to interpretation, and interpretations by taxing authorities could be different from those of the Company, which could result in the imposition of additional taxes. The Company’s Federal returns since 2016 are still subject for examination by taxing authorities. Earnings Per Share Basic earnings per common share is computed by dividing net earnings available to common stockholders by the weighted average number of common shares outstanding for the reporting period. Average number of common shares were 83,618,412 and 83,618,412 for the three and nine Months ended June 30, 2021, respectively, and 72,018,838 and 51,669,659 for the three and nine Months Ended June 30, 2020, respectively. For the three and nine Months ended June 30, 2021, approximately 4,466,284 and 4,466,284 , respectively, 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, 2020, approximately 1,351,323 and 1,351,323 , respectively, common stock equivalents were not added to the diluted average shares because inclusion of such equivalents would be antidilutive. Revenue Recognition The Company adopted the Financial Accounting Standards Board ("FASB") issued Accounting Standards Updates (“ASU”) ASU 2014-09, Revenue from Contracts with Customers October 1, 2019 on a modified basis. As the initial adoption of the standard did not have a material impact on the Company's financial condition or results of operations, no cumulative effect was recognized at the date of initial application. The Company also had no significant changes to systems, processes, or controls. The Company derives its revenues primarily from the following activities: Investment Management Fees, Securities Brokerage Commissions, Tax Master Network subscriptions, Tax Operating System subscriptions, Financial Advisor subscriptions, Tax BluePrint sales, and Insurance Sales. Investment management fees are recognized as services are provided by the Company through Forta. Investment management fees include fees earned from assets under management by providing professional services to manage clients’ investments. Fees are generally paid quarterly, in advance, for each quarter or monthly in arrears. Revenues are earned over the period in which the service is provided, which is typically monthly. Revenue represents gross billings less discounts, and are net of sales taxes, as applicable. Amounts invoiced for work not yet completed are shown as deferred revenue in the accompanying consolidated balance sheets. 10 Trade accounts receivable are carried only for investment management fees that are billed to and paid by customers. Currently the Company has the ability to pull all fees from the client accounts, and no trade accounts receivable are carried. Client fees due on accounts the Company can pull the fees from, are carried in Accrued Income. The allowance for doubtful accounts was $0 and $0 as of June 30, 2021 and 2020, respectively. Sofos generates investment management fees for money management services and investment advisory services based upon assets under management. Revenue is recognized as earned, at the end of each month. Forta generates commission revenue from the sale of securities, annuities and premiums on life insurance policies held by third parties. The revenue is recognized on a trade date basis for commissions on securities sales and upon acceptance of insurance policies by insurers. MPath generates revenue from insurance marketing services for insurance agents, including sourcing of insurance policies through selling agreements. Tax Master Network has five levels of network subscription services that are charged and collected on a month-to-month basis. 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. 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. A contract liability is recognized when the customer payment is received. Revenue is deferred until the customer reviews and accepts the final Tax Blueprint® document and returns an executed delivery agreement. The Company received revenue from Sofos’ operations for the nine months ended June 30, 2021 and 2020, respectively, $ 1,479,481 and $ 1,019,505 , and for the three months ended June 30, 2021 and 2020, respectively, $ 554,152 and $ 243,622 . The Company received revenue from Forta’s operations for the nine months and three months ended June 30, 2021 including: Schedule of revenues from operations Investment Advisory fees $ 515,415 $ 1,422,745 Commission-based transactions 244,470 767,284 Insurance and Other Service Revenue 45,753 114,570 Other – – Total Revenue $ 805,639 $ 2,304,598 The Company received revenue from TMN’s operations from the following major sources