Document and Entity Information
Document and Entity Information - USD ($) | 3 Months Ended | |||
Dec. 31, 2017 | Mar. 01, 2018 | Feb. 15, 2018 | Mar. 31, 2017 | |
Document And Entity Information | ||||
Entity Registrant Name | Financial Gravity Companies, Inc. | |||
Entity Central Index Key | 1,377,167 | |||
Document Type | S-1/A | |||
Document Period End Date | Dec. 31, 2017 | |||
Amendment Flag | false | |||
Current Fiscal Year End Date | --09-30 | |||
Is Entity a Well-known Seasoned Issuer? | No | |||
Is Entity a Voluntary Filer? | No | |||
Is Entity's Reporting Status Current? | Yes | |||
Entity Filer Category | Smaller Reporting Company | |||
Entity Public Float | $ 37,762,295 | |||
Entity Common Stock, Shares Outstanding | 35,837,900 | 35,837,900 | ||
Document Fiscal Period Focus | Q1 | |||
Document Fiscal Year Focus | 2,018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2016 |
CURRENT ASSETS | |||
Cash and cash equivalents | $ 608,700 | $ 444,420 | $ 132,803 |
Trade accounts receivable, net | 169,082 | 109,795 | 78,843 |
Accounts receivable - related party | 2,303 | 4,506 | 4,506 |
Prepaid expenses | 109,098 | 64,603 | 32,239 |
Total current assets | 889,183 | 623,324 | 248,391 |
OTHER ASSETS | |||
Property and equipment, net | 129,343 | 127,503 | 141,080 |
Investment | 0 | 10,000 | |
Customer relationships, net | 19,644 | 22,450 | 33,675 |
Proprietary content, net | 377,414 | 393,824 | 459,463 |
Trade name | 69,300 | 69,300 | 69,300 |
Non-compete agreements, net | 14,465 | 15,780 | 21,040 |
Trademarks | 30,085 | 30,085 | 22,592 |
Goodwill | 1,094,702 | 1,094,702 | 1,094,702 |
Total assets | 2,624,136 | 2,376,968 | 2,100,243 |
CURRENT LIABILITIES | |||
Accounts payable - trade | 70,318 | 51,814 | 27,229 |
Accrued expenses | 84,423 | 122,552 | 103,654 |
Deferred revenue | 50,272 | 95,601 | 32,739 |
Line of credit | 0 | 19,732 | |
Notes payable | 54,376 | 165,562 | 93,397 |
Pre-merger payables | 0 | 99,056 | |
Total current liabilities | 259,389 | 435,529 | 375,807 |
Notes payable | 821,008 | 281,031 | 0 |
STOCKHOLDERS' EQUITY | |||
Common stock, $0.001 par value; 300,000,000 shares authorized; 35,737,900 shares issued and outstanding as of September 30, 2017 and 34,862,900 shares issued and outstanding as of September 30, 2016 | 35,838 | 35,738 | 34,863 |
Additional paid-in capital | 5,833,752 | 5,679,668 | 4,768,596 |
Accumulated deficit | (4,325,851) | (4,054,998) | (3,079,023) |
Total stockholders' equity | 1,543,739 | 1,660,408 | 1,724,436 |
Liabilities and Stockholders Equity | $ 2,624,136 | $ 2,376,968 | $ 2,100,243 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2016 |
Statement of Financial Position [Abstract] | |||
Common stock, shares authorized | 300,000,000 | 300,000,000 | 300,000,000 |
Common stock par value | $ 0.001 | $ .001 | $ .001 |
Common stock shares issued | 35,837,900 | 35,737,900 | 34,862,900 |
Common stock shares outstanding | 35,837,900 | 35,737,900 | 34,862,900 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
REVENUE | ||||
Investment management fees | $ 380,237 | $ 244,379 | $ 1,279,206 | $ 920,813 |
Service income | 539,663 | 517,961 | 2,195,718 | 1,750,613 |
Commissions | 0 | 9,156 | 50,575 | 69,073 |
Rental income | 0 | 1,500 | 5,000 | 16,500 |
Total revenue | 919,900 | 772,996 | 3,530,499 | 2,756,999 |
OPERATING EXPENSES | ||||
Cost of services | 9,132 | 20,258 | 73,004 | 75,378 |
Professional services | 176,054 | 270,093 | 997,117 | 1,237,221 |
Depreciation and amortization | 25,829 | 24,677 | 99,744 | 153,547 |
Impairment of goodwill | 0 | 662,967 | ||
General and administrative | 241,072 | 121,826 | 748,481 | 408,537 |
Management fees - related party | 50,000 | 53,000 | 200,000 | 213,333 |
Marketing | 60,937 | 101,878 | 375,499 | 402,402 |
Salaries and wages | 606,341 | 377,720 | 1,961,126 | 1,730,278 |
Total operating expenses | 1,169,365 | 969,452 | 4,454,971 | 4,883,663 |
Net operating loss | (249,465) | (196,456) | (924,472) | (2,126,664) |
OTHER INCOME (EXPENSE) | ||||
Other income | 0 | 191 | ||
Interest expense | (21,388) | (12,002) | (51,503) | (8,475) |
Total other expense | (21,388) | (11,811) | (51,503) | (8,475) |
NET LOSS | $ (270,853) | $ (208,267) | $ (975,975) | $ (2,135,139) |
LOSS PER SHARE - Basic and Diluted | $ (0.01) | $ (0.01) | $ (0.03) | $ (0.07) |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) | Common Stock | Additional Paid-In Capital | Retained Earnings / Accumulated Deficit | Total |
Beginning balance, shares at Sep. 30, 2015 | 28,389,477 | |||
Beginning balance, value at Sep. 30, 2015 | $ 28,389 | $ 2,411,791 | $ (943,884) | $ 1,496,296 |
Common stock issued under a private placement memorandum, shares | 785,000 | |||
Common stock issued under a private placement memorandum, value | $ 785 | 534,215 | 535,000 | |
Common stock issued on acquisition, shares | 6,000,000 | |||
Common stock issued on acquisition, value | $ 6,000 | 1,898,620 | 1,904,620 | |
Common stock surrendered by former officer, shares | (2,926,294) | |||
Common stock surrendered by former officer, value | $ (2,926) | 2,926 | ||
Common stock held by Pacific Oil Company (reverse merger), shares | 2,614,747 | |||
Common stock held by Pacific Oil Company (reverse merger), value | $ 2,615 | (101,671) | (99,056) | |
Stock based compensation | 22,715 | 22,715 | ||
Net loss | (2,135,139) | (2,135,139) | ||
Ending balance, shares at Sep. 30, 2016 | 34,862,900 | |||
Ending balance, value at Sep. 30, 2016 | $ 34,863 | 4,768,596 | (3,079,023) | 1,724,436 |
Common stock issued under a private placement memorandum, shares | 725,000 | |||
Common stock issued under a private placement memorandum, value | $ 725 | 724,275 | 725,000 | |
Release of Pacific Oil Company shares for settlement of pre-acquisition liabilities | 23,674 | 23,674 | ||
Common stock issued in exchange for services, shares | 150,000 | |||
Common stock issued in exchange for services, value | $ 150 | 112,350 | 112,500 | |
Stock based compensation | 50,773 | 50,773 | ||
Net loss | (975,975) | (975,975) | ||
Ending balance, shares at Sep. 30, 2017 | 35,737,900 | |||
Ending balance, value at Sep. 30, 2017 | $ 35,738 | $ 5,679,668 | $ (4,054,998) | 1,660,408 |
Net loss | (270,853) | |||
Ending balance, value at Dec. 31, 2017 | $ 1,543,739 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||||
Net loss | $ (270,853) | $ (208,267) | $ (975,975) | $ (2,135,139) |
Adjustments to reconcile net loss to net cash used in operating activities | ||||
Depreciation and amortization | 25,829 | 24,677 | 99,744 | 153,547 |
Impairment of goodwill | 0 | 662,967 | ||
Forfeiture of deposit for failed acquisition | 0 | 50,000 | ||
Common stock issued in exchange for services | 112,500 | 0 | ||
Stock based compensation | 54,184 | 0 | 50,773 | 22,715 |
Changes in operating assets and liabilities, net of effects of purchase of subsidiaries | ||||
Trade accounts receivable, net | (59,287) | (7,963) | (30,952) | (22,420) |
Accounts receivable - related party | 2,203 | 2,303 | 0 | 30,228 |
Prepaid expenses | (44,495) | 231 | (32,364) | (16,136) |
Accounts payable - trade | 18,504 | 9,374 | 24,585 | (55,474) |
Accounts payable - related party | 0 | (2,300) | ||
Accrued expenses | (38,129) | 4,093 | 18,898 | (12,230) |
Deferred revenue | (45,329) | 18,976 | 62,862 | 32,739 |
Pre-merger payables | (75,382) | 0 | ||
Net cash used in operating activities | (357,373) | (156,676) | (745,311) | (1,291,503) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
Cash from the sale of investment | 10,000 | 0 | ||
Cash paid on purchase of property and equipment | (7,138) | 0 | (4,043) | (65) |
Cash acquired upon acquisition of subsidiaries | 0 | 57,025 | ||
Payments for purchase of investment | 0 | (10,000) | ||
Purchases of trademarks | (7,493) | (2,419) | ||
Net cash (used in) provided by investing activities | (7,138) | 0 | (1,536) | 44,541 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||||
Borrowings on line of credit | 42,377 | 24,391 | ||
Borrowings on note payable | 540,000 | 100,000 | 450,000 | 26,086 |
Payments on note payable | (111,209) | (534) | (96,804) | (6,354) |
Payments on line of credit | 0 | (11,563) | (62,109) | (900) |
Proceeds from the sale of common stock | 100,000 | 350,000 | 725,000 | 535,000 |
Net cash provided by financing activities | 528,791 | 437,903 | 1,058,464 | 578,223 |
TOTAL INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 164,280 | 281,327 | 311,617 | (668,739) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 444,420 | 132,803 | 132,803 | 801,542 |
CASH AND CASH EQUIVALENTS AT END OF YEAR | 608,700 | 414,130 | 444,420 | 132,803 |
Supplemental disclosures of cash flow information: | ||||
Interest | 13,000 | 12,003 | 48,586 | 5,921 |
Taxes | 0 | 0 | 0 | 0 |
Common stock issued upon acquisition of: | ||||
Tax Coach Software, LLC (Note 9) | 0 | 1,904,620 | ||
Net assets (liabilities) assumed for purchase of: | ||||
Tax Coach Software, LLC (Note 9) | 0 | 809,918 | ||
Payables owed by Pacific Oil Company | 0 | (99,056) | ||
Equity in escrow to offset payables owed by legacy Pacific Oil Company | 0 | 99,056 | ||
Settlement of payables owed by legacy Pacific Oil Company Stockholders | $ 0 | $ 23,674 | $ 23,674 | $ 0 |
Nature of Business
Nature of Business | 3 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Nature of Business | NATURE OF BUSINESS Financial Gravity Companies, Inc. and Subsidiaries (the “Company”) is located in Allen, Texas and provides integrated tax, business, and financial solutions to small businesses, small business owners and high net worth individuals. The Company’s focus is on helping clients build wealth, most often with tax savings, lowering costs and improving efficiency. The wholly-owned subsidiaries of the Company include: Financial Gravity Holdings, Inc., Financial Gravity Operations, Inc., Financial Gravity Tax, Inc., Financial Gravity Wealth, Inc., Cloud9 Holdings Company, Financial Gravity Business, LLC, Financial Gravity Ventures, LLC., SASH Corporation (doing business as Metro Data Processing) and Tax Coach Software, LLC. | Financial Gravity Companies, Inc. and Subsidiaries (the “Company”) is located in Allen, Texas. The wholly-owned subsidiaries of the organization include: Financial Gravity Holdings, Inc., Financial Gravity Operations, Inc., Financial Gravity Tax, Inc., Financial Gravity Wealth, Inc., Cloud9 Holdings Company, Financial Gravity Business, LLC, Financial Gravity Ventures, LLC., SASH Corporation (doing business as Metro Data Processing) and Tax Coach Software, LLC. Financial Gravity Holdings, Inc. (“FGH”) was established on September 29, 2014 to engage in the acquisition and integration of financial and other businesses which will deliver a wide range of accounting, tax planning and management services to high net worth individuals and businesses in the Dallas/Fort Worth region, with further expansion into other markets in accordance with its long-term growth rate and strategic business plan. Financial Gravity Operations, Inc. (“FGO”) was established as a wholly-owned subsidiary of FGH in Texas on September 29, 2014. FGO did not have any activity through September 30, 2014. Activity commenced in 2015 for FGO related to the management of operational expenses for the shared services of the subsidiaries. Financial Gravity Business, LLC. (“FGB”) formerly Cloud9b2b, LLC (“Cloud9 B2B”) was acquired by Cloud9 Holdings Company effective December 31, 2014 and provides business consulting services to Small Business Owners that identify ways to leverage a business’ current assets (people, platforms and processes) and reduce exposure to risk, both short-term and long-term, while simplifying the business and increasing profitability. FGB does not have any financial activity through September 30, 2017. Financial Gravity Ventures, LLC. (“FGV”) formerly Cloud9 Accelerator, LLC was acquired by Cloud9 Holdings Company (Cloud9) effective December 31, 2014 and holds acquired companies and business assets until they are integrated into the main stream Financial Gravity business structure. FGV did not have any financial activity through September 30, 2017. Effective January 1, 2015, Cloud9 assigned 100% of the membership interest in Cloud9 Accelerator, LLC and Cloud9B2B, to FGO. Financial Gravity Tax, Inc. (“FG Tax”) formerly Business Legacy, Inc., (“BLI”) was acquired by FGO for no cost effective January 1, 2015 and is located in Allen, Texas. BLI is a bookkeeping, tax planning, tax preparation, and payroll service provider to small companies and individuals. Financial Gravity Wealth, Inc. (“FG Wealth”) formerly Pollock Advisory Group, Inc., (“PAG”) was acquired by FGO for no cost-effective January 1, 2015 and is a registered investment advisor, located in Allen, Texas. PAG provides asset management services. SASH Corporation, an Oklahoma corporation doing business as Metro Data Processing (“MDP”) was acquired August 12, 2015. The purchase was made by Cloud9Accelerator, LLC. MDP is located in Tulsa, Oklahoma, and provides payroll services, software, and support solutions to business owners. Tax Coach Software, LLC (“TCS”), was acquired effective October 1, 2015, and is an Ohio limited liability company. The purchase was made by FGH. TCS, located in Cincinnati, Ohio, provides three primary services including monthly subscriptions to the “Tax Coach” software system, coaching and email marketing services. |
1. Summary of Significant Accou
1. Summary of Significant Accounting Policies | 3 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Sep. 30, 2017 | |
Accounting Policies [Abstract] | ||
