| 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 $0 as of June 30, 2018
and $14,482 as of 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 TMN 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 three and nine months ended June 30, 2018 and 2017, the Company recorded
amortization expense of $2,806 and $8,418, respectively, on this intangible asset, which is included in depreciation and amortization
expense in the accompanying consolidated statements of operations. Accumulated amortization at June 30, 2018 was $30,868 and $22,450
at September 30, 2017. Proprietary
Content The proprietary
content acquired as a part of the TMN purchase has been recognized in the accompanying consolidated balance sheets at $525,100,
the value attributed to 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 three and nine months ended June 30, 2018 and 2017, the Company recorded
amortization expense of $16,409 and $49,227 on this intangible asset, which is included in depreciation and amortization expense
in the accompanying consolidated statements of operations. Accumulated amortization at June 30, 2018 was $180,503 and $131,276
at September 30, 2017. Trade
Name The trade
name acquired as a part of the TMN 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
June 30, 2018 and September 30, 2017. Non-compete
Agreements Non-compete
agreements entered into as a part of the TMN purchase have been recognized in the accompanying consolidated balance sheets at
$26,300, the value attributed to such agreements on the date of the purchase. The non-compete agreements are being amortized on
a straight-line basis over the five-year term of the non-compete clause of the agreement. During each of the three and nine months
ended June 30, 2018 and 2017, the Company recorded amortization expense of $1,315 and $3,945, respectively, on this intangible
asset, which is included in depreciation and amortization expense in the accompanying consolidated statements of operations. Accumulated
amortization at June 30, 2018 was $14,465 and $10,520 at September 30, 2017. Intellectual
Property The Company
accounts for Intellectual Property in accordance with GAAP and accordingly, Intellectual Property are stated at cost. Intellectual
Property with indefinite lives is not amortized but are tested for impairment at least annually. Management has determined that
the Intellectual Property have an indefinite life and do not consider the value of Intellectual Property recorded in the accompanying
consolidated balance sheet to be impaired as of June 30, 2018 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 TMN in the accompanying consolidated balance sheets to be impaired as of June 30, 2018 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 was 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 June 30, 2018 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 35,837,900 and 34,886,089 for the three months
ended June 30, 2018 and 2017, respectively. Average number of common shares were 35,827,925 and 35,137,625 for the nine months
ended June 30, 2018 and 2017, respectively. For the periods ended June 30, 2018 and 2017, 3,430,646 and 2,340,171 common stock
options and warrants were excluded from diluted loss per share as they were 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 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 Master
Network (formally known as 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 for the three months ended June 30, 2018 and
2017 was $67,783 and $131,508, respectively; and $206,018 and $307,977 for the nine months ended June 30, 2018 and 2017. 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 2.55% in 2018 and 0.97% in 2017, 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. 2016-08, 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. |