for the nine months and three months ended June 30: Schedule of revenues from operations Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended June 30, June 30, June 30, June 30, 2021 2020 2021 2020 TMN membership subscriptions $ 205,871 $ 178,463 $ 653,467 $ 529,500 Tax Blueprints 67,500 47,500 232,500 134,000 Commissions/Referrals and Other 5,043 41,239 31,154 63,450 Total $ 278,415 $ 267,202 $ 917,121 $ 726,950 11 The Company received revenue from MPath’s operations from insurance sales of $ 365,131 and $ 0 for the nine months ended June 30, 2021 and 2020, respectively, and $ 38,453 and $ 0 for the three months ended June 30, 2021 and 2020, respectively. Advertising and Marketing Marketing costs are charged to operations when incurred. Marketing expenses were $ 56,029 and $ 90,999 for the nine months ended June 30, 2021 and 2020, respectively, and $ 23,249 and $ 56,865 for the three months ended June 30, 2021 and 2020, respectively. Stock-Based Compensation For the three months ended June 30, 2021, the Company reported stock based compensation of $ 63,508 , and for the nine months ended June 30, 2021 $ 183,751 , respectively. For the three and nine months ended June 30, 2020 the Company reported stock based compensation of $ 50,885 and $ 67,136 , respectively. Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Adjustments The accompanying unaudited consolidated financial statements have been prepared by the Company in accordance with generally accepted accounting principles in the United States (“GAAP”), pursuant to the applicable rules and regulations of the SEC. The information furnished herein reflects all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary to present a fair statement of the financial position and operating results of the Company as of and for the respective periods. However, these operating results are not necessarily indicative of the results expected for a full fiscal year or any other future period. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. However, management of the Company believes, to the best of their knowledge, that the disclosures herein are adequate to make the information presented not misleading. The Company has determined that there were no subsequent events that would require adjustments to the accompanying consolidated financial statements through the date the financial statements were issued. The accompanying unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the fiscal year ended September 30, 2020, included in its Annual Report on Form 10-K. Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the Company will need to manage additional asset units under contract and/or additional financing to fully implement its business plan, including continued growth and establishment of a stronger brand. 12 For the nine months ended June 30, 2021, the Company reported $ 5,066,332 in revenue, a net loss of $ 7,406,240 , which included the write off of Company’s goodwill related to the investment in Forta of $ 7,380,603 , income recognized from the forgiveness of PPP loans of $ 661,045 , net cash used in operations of $ 412,807 , cash used in financing activities of $ 288,762 , purchases of assets of $ 3540 , and an accumulated deficit of $ 14,397,029 . These operating results raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of these uncertainties. On February 2, 2021 Forta received a PPP loan in the amount of $ 422,900 . This PPP loan bears a fixed interest rate of 1% over a five-year term, is guaranteed by the federal government, and does not require collateral. The loan 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 loan will be eligible for forgiveness. Company’s plans for expansion include attracting additional clients through marketing efforts with its current and future investment management and insurance agent representatives, as well as increasing the TMN membership and the investment advisory activity of the members to increase assets under management and Company’s revenue. Future growth plans will include efforts to increase advisory headcount through recruiting of individuals advisors and groups of advisors. There is no guaranty that the Company will achieve these objectives. Future Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13 Financial Instruments-Credit Losses, which amends how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income, which applies to trade accounts receivable and the calculation of the allowance for uncollectible accounts receivable. In November of 2019, the FASB issued ASU 2019-10 Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, which deferred the effective date of ASU Topic No. 2016-13 to fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact of the adoption of this accounting guidance will have on the consolidated financial statements. Since the Company currently uses 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. In January 2017, the FASB issued ASU No. 2017-04 Intangibles-Goodwill and Other Simplifying the Test for Goodwill Impairment, which provides guidance to simplify the subsequent measurement of goodwill by eliminating the Step 2 procedure from the goodwill impairment test. Adoption of ASU 2017-04 does not have a material impact on the Company's financial condition or results of operations. 