Summary of Significant Accounting Policies | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A summary of the significant accounting polices 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. 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 several 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. Receivables Receivables include trade accounts receivable and 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 $17,014 as of December 31, 2017 and September 30, 2017. 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. Prepaid Expenses 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. 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. Property and equipment operated under material leases which transfer substantially all benefits and risks associated with the assets to the Company are capitalized. An asset and liability equal to the present or fair value, if appropriate, of minimum payments over the term of the leases are recorded. Amortization of the asset is computed using the straight-line method. Expenses associated with all other leases (operating leases) are charged to income as incurred. Customer Relationships The customer relationships acquired as part of the TCS purchase have been recognized in the accompanying consolidated balance sheets at $44,900, the value attributed to such relationships on the date of the purchase. The customer relationships are being amortized on a straight-line basis over a four-year estimated life. During each of the quarters ended December 31, 2017 and 2016, the Company recorded amortization expense of $2,806, respectively, on this intangible asset, which is included in depreciation and amortization expense in the accompanying consolidated statements of operations. Accumulated amortization at December 31, 2017 was $25,256 and $22,450 at September 30, 2017. Proprietary Content The proprietary content acquired as a part of the TCS purchase has been recognized in the accompanying consolidated balance sheets at $525,100, the value attributed to such content 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 quarters ended December 31, 2017 and 2016, the Company recorded amortization expense of $16,410 on this intangible asset, which is included in depreciation and amortization expense in the accompanying consolidated statements of operations. Accumulated amortization at December 31, 2017 was $147,686 and $131,276 at September 30, 2017. Trade Name The trade name acquired as a part of the TCS purchase has been recognized in the accompanying consolidated balance sheets at $69,300, the value attributed to such name on the date of the purchase. Management has determined that the trade name has an indefinite life and does not consider the value of the trade name recorded in the accompanying consolidated balance sheets to be impaired as of December 31, 2017 and September 30, 2017. Non-compete Agreements Non-compete agreements entered into as a part of the TCS 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 quarters ended December 31, 2017 and 2016, the Company recorded amortization expense of $1,315 on this intangible asset, which is included in depreciation and amortization expense in the accompanying consolidated statements of operations. Accumulated amortization at December 31, 2017 was $11,835 and $10,520 at September 30, 2017. Trademarks The Company accounts for trademarks in accordance with GAAP and accordingly, trademarks are stated at cost. Trademarks with indefinite lives are not amortized but are tested for impairment at least annually. Management has determined that the trademarks have an indefinite life and do not consider the value of trademarks recorded in the accompanying consolidated balance sheets to be impaired as of December 31, 2017 and September 30, 2017. Goodwill 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 its 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 its 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 its carrying value. Management does not consider the value of goodwill recorded for TCS in the accompanying consolidated balance sheets to be impaired as of December 31, 2017 and September 30, 2017. The fair values of the assets acquired and liabilities assumed were determined primarily using the income approach, which determines the fair value for the asset based on the present value of cash flows projected to be generated by the asset. Projected cash flows are discounted at a rate of return that reflects the relative risk of achieving the cash flow and the time value of money. The fair value of relationships were determined by projecting expected cash flows and subtracting the portion of the cash flow derived by the relevant contributory assets. The accompanying consolidated balance sheets, consolidated statements of operations and cash flows include the results of operations of the acquired subsidiaries from the date of acquisition. Income Taxes The Company accounts for Federal and state income taxes pursuant to GAAP, 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 or penalties as of December 31, 2017 and September 30, 2017. 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 2014 are still subject for examination by taxing authorities. Loss Per Share Basic loss per common share is computed by dividing net losses available to common stockholders by the weighted average number of common shares outstanding for the reporting period. Average number of common shares were 35,812,952 and 35,037,900 for the quarters ended December 31, 2017 and 2016, respectively. For the quarter ended December 31, 2017, approximately 3,430,646 common stock shares were not added to the diluted average shares because inclusion of such shares would be antidilutive. The antidilutive shares for December 31, 2017 include 350,000 warrants and 3,080,646 in options. For the quarter ended December 31, 2016, approximately 2,350,346 common stock shares were not added to the diluted average shares because inclusion of such shares would be antidilutive. The antidilutive shares for December 31, 2016 include 150,000 warrants and 2,200,346 in options. Revenue Recognition FG Wealth generates investment management fees for services provided by the Company. Investment management fees include fees earned from assets under management by providing professional services to manage client investments. FG Tax and MDP generate service income from consulting and other professional services performed. Commission revenue is derived from the sale of annuities and premiums on life insurance policies held by third parties. The revenue is recognized at the time the policy is issued. Revenue represents gross billings less discounts, and is calculated net of sales taxes, as applicable. Amounts invoiced for work not yet completed are shown as deferred revenue in the accompanying consolidated balance sheets. Tax Coach Software has 3 types of services that are charged and collected on a month to month subscription basis (Tax Coach basic membership, All-Stars coaching, and Wire Service weekly broadcast email). None of these programs come with a long-term commitment or contract, and there is no up-front payment beyond the monthly subscription fee. Cancellations are processed within the month requested and memberships are closed at the end of the period for which the most recent payment was made. Members are not entitled to refunds for unused memberships. Advertising Advertising costs are charged to operations when incurred. Advertising and marketing expense was $60,538 and $101,878 for the quarters ended December 31, 2017 and 2016, respectively. Stock-Based Compensation The Company recognizes the fair value of 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 0.85% to 1.41% in 2017 and 0.97% in 2016, dividend yield of 0%, expected life of 2 years and volatility of 43% to 137%. 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 All adjustments that, in the opinion of management, are necessary for a fair presentation for the periods presented have been reflected in the financial statements. 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. The Company is actively seeking growth of its service offerings, both organically and via new client relationships. Management, in the ordinary course of business, is trying to raise 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. Future Accounting Pronouncements In January 2017, the FASB issued ASU No. 2017-03, Accounting Changes and Error Corrections (Topic 250) and Investments-Equity Method and Joint Ventures (Topic 323). ASU 2017-03 amends the Codification for SEC staff announcements made at two Emerging Issues Task Force (EITF) meetings. At the September 2016 meeting, the SEC staff expressed its expectations about the extent of disclosures registrants should make about the effects of the new FASB guidance (including any amendments issued prior to adoption) on revenue (ASU 2014-09), leases (ASU 2016-02) and credit losses on financial instruments (ASU 2016-13) in accordance with SAB Topic 11.M. That Topic requires registrants to disclose the effect that recently issued accounting standards will have on their financial statements when adopted in a future period. ASU 2017-03 incorporates these SEC staff views into ASC 250 and adds references to that guidance in the transition paragraphs of each of the three new standards. The ASU also conforms ASC 323-740-S99-2, which describes the SEC staff’s views on accounting for investments in qualified affordable housing projects, to the guidance issued in ASU 2014-01. The staff announced the change at the November 2016 EITF meeting. In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, part of the FASB’s simplification initiative. ASU 2015-17 requires companies to classify deferred tax liabilities and assets as noncurrent. ASU 2015-17 is effective for fiscal years beginning after December 15, 2018. Early application of the amendments in this ASU is permitted. The Company does not expect any significant financial impact to the financial statements upon adoption of this standard. In February 2016, the FASB issued ASU Update No. 2016-02 Leases (Topic 842). Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP - which requires only capital leases to be recognized on the balance sheet - the new ASU will require both types of leases to be recognized on the balance sheet. ASU 2016-02 is effective for the years beginning after December 15, 2018 and for all periods presented. Early application of the amendments in this ASU is permitted. The Company does not expect any significant financial impact to the financial statements upon adoption of this standard. In March 2016, the FASB issued ASU Update No. 2016-07, Investments – Equity Method and Joint Ventures (Topic 323). The amendments in this Update eliminate the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. ASU 2016-07 is effective for the years beginning after December 15, 2016. Early application of the amendments in this ASU is permitted. The Company does not expect any significant financial impact to the financial statements upon adoption of this standard. In March 2016, the FASB issued ASU Update No. 2016-08, Revenue from Contracts with Customers (Topic 606). The amendments in this Update are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations by clarifying the criteria in determining a principal versus agent relationship. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, an entity should apply the following five steps: (1) identify contracts with customers, (2) identify the performance obligations in the contracts, (3) determine the transaction price, (4) allocate the transaction price to the performance obligation in the contract, and (5) recognize revenue as the entity satisfies performance obligations. The new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early application is permitted for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. We are currently evaluating what impact adoption of this guidance will have on our financial position, results of operations, cash flows and disclosures. The Company does not expect any significant financial impact to the financial statements upon adoption of this standard. | A summary of the significant accounting polices consistently applied in the preparation of the accompanying consolidated financial statement 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 FGH, FGO, Cloud9 (from the date of acquisition), including Cloud9B2B and Cloud9 Accelerator, LLC, PAG (from the date of acquisition), BLI (from the date of acquisition), TCS (from the date of acquisition), and MDP (from the date of acquisition), (collectively referred to as the “Company”). All significant intercompany accounts and transactions have been eliminated on consolidation. 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 several 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. Trade Accounts Receivable 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 $17,014 and $-0- as of September 30, 2017 and 2016, 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 they are exposed to any significant risk of loss on accounts receivable. Prepaid Expenses 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. 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. Property and equipment operated under material leases which transfer substantially all benefits and risks associated with the assets to the Company are capitalized. An asset and liability equal to the present or fair value, if appropriate, of minimum payments over the term of the leases are recorded. Amortization of the asset is computed using the straight-line method. Expenses associated with all other leases (operating leases) are charged to income as incurred. Customer Relationships The customer relationships acquired from the TCS purchase have been recognized in the accompanying consolidated balance sheets at $44,900, the value attributed to it on the date of the purchase (see Note 9). The customer relationships are being amortized on a straight-line basis over a four- year estimated life. During the years ended September 30, 2017 and 2016, the Company recorded amortization expense of $11,225 on this intangible asset, which is included in depreciation and amortization expense in the accompanying consolidated statements of operations. Accumulated amortization at September 30, 2017 and 2016 was $22,450 and $11,225, respectively. Future amortization of customer relationships is estimated to be as follows for the years ended September 30: 2018 $ 11,225 2019 11,225 $ 22,450 Proprietary Content The proprietary content acquired as a part of the TCS purchase has been recognized in the accompanying consolidated balance sheets at $525,100, the value attributed to it on the date of the purchase (see Note 9). The proprietary content is being amortized on a straight-line basis over an eight- year estimated life. During the years ended September 30, 2017 and 2016, the Company recorded amortization expense of $65,638 on this intangible asset, which is included in depreciation and amortization expense in the accompanying consolidated statements of operations. Accumulated amortization at September 30, 2017 and 2016 was $131,276 and $65,638, respectively. Future amortization of proprietary content is estimated to be as follows for the years ended September 30: 2018 $ 65,638 2019 65,638 2020 65,638 2021 65,638 2022 65,638 Thereafter 65,634 $ 393,824 Trade Name The trade name acquired as a part of the TCS purchase has been recognized in the accompanying consolidated balance sheets at $69,300, the value attributed to it on the date of the purchase (see Note 9). Management has determined that the trade name has an indefinite life and does not consider the value of the trade name recorded in the accompanying consolidated balance sheet to be impaired as of September 30, 2017 and 2016. Non-compete Agreements Non-compete agreements established as a part of the TCS purchase have been recognized in the accompanying consolidated balance sheets at $26,300, the value attributed to them on the date of the purchase (see Note 9). 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 the years ended September 30, 2017 and 2016, the Company recorded amortization expense of $5,260 on this intangible asset, which is included in depreciation and amortization expense in the accompanying consolidated statements of operations. Accumulated amortization at September 30, 2017 and 2016 was $10,520 and $5,260, respectively. Future amortization of the non-compete agreements is estimated to be as follows for the years ended September 30: 2018 $ 5,260 2019 5,260 2020 5,260 $ 15,780 Trademarks The Company accounts for trademarks in accordance with GAAP and accordingly, trademarks are stated at cost. Trademarks with indefinite lives are not amortized but are tested for impairment at least annually. Management has determined that the trademarks have an indefinite life and do not consider the value of trademarks recorded in the accompanying consolidated balance sheet to be impaired as of September 30, 2017 and 2016. Goodwill 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 its 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 its 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 its carrying value. Management does not consider the value of goodwill recorded for TCS in the accompanying consolidated balance sheet to be impaired as of September 30, 2017, and 2016. However, goodwill attributed to Cloud9 and MDP was deemed to be impaired as of September 30, 2016 as that business offering has been discontinued. The fair values of the assets acquired, and liabilities assumed were determined primarily using the income approach, which determines the fair value for the asset based on the present value of cash flows projected to be generated by the asset. Projected cash flows are discounted at a rate of return that reflects the relative risk of achieving the cash flow and the time value of money. The fair value of relationships were determined by projecting expected cash flows and subtracting the portion of the cash flow derived by the relevant contributory assets. The accompanying consolidated balance sheets, consolidated statements of operations, changes in stockholders’ equity and cash flows include the results of operations of the acquired subsidiaries from the date of acquisition. Goodwill consists of the following: Goodwill at September 30, 2015 $ 662,967 Goodwill generated from acquisition of TCS 1,094,702 Impairment of Cloud9 (592,369 ) Impairment of MDP (70,598 ) Goodwill at September 30, 2016 1,094,702 Goodwill at September 30, 2017 $ 1,094,702 Income Taxes The Company accounts for Federal and state income taxes pursuant to GAAP, 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 or penalties as of September 30, 2017 and 2016. 