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Item 5. Market for Registrant’s Common Equity

2021-12-30 compared with 2021-01-12 · 33 added, 311 removed, 5 unchanged (99% of the section changed)

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED

STOCKHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER

MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES.

Market Information

The Company’s Common Stock is currently

traded in the over-the-counter market and quoted under the symbol FGCO.

The following are the high and low sales prices for the

Company’s Common Stock for the periods reflected below:

Fiscal Year Ended September 30, 2019

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Fiscal Year Ended September 30, 2020

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

The above prices reflect inter-dealer prices,

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

The approximate number of stockholders

of record of the Company’s Common Stock on September 30, 2020 was 85.

The Company has never paid any cash dividends

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

The Company’s Common Stock is currently traded in the over-the-counter

market and quoted under the symbol FGCO.

The approximate number of stockholders of record of the Company’s

Common Stock on September 30, 2021 was 87.

The Company has never paid any cash dividends on its common stock,

and it is anticipated that none will be paid in the foreseeable future.

Recent Sales/Issuance of Unregistered Securities

During the year ended September

30, 2020 an aggregate of 75,757 shares of the Company’s common stock have been sold for $25,000, 116,375 shares in stock

options were exercised for $182 and 382,931 shares were issued for $50,000 in services rendered to the Company;

in 2019, 5,598,133

shares were issued in exchange for $1,007,664 in debt.

As a result of the merger with Forta, 41,607,315 shares of stock

have been issued to Forta shareholders as of September 30, 2020, with a total of 4,178,564 that remain unissued.

The sales of the securities identified above were made pursuant

to privately negotiated transactions that did not involve a public offering of securities and, accordingly, the Company believes

that these transactions were exempt from the registration requirements of the Securities Act pursuant to Section 4(2) thereof.

Each investor represented that such investor either (A) is an “accredited investor,”

(B) has such knowledge and experience

in financial and business matters that the investor is capable of evaluating the merits and risks of acquiring the shares of the

Company’s common stock, or (C) appointed an appropriate person to act as the investor’s purchaser representative in

connection with evaluating the merits and risks of acquiring the shares of the Company’s common stock.

The investors received

written disclosures that the securities had not been registered under the Securities Act and that any resale must be made pursuant

to a registration or an available exemption from such registration.

All of the foregoing securities are deemed restricted securities

for purposes of the Securities Act.

The Company’s option grants were

effected pursuant to Rule 701 promulgated under the Securities Act.

During the year ended September 30, 2021, 8,000,000 shares of common

stock were issued in connection with the NCW acquisition transaction.

During the year ended September 30, 2020, an aggregate of 75,757

shares of the Company’s common stock have been sold for $25,000, 116,375 shares in stock options were exercised for $182 and 382,931

shares were issued for $50,000 in services rendered to the Company.

As a result of the merger

with Forta, 41,607,315 shares of stock have been issued to Forta shareholders as of September 30, 2021 with a total of 4,178,564 that

remain unissued.

As a result of the merger with NCW Group, Inc., 8,000,000 shares were issued to NCW shareholders as of September 30,

The sales of the securities identified above were made pursuant to

privately negotiated transactions that did not involve a public offering of securities and, accordingly, the Company believes that these

transactions were exempt from the registration requirements of the Securities Act pursuant to Section 4(2) thereof.

Each investor represented

that such investor either (A) is an “accredited investor,” (B) has such knowledge and experience in financial and business

matters that the investor is capable of evaluating the merits and risks of acquiring the shares of the Company’s common stock, or

(C) appointed an appropriate person to act as the investor’s purchaser representative in connection with evaluating the merits and

risks of acquiring the shares of the Company’s common stock.

The investors received written disclosures that the securities had

not been registered under the Securities Act and that any resale must be made pursuant to a registration or an available exemption from

such registration.

All of the foregoing securities are deemed restricted securities for purposes of the Securities Act.

The Company’s option grants were effected

pursuant to Rule 701 promulgated under the Securities Act.