3. SEGMENT REPORTING We manage our business in four reportable segments. Each of our active subsidiaries is treated as a segment. We evaluate the performance of our operating segments based on a segment’s share of consolidated operating income. Therefore, for instance, the tax unit, Financial Gravity Tax (“FGT”), was sold in October of 2020 because the Company did not see growth potential in the unit’s accounting and direct tax advice operations. Certain growth operations of the tax unit, including the tax operating system, have been taken over by TMN. 13 CONSOLIDATING STATEMENTS OF OPERATIONS FOR THREE MONTHS ENDED JUNE 30, 2020 Segment Reporting FGC Forta MPath Sofos TMN TOTAL Income Broker Dealer $ – $ 151,569 $ – $ – $ – $ 151,569 Service Income – 10,737 30,133 11,380 267,202 319,452 Investment Management Fees – 244,227 – 232,243 – 476,470 Total Income – 406,533 30,133 243,622 267,202 947,491 Expense Compensation Expense 408,387 261,426 – 103,835 93,681 867,330 Cost of services – 11,007 – – 6,652 17,659 Depreciation Amortization 38,636 – – – – 38,636 General and Administrative 62,817 82,884 2,244 17,440 2,698 168,084 Marketing 31,636 7,414 – 15,639 2,175 56,865 Professional Services 34,258 27,171 – 251 – 61,681 Total Expense 575,734 389,902 2,244 137,165 105,206 1,210,254 Net Operating Income ( 575,734 ) 16,631 27,889 106,458 161,996 ( 262,763 ) Other Income ( 20,747 ) – – – – ( 20,747 ) Total Other Income ( 20,747 ) – – – – ( 20,747 ) Other Expense Interest Expense 12,341 – – – – 12,341 Income Taxes – – – – – – Total Other Expense 12,341 – – – – 12,341 Net Other Income/(Loss) ( 8,406 ) – – – – ( 8,406 ) Net Income/(Loss) $ ( 584,140 ) $ 16,631 $ 27,889 $ 106,458 $ 161,996 $ ( 271,170 ) 14 CONSOLIDATING STATEMENTS OF OPERATIONS FOR THREE MONTHS ENDED JUNE 30, 2021 FG Companies Forta Sofos Mpath TMN TOTAL Broker Dealer $ – $ 244,470 $ – $ – $ – $ 244,470 Service Income – 45,753 683 38,453 278,415 363,304 Investment Management Fees – 515,415 553,469 – – 1,068,884 Total Income – 805,638 554,152 38,453 278,415 1,676,658 Expense Compensation Expense 484,310 723,069 219,200 10,850 98,500 1,535,929 Cost of services – 18,310 – – 10,856 29,166 Depreciation & Amortization 5,105 125 – – 16,364 21,594 General and Administrative 119,793 190,687 4,462 7,386 19,695 342,023 Marketing 7,488 5,233 – 681 9,846 23,248 Professional Services 54,551 49,690 3,889 – 14,947 123,077 Total Expense 671,247 987,114 227,551 18,917 170,208 2,075,037 Net Ordinary Income ( 671,247 ) ( 181,476 ) 326,601 19,536 108,207 ( 398,379 ) Other Income Loan Forgiveness 283,345 377,700 – – – 661,045 Total Other Income 283,345 377,700 – – – 661,045 Other Expense Interest Expense 903 635 – – – 1,538 Income Taxes ( 64,562 ) 56,928 – – – ( 7,634 ) Loss on impairment of Goodwill 7,380,603 – – – – 7,380,603 Total Other Expense 7,316,944 57,563 – – – 7,374,507 Net Other Income ( 7,033,599 ) 320,137 – – – ( 6,713,462 ) Net Income/(Loss) $ ( 7,704,846 ) $ 138,661 $ 326,601 $ 19,536 $ 108,207 $ ( 7,111,843 ) 15 CONSOLIDATING STATEMENTS OF OPERATIONS FOR NINE MONTHS ENDED JUNE 30, 2020 FGC FGT Forta MPath Sofos TMN TOTAL Income Broker Dealer $ – $ – $ 151,569 $ – $ – $ – $ 151,569 Service Income ( 3,263 ) 69,721 10,737 30,133 39,545 726,950 873,824 Investment Management Fees – – 244,227 – 979,959 – 1,224,187 Total Income ( 3,263 ) 69,721 406,533 30,133 1,019,505 726,950 2,249,580 Gross Profit ( 3,263 ) 69,721 406,533 30,133 1,019,505 726,950 2,249,580 Expense Compensation Expense 1,120,858 ( 78 ) 261,426 1,972 385,049 245,186 2,014,413 Cost of services – 4,410 11,007 – – 28,899 44,317 Depreciation Amortization 72,094 – – – – 14,350 86,443 General and Administrative 211,992 1,620 82,884 2,655 25,235 23,772 348,158 Marketing 54,899 2,411 7,414 – 20,158 6,117 90,999 Professional Services 212,815 – 27,171 – 897 2,997 243,881 Total Expense 1,672,658 8,363 389,903 4,627 431,339 321,320 2,828,211 Net Operating Income ( 1,675,922 ) 61,358 16,631 25,506 588,166 