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 2014 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 35,361,321 and 31,626,189 for years ended September 30, 2017 and 2016, respectively. For the years ended September 30, 2017 and 2016, approximately 2,817,146 and 2,200,346 common stock options, respectively, were not added to the diluted average shares because inclusion of such shares would be antidilutive. Revenue Recognition FG Wealth generates investment management fees for services provided by the Company. Investment management fees include fees earned from assets under management by providing professional services to manage client investments. FG Tax and MDP generate service income from its consulting and other professional services performed. Commission revenue is derived from the sale of annuities and premiums on life insurance policies held by third parties. The revenue is recognized at the time the policy is issued. 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. TaxCoach Software has 3 types of services that are charged and collected on a month to month subscription basis (TaxCoach basic membership, All-Stars coaching, and Wire Service weekly broadcast email). None of these programs come with a long-term commitment or contract, and there is no up-front payment beyond the monthly subscription fee. Cancellations are processed within the month requested and memberships are closed at the end of the period for which the most recent payment was made. Members are not entitled to refunds for unused memberships. Advertising Advertising costs are charged to operations when incurred. Advertising and marketing expense was $375,499 and $402,402 for the years ended September 30, 2017 and 2016, respectively. Stock-Based Compensation The Company recognizes the fair value of the stock-based compensation awards as wages in the accompanying statements of operations on a straight-line basis over the vesting period based on the Black-Scholes option pricing model based on a risk-free rate from 0.85% to 1.41% in 2017 and 0.97% in 2016, dividend yield of 0%, expected life of 2 years and volatility of 43% to 137%. 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. 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. On May 23, 2017, the Company and GHS Investments, LLC (“GHS Investments”) entered into an Equity Financing Agreement (the “Agreement”). The Agreement was filed as an exhibit to a registration statement on Form S-1, filed with the Securities and Exchange Commission on September 18, 2017. 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. 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, is trying to raise 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. Future Accounting Pronouncements In February 2016, the FASB issued ASU Update No. 2016-02 Leases (Topic 842). Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP - which requires only capital leases to be recognized on the balance sheet - the new ASU will require both types of leases to be recognized on the balance sheet. ASU 2016-02 is effective for the years beginning after December 15, 2018 and for all periods presented. Early application of the amendments in this ASU is permitted. The Company does not expect any significant financial impact to the financial statements upon adoption of this standard. In March 2016, the FASB issued ASU Update No. 2016-07, Investments – Equity Method and Joint Ventures (Topic 323). The amendments in this Update eliminate the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. ASU 2016-07 is effective for the years beginning after December 15, 2016. Early application of the amendments in this ASU is permitted. The Company does not expect any significant financial impact to the financial statements upon adoption of this standard. In March 2016, the FASB issued ASU Update No. 2016-08, Revenue from Contracts with Customers (Topic 606). The amendments in this Update are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations by clarifying the criteria in determining a principal versus agent relationship. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, an entity should apply the following five steps: (1) identify contracts with customers, (2) identify the performance obligations in the contracts, (3) determine the transaction price, (4) allocate the transaction price to the performance obligation in the contract, and (5) recognize revenue as the entity satisfies performance obligations. The new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early application is permitted for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. We are currently evaluating what impact adoption of this guidance will have on our financial position, results of operations, cash flows and disclosures. The Company does not expect any significant financial impact to the financial statements upon adoption of this standard. In March 2016, the FASB issued ASU Update No. 2016-09, Compensation – Stock Compensation (Topic 718). The amendments in this Update are to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company has yet to do a full analysis on the impact this will have but will do during the next fiscal year. The Company does not expect any significant financial impact to the financial statements upon adoption of this standard. |
2. Property and Equipment
2. Property and Equipment | 3 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Property and Equipment | Property and equipment consist of the following at December 31, 2017 and September 30, 2017: Estimated December 31, 2017 September 30, 2017 Furniture, fixtures and equipment 2 - 5 years $ 18,177 $ 11,039 Internally developed software 10 years 152,000 152,000 170,177 163,039 Less accumulated depreciation and amortization 40,834 35,536 $ 129,343 $ 127,503 | Property and equipment consist of the following at September 30: Estimated 2017 2016 Furniture, fixtures and equipment 2 to 5 years $ 11,039 $ 6,994 Internally developed software 10 years 152,000 152,000 163,039 158,994 Less accumulated depreciation and amortization 35,536 17,914 $ 127,503 $ 141,080 Depreciation expense was $17,622 and $17,625 during the years ended September 30, 2017 and 2016, respectively. |
3. Trademarks
3. Trademarks | 3 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Trademarks | Trademarks consist of the following: Trademarks at September 30, 2016 $ 22,592 Trademarks purchased at cost 7,493 Trademarks at September 30, 2017 30,085 Trademarks purchased at cost – Trademarks at December 31, 2017 $ 30,085 | Trademarks consist of the following: Trademarks at September 30, 2015 $ 20,174 Trademarks purchased at cost 2,418 Trademarks at September 30, 2016 22,592 Trademarks purchased at cost 7,493 Trademarks at September 30, 2017 $ 30,085 |
4. Line of Credit
4. Line of Credit | 3 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Sep. 30, 2017 | |
Debt Disclosure [Abstract] | ||
Line of Credit | The Company has a revolving line of credit with Wells Fargo Bank, N.A. in the amount of $55,000. 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 7.5%. This line of credit is collateralized by the personal guarantee of the majority stockholder. No amounts were outstanding under the line of credit at December 31, 2017 or September 30, 2017. | The Company has a revolving line of credit with Wells Fargo Bank, N.A. in the amount of $55,000. 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 7.5%. This line of credit is collateralized by the personal guarantee of the majority stockholder. Line of credit balance was $0 and $19,732 for the years ended September 30, 2017 and 2016, respectively. |
5. Notes Payable
5. Notes Payable | 3 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Sep. 30, 2017 | |
Debt Disclosure [Abstract] | ||
Notes Payable | With the acquisition of Tax Coach Software, LLC, the Company also acquired a promissory note payable to The Huntington National Bank. The note permits maximum borrowings of $100,000. Interest is paid monthly at prime plus 1.25% and the balance is due on demand. The facility matures in February 2018, is collateralized by substantially all assets of Tax Coach Software, LLC, and is secured by a personal guarantee from Keith VandeStadt, a significant stockholder of the Company. The balance outstanding under this note payable was $0 and $92,197 at December 31, 2017 and September 30, 2017, respectively. The Company entered into a Business Loan and Security Agreement to Small Business Financial Solutions, LLC, on October 28, 2016 in the amount of $100,000. The transaction is structured as an advance against assets. The lender has a security interest in all collateral of the Company, and outstanding under this note payable was $171 and $7,935 at December 31, 2017 and September 30, 2017, respectively. On July 31, 2017, the Company entered into a Promissory Note Payable with Fourly Enterprises, LLC (“Fourly”) in the amount of $50,000. The interest rate on the note is 20% with payments of $5,000 due monthly. The note matures on August 16, 2018. Fourly is owned by the majority stockholder of the Company. The outstanding balance was $35,213 and $46,461 at December 31, 2017 and September 30, 2017, respectively. On August 9, 2017 the Company entered into a Promissory Note Payable with Elmer Fink in the amount of $100,000. The interest rate on the note is 10%. First year payment is equal to 10% of the loan value with monthly principal and interest of $4,614 starting on year two. The remaining principal and accrued interest of this note is due on the maturity date, July 31, 2020. The outstanding balance was $100,000 at December 31, 2017 and September 30, 2017. On August 9, 2017 the Company entered into a Promissory Note Payable with Mike and Terri Ashby in the amount of $100,000. The interest rate on the note is 10%. First year payment is equal to 10% of the loan value with monthly principal and interest of $4,614 starting on year two. The remaining principal and accrued interest of this note is due on the maturity date, August 15, 2020. The outstanding balance was $100,000 at December 31, 2017 and September 30, 2017. On September 5, 2017 the Company entered into a Promissory Note Payable with Heleon Investment Company, Ltd. in the amount of $100,000. The interest rate on the note is 10%. First year payment is equal to 10% of the loan value with monthly principal and interest of $4,614 starting on year two. The remaining principal and accrued interest of this note is due on the maturity date, August 15, 2020. The outstanding balance was $100,000 at December 31, 2017 and September 30, 2017. On October 2, 2017 the Company entered into a Promissory Note Payable with Indy and Sybill Bally in the amount of $100,000. The interest rate on the note is 10%. First year payment is equal to 10% of the loan value with monthly principal and interest of $4,614 starting on year two. The remaining principal and accrued interest of this note is due on the maturity date, October 2, 2020. The outstanding balance was $100,000 at December 31, 2017 and $0 at September 30, 2017. On October 2, 2017 the Company entered into a Promissory Note Payable with Paul Frueh in the amount of $100,000. The interest rate on the note is 10%. First year payment is equal to 10% of the loan value with monthly principal and interest of $4,614 starting on year two. The remaining principal and accrued interest of this note is due on the maturity date, October 20, 2020. The outstanding balance was $100,000 at December 31, 2017 and $0 at September 30, 2017. On November 2, 2017 the Company entered into a Promissory Note Payable with Michael and Donna Dage in the amount of $340,000. The interest rate on the note is 10%. First year payment is equal to 10% of the loan value with monthly principal and interest of $15,689 starting on year two. The remaining principal and accrued interest of this note is due on the maturity date, October 20, 2020. The outstanding balance was $340,000 at December 31, 2017 and $0 at September 30, 2017. The Company’s maturities of debt subsequent to December 31, 2017 are as follows: 2018 $ 54,376 2019 387,006 2020 418,465 2021 15,537 $ 875,384 | With the acquisition of Tax Coach Software, LLC, the Company also acquired a promissory note payable to The Huntington National Bank. The note permits maximum borrowings of $100,000. Interest is paid monthly at prime plus 1.25% and the balance is due on demand. The facility matures in February 2018 (paid off on November 30, 2017), is collateralized by substantially all assets of Tax Coach Software, LLC, and is secured by a personal guarantee from Keith VandeStadt, a significant stockholder of the Company. The balance outstanding under this note payable was $92,197 and $93,397 at September 30, 2017 and 2016, respectively. The Company entered into a Business Loan and Security Agreement to Small Business Financial Solutions, LLC, on October 28, 2016 in the amount of $100,000. The transaction is structured as an advance against assets. The lender has a security interest in all collateral of the Company, and outstanding under this note payable was $7,935 and $0 at September 30, 2017 and 2016, respectively. On July 31, 2017, the Company entered into a Promissory Note Payable with Fourly Enterprises, LLC (“Fourly”) in the amount of $50,000. The interest rate on the note is 20%. The note matures on August 16, 2018. Fourly is owned by the majority stockholder of the Company. The outstanding balance was $46,461 at September 30, 2017. On August 9, 2017 the Company entered into a Promissory Note Payable with Elmer Fink in the amount of $100,000. The interest rate on the note is 10%. The note matures July 31, 2020. The outstanding balance was $100,000 at September 30, 2017. On August 9, 2017 the Company entered into a Promissory Note Payable with Mike and Terri Ashby in the amount of $100,000. The interest rate on the note is 10%. The note matures August 15, 2020. The outstanding balance was $100,000 at September 30, 2017. On September 5, 2017 the Company entered into a Promissory Note Payable with Heleon Investment Company, Ltd. in the amount of $100,000. The interest rate on the note is 10%. The note matures August 15, 2020. The outstanding balance was $100,000 at September 30, 2017. The Company’s maturities of debt subsequent to September 30, 2017 are as follows: 2018 $ 165,562 2019 144,524 2020 136,507 $ 446,593 |
6. Accrued Expenses
6. Accrued Expenses | 3 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Sep. 30, 2017 | |
Payables and Accruals [Abstract] | ||
Accrued Expenses | Accrued expenses consist of the following at December 31, and September 30, 2017: December 31, September 30, Accrued payroll $ – $ 19,165 Accrued operating expenses 84,173 103,137 Deferred rent 250 250 $ 84,423 $ 122,552 | Accrued expenses consist of the following at September 30: 2017 2016 Accrued payroll $ 19,165 $ 44,327 Accrued operating expenses 103,137 59,077 Deferred rent 250 250 $ 122,552 $ 103,654 |
7. Income Taxes
7. Income Taxes | 3 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||
Income Taxes | For the three months ended December 31, 2017 and 2016, 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, changes in the federal statutory rate are from 35% to 21%, 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. The deferred tax assets and liabilities in the accompanying consolidated balance sheets include the following components at December 31, 2017 and September 30, 2017: December 31, September 30, Net non-current deferred tax assets: Net operating loss carry-forward $ 745,021 $ 1,131,643 Property and equipment 7,350 10,719 Total 752,371 1,142,362 Net non-current deferred tax liabilities: Intangible assets 580 728 Net 751,791 1,141,634 Less valuation allowance (751,791 ) (1,141,634 ) Net deferred taxes $ – $ – | The Company elected C Corporation tax status upon inception in 2014. Net operating losses (“NOL”) since that date total $3,233,265 as of September 30, 2017 and may be carried forward to offset future taxable income; accordingly, no current provision for income tax has been recorded in the accompanying statements of operations. NOL carry-forward benefits begin to expire in 2035. The following table summarizes the difference between the actual tax provision and the amounts obtained by applying the statutory tax rates to the income or loss before income taxes for the years ended September 30: 2017 2016 Tax benefit calculated at statutory rate 35.00% 35.00% Expense not deductible (0.37 ) (0.19 ) Merger costs – (1.64 ) Impairment of goodwill – (10.87 ) Changes to valuation allowance (34.63 ) (22.30 ) Provision for income taxes – % – % 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. The deferred tax assets and liabilities in the accompanying consolidated balance sheets include the following components at September 30: 2017 2016 Net non-current deferred tax assets: Net operating loss carry-forward $ 1,131,643 $ 799,254 Property and equipment 10,719 4,627 1,142,362 803,881 Net non-current deferred tax liabilities: Intangible assets 728 303 Net 1,141,634 803,578 Less valuation allowance (1,141,634 ) (803,578 ) Net deferred taxes $ – $ – |
8. Commitments, Contingencies a
8. Commitments, Contingencies and Concentrations | 3 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Commitments, Contingencies and Concentrations | Leases The Company conducts operations from leased premises. Some of these leases provide for payment of taxes, insurance, utilities and maintenance. The Company also leases certain equipment under operating leases. Total rent expense for the quarters ended December 31, 2017 and 2016 was $31,079 and $22,201, respectively. Rent expense is recorded on a straight-line basis over the term of the lease. The difference between rental expense and rental payments is recorded as deferred rent within accrued expenses in the accompanying consolidated balance sheets. Management expects that in the normal course of business, leases will be renewed or replaced by other leases. Future minimum rental obligations as of December 31, 2017 are as follows: 2018 $ 50,400 2019 5,700 $ 56,100 Contingencies Effective October 1, 2015, the Company completed the acquisition of Tax Coach Software, LLC, an Ohio limited liability company ("Tax Coach Software"). The purchase was made by Financial Gravity Holdings, Inc. Under the terms of the acquisition, the Company acquired 100% of Tax Coach Software's membership interests, for shares of common stock of the Company. The total number of shares of common stock issued to the owners of Tax Coach Software was 6,000,000 shares (as amended), at par value of $0.00001 per share, in exchange for 100% of the membership interests of Tax Coach Software. Certificates representing the shares of common stock which served as the purchase price, were required to be deposited in escrow as of the effective date of the acquisition. As part of the purchase agreement documentation, the Sellers maintained the right to unwind the transaction under certain conditions as described in the purchase agreement. The Sellers also retained all rights as shareholders while shares were held in escrow, including the right to vote. On November 11, 2016, the parties to the escrow agreement agreed (in a Company Distribution Notice) that the average daily closing price of the shares had exceeded the $1.00 threshold and accordingly, the shares were released from escrow and the right to unwind the Tax Coach Software acquisition transaction terminated. At September 30, 2016, Pacific Oil Company had outstanding payables that the previous owners were in the process of liquidating. The Company recorded $99,056 in pre-merger payables at September 30, 2016. The liabilities have been recorded on the Company’s financial statements but are expected to be settled by the previous owners. Shares of the Company were held in escrow to cover the possibility that these liabilities will ultimately have to be settled by the Company. During the quarter ended December 31, 2016, $23,764 had been settled. The remaining payable was settled during the fiscal year ended September 30, 2017. Legal Proceedings From time to time, we are a party to or are otherwise involved in legal proceedings, claims and other legal matters, arising in the ordinary course of our business or otherwise. A subsidiary of the Company is currently involved in one legal proceeding, the outcome of which will not be material to our ability to operate or market our services, our consolidated financial position, results of operations or cash flows. | Leases The Company conducts operations from leased premises. Some of these leases provide for payment of taxes, insurance, utilities and maintenance. The Company also leases certain equipment under operating leases. Total rent expense for the years ended September 30, 2017 and 2016 was $102,960 and $89,150, respectively. Rent expense is recorded on a straight-line basis over the term of the lease. The difference between rental expense and rental payments is recorded as deferred rent within accrued expenses in the accompanying consolidated balance sheets. Management expects that in the normal course of business, leases will be renewed or replaced by other leases. Minimum future annual rental payments under non-cancelable operating leases having original terms in excess of one year are as follows: 2018 $ 68,400 2019 5,700 $ 74,100 Contingencies Under the terms of the TCS purchase agreement, the common stock issued has been placed in escrow. The sellers maintain the right to unwind this transaction under certain conditions. One agreement with one of the employees was terminated during December 2016 (see Note 9). At September 30, 2016, Pacific Oil Company had some outstanding payables that the previous owners were in the process of liquidating. Those liabilities have been shown here but are expected to be settled by the previous owners. Shares of the Company were held in escrow to cover the possibility that these liabilities will ultimately have to be settled by the Company. The liabilities were settled during 2017. Legal Proceedings From time to time, we are a party to or otherwise involved in legal proceedings, claims and other legal matters, arising in the ordinary course of our business or otherwise. A subsidiary of the Company is currently involved in one legal proceeding, the outcome of which will not be material to our ability to operate or market our services, our consolidated financial position, results of operations or cash flows. |
9. Business Acquisitions
9. Business Acquisitions | 12 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Business Acquisitions | Business Acquisition – Tax Coach Software, Inc. Effective October 1, 2015, the Company completed the acquisition of Tax Coach Software, LLC, an Ohio limited liability company (“Tax Coach Software”). The purchase was made by Financial Gravity Holdings, Inc. Under the terms of the acquisition, the Company acquired 100% of Tax Coach Software’s stock in a stock exchange. Total stock exchanged was 6,000,000 shares (as amended), at par value of $0.001 per share, from the Company for 100% of the shares of Tax Coach Software. Goodwill, as a result of this acquisition, is not deductible for tax purposes. Certificates representing the shares were required to be deposited in escrow as of the effective date of the acquisition. As part of the purchase agreement documentation, the Sellers maintained the right to unwind the transaction under certain conditions as described. The Sellers also retained all rights as shareholders while shares were held in escrow, including the right to vote. Under the escrow agreement, if the average daily closing price of the shares for any continuous 10-day trading period equals or exceeds $1.00 during the thirty-six months following October 28, 2015, the Company had the right to cause the shares deposited in escrow to be distributed to the Sellers, terminating any right to unwind the transaction. If the shares did not trade as to provide a closing price during the thirty-six months following October 28, 2015 or if the average daily closing price of the shares for any continuous 10-day trading period failed to equal or exceed $1.00 during the thirty-six months following October 28, 2015, then no later than five days following the conclusion of the thirty-six month period, the Sellers would have the right to unwind the acquisition of Tax Coach Software by the Company and the Company would immediately transfer the ownership of Tax Coach Software back to the Sellers in exchange for the return of common stock issued during the acquisition. The closing price was defined as the last closing trade price for the shares on an electronic bulletin board as reported by Bloomberg or on the NASDAQ Capital Market or the highest bid price as reported on “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If listed for trading on the American or New York Stock Exchange during the thirty-six months following October 28, 2015 it will be deemed to meet the $1.00 benchmark. On November 11, 2016, the parties to the escrow agreement agreed (in a Company Distribution Notice) that the average daily closing price of the shares had exceeded the $1.00 threshold and accordingly, the shares were released from escrow and the right to unwind the Tax Coach Software acquisition transaction terminated. Three employment agreements were made as a condition to the acquisition. Each agreement has an effective date as of November 1, 2015 and is effective for a period of three years. Two employee agreements include a base salary of $42,000 per year, per employee. These same two agreements, include a bonus that is calculated, for each employee, as the sum of 40% of the gross profit of Tax Coach Software for all revenues that exceed $850,000 and are less than $950,000 and 20% of the gross profit of Tax Coach Software for all revenues earned in excess of $950,000. One employee agreement includes a base salary of $60,000 per year. This same agreement, includes a bonus that is calculated as the sum of 20% of the gross profit of Tax Coach Software for all revenues that exceed $850,000 and are less than $950,000 and 10% of the gross profit of Tax Coach Software for all revenues earned in excess of $950,000. Gross profit is determined in accordance with generally acceptable accounting principles, net of other amounts paid under employment and consulting agreements. The agreements also include other certain termination and non-compete clauses. Compensation during the month of October 2015 to be paid to the three employees totals an aggregate amount of $49,150. Three consulting agreements were made as a condition to the acquisition. Two agreements require certain services at a fixed fee of $17,000 per month, per agreement, commencing on November 1, 2015 with a 90-day termination clause. One agreement was terminated by the Company during December 2017. One agreement requires certain services at a fixed fee of $3,500 per month, commencing on November 1, 2015 with a 90-day termination clause. $444,600 and $444,650 in professional fees were paid under these 3 agreements during the years ended September 30, 2017 and 2016, respectively. Tax Coach Software, located in Cincinnati, Ohio, provides three primary services including monthly subscription revenue from the “Tax Coach” software system, coaching revenue and email marketing services for customers. The transaction resulted in a fair value of the acquisition of $1,094,702 as follows: Common stock issued in stock exchange at a value of $0.25 per share (as amended) $ 1,500,020 Additional paid in capital for the escrow agreement provision 404,600 Total value of the goodwill generated on acquisition 1,904,620 Intangible assets acquired (719,400 ) Net tangible assets acquired (90,518 ) Total assets acquired (809,918 ) Total fair value of acquisition $ 1,094,702 The intangible assets were as follows: Customer relationships $ 44,900 Proprietary content 525,100 Trade name 69,300 Prospect list 53,800 Non-compete agreements 26,300 Total intangible assets $ 719,400 The tangible assets acquired and liabilities assumed were as follows: Assets acquired: Cash $ 57,025 Accounts receivable 15,476 Accounts receivable - other 5,408 Internally developed software 152,000 Total tangible assets 229,909 Liabilities assumed: Accrued expenses 69,485 Line of credit 69,906 Total liabilities 139,391 Net acquired assets $ 90,518 The primary asset acquired from Tax Coach Software is the proprietary content which includes a comprehensive platform of tax planning strategies including marketing and instructional guides. TCS will provide the Company with expertise in areas of service which expand beyond the Company’s current service areas. The Company believes they will also be able to leverage the use of the proprietary content in maximizing the benefits of consulting with customers. The acquisition of this entity increases the additional services the Company can provide to high net worth individuals and business in accordance with its strategic business plan. |
10. Stockholders' Equity
10. Stockholders' Equity | 3 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Sep. 30, 2017 | |
STOCKHOLDERS' EQUITY | ||
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 three months ended December 31, 2017 and 2016, the Company sold 100,000 shares and 350,000 shares, respectively, for $100,000 and $350,000, respectively. Preferred Stock The Company does not have a preferred stock authorization in its articles of incorporation. Financial Gravity Holdings, a subsidiary of the Company, has authorized the issuance of up to 10,000,000 shares of preferred stock, by action of the Board of Directors. The preferred stock authorization has not been formalized via the filing of an amendment to the certificate of formation of Financial Gravity Holdings. The rights and obligations of the preferred stock are as determined by the Board of Directors at the time of issuance. There were no preferred shares issued or outstanding as of December 31, 2017 and September 30, 2017 for Financial Gravity Holdings. Warrants As part of the sale of common shares starting October 2016, the Company granted to investors who invest at value of $100,000 or above common stock purchase warrants (the "Warrants"). In the quarter ended December 31, 2016 there were three individual investments of $100,000 for which the Company issued warrants for the purchase of 75,000 shares of common stock of the Company at an exercise price of $ 1.25 per share for a 1 -year term and an additional 75,000 shares of common stock of the Company at an exercise price of $1.50 for a 2-year term. In the quarter ended March 31, 2017 there were two individual investments for an aggregate of $250,000 for which the Company issued warrants for the purchase of 50,000 shares of common stock of the Company at an exercise price of $1.25 per share for a l-year term and an additional 50,000 shares of common stock of the Company at an exercise price of $1.50 for a 2-year term. In the quarter ended September 30, 2017, there was one additional investment of $100,000 for which the Company issued warrants for the purchase of 25,000 shares of common stock of the Company after exercise price of $1.25 per share for 1-year term and an additional 25,000 shares of common stock of the Company at an exercise price of $1.50 for a 2-year term. In the quarter ended December 31, 2017, an aggregate of 100,000 shares of the Company’s common stock had been sold for $100,000 for which the Company issued warrants for the purchase of 25,000 shares of common stock of the Company at an exercise price of $1.25 per share for a 1 year term and an additional 25,000 shares of common stock of the Company at an exercise price of $1.50 for a 2-year term. The Company follows the provisions of ASC 815, “Derivatives and Hedging”. ASC 815 requires freestanding contracts that are settled in a company’s own stock to be designated as an equity instrument, assets or liability. Under the provisions of ASC 815, a contract designated as an asset or liability must be initially recorded and carried at fair value until the contract meets the requirements for classification as equity, until the contract is exercised or until the contract expires. However, the Company determined that these warrants should be accounted for as equity and as such no determination of fair value was necessary. Private Placement Memorandum, Financial Gravity Holdings, Inc. On October 31, 2014, Financial Gravity Holdings issued a private placement memorandum (“PPM”) for stock purchases of up to 2,000,000 shares of common stock at a cost of $1.00 and a par value of $0.00001, with a minimum purchase level of $50,000 per investor. The subscription period initially expired June 30, 2015, however, the Board of Directors extended the offering period indefinitely, and increased the number of shares authorized for sale under the PPM incrementally to accommodate additional investor interest. Additional Common Stock Issuances, Financial Gravity Holdings, Inc. During the year ended September 30, 2016, one of the founding members of Financial Gravity Holdings forfeited 2,926,294 common shares, in addition to the issuance of shares sold under the PPM and common shares issued in connection with the Tax Coach Software, LLC acquisition. Stock Split, Financial Gravity Holdings, Inc. Effective October 20, 2015, Financial Gravity Holdings declared a three for one stock split of its common stock. Upon the stock split, every one share of common stock issued and outstanding was automatically reclassified and converted into three shares of common stock. The common stock retained a par value of $0.00001 per share. | Common Stock The Company is authorized to issue up to 300,000,000 shares of common stock, par value $0.001 per share. Preferred Stock The Company does not have a preferred stock authorization in its articles of incorporation. Financial Gravity Holdings, a subsidiary of the Company, has authorized the issuance of up to 10,000,000 shares of preferred stock, by action of the Board of Directors. The preferred stock authorization has not been formalized via the filing of an amendment to the certificate of formation of Financial Gravity Holdings. The rights and obligations of the preferred stock are as determined by the Board of Directors at the time of issuance. For each of the Company and Financial Gravity Holdings, its subsidiary, there were no preferred shares issued or outstanding as of September 30, 2017 and 2016. Warrants As part of the sale of common shares starting October 2016, the Company granted to investors who invest at value of $100,000 or above common stock purchase warrants (the “Warrants”). In the quarter ended December 31, 2016 there were three individual investments of $100,000 for which the Company issued warrants for the purchase of 75,000 shares of common stock of the Company at an exercise price of $1.25 per share for a 1-year term and an additional 75,000 shares of common stock of the Company at an exercise price of $1.50 for a 2-year term. In the quarter ended March 31, 2017 there were two individual investments for an aggregate of $250,000 for which the Company issued warrants for the purchase of 50,000 shares of common stock of the Company at an exercise price of $1.25 per share for a 1-year term and an additional 50,000 shares of common stock of the Company at an exercise price of $1.50 for a 2-year term. In the quarter ended September 30, 2017, there was one additional investment of $100,000 for which the Company issued warrants for the purchase of 25,000 shares of common stock of the Company after exercise price of $1.25 per share for 1-year term and an additional 25,000 shares of common stock of the Company at an exercise price of $1.50 for a 2-year term. The Company follows the provisions of ASC 815, “Derivatives and Hedging”. ASC 815 requires freestanding contracts that are settled in a company’s own stock to be designated as an equity instrument, assets or liability. Under the provisions of ASC 815, a contract designated as an asset or liability must be initially recorded and carried at fair value until the contract meets the requirements for classification as equity, until the contract is exercised or until the contract expires. However, the Company determined that these warrants should be accounted for as equity and as such no determination of fair value was necessary. Private Placement Memorandum, Financial Gravity Holdings, Inc. On October 31, 2014, Financial Gravity Holdings, Inc. issued a private placement memorandum (“PPM”) for stock purchases of up to 2,000,000 shares of common stock at a cost of $1.00 and a par value of $0.00001, with a minimum purchase level of $50,000 per investor. The subscription period initially expired June 30, 2015, however, the Board of Directors extended the offering period indefinitely, and increased the number of shares authorized for sale under the PPM incrementally to accommodate additional investor interest. Additional Common Stock Issuances, Financial Gravity Companies, Inc. On April 1, 2017, the Company entered into an agreement with FMW Media Works Corp (“FMW”), wherein FMW would provide television, production, and media analysis to the Company. The Company issued 50,000 shares of common stock, worth $52,500, to FMW along with $3,500 cash as payment for services. On August 22, 2017, the Company issued 100,000 shares of common stock, worth $60,000 to Nationwide EZ Cash Flow in exchange for professional services. During the years ended September 30, 2017 and 2016, 725,000 shares and 785,000 shares, respectively, were issued for $725,000 and $535,000, respectively. Additional Common Stock Issuances, Financial Gravity Holdings, Inc. During the year ended September 30, 2016, one of the founding members of Financial Gravity Holdings forfeited 2,926,294 common shares, in addition to the issuance of shares sold under the PPM and common shares issued in connection with the Tax Coach Software, LLC acquisition. During the year ended September 30, 2016, Financial Gravity Holdings sold 350,000 shares of common stock. Stock Split, Financial Gravity Holdings Effective October 20, 2015, Financial Gravity Holdings declared a three for one stock split of its common stock. Upon the stock split, every one share of common stock issued and outstanding was automatically reclassified and converted into three shares of common stock. The common stock retained a par value of $0.00001 per share. |
11. Stock Option Plan
11. Stock Option Plan | 3 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
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, 2017. 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. 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. Stock option activity is summarized as follows: Shares Value of Weighted Weighted Outstanding - September 30, 2016 2,200,346 $ 22,129 $ 0.64 109 months Granted 661,400 323,927 0.78 116 months Exercised – – – – Canceled or expired 44,600 28,495 1.00 – Outstanding - September 30, 2017 2,817,146 317,561 0.67 101 months Granted 263,500 70,727 0.53 118 months Exercised – – – Canceled or expired – – – Outstanding - December 31, 2017 3,080,646 $ 388,288 $ 0.66 100 months Exercisable - December 31, 2017 2,406,029 $ 0.66 95 months All outstanding 2015 Plan stock options at September 30, 2016 became immediately vested upon the completion of the reverse merger with Pacific Oil Company. Most of the stock options granted under the 2016 Plan have 2- year vesting periods but there were 45,000 options that vested at issuance. Total compensation expense, included in salaries and wages, of previously unamortized stock compensation was $54,184 and $ 0 for the quarters ended December 31, 2017 and 2016, respectively. Unamortized share-based compensation expense as of December 31, 2017 amounted to $265,576 which is expected to recognized over the next 2 years. | Effective February 27, 2015, the Company established the 2015 Stock Option Plan (the “2015 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 and exercised 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. The last date any options were granted under the 2015 Plan was March 14, 2016. 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. The maximum number of shares of stock that may be issued and exercised under the 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. The first date any options were granted under the 2016 Plan was December 19, 2016. Stock option activity is summarized as follows: 2017 2016 Shares Under Option Value of Shares Under Option Weighted Average Exercise Price Weighted Average Remaining Contractual Life Shares Under Option Value of Shares Under Option Weighted Average Exercise Price Weighted Average Remaining Contractual Life Outstanding - beginning of year 2,200,346 $ 22,129 $ 0.64 1,500,996 $ 7,359 $ 0.33 Granted 661,400 323,927 0.78 116 months 1,024,400 19,677 1.00 111 months Exercised – – – – – – – – Canceled or expired 44,600 28,495 1.00 – 325,050 4,907 0.33 – Outstanding - end of year 2,817,146 $ 317,561 $ 0.67 101 months 2,200,346 $ 22,129 $ 0.64 109 months Exercisable - end of year 2,276,813 $ 0.65 97 months 2,200,346 $ 0.64 109 months All outstanding 2015 Plan stock options at September 30, 2016 became immediately vested upon the completion of the reverse merger with Pacific Oil Company. Most of the stock options granted under the 2016 Plan have 2-year vesting periods but there were 20,000 options that vested at issuance. Total compensation expense included in salaries and wages of previously unamortized stock compensation was $50,773 and $22,715 for the years ended September 30, 2017 and 2016, respectively. Unamortized share-based compensation expense as of September 30, 2017 amounted to $249,033 which is expected to recognized over the next 2 years. |
12. Related Party Transactions
12. Related Party Transactions | 3 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Sep. 30, 2017 | |
Related Party Transactions [Abstract] | ||
Related Party Transactions | Accounts receivable due from the majority stockholder of the entity, included in accounts receivable – related party in the accompanying consolidated balance sheets was $2,303 and $4,506 as of December 31, 2017 and September 30, 2017, respectively. Management fees paid to the majority stockholder of the entity, included as management fees - related party in the accompanying consolidated statements of operations were $50,000 and $53,000 for quarters ended December 31, 2017 and 2016, respectively. A board member who is also a stockholder provided services to the Company. Expenses for these services totaled $0 and $15,000 for the quarters ended December 31, 2017 and 2016, respectively, and were included as general and administrative expenses in the accompanying consolidated statements of operations. Included in professional fees were consulting fees paid to a related party as a condition to the TCS acquisition. Two agreements require certain services at a fixed fee of $17,000 per month, per agreement, commencing on November 1, 2015 with a 90-day termination clause. One agreement requires certain services at a fixed fee of $3,500 per month, commencing on November 1, 2015 with a 90-day termination clause. $101,960 and $116,100 in professional fees were paid under these 3 agreements for the three months ended December 31, 2017 and December 31, 2016, respectively and were included as professional services in the accompanying consolidated statements of operations. | Accounts receivable due from the majority stockholder of the entity, included in accounts receivable – related party in the accompanying consolidated balance sheets was $4,506 as of September 30, 2017, and 2016. Management fees paid to the majority stockholder of the entity, included as management fees - related party in the accompanying consolidated statements of operations were $200,000 and $213,333 for fiscal 2017, and 2016. During the year ended September 30, 2016, a board member who is also a stockholder provided services to the Company. Expenses for these services totaled $49,000 and were included as general and administrative expenses in the accompanying consolidated statement of operations. There were no associated expenses during 2017. On July 31, 2017, the Company entered into a Promissory Note Payable with Fourly Enterprises, LLC (“Fourly”) in the amount of $50,000. The interest rate on the note is 20%. The note matures on August 16, 2018. Fourly is owned by the majority stockholder of the Company. The outstanding balance was $46,461 at September 30, 2017. |
13. Subsequent Events
13. Subsequent Events | 12 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent to September 30, 2017, an aggregate of 100,000 shares of the Company’s common stock have been sold for $100,000. Additionally, an aggregate of 50,000 warrants to purchase the Company’s common stock have been issued in conjunction with the sale of the Company’s common stock. Subsequent to September 30, 2017, an aggregate of 375,500 options to purchase the Company’s common stock have been granted. On November 30, 2017, the Company paid off the remaining balance of the note payable to The Huntington National Bank. On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was signed into United States tax law, which among other provisions will lower the corporate tax rate to 21%. Given this date of enactment, our financial statements as of and for the year ended September 30, 2017 do not reflect the impact of the Act. The Company is in the process of analyzing the potential aggregate impact of the Act and will reflect any such impact in the quarterly report for the period in which the law was enacted. |
1. Summary of Significant Acc21
1. Summary of Significant Accounting Policies (Policies) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Sep. 30, 2017 | |
Accounting Policies [Abstract] | ||
Basis of Consolidation | Basis of Consolidation The consolidated financial statements include the accounts of its subsidiaries. All significant intercompany accounts and transactions have been eliminated on consolidation. | Basis of Consolidation The consolidated financial statements include the accounts of FGH, FGO, Cloud9 (from the date of acquisition), including Cloud9B2B and Cloud9 Accelerator, LLC, PAG (from the date of acquisition), BLI (from the date of acquisition), TCS (from the date of acquisition), and MDP (from the date of acquisition), (collectively referred to as the “Company”). All significant intercompany accounts and transactions have been eliminated on consolidation. |
Cash and Cash Equivalents | 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 several 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 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 several 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. |