Repurchases of Equity Securities

The Company did not repurchase any of its

equity securities during the years ended September 30, 2020 or 2019.

The Company did not repurchase any of its equity securities during

the years ended September 30, 2020 or 2019.

SELECTED FINANCIAL DATA.

Not applicable.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS.

Forward-Looking Statements

The following Management’s Discussion

and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help you understand its historical

results of operations during the periods presented and its financial condition.

This MD&A should be read in conjunction with

its financial statements and the accompanying notes and contains forward-looking statements that involve risks and uncertainties

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

See the sections

entitled “Forward-Looking Statements”

and “Risk Factors”

Plan of Operations

Financial Gravity Companies, Inc.

(“Financial Gravity”,

“We”

or the “Company”), based in Austin, Texas, was formed specifically to be the parent company of several

subsidiaries that provide integrated tax, investment, business, and financial solutions.

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 build wealth, most often with investment advice, tax savings, lowering costs and improving efficiency.

to expanding through client procurement and organic growth, Financial Gravity intends to pursue acquisitions.

The primary acquisition

targets currently include individuals and groups that provide investment and financial advice.

The Company is actively identifying

potential acquisition candidates to fuel more rapid growth.

Financial Gravity’s Subsidiaries and Reportable Segments:

The following outline briefly describes Financial Gravity’s

active subsidiaries and the products and services they offer:

Sofos Investments, 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 financial planning, wealth management and money management.

Sofos commenced its money management services

in late 2019, and by September 2020 was approaching $100,000,000 in assets under management.

Tax Master Network, LLC (“TMN”) through the Tax

Master Network®

provides monthly subscriptions services to the TMN systems, coaching and marketing services to over 300 Certified

Public Accountants (“CPA”) and Enrolled Agent professionals, training them to add crucial tax planning services to

support clients.

TMN’s tax planning services include the Tax Blueprint®, Certified Tax Master®, and the Tax Operating

In addition, TMN will be launching new efforts to increase subscribers, including a revamped tax operating system and financial

advisor business development programs that will assist TMN subscribers in increasing their business activity.

The goal is to provide

TMN subscribers with a platform for them to enhance their business opportunities in the areas of investment and financial advice

and to increase their effectiveness as tax advisors to small businesses and individuals.

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”) Forta is a

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

is to have Forta focus on attracting independent advisors and to support TMN members as they grow their financial advisory businesses.

Forta is implementing plans to recruit independent advisors.

Growth comes from the following reportable segments:

Tax services and financial advisory services, including Tax

Blueprint®

and Tax Operating System®

services through TMN, as well as investment advisory services by TMN subscribers to

their clients.

Brokerage and wealth management services 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.

Business Acquisition and Disposition

The Company acquired Forta in 2020 in exchange

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.

Forta also has key employees who assumed vital executive leadership

roles, including key executives who will focus on improving operations and growth opportunity.

Forta also contributed key operating

assets, including in excess of $700,000 in cash, and annual revenues in excess of $3,000,000.

The Company disposed of its tax unit.

tax unit has the tax operating system, but that could be run more effectively by TMN, so the decision was made to transfer that

activity to the TMN.

The tax unit was left with minor tax and accounting operations, and those activities did not present a significant

upside to the Company.

For the year ended September 30, 2020, revenue decreased $387,568

to $3,687480 from $4,075,048 for the year ended September 30, 2019.

The principal drivers for this are a decrease in revenue from

the discontinued tax operations of $649,830 and reduced revenue from reduction of the number of advisors at Sofos of $1,112,944,

as well as some minor non-recurring revenue at Financial Gravity, offset by an increase in revenue from Forta of $1,270,339, an

increase in revenue from TMN of $35,844, an increase of revenue from MPath of $73,882.

The combined revenue for the Company includes

only the revenue from Forta since May 21, 2020.

Forta generated in excess of $2 million of revenue from October 1, 2019 through

May 20, 2020 (the day prior to the acquisition of Forta).