405,630 ( 578,631 ) Other Income 129,253 – – – – – 129,253 Total Other Income 129,800 – – – – – 129,800 Other Expense Interest Expense 5,678 – – – – ( 55 ) 5,624 Income Taxes – – ( 14,123 ) – – – ( 14,123 ) Total Other Expense 5,678 – ( 14,123 ) – – ( 55 ) ( 8,500 ) Net Other Income/(Loss) 124,122 – 14,123 – – 55 138,300 Net Income/(Loss) $ ( 1,548,980 ) $ 61,358 $ 30,754 $ 25,506 $ 588,166 $ 405,685 $ ( 437,511 ) 16 CONSOLIDATING STATEMENTS OF OPERATIONS FOR NINE MONTHS ENDED JUNE 30, 2021 FG Companies Forta Sofos Mpath TMN TOTAL Income Broker Dealer $ – $ 767,284 $ – $ – $ – $ 767,284 Service Income – 114,570 683 365,131 917,121 1,397,505 Investment Management Fees – 1,422,745 1,478,798 – – 2,901,543 Total Income – 2,304,599 1,479,481 365,131 917,121 5,066,332 Expense Compensation Expense 1,389,281 1,959,331 531,973 96,311 294,500 4,271,396 Cost of services 0 45,846 11,074 – 30,476 87,396 Depreciation & Amortization 60,083 284 – – 28,731 89,098 General and Administrative 201,983 569,240 16,670 16,707 91,839 896,439 Marketing 17,525 17,584 132 1,135 19,653 56,029 Professional Services 169,302 137,628 3,889 175 41,886 352,880 Total Expense 1,838,174 2,729,913 563,738 114,328 507,085 5,753,238 Net Ordinary Income ( 1,838,174 ) ( 425,314 ) 915,743 250,803 410,036 ( 686,906 ) Other Income Loan Forgiveness 283,345 377,700 – – – 661,045 Total Other Income 283,345 377,700 – – – 661,045 283,345 377,700 – – – 661,045 Other Expense Interest Expense 3,173 635 – – – 3,808 Income Taxes 199,820 ( 203,854 ) – – – ( 4,034 ) Loss on impairment of Goodwill 7,380,603 – – – – 7,380,603 Total Other Expense 7,583,596 ( 203,219 ) – – – 7,380,377 Net Other Income ( 7,300,251 ) 580,919 – – – ( 6,719,332 ) Net Income/(Loss) $ ( 9,138,425 ) $ 155,605 $ 915,743 $ 250,803 $ 410,036 $ ( 7,406,240 ) 4. BUSINESS ACQUISITION On May 21, 2020 the Company acquired 100% of the stock of Forta. Forta is a broker dealer, registered investment advisor and an insurance brokerage, subject to FINRA, SEC and insurance regulation. Forta’s financial performance is included in Company’s consolidated statements starting as of May 21, 2020. The Company acquired Forta in May of 2020 in exchange for 45,785,879 shares of Company common stock. A liability of $ 699,117 has been recorded for 4,178,564 shares of common stock related to the acquisition remaining to be issued as of December 31, 2020. Forta is a broker dealer, and its acquisition presented the Company with an opportunity to compete in the broker dealer market, and to try to grow in this area of financial services. 17 Assets Acquired and Liabilities Assumed Forta Financial Group, Inc. Assets Acquired and Liabilities Assumed As of May 21, 2020 Assets Acquired and Liabilities Assumed PURCHASE PRICE $ 7,652,415 ASSETS Current Assets Cash 710,154 Accounts Receivable 20,882 Other Current Assets 135,056 Total Current Assets 866,093 Other Assets 582,330 TOTAL ASSETS 1,448,423 LIABILITIES Liabilities Current Liabilities Total Accounts Payable 18,215 Total Other Current Liabilities 710,131 Total Current Liabilities 728,346 Long-Term Liabilities Total Long-Term Liabilities 448,265 Total Liabilities 1,176,611 Goodwill $ 7,380,603 5. PROPERTY AND EQUIPMENT Property and equipment consist of the following at June 30: Schedule of property and equipment Estimated Service Lives June 30, 2021 September 30, 2020 Furniture, fixtures and equipment 2 to 5 years $ 60,442 $ 407,580 Internally developed software 5 years 152,000 152,000 212,442 559,580 Less accumulated depreciation and amortization ( 169,621 ) ( 477,868 ) $ 42,821 $ 81,712 18 Depreciation expense was $ 5,230 and $ 21,009 for the three months ended June 30, 2021 and 2020, respectively. Depreciation expense was $ 47,775 and $ 33,367 during the nine months ended June 30, 2021 and 2020 respectively. 6. INTELLECTUAL PROPERTY Intellectual property consists of the following: Schedule of intellectual property Intellectual property at September 30, 2020 $ 53,170 Intellectual property purchased at cost – Intellectual property at June 30, 2021 $ 53,170 7. LEASES In February 2016, the FASB issued ASU 2016-02 Leases, which changed financial reporting as it relates to leasing transactions to recognize a lease liability, measured on a discounted basis; and a right-of-use asset, for the lease term. In July 2018, the FASB issued ASU No. 2018-10 Codification Improvements to Topic 842, Leases and ASU No. 2018-11 Leases (Topic 842): Targeted Improvements. In March 2020, the FASB issued ASU No. 2020-1 Codification Improvements to Topic 842, Leases. The Company adopted these ASUs on October 1, 2019 on a modified retrospective basis. The