Trade Accounts Receivable | Receivables Receivables include trade accounts receivable and 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 $17,014 as of December 31, 2017 and September 30, 2017. 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. | Trade Accounts Receivable 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 $17,014 and $-0- as of September 30, 2017 and 2016, 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 they are exposed to any significant risk of loss on accounts receivable. |
Prepaid Expenses | Prepaid Expenses 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. | Prepaid Expenses 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. |
Property and Equipment | 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. Property and equipment operated under material leases which transfer substantially all benefits and risks associated with the assets to the Company are capitalized. An asset and liability equal to the present or fair value, if appropriate, of minimum payments over the term of the leases are recorded. Amortization of the asset is computed using the straight-line method. Expenses associated with all other leases (operating leases) are charged to income as incurred. | 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. Property and equipment operated under material leases which transfer substantially all benefits and risks associated with the assets to the Company are capitalized. An asset and liability equal to the present or fair value, if appropriate, of minimum payments over the term of the leases are recorded. Amortization of the asset is computed using the straight-line method. Expenses associated with all other leases (operating leases) are charged to income as incurred. |
Customer Relationships | Customer Relationships The customer relationships acquired as part of the TCS purchase have been recognized in the accompanying consolidated balance sheets at $44,900, the value attributed to such relationships on the date of the purchase. The customer relationships are being amortized on a straight-line basis over a four-year estimated life. During each of the quarters ended December 31, 2017 and 2016, the Company recorded amortization expense of $2,806, respectively, on this intangible asset, which is included in depreciation and amortization expense in the accompanying consolidated statements of operations. Accumulated amortization at December 31, 2017 was $25,256 and $22,450 at September 30, 2017. | Customer Relationships The customer relationships acquired from the TCS purchase have been recognized in the accompanying consolidated balance sheets at $44,900, the value attributed to it on the date of the purchase (see Note 9). The customer relationships are being amortized on a straight-line basis over a four- year estimated life. During the years ended September 30, 2017 and 2016, the Company recorded amortization expense of $11,225 on this intangible asset, which is included in depreciation and amortization expense in the accompanying consolidated statements of operations. Accumulated amortization at September 30, 2017 and 2016 was $22,450 and $11,225, respectively. Future amortization of customer relationships is estimated to be as follows for the years ended September 30: 2018 $ 11,225 2019 11,225 $ 22,450 |
Proprietary Content | Proprietary Content The proprietary content acquired as a part of the TCS purchase has been recognized in the accompanying consolidated balance sheets at $525,100, the value attributed to such content 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 quarters ended December 31, 2017 and 2016, the Company recorded amortization expense of $16,410 on this intangible asset, which is included in depreciation and amortization expense in the accompanying consolidated statements of operations. Accumulated amortization at December 31, 2017 was $147,686 and $131,276 at September 30, 2017. | Proprietary Content The proprietary content acquired as a part of the TCS purchase has been recognized in the accompanying consolidated balance sheets at $525,100, the value attributed to it on the date of the purchase (see Note 9). The proprietary content is being amortized on a straight-line basis over an eight- year estimated life. During the years ended September 30, 2017 and 2016, the Company recorded amortization expense of $65,638 on this intangible asset, which is included in depreciation and amortization expense in the accompanying consolidated statements of operations. Accumulated amortization at September 30, 2017 and 2016 was $131,276 and $65,638, respectively. Future amortization of proprietary content is estimated to be as follows for the years ended September 30: 2018 $ 65,638 2019 65,638 2020 65,638 2021 65,638 2022 65,638 Thereafter 65,634 $ 393,824 |
Trade Name | Trade Name The trade name acquired as a part of the TCS purchase has been recognized in the accompanying consolidated balance sheets at $69,300, the value attributed to such name on the date of the purchase. Management has determined that the trade name has an indefinite life and does not consider the value of the trade name recorded in the accompanying consolidated balance sheets to be impaired as of December 31, 2017 and September 30, 2017. | Trade Name The trade name acquired as a part of the TCS purchase has been recognized in the accompanying consolidated balance sheets at $69,300, the value attributed to it on the date of the purchase (see Note 9). Management has determined that the trade name has an indefinite life and does not consider the value of the trade name recorded in the accompanying consolidated balance sheet to be impaired as of September 30, 2017 and 2016. |
Non-compete Agreements | Non-compete Agreements Non-compete agreements entered into as a part of the TCS 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 quarters ended December 31, 2017 and 2016, the Company recorded amortization expense of $1,315 on this intangible asset, which is included in depreciation and amortization expense in the accompanying consolidated statements of operations. Accumulated amortization at December 31, 2017 was $11,835 and $10,520 at September 30, 2017. | Non-compete Agreements Non-compete agreements established as a part of the TCS purchase have been recognized in the accompanying consolidated balance sheets at $26,300, the value attributed to them on the date of the purchase (see Note 9). 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 the years ended September 30, 2017 and 2016, the Company recorded amortization expense of $5,260 on this intangible asset, which is included in depreciation and amortization expense in the accompanying consolidated statements of operations. Accumulated amortization at September 30, 2017 and 2016 was $10,520 and $5,260, respectively. Future amortization of the non-compete agreements is estimated to be as follows for the years ended September 30: 2018 $ 5,260 2019 5,260 2020 5,260 $ 15,780 |
Trademarks | Trademarks The Company accounts for trademarks in accordance with GAAP and accordingly, trademarks are stated at cost. Trademarks with indefinite lives are not amortized but are tested for impairment at least annually. Management has determined that the trademarks have an indefinite life and do not consider the value of trademarks recorded in the accompanying consolidated balance sheets to be impaired as of December 31, 2017 and September 30, 2017. | Trademarks The Company accounts for trademarks in accordance with GAAP and accordingly, trademarks are stated at cost. Trademarks with indefinite lives are not amortized but are tested for impairment at least annually. Management has determined that the trademarks have an indefinite life and do not consider the value of trademarks recorded in the accompanying consolidated balance sheet to be impaired as of September 30, 2017 and 2016. |
Goodwill | Goodwill 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 its 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 its 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 its carrying value. Management does not consider the value of goodwill recorded for TCS in the accompanying consolidated balance sheets to be impaired as of December 31, 2017 and September 30, 2017. The fair values of the assets acquired and liabilities assumed were determined primarily using the income approach, which determines the fair value for the asset based on the present value of cash flows projected to be generated by the asset. Projected cash flows are discounted at a rate of return that reflects the relative risk of achieving the cash flow and the time value of money. The fair value of relationships were determined by projecting expected cash flows and subtracting the portion of the cash flow derived by the relevant contributory assets. The accompanying consolidated balance sheets, consolidated statements of operations and cash flows include the results of operations of the acquired subsidiaries from the date of acquisition. | Goodwill 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 its 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 its 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 its carrying value. Management does not consider the value of goodwill recorded for TCS in the accompanying consolidated balance sheet to be impaired as of September 30, 2017, and 2016. However, goodwill attributed to Cloud9 and MDP was deemed to be impaired as of September 30, 2016 as that business offering has been discontinued. The fair values of the assets acquired, and liabilities assumed were determined primarily using the income approach, which determines the fair value for the asset based on the present value of cash flows projected to be generated by the asset. Projected cash flows are discounted at a rate of return that reflects the relative risk of achieving the cash flow and the time value of money. The fair value of relationships were determined by projecting expected cash flows and subtracting the portion of the cash flow derived by the relevant contributory assets. The accompanying consolidated balance sheets, consolidated statements of operations, changes in stockholders’ equity and cash flows include the results of operations of the acquired subsidiaries from the date of acquisition. Goodwill consists of the following: Goodwill at September 30, 2015 $ 662,967 Goodwill generated from acquisition of TCS 1,094,702 Impairment of Cloud9 (592,369 ) Impairment of MDP (70,598 ) Goodwill at September 30, 2016 1,094,702 Goodwill at September 30, 2017 $ 1,094,702 |
Income Taxes | Income Taxes The Company accounts for Federal and state income taxes pursuant to GAAP, 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 or penalties as of December 31, 2017 and September 30, 2017. 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 2014 are still subject for examination by taxing authorities. | Income Taxes The Company accounts for Federal and state income taxes pursuant to GAAP, 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 or penalties as of September 30, 2017 and 2016. 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 2014 are still subject for examination by taxing authorities. |
Earnings Per Share | Loss Per Share Basic loss per common share is computed by dividing net losses available to common stockholders by the weighted average number of common shares outstanding for the reporting period. Average number of common shares were 35,812,952 and 35,037,900 for the quarters ended December 31, 2017 and 2016, respectively. For the quarter ended December 31, 2017, approximately 3,430,646 common stock shares were not added to the diluted average shares because inclusion of such shares would be antidilutive. The antidilutive shares for December 31, 2017 include 350,000 warrants and 3,080,646 in options. For the quarter ended December 31, 2016, approximately 2,350,346 common stock shares were not added to the diluted average shares because inclusion of such shares would be antidilutive. The antidilutive shares for December 31, 2016 include 150,000 warrants and 2,200,346 in options. | 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 35,361,321 and 31,626,189 for years ended September 30, 2017 and 2016, respectively. For the years ended September 30, 2017 and 2016, approximately 2,817,146 and 2,200,346 common stock options, respectively, were not added to the diluted average shares because inclusion of such shares would be antidilutive. |
Revenue Recognition | Revenue Recognition FG Wealth generates investment management fees for services provided by the Company. Investment management fees include fees earned from assets under management by providing professional services to manage client investments. FG Tax and MDP generate service income from consulting and other professional services performed. Commission revenue is derived from the sale of annuities and premiums on life insurance policies held by third parties. The revenue is recognized at the time the policy is issued. Revenue represents gross billings less discounts, and is calculated net of sales taxes, as applicable. Amounts invoiced for work not yet completed are shown as deferred revenue in the accompanying consolidated balance sheets. Tax Coach Software has 3 types of services that are charged and collected on a month to month subscription basis (Tax Coach basic membership, All-Stars coaching, and Wire Service weekly broadcast email). None of these programs come with a long-term commitment or contract, and there is no up-front payment beyond the monthly subscription fee. Cancellations are processed within the month requested and memberships are closed at the end of the period for which the most recent payment was made. Members are not entitled to refunds for unused memberships. | Revenue Recognition FG Wealth generates investment management fees for services provided by the Company. Investment management fees include fees earned from assets under management by providing professional services to manage client investments. FG Tax and MDP generate service income from its consulting and other professional services performed. Commission revenue is derived from the sale of annuities and premiums on life insurance policies held by third parties. The revenue is recognized at the time the policy is issued. 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. TaxCoach Software has 3 types of services that are charged and collected on a month to month subscription basis (TaxCoach basic membership, All-Stars coaching, and Wire Service weekly broadcast email). None of these programs come with a long-term commitment or contract, and there is no up-front payment beyond the monthly subscription fee. Cancellations are processed within the month requested and memberships are closed at the end of the period for which the most recent payment was made. Members are not entitled to refunds for unused memberships. |
Advertising | Advertising Advertising costs are charged to operations when incurred. Advertising and marketing expense was $60,538 and $101,878 for the quarters ended December 31, 2017 and 2016, respectively. | Advertising Advertising costs are charged to operations when incurred. Advertising and marketing expense was $375,499 and $402,402 for the years ended September 30, 2017 and 2016, respectively. |
Stock-Based Compensation | Stock-Based Compensation The Company recognizes the fair value of 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 0.85% to 1.41% in 2017 and 0.97% in 2016, dividend yield of 0%, expected life of 2 years and volatility of 43% to 137%. | Stock-Based Compensation The Company recognizes the fair value of the stock-based compensation awards as wages in the accompanying statements of operations on a straight-line basis over the vesting period based on the Black-Scholes option pricing model based on a risk-free rate from 0.85% to 1.41% in 2017 and 0.97% in 2016, dividend yield of 0%, expected life of 2 years and volatility of 43% to 137%. |
Use of Estimates | 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. | 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 | Adjustments All adjustments that, in the opinion of management, are necessary for a fair presentation for the periods presented have been reflected in the financial statements. | |
Going Concern | 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. The Company is actively seeking growth of its service offerings, both organically and via new client relationships. Management, in the ordinary course of business, is trying to raise 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. | 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. On May 23, 2017, the Company and GHS Investments, LLC (“GHS Investments”) entered into an Equity Financing Agreement (the “Agreement”). The Agreement was filed as an exhibit to a registration statement on Form S-1, filed with the Securities and Exchange Commission on September 18, 2017. 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. 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, is trying to raise 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. |
Future Accounting Pronouncements | Future Accounting Pronouncements In January 2017, the FASB issued ASU No. 2017-03, Accounting Changes and Error Corrections (Topic 250) and Investments-Equity Method and Joint Ventures (Topic 323). ASU 2017-03 amends the Codification for SEC staff announcements made at two Emerging Issues Task Force (EITF) meetings. At the September 2016 meeting, the SEC staff expressed its expectations about the extent of disclosures registrants should make about the effects of the new FASB guidance (including any amendments issued prior to adoption) on revenue (ASU 2014-09), leases (ASU 2016-02) and credit losses on financial instruments (ASU 2016-13) in accordance with SAB Topic 11.M. That Topic requires registrants to disclose the effect that recently issued accounting standards will have on their financial statements when adopted in a future period. ASU 2017-03 incorporates these SEC staff views into ASC 250 and adds references to that guidance in the transition paragraphs of each of the three new standards. The ASU also conforms ASC 323-740-S99-2, which describes the SEC staff’s views on accounting for investments in qualified affordable housing projects, to the guidance issued in ASU 2014-01. The staff announced the change at the November 2016 EITF meeting. In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, part of the FASB’s simplification initiative. ASU 2015-17 requires companies to classify deferred tax liabilities and assets as noncurrent. ASU 2015-17 is effective for fiscal years beginning after December 15, 2018. Early application of the amendments in this ASU is permitted. The Company does not expect any significant financial impact to the financial statements upon adoption of this standard. In February 2016, the FASB issued ASU Update No. 2016-02 Leases (Topic 842). Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP - which requires only capital leases to be recognized on the balance sheet - the new ASU will require both types of leases to be recognized on the balance sheet. ASU 2016-02 is effective for the years beginning after December 15, 2018 and for all periods presented. Early application of the amendments in this ASU is permitted. The Company does not expect any significant financial impact to the financial statements upon adoption of this standard. In March 2016, the FASB issued ASU Update No. 2016-07, Investments – Equity Method and Joint Ventures (Topic 323). The amendments in this Update eliminate the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. ASU 2016-07 is effective for the years beginning after December 15, 2016. Early application of the amendments in this ASU is permitted. The Company does not expect any significant financial impact to the financial statements upon adoption of this standard. In March 2016, the FASB issued ASU Update No. 2016-08, Revenue from Contracts with Customers (Topic 606). The amendments in this Update are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations by clarifying the criteria in determining a principal versus agent relationship. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, an entity should apply the following five steps: (1) identify contracts with customers, (2) identify the performance obligations in the contracts, (3) determine the transaction price, (4) allocate the transaction price to the performance obligation in the contract, and (5) recognize revenue as the entity satisfies performance obligations. The new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early application is permitted for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. We are currently evaluating what impact adoption of this guidance will have on our financial position, results of operations, cash flows and disclosures. The Company does not expect any significant financial impact to the financial statements upon adoption of this standard. | Future Accounting Pronouncements In February 2016, the FASB issued ASU Update No. 2016-02 Leases (Topic 842). Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP - which requires only capital leases to be recognized on the balance sheet - the new ASU will require both types of leases to be recognized on the balance sheet. ASU 2016-02 is effective for the years beginning after December 15, 2018 and for all periods presented. Early application of the amendments in this ASU is permitted. The Company does not expect any significant financial impact to the financial statements upon adoption of this standard. In March 2016, the FASB issued ASU Update No. 2016-07, Investments – Equity Method and Joint Ventures (Topic 323). The amendments in this Update eliminate the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. ASU 2016-07 is effective for the years beginning after December 15, 2016. Early application of the amendments in this ASU is permitted. The Company does not expect any significant financial impact to the financial statements upon adoption of this standard. In March 2016, the FASB issued ASU Update No. 2016-08, Revenue from Contracts with Customers (Topic 606). The amendments in this Update are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations by clarifying the criteria in determining a principal versus agent relationship. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, an entity should apply the following five steps: (1) identify contracts with customers, (2) identify the performance obligations in the contracts, (3) determine the transaction price, (4) allocate the transaction price to the performance obligation in the contract, and (5) recognize revenue as the entity satisfies performance obligations. The new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early application is permitted for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. We are currently evaluating what impact adoption of this guidance will have on our financial position, results of operations, cash flows and disclosures. The Company does not expect any significant financial impact to the financial statements upon adoption of this standard. In March 2016, the FASB issued ASU Update No. 2016-09, Compensation – Stock Compensation (Topic 718). The amendments in this Update are to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company has yet to do a full analysis on the impact this will have but will do during the next fiscal year. The Company does not expect any significant financial impact to the financial statements upon adoption of this standard. |
1. Summary of Significant Acc22
1. Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Schedule of goodwill | Goodwill at September 30, 2015 $ 662,967 Goodwill generated from acquisition of TCS 1,094,702 Impairment of Cloud9 (592,369 ) Impairment of MDP (70,598 ) Goodwill at September 30, 2016 1,094,702 Goodwill at September 30, 2017 $ 1,094,702 |
Customer Relationships [Member] | |
Schedule of future amortization | 2018 $ 11,225 2019 11,225 $ 22,450 |
Proprietary Content [Member] | |
Schedule of future amortization | 2018 $ 65,638 2019 65,638 2020 65,638 2021 65,638 2022 65,638 Thereafter 65,634 $ 393,824 |
Noncompete Agreements [Member] | |
Schedule of future amortization | 2018 $ 5,260 2019 5,260 2020 5,260 $ 15,780 |
2. Property and Equipment (Tabl
2. Property and Equipment (Tables) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Schedule of property and equipment | Estimated December 31, 2017 September 30, 2017 Furniture, fixtures and equipment 2 - 5 years $ 18,177 $ 11,039 Internally developed software 10 years 152,000 152,000 170,177 163,039 Less accumulated depreciation and amortization 40,834 35,536 $ 129,343 $ 127,503 | Estimated 2017 2016 Furniture, fixtures and equipment 2 to 5 years $ 11,039 $ 6,994 Internally developed software 10 years 152,000 152,000 163,039 158,994 Less accumulated depreciation and amortization 35,536 17,914 $ 127,503 $ 141,080 |
3. Trademarks (Tables)
3. Trademarks (Tables) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Schedule of trademarks | Trademarks at September 30, 2016 $ 22,592 Trademarks purchased at cost 7,493 Trademarks at September 30, 2017 30,085 Trademarks purchased at cost – Trademarks at December 31, 2017 $ 30,085 | Trademarks at September 30, 2015 $ 20,174 Trademarks purchased at cost 2,418 Trademarks at September 30, 2016 22,592 Trademarks purchased at cost 7,493 Trademarks at September 30, 2017 $ 30,085 |
5. Notes Payable (Tables)
5. Notes Payable (Tables) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Sep. 30, 2017 | |
Debt Disclosure [Abstract] | ||
Schedule of debt maturities | 2018 $ 54,376 2019 387,006 2020 418,465 2021 15,537 $ 875,384 | 2018 $ 165,562 2019 144,524 2020 136,507 $ 446,593 |
6. Accrued Expenses (Tables)
6. Accrued Expenses (Tables) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Sep. 30, 2017 | |
Payables and Accruals [Abstract] | ||
Schedule of accrued expenses | December 31, September 30, Accrued payroll $ – $ 19,165 Accrued operating expenses 84,173 103,137 Deferred rent 250 250 $ 84,423 $ 122,552 | 2017 2016 Accrued payroll $ 19,165 $ 44,327 Accrued operating expenses 103,137 59,077 Deferred rent 250 250 $ 122,552 $ 103,654 |
7. Income Taxes (Tables)
7. Income Taxes (Tables) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||
Reconciliation of income tax rates | 2017 2016 Tax benefit calculated at statutory rate 35.00% 35.00% Expense not deductible (0.37 ) (0.19 ) Merger costs – (1.64 ) Impairment of goodwill – (10.87 ) Changes to valuation allowance (34.63 ) (22.30 ) Provision for income taxes – % – % | |
Schedule of deferred taxes | December 31, September 30, Net non-current deferred tax assets: Net operating loss carry-forward $ 745,021 $ 1,131,643 Property and equipment 7,350 10,719 Total 752,371 1,142,362 Net non-current deferred tax liabilities: Intangible assets 580 728 Net 751,791 1,141,634 Less valuation allowance (751,791 ) (1,141,634 ) Net deferred taxes $ – $ – | 2017 2016 Net non-current deferred tax assets: Net operating loss carry-forward $ 1,131,643 $ 799,254 Property and equipment 10,719 4,627 1,142,362 803,881 Net non-current deferred tax liabilities: Intangible assets 728 303 Net 1,141,634 803,578 Less valuation allowance (1,141,634 ) (803,578 ) Net deferred taxes $ – $ – |
8. Commitments, Contingencies28
8. Commitments, Contingencies and Concentrations (Tables) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Schedule of minimum lease payments | 2018 $ 50,400 2019 5,700 $ 56,100 | 2018 $ 68,400 2019 5,700 $ 74,100 |
9. Business Acquisitions (Table
9. Business Acquisitions (Tables) | 12 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Schedule of assets acquired and liabilities assumed | The transaction resulted in a fair value of the acquisition of $1,094,702 as follows: Common stock issued in stock exchange at a value of $0.25 per share (as amended) $ 1,500,020 Additional paid in capital for the escrow agreement provision 404,600 Total value of the goodwill generated on acquisition 1,904,620 Intangible assets acquired (719,400 ) Net tangible assets acquired (90,518 ) Total assets acquired (809,918 ) Total fair value of acquisition $ 1,094,702 The intangible assets were as follows: Customer relationships $ 44,900 Proprietary content 525,100 Trade name 69,300 Prospect list 53,800 Non-compete agreements 26,300 Total intangible assets $ 719,400 The tangible assets acquired and liabilities assumed were as follows: Assets acquired: Cash $ 57,025 Accounts receivable 15,476 Accounts receivable - other 5,408 Internally developed software 152,000 Total tangible assets 229,909 Liabilities assumed: Accrued expenses 69,485 Line of credit 69,906 Total liabilities 139,391 Net acquired assets $ 90,518 |
11. Stock Option Plan (Tables)
11. Stock Option Plan (Tables) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Schedule of option activity | Shares Value of Weighted Weighted Outstanding - September 30, 2016 2,200,346 $ 22,129 $ 0.64 109 months Granted 661,400 323,927 0.78 116 months Exercised – – – – Canceled or expired 44,600 28,495 1.00 – Outstanding - September 30, 2017 2,817,146 317,561 0.67 101 months Granted 263,500 70,727 0.53 118 months Exercised – – – Canceled or expired – – – Outstanding - December 31, 2017 3,080,646 $ 388,288 $ 0.66 100 months Exercisable - December 31, 2017 2,406,029 $ 0.66 95 months | 2017 2016 Shares Under Option Value of Shares Under Option Weighted Average Exercise Price Weighted Average Remaining Contractual Life Shares Under Option Value of Shares Under Option Weighted Average Exercise Price Weighted Average Remaining Contractual Life Outstanding - beginning of year 2,200,346 $ 22,129 $ 0.64 1,500,996 $ 7,359 $ 0.33 Granted 661,400 323,927 0.78 116 months 1,024,400 19,677 1.00 111 months Exercised – – – – – – – – Canceled or expired 44,600 28,495 1.00 – 325,050 4,907 0.33 – Outstanding - end of year 2,817,146 $ 317,561 $ 0.67 101 months 2,200,346 $ 22,129 $ 0.64 109 months Exercisable - end of year 2,276,813 $ 0.65 97 months 2,200,346 $ 0.64 109 months |
1. Summary of Significant Acc31
1. Summary of Significant Accounting Policies (Details - Amortization) | Sep. 30, 2017USD ($) |
Customer Relationships [Member] | |
Future amortization, 2018 | $ 11,225 |
Future amortization, 2019 | 11,225 |
Future amortization | 22,450 |
Proprietary Content [Member] | |
Future amortization, 2018 | 65,638 |
Future amortization, 2019 | 65,638 |
Future amortization, 2020 | 65,638 |
Future amortization, 2021 | 65,638 |
Future amortization, 2022 | 65,638 |
Future amortization, thereafter | 65,634 |
Future amortization | 393,824 |
Noncompete Agreements [Member] | |
Future amortization, 2018 | 5,260 |
Future amortization, 2019 | 5,260 |
Future amortization, 2020 | 5,260 |
Future amortization | $ 15,780 |
1. Summary of Significant Acc32
1. Summary of Significant Accounting Policies (Details - Goodwill) - USD ($) | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Goodwill, beginning balance | $ 1,094,702 | $ 662,967 |
Impairment of goodwill | 0 | (662,967) |
Goodwill, ending balance | 1,094,702 | 1,094,702 |
Tax Coach Software [Member] | ||
Goodwill acquired | $ 1,094,702 | |
Cloud9 [Member] | ||
Impairment of goodwill | (592,369) | |
Metro Data Processing [Member] | ||
Impairment of goodwill | $ (70,598) |
1. Summary of Significant Acc33
1. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Allowance for doubtful accounts | $ 17,014 | $ 17,014 | $ 0 | |
Indefinite lived trade name | 69,300 | 69,300 | 69,300 | |
Advertising and marketing expense | $ 60,538 | $ 101,878 | $ 375,499 | $ 402,402 |
Risk free interest rate minimum | 0.85% | 0.85% | ||
Risk free interest rate maximum | 1.41% | 1.41% | ||
Risk free interest rate | 0.97% | 0.97% | ||
Dividend yield | 0.00% | 0.00% | ||
Expected life | 2 years | 2 years | ||
Volatility rate minimum | 43.00% | 43.00% | ||
Volatility rate maximum | 137.00% | 137.00% | ||
Weighted average number of shares outstanding | 35,812,952 | 35,037,900 | 35,361,321 | 31,626,189 |
Antidilutive shares excluded from computation of EPS | 3,430,646 | 2,350,346 | 2,817,146 | 2,200,346 |
Tax Coach Software [Member] | Customer Relationships [Member] | ||||
Finite lived intangible assets | $ 44,900 | $ 44,900 | ||
Amortization expense | 2,806 | $ 2,806 | 11,225 | $ 11,225 |
Accumulated amortization | 25,256 | 22,450 | 11,225 | |
Tax Coach Software [Member] | Proprietary Content [Member] | ||||
Finite lived intangible assets | 525,100 | 525,100 | ||
Amortization expense | 16,410 | 16,410 | 65,638 | 65,638 |
Accumulated amortization | 147,686 | 131,276 | 65,638 | |
Tax Coach Software [Member] | Noncompete Agreements [Member] | ||||
Finite lived intangible assets | 26,300 | 26,300 | ||
Amortization expense | 1,315 | $ 1,315 | 5,260 | 5,260 |
Accumulated amortization | 11,835 | 10,520 | $ 5,260 | |
Tax Coach Software [Member] | Trade Names [Member] | ||||
Indefinite lived trade name | $ 69,300 | $ 69,300 |
2. Property and Equipment (Deta
2. Property and Equipment (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | |
Property and equipment, gross | $ 170,177 | $ 163,039 | $ 158,994 |
Accumulated depreciation and amortization | 40,834 | 35,536 | 17,914 |
Property and equipment, net | 129,343 | 127,503 | 141,080 |
Furniture and Fixtures [Member] | |||
Property and equipment, gross | $ 18,177 | $ 11,039 | 6,994 |
Estimated service lives | 2 to 5 years | 2 to 5 years | |
Software Development [Member] | |||
Property and equipment, gross | $ 152,000 | $ 152,000 | $ 152,000 |
Estimated service lives | 10 years | 10 years |
2. Property and Equipment (De35
2. Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 5,298 | $ 4,146 | $ 17,625 | $ 17,625 |
3. Trademarks (Details)
3. Trademarks (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | |
Trademarks, beginning balance | $ 30,085 | $ 22,592 | |
Trademarks purchased | 0 | ||
Trademarks, ending balance | 30,085 | 30,085 | $ 22,592 |
Trademarks [Member] | |||
Trademarks, beginning balance | $ 30,085 | 22,592 | 20,174 |
Trademarks purchased | 7,493 | 2,418 | |
Trademarks, ending balance | $ 30,085 | $ 22,592 |
4. Line of Credit (Details Narr
4. Line of Credit (Details Narrative) - USD ($) | 12 Months Ended | ||
Sep. 30, 2017 | Dec. 31, 2017 | Sep. 30, 2016 | |
Line of credit, amount outstanding | $ 0 | $ 19,732 | |
Wells Fargo [Member] | |||
Line of credit maximum amount | $ 55,000 | $ 55,000 | |
Line of credit interest rate | 7.50% | ||
Line of credit, amount outstanding | $ 19,732 | $ 0 |
5. Notes Payable (Details Narra
5. Notes Payable (Details Narrative) - USD ($) | 12 Months Ended | ||
Sep. 30, 2017 | Dec. 31, 2017 | Sep. 30, 2016 | |
Note payable current | $ 165,562 | $ 54,376 | $ 93,397 |
Small Business Financial Solutions [Member] | |||
Note payable current | 7,935 | 0 | |
Fourly Enterprises [Member] | |||
Debt face amount | $ 50,000 | ||
Debt stated interest rate | 20.00% | ||
Debt maturity date | Aug. 16, 2018 | ||
Notes payable | $ 46,461 | ||
Elmer Fink [Member] | |||
Debt face amount | $ 100,000 | ||
Debt stated interest rate | 10.00% | ||
Debt maturity date | Jul. 31, 2020 | ||
Notes payable | $ 100,000 | ||
Mike and Terri Ashby [Member] | |||
Debt face amount | $ 100,000 | ||
Debt stated interest rate | 10.00% | ||
Debt maturity date | Aug. 15, 2020 | ||
Notes payable | $ 100,000 | ||
Heleon Investment Company [Member] | |||
Debt face amount | $ 100,000 | ||
Debt stated interest rate | 10.00% | ||
Debt maturity date | Aug. 15, 2020 | ||
Notes payable | $ 100,000 | ||
Huntington National Bank [Member] | |||
Line of credit maximum amount | $ 100,000 | ||
Interest rate terms | Prime plus 1.25% | ||
Credit line outstanding | $ 92,197 | $ 93,397 | |
Debt maturity date | Feb. 28, 2018 |
6. Accrued Expenses (Details)
6. Accrued Expenses (Details) - USD ($) | Dec. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2016 |
Payables and Accruals [Abstract] | |||
Accrued payroll | $ 0 | $ 19,165 | $ 44,327 |
Accrued operating expenses | 84,173 | 103,137 | 59,077 |
Deferred rent | 250 | 250 | 250 |
Total accrued expenses | $ 84,423 | $ 122,552 | $ 103,654 |
7. Income Taxes (Details - Tax
7. Income Taxes (Details - Tax rates) | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | ||
Tax benefit calculated at statutory rate | 35.00% | 35.00% |
Expense not deductible | (0.37%) | (0.19%) |
Merger costs | (1.64%) | |
Impairment of goodwill | (10.87%) | |
Changes to valuation allowance | (34.63%) | (22.30%) |
Provision for income taxes | 0.00% | 0.00% |
7. Income Taxes (Details - Defe
7. Income Taxes (Details - Deferred taxes) - USD ($) | Dec. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2016 |
Net non-current deferred tax assets: | |||
Net operating loss carry-forward | $ 745,021 | $ 1,131,643 | $ 799,254 |
Property and equipment | 7,350 | 10,719 | 4,627 |
Total non-current deferred tax assets | 752,371 | 1,142,362 | 803,881 |
Net non-current deferred tax liabilities: | |||
Intangible assets | 580 | 728 | 303 |
Deferred tax assets less deferred tax liabilities | 751,791 | 1,141,634 | 803,578 |
Less valuation allowance | (751,791) | (1,141,634) | (803,578) |
Net deferred taxes | $ 0 | $ 0 | $ 0 |
7. Income Taxes (Details Narrat
7. Income Taxes (Details Narrative) | 12 Months Ended |
Sep. 30, 2017USD ($) | |
Income Tax Disclosure [Abstract] | |
Net operating loss carryover | $ 3,233,265 |
NOL beginning expiration date | Dec. 31, 2035 |
8. Commitments, Contingencies43
8. Commitments, Contingencies and Concentrations (Details) - USD ($) | Dec. 31, 2017 | Sep. 30, 2017 |
Commitments and Contingencies Disclosure [Abstract] | ||
Future lease commitment, 2018 | $ 50,400 | $ 68,400 |
Future lease commitment, 2019 | 5,700 | 5,700 |
Future lease commitment | $ 56,100 | $ 74,100 |
8. Commitments, Contingencies44
8. Commitments, Contingencies and Concentrations (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Rent expense | $ 31,079 | $ 22,201 | $ 102,960 | $ 89,150 |
9. Business Acquisitions (Detai
9. Business Acquisitions (Details - Acquisitions) - USD ($) | 3 Months Ended | 12 Months Ended | ||||
Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Oct. 02, 2015 | Sep. 30, 2015 | |
Professional fees paid | $ 176,054 | $ 270,093 | $ 997,117 | $ 1,237,221 | ||
Goodwill | $ 1,094,702 | 1,094,702 | 1,094,702 | $ 662,967 | ||
Tax Coach Software [Member] | ||||||
Professional fees paid | 444,600 | $ 444,650 | ||||
Tax Coach Software [Member] | ||||||
Stock issued for acquisition, shares | 6,000,000 | |||||
Common stock issued in stock exchange | 1,500,020 | |||||
Additional paid in capital for the escrow agreement provision | 404,600 | |||||
Intangible assets acquired | $ 719,400 | |||||
Net assets acquired/ net liabilities assumed | 90,518 | |||||
Goodwill | 1,904,620 | |||||
Total assets acquired | 809,918 | |||||
Fair value of acquisition | $ 1,094,702 | |||||
Assets acquired: | ||||||
Cash | 57,025 | |||||
Accounts receivable | 15,476 | |||||
Accounts receivable - other | 5,408 | |||||
Internally developed software | 152,000 | |||||
Total tangible assets | 229,909 | |||||
Liabilities assumed: | ||||||
Accrued expenses | 69,485 | |||||
Line of credit | 69,906 | |||||
Total liabilities | 139,391 | |||||
Net acquired assets/liabilities | 90,518 | |||||
Tax Coach Software [Member] | Trade Names [Member] | ||||||
Intangible assets acquired | 69,300 | |||||
Tax Coach Software [Member] | Customer Relationships [Member] | ||||||
Intangible assets acquired | 44,900 | |||||
Tax Coach Software [Member] | Proprietary Content [Member] | ||||||
Intangible assets acquired | 525,100 | |||||
Tax Coach Software [Member] | Prospect List [Member] | ||||||
Intangible assets acquired | 53,800 | |||||
Tax Coach Software [Member] | Noncompete Agreements [Member] | ||||||
Intangible assets acquired | $ 26,300 |
10. Stockholders' Equity (Detai
10. Stockholders' Equity (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Stock issued for services, value | $ 112,500 | |
Stock issued for cash, shares | 725,000 | 785,000 |
Stock issued for cash, value | $ 725,000 | $ 535,000 |
FMW Media Works [Member] | ||
Stock issued for services, shares | 50,000 | |
Stock issued for services, value | $ 52,500 | |
Nationwide EZ Cash Flow [Member] | ||
Stock issued for services, shares | 100,000 | |
Stock issued for services, value | $ 60,000 |
11. Stock Option Plan (Details)
11. Stock Option Plan (Details) - Options [Member] - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | |
Number of Options | |||
Options outstanding, beginning balance | 2,817,146 | 2,200,346 | 1,500,996 |
Options granted | 263,500 | 661,400 | 1,024,400 |
Options exercised | 0 | 0 | |
Options cancelled or expired | 44,600 | 325,050 | |
Options outstanding, ending balance | 3,080,646 | 2,817,146 | 2,200,346 |
Options exercisable | 2,406,029 | 2,276,813 | 2,200,346 |
Value of Shares Under Option | |||
Options outstanding, beginning balance | $ 317,561 | $ 22,129 | $ 7,359 |
Options granted | 70,727 | 323,927 | 19,677 |
Options exercised | |||
Options cancelled or expired | 28,495 | 2,907 | |
Options outstanding, ending balance | $ 388,288 | $ 317,561 | $ 22,129 |
Weighted average exercise price | |||
Weighted average exercise price, options outstanding, beginning balance | $ 0.67 | $ 0.64 | $ 0.33 |
Weighted average exercise price, options granted | 0.53 | 0.78 | 1 |
Weighted average exercise price, options exercised | |||
Weighted average exercise price, options cancelled or expired | 1 | .33 | |
Weighted average exercise price, options outstanding, ending balance | 0.66 | 0.67 | 0.64 |
Weighted average exercise price, options exercisable | $ 0.66 | $ 0.65 | $ 0.64 |
Weighted average remaining contractual life | |||
Weighted average remaining contractual life, options granted | 118 months | 116 months | 111 months |
Weighted average remaining contractual life, options outstanding | 100 months | 101 months | 109 months |
Weighted average remaining contractual life, options exercisable | 95 months | 97 months | 109 months |
11. Stock Option Plan (Details
11. Stock Option Plan (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Share based compensation | $ 54,184 | $ 0 | $ 50,773 | $ 22,715 |
Unamortized share-based compensation expense | $ 265,576 | $ 249,033 | ||
Unamortized share-based compensation expense recognition period | 2 years | 2 years | ||
2015 Stock Option Plan [Member] | ||||
Maximum shares allowed under plan | 9,000,000 | |||
2016 Stock Option Plan [Member] | ||||
Maximum shares allowed under plan | 20,000,000 |
12. Related Party Transactions
12. Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Accounts receivable - related party | $ 2,303 | $ 4,506 | $ 4,506 | |
Management fees | 50,000 | $ 53,000 | 200,000 | 213,333 |
General and admin expenses | 241,072 | 121,826 | 748,481 | 408,537 |
Majority Stockholder [Member] | ||||
Accounts receivable - related party | 4,506 | 4,506 | ||
Management fees | 50,000 | 53,000 | 200,000 | 213,333 |
Board member and Stockholder [Member] | ||||
General and admin expenses | $ 0 | $ 15,000 | $ 49,000 | |
Fourly Enterprises [Member] | ||||
Debt face amount | $ 50,000 | |||
Debt stated interest rate | 20.00% | |||
Debt maturity date | Aug. 16, 2018 | |||
Promissory note payable balance | $ 46,461 |
1. SUMMARY OF SIGNIFICANT ACC50
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Dec. 2017 note (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Allowance for doubtful accounts | $ 17,014 | $ 17,014 | $ 0 | |
Indefinite lived trade name | 69,300 | 69,300 | 69,300 | |
Advertising and marketing expense | $ 60,538 | $ 101,878 | $ 375,499 | $ 402,402 |
Risk free interest rate minimum | 0.85% | 0.85% | ||
Risk free interest rate maximum | 1.41% | 1.41% | ||
Risk free interest rate | 0.97% | 0.97% | ||
Dividend yield | 0.00% | 0.00% | ||
Expected life | 2 years | 2 years | ||
Volatility rate minimum | 43.00% | 43.00% | ||
Volatility rate maximum | 137.00% | 137.00% | ||
Weighted average number of shares outstanding | 35,812,952 | 35,037,900 | 35,361,321 | 31,626,189 |
Antidilutive shares excluded from computation of EPS | 3,430,646 | 2,350,346 | 2,817,146 | 2,200,346 |
Warrant [Member] | ||||
Antidilutive shares excluded from computation of EPS | 350,000 | 150,000 | ||
Tax Coach Software, LLC [Member] | Trade Names [Member] | ||||
Indefinite lived trade name | $ 69,300 | $ 69,300 | ||
Tax Coach Software, LLC [Member] | Customer Relationships [Member] | ||||
Finite lived intangible assets | 44,900 | 44,900 | ||
Amortization expense | 2,806 | $ 2,806 | 11,225 | $ 11,225 |
Accumulated amortization | 25,256 | 22,450 | 11,225 | |
Tax Coach Software, LLC [Member] | Proprietary Content [Member] | ||||
Finite lived intangible assets | 525,100 | 525,100 | ||
Amortization expense | 16,410 | 16,410 | 65,638 | 65,638 |
Accumulated amortization | 147,686 | 131,276 | 65,638 | |
Tax Coach Software, LLC [Member] | Noncompete Agreements [Member] | ||||
Finite lived intangible assets | 26,300 | 26,300 | ||
Amortization expense | 1,315 | $ 1,315 | 5,260 | 5,260 |
Accumulated amortization | $ 11,835 | $ 10,520 | $ 5,260 |
2. PROPERTY AND EQUIPMENT - Dec
2. PROPERTY AND EQUIPMENT - Dec. 2017 note (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | |
Property and equipment, gross | $ 170,177 | $ 163,039 | $ 158,994 |
Accumulated depreciation and amortization | 40,834 | 35,536 | 17,914 |
Property and equipment, net | 129,343 | 127,503 | 141,080 |
Software Development [Member] | |||
Property and equipment, gross | $ 152,000 | $ 152,000 | 152,000 |
Estimated service lives | 10 years | 10 years | |
Furniture and Fixtures [Member] | |||
Property and equipment, gross | $ 18,177 | $ 11,039 | $ 6,994 |
Estimated service lives | 2 to 5 years | 2 to 5 years |
5. NOTES PAYABLE - Dec. 2017 no
5. NOTES PAYABLE - Dec. 2017 note (Details) | Dec. 31, 2017USD ($) |
Notes Payable - Dec. 2017 Note Details | |
2,018 | $ 54,376 |
2,019 | 387,006 |
2,020 | 418,465 |
2,021 | 15,537 |
Maturities of debt | $ 875,384 |
8. COMMITMENTS, CONTINGENCIES53
8. COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS - Dec. 2017 note (Details Narrative) - USD ($) | Oct. 02, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2017 | Sep. 30, 2016 |
Rent expense | $ 31,079 | $ 22,201 | $ 102,960 | $ 89,150 | |
Pacific Oil Company [Member] | |||||
Pre-merger payables | $ 99,056 | ||||
Settled amount | $ 23,764 | ||||
Tax Coach Software [Member] | |||||
Percentage of interests acquired | 100.00% | ||||
Number of shares issued in business acquisition | 6,000,000 | ||||
Shares par value (in dollars per share) | $ 0.00001 |
12. RELATED PARTY TRANSACTION54
12. RELATED PARTY TRANSACTIONS - Dec. 2017 note (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Accounts receivable - related party | $ 2,303 | $ 4,506 | $ 4,506 | |
Management fees | 50,000 | $ 53,000 | 200,000 | 213,333 |
General and admin expenses | $ 241,072 | 121,826 | 748,481 | 408,537 |
Tax Coach Software, LLC [Member] | Two Agreements [Member] | ||||
Description of agreement terms | Two agreements require certain services at a fixed fee of $17,000 per month, per agreement, commencing on November 1, 2015 with a 90-day termination clause. One agreement requires certain services at a fixed fee of $3,500 per month, commencing on November 1, 2015 with a 90-day termination clause. | |||
Tax Coach Software, LLC [Member] | Three Agreements [Member] | ||||
Professional fees | $ 101,960 | 116,100 | ||
Majority Stockholder [Member] | ||||
Accounts receivable - related party | 4,506 | 4,506 | ||
Management fees | 50,000 | 53,000 | $ 200,000 | 213,333 |
Board member and Stockholder [Member] | ||||
General and admin expenses | $ 0 | $ 15,000 | $ 49,000 |