On a twelve-month pro forma basis that included Forta’s revenue,

the Company would have generated in excess of $6,000,000 in revenue, or approximately $2,000,000 in annualized increased revenue.

Operating Expenses

Cost of services increased by $18,144 to

$73,071 for the year ended September 30, 2020 from $54,927 for the year ended September 30, 2019, primarily due increased costs

at Forta of $33,784, offset by decreases at Financial Gravity ($5,946), discontinued tax operations ($21,355), and increase at

TMN of $8,891.

Professional services expenses include

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

Professional services expenses increased $233,528 to

$375,263 for the year ended September 30, 2020 from $141,835 for the year ended September 30, 2019.

The increase included professional

fees at Forta of $93,095, an increase in professional fees at Financial Gravity of $321,761 (including adjustments in 2019 for

accrual of expenses that were greater than the fees incurred), offset by decreases in professional fees at Sofos of $73,793, at

TMN of $69,516, and at the discontinued tax practice of $43,526.

Depreciation and amortization expenses

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

Depreciation and amortization expenses decreased

$22,282 to $166,586 for the year ended September 30, 2020 from $189,070 for the year ended September 30, 2019.

The decrease is

primarily due to an increase of expense at Financial Gravity of $152,173 (including the full impairment of Trademarks ($69,000),

offset by a decrease at TMN of $159,602, a small decrease at Sofos of $4,165, and a decrease at the discontinued tax practice of

General and administrative expenses increased

$138,979 to $672,784 for the year ended September 30, 2020 from $533,805 for the year ended September 30, 2019.

The increase is

primarily due increased costs at Forta of $275,272, and Financial Gravity, offset by decreases at other subsidiaries including

the discontinued tax department operations ($163,452), Sofos reductions due to fewer advisors and at TMN aggregating approximately

Marketing expenses decreased $6,368 to $125,161 for the year ended

September 30, 2020 from $131,529 for the year ended September 30, 2019.

The decrease is primarily due to a reduction of costs

at the discontinued tax operations of ($22,788), and reductions in outside vendors by bringing marketing efforts in-house at TMN

($76,678) and Sofos ($15,838), offset by an increase in marketing expenses at Forta of $20,568, at Financial Gravity $85,110,

and at MPath $3300.

The variance in expenses also reflects a change in marketing efforts influenced by Covid 19 restrictions that

shut down some previous marketing channels and a move toward the independent advisor model at Forta where advisors cover their

own marketing expenses.

Compensation expenses decreased $315,438

to $3,186,305 for the year ended September 30, 2020 from $3,501,744 for the year ended September 30, 2019.

The decrease is primarily

due to an increase in executive compensation at Financial Gravity of $1,580,121, the increase of compensation at Forta of $808,670

that includes commissions, and a small increase at MPath, offset by a decrease in compensation at the discontinued tax operations

of $1,023,467, Sofos of $917,359 that includes reduction in commissions, at TMN of $703,375 related to reduction in employees and

outsourced services and a move toward the independent advisor model at Forta where advisors cover their own marketing expenses.

The Company experienced an increase in

net loss of $168,190 to a net loss of $791,675 for the year ended September 30, 2020 from a net loss of $623,485 for the year

ended September 30, 2019, primarily attributable to the reasons noted above.

The variance in loss for the period also reflects

the impact of Covid-19 related reduction in marketing and face to face sales, which impacted revenues.

This was offset by the

sale of the tax unit for $150,000.

Significant Accounting Policies

Certain critical accounting policies affect

the more significant judgments and estimates used in the preparation of the Company’s consolidated financial statements.

These policies are contained in Note 1 to the consolidated financial statements.

Use of Estimates and Assumptions.

The preparation of consolidated financial

statements in conformity with accounting principles generally accepted in the United States of America requires management to make

estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities

at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported period.

Actual results could differ from those estimates.

Revenue Recognition and Accounts Receivable.

Investment management fees are recognized

as services are provided by the Company.

Investment management fees include fees earned from assets under management by providing

professional services to manage clients’

Fees are generally paid quarterly, five days before each quarter-end

or monthly in arrears.