Company did not elect the hindsight practical expedient and did elect the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs for all leases. The initial adoption of the standard recognized right-of-use assets of $ 323,097 and lease liabilities of $ 337,454 on the Company’s statement of financial position with no impact on the Company's results of operations. The Company had no significant changes to processes or controls. The Company leases their office space through an operating lease in Denver Colorado runs through 2024 and non-material offices leases in Cincinnati, Ohio, and short-term tenancies in Austin, Texas, Allen, Texas 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 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 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. The Company also leases certain equipment under operating leases. Total Company rent expense for the three months ended June 30, 2021 and 2020 respectively was $ 106,543 , and $ 59,115 . Total Company rent expense for the nine months ended June 30, 2021 and 2020, respectively was $ 241,168 and $ 123,703 . The rent expense for the three and nine months ended June 30, 2021 include a final settlement of the termination of the Allen lease, of $66,000. The Forta lease for its Greenwood Village premises was renegotiated. As part of the lease amendment entered into with the lessor in December 2020, the rent owed for September to December 2020 was deferred and will be paid over the term of the amended lease.” The difference between rental expense and rental payments is recorded as deferred rent in the accompanying consolidated balance sheets. Management expects that in the normal course of business, leases will be renewed or replaced by other leases. Company also has short term leases that are insignificant in its other locations. 19 Minimum future annual rental payments under non-cancelable operating leases having original terms in excess of one year are as follows: Schedule of future minimum rental payments for operating leases Denver Lease Rental Payments 2021 $ 49,129 2022 139,721 2023 141,630 2024 47,369 Total Rental Payments $ 377,849 Less: Deferred Rent ( 99,742 ) Interest ( 24,631 ) Net Rental Payments $ 253,476 8. LINE OF CREDIT The Company has a revolving line of credit with Wells Fargo Bank, N.A. in the amount of $ 67,500 . Amounts drawn under this line of credit are due on demand, and monthly interest and principal payments are required. The interest rate on the line of credit is 9.5 %. This line of credit is supported by the personal guarantee of John Pollock. Line of credit balance was $ 38,830 and $ 54,112 at June 30, 2021 and September 30, 2020, respectively. 9. NOTES PAYABLE On April 19, 2020, the Company entered into an unsecured 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 Company has instituted abatement efforts on O’Banon’s behalf, with the taxing authority, however the abatement was denied. The outstanding balance on June 30, 2021 and September 30, 2020, were $ 18,897 and $ 23,534 respectively. On August 31, 2020, the Company entered into an agreement with John DuPriest (DuPriest), a former officer of Forta, in settlement pursuant to employment termination. The parties entered into an unsecured promissory note to DuPriest in the amount of $ 52,000 .00, bearing interest of 5 %, payable over 26 months beginning with January 15, 2021 through February 15, 2023 . The balance at June 30, 2021 and September 30, 2020 were $ 40,494 and $ 52,000 , respectively. On February 2, 2021 Forta received a PPP loan in the amount of $ 422,900 . This PPP loan bears a fixed interest rate of 1 % over a five-year term, are guaranteed by the federal government, and does not require collateral. The loan 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. Two PPP loans received in May 2020 were forgiven in April 2021, $ 283,345 , and in June 2021, $ 377,700 , resulting in income from those forgivenesses. 20 The Company’s maturities of debt subsequent to June 30, 2021 are as follows: Schedule of debt maturities 2021 $ 254,238 2022 217,611 2023 10,442 Total debt $ 482,291 10. ACCRUED EXPENSES Accrued expenses increased by $ 225,359 for the nine months ending June 30, 2021 to $ 1,292,751 from $ 1,067,392 as of September 30, 2020. Accrued expenses consist of the following at June 30: Schedule of accrued expenses 30-Jun-21 30-Sep-20 SAR Liability $ 154,567 $ 31,793 Accrued payroll 138,096 105,458 Commissions payable 80,586 16,783 State Tax liability 0 3,165 Federal Tax liability 0 3,355 Credit Cards ( 401 ) 12,798 Other Accounts payable 765,117 699,117 Accrued operating expenses 97,345 194,923 Accrued E&O liability 82,752 – Total accrued expenses $ 1,318,062 $ 1,067,392 11. INCOME TAXES For the three months ending June 30, 2021 and 2020, the effective tax rate of 0 % varies from the U.S. federal statutory rate primarily due to state income taxes, net losses, certain nondeductible expenses, and an increase in the valuation allowance associated with the net operating loss carryforwards. Our deferred tax assets related to net operating loss carryforwards remain fully reserved due to uncertainty of utilization of those assets. A deferred tax liability or asset is determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates which will be in effect when these differences reverse. Deferred tax expense or benefit in the accompanying consolidated statements of operations are the result of changes in the assets and liabilities for deferred taxes. The measurement of deferred tax assets is reduced, if necessary, by the amount for any tax benefits that, based on available evidence, are not expected to be realized. Income tax expense is the current tax payable or refundable for the year plus or minus the net change in the deferred tax assets and liabilities. Deferred income taxes of the Company arise from the temporary differences between financial statement and income tax recognition of NOL carry-forwards. 21 The deferred tax assets and liabilities in the accompanying consolidated balance sheets include the following components at June 30, 2021 and September 30, 2020: Schedule of deferred tax assets and liabilities 30-Jun-21 30-Sep-20 Net non-current deferred tax assets: Net operating loss carry-forward $ 1,250,479 $ 1,314,515 Property and equipment 4,329 4,329 Total 1,254,808 1,318,844 Net non-current deferred tax liabilities: Intangible assets ( 7,221 ) ( 7,221 Net 1,247,587 1,311,623 Less valuation allowance ( 1,247,588 ) ( 1,311,623 Net deferred taxes $ – $ – 12. COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS 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. Forta has 16 pending FINRA claims that arise from the sale to clients of alternative investments (REITs, Business Development Loan Funds, and Oil and Gas securities). Most of the claims arise from investments prior 2015. None of the registered representatives that recommended these alternative investments is currently associated with Forta. The total amount of the pending claims is in excess of $3,000,000 and the Company is in the process of determining the best approach to respond to the claims. Based on the status of the claims with FINRA, management cannot reasonably estimate a potential range of losses or settlements of the claims. Forta is evaluating how best to resolve the claims. Forta no longer generates significant revenue from brokerage activity like the sale of alternative investments and the continuing need for a broker dealer will be evaluated by Company. In December 2020, 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 States. 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. While the economy has reopened, the Delta variant may impact the Company. 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 remotely. The long-term effects, however, may present significant issues. 22 Any significant shutdown of the economy for a sustained period will affect the Company’s revenue which could lead to losses. 13. STOCKHOLDERS’ EQUITY Common Stock The Company is authorized to issue up to 300,000,000 shares of common stock, par value $ 0.001 per share. During the nine months ended June 30, 2021 the Company sold 0 shares, for $ 0 and during the nine months Ended June 30, 2020, respectively, the Company sold 75,757 , for $ 25,000 . 14. STOCK OPTION PLAN Effective February 27, 2015, the Company established the 2015 Stock Option Plan (the “Plan”). The Board of Directors of the Company has the authority and discretion to grant stock options. The maximum number of shares of stock that may be issued pursuant to the exercise of options under the Plan is 9,000,000 . Eligible individuals include any employee of the Company or any director, consultant, or other person providing services to the Company. The expiration date and exercise price are as established by the Board of Directors of the Company. No option may be issued under the Plan after February 27, 2018. Effective November 22, 2016, the Company established the 2016 Stock Option Plan (the “2016 Plan”). The Board of Directors of the Company has the authority and discretion to grant stock options and stock appreciation rights (SARs). The maximum number of shares of stock that may be issued pursuant to the exercise of options under the 2016 Plan is 20,000,000 . Eligible individuals include any employee of the Company or any director, consultant, or other person providing services to the Company. The expiration date and exercise price are as established by the Board of Directors of the Company. No option may be issued under the Plan after ten years from the date of adoption of the 2016 Plan. The Company recognizes the fair value of stock-based compensation awards as wages in the accompanying statements of operations for employee grants, commissions for non-employee 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 0.834 %, dividend yield of 0 %, expected life of 10 years and volatility of 35 % to 40 % in 2020 and 87.67 % in 2021. SAR awards are being treated as a liability award while the options are being treated as equity awards. While the fair value of the options are based on the Black Scholes assumptions included here, the SAR awards are based on assumptions at period end and are treated as liability awards. Forfeitures are recorded as they occur. Stock option and stock appreciation rights activity is summarized as follows: Schedule of option activity Shares Under Option Value of Shares Under Option Weighted Average Exercise Price Weighted Average Remaining Contractual Life Outstanding - September 30, 2019 2,788,476 550,455 $ 0.29 81 months Granted 5,600,000 1,361,200 $ 0.23 108 months Exercised ( 116,375 ) ( 13,850 ) $ 0.09 87 months Canceled or expired ( 1,299,405 ) ( 1,845,870 ) $ 0.27 Outstanding - September 30, 2020 6,972,696 51,935 $ 0.17 100 months Granted 187,500 45,956 $ 0.25 118 months Exercised – – $ – Canceled or expired – – $ – Outstanding - June 30, 2021 7,160,196 97,891 $ 0.23 98 months Exercisable - June 30, 2021 2,693,912 $ 0.25 85 months 23 Unamortized share-based compensation expense as of June 30, 2021 amounted to $382,874 which is expected to be recognized over the next 4.3068 years. Total compensation expense, included in salaries and wages, of previously unamortized stock compensation for the three months ended June 30, 2021 and 2020 was $ 54,034 and $ 50,885 , respectively, and for the nine months ended June 30, 2021 and 2020, respectively, was $ 158,184 and $ 67,136 . 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 nine months ended June 30, 2021, 0 and 0 options and SARs were granted, respectively. 15. RELATED PARTY TRANSACTIONS As a result of the acquisition of the TMN business in 2016, the Company is obligated to make payments to TaxTuneup, LLC, which is an entity owned by Edward A. Lyon (a current board member), each month totaling $16,500. The total paid under these agreements was $ 49,500 and $ 49,500 for the three months ended June 30,2021 and 2020 respectively, and $ 148,500 and $ 148,500 for the nine months ended June 30, 2021 and 2020 respectively. On April 12, 2020, 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, 2020. The balance of the loan at June 30, 2021 was $ 5,259 and at September 30, 2020 was $ 5,152 . In addition, there are payables owed to Mr. Pollock of approximately $51,000 related to services rendered by him to Company, and $10,000 owed to a former principal of TMN for services rendered. There is no specific due date on these obligations, but Company plans are substantial reductions in the amounts owing this fiscal year. 16. SUBSEQUENT EVENTS In March 1, 2021 Company entered into a merger agreement with NCW Group, Inc. The consummation of the merger was completed in July of 2021 and Company issued 8,000,000 shares of its common stock in exchange for 100% ownership of the NCW Group, Inc. The owners of the two companies and some staff have become employees of Company , and NCW has ceased to exist. The number of FINRA claims against Forta has increased to 22 as of August 2021. The claims that arise from the sale to clients of alternative investments (REITs, Business Development Loan Funds, and Oil and Gas securities). Most of the claims arise from investments prior 2015. None of the registered representatives that recommended these alternative investments is currently associated with Forta. The total amount of the pending claims is in excess of $3,000,000 and the Company is in the process of determining the best approach to respond to the claims. Based on the status of the claims with FINRA, management cannot reasonably estimate a potential range of losses or settlements of the claims. Forta is evaluating how best to resolve the claims. Forta no longer generates significant revenue from brokerage activity like the sale of alternative investments and the continuing need for a broker dealer will be evaluated by Company. 24