Revenues are recognized in the period earned.

The Company earns commission when it buys

and sells securities and various insurance products on behalf of its customers.

Each time a customer enters into a buy or sell

transaction, the Company charges a commission.

Commissions and related clearing expenses are recorded on the trade date (the date

that the Company fills the trade order by finding and contracting with a counterparty and confirms the trade with the customer),

and commission revenue from the sale of premiums on life insurance policies is recognized as received from the insurer, issuer.

The Company generates services income which

is recognized as consulting and other professional services are performed by the Company.

Income is recognized as services are

Revenue represents gross billings less discounts, net of sales tax, as applicable.

Amounts invoiced for work not yet

completed are shown as deferred revenue in the accompanying consolidated balance sheets.

Trade accounts receivable are carried

only for investment management fees that are paid in arrears.

The allowance for doubtful accounts was $0 and $0 as of September

30, 2020 and 2019, respectively.

In the normal course of business, the Company extends credit on an unsecured basis to its customers,

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.

The Company received revenue from Sofos’

operations that are primarily from investment management fees, including money management fees.

Investment management fees are

based upon a percentage of assets under management and totaled $1,255,457 for the fiscal year after elimination of intercompany

The Company received revenue from Forta’s

operations from (the date of the merger) from the following sources from May 21, 2020 through fiscal year ending September 30,2020

Investment Advisory fees

Commission-based transactions

Insurance and Other Service Revenue

Total Revenue

TMN has 3 types of services that are charged

and collected on a month-to-month subscription basis (TMN basic membership, All-Stars coaching, and Wire Service weekly broadcast

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.

The Company received revenue from TMN’s

operations from the following sources during the fiscal year ending September 30,2020 including:

TMN membership subscriptions:

Tax Blueprints:

Commissions/Referrals:

Miscellaneous:

The Company received revenue from MPath’s

operations from insurance sales of $73,882 during the fiscal year ending September 30,2020.

The total of all revenue also includes

approximately $70,000 from discontinued operations and minor non-recurring revenue.

Stock-Based Compensation.

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 1.32% in the year ended September 30, 2020 and

1.50% to 2.89% in 2019, dividend yield of 0%, expected life of 10 years and volatility of 159% in 2020 and volatility of 25% to

34.05% in 2019.

Liquidity and Capital Resources

As of September 30, 2020, the Company had

cash and cash equivalents of $482,854, as compared $36,053 as of September 30, 2019.

The increase of $446,801 in cash and cash

equivalents from September 30, 2019 was due to net cash provided financing from Paycheck Protection Program (“PPP”)

through loans to Financial Gravity of $283,345, and other sources of cash as per the Financial Gravity’s Statement of Cash

Flows, including approximately $700,000 in cash at Forta at the May 21, 2020 merger date.

As shown below, at September 30, 2020,

Financial Gravity’s contractual cash obligations totaled approximately $970,741 all of which consisted of operating lease

obligations and debt principal.

Payments due by period

Contractual obligations

Less than 1 year

Notes payable

Operating leases

Line of Credit

Total contractual cash obligations

The accompanying consolidated financial

statements have been prepared assuming that the Company will continue as a going concern, which contemplates the Company will need

additional financing to fund additional material capital expenditures and to fully implement its business plan.

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 as a way to supplement

the cash flows generated by operations.

The Company has a backlog of fees under contract in addition to the Company’s accounts

receivable balance.

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

covenants that restrict its operations.

Management, in the normal course of business, is trying to raise additional capital through

sales of common stock as well as seeking financing from third parties, via both debt and equity, to balance the Company’s

cash requirements and to finance specific capital projects.

Off Balance Sheet Transactions and Related Matters

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.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

Interest Rate Risk.

The Company’s

business is leveraged and, accordingly, is sensitive to fluctuations in interest rates.

Any significant increase in interest rates

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

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The financial statements required by this

item are included in this report in Part IV, Item 15.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON

ACCOUNTING AND FINANCIAL DISCLOSURE.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity