| Summary of Significant Accounting Policies | 2. 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. Beginning as of May 21, 2020 Forta’s
assets and liabilities are included in Company’s assets and liabilities and Forta’s results of operations have been
consolidated with Company’s results. Cash and Cash Equivalents The Company considers all highly liquid investments
with an initial maturity of three months or less, when purchased, to be cash equivalents. The Company maintains cash balances at
financial institutions located throughout the United States, which at times may exceed insured limits. The Company has not experienced
any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents. Cash does
not include restricted cash, including the net capital deposit of approximately $100,000 at First Clearing, which is recorded on
the balance sheet with prepaid expenses and other current assets. Receivables Trade accounts receivable are carried at the
invoiced amount less an estimate made for doubtful accounts based on management’s review of outstanding balances. The collectability
of the Company’s accounts receivable is reviewed on an ongoing basis, using historical payment trends and a review of specific
accounts. Accounts receivable are written off after all reasonable collection efforts have been exhausted and when management determines
the amounts to be uncollectible. Recoveries of receivables previously written off are recorded when received. The allowance for
doubtful accounts was $0 as of December 31, 2020 and September 30, 2020, respectively. In the normal course of business, the Company
may extend credit to its customers, on an unsecured basis, substantially all of whom are in the United States of America. The Company
does not believe that it is exposed to any significant risk of loss on accounts receivable. Prepaid Expenses and other current assets Prepaid expenses consist of expenses the Company
has paid for prior to the service or good being provided. These prepaid expenses will be recorded as expense at the time the service
has been provided. Property and Equipment Property and equipment are stated at cost,
less accumulated depreciation. Depreciation is provided in amounts sufficient to relate the cost of depreciable assets to earnings
over their estimated service lives by the straight-line method. Maintenance and repairs are charged to earnings
as incurred; major repairs and replacements are capitalized. When items of property or equipment are sold or retired, the related
cost and accumulated depreciation are removed from the accounts and any gain or loss is included in operations. Proprietary Content The proprietary content acquired as a part
of the TMN purchase has been recognized in the accompanying consolidated balance sheets at $525,100, the value attributed to it
on the date of the purchase. The proprietary content is being amortized on a straight-line basis over an eight- year estimated
life. During each of the three months ended December 31, 2020 and 2019, the Company recorded amortization expense of $16,544 and
$16,410 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, 2020 was $394,049 and $377,505 at September 30,
2020. Future amortization of proprietary content
is estimated to be as follows for the years ended September 30:
2021 $ 49,632
2022 81,419
$ 131,051 Non-compete Agreements Non-compete agreements entered into as a part
of the TMN purchase have been recognized in the accompanying consolidated balance sheets at $26,300, the value attributed to such
agreements on the date of the purchase. The non-compete agreements are being amortized on a straight-line basis over the five-year
term of the non-compete clause of the agreement. During each of the three months ended December 31, 2020 and 2019, the Company
recorded amortization expense of $0 and $1,315 respectively on this intangible asset, which is included in depreciation and amortization
expense in the accompanying consolidated statements of operations. Accumulated amortization was $26,300 at September 30, 2020.
This asset is fully depreciated and written off, as of September 30, 2020. 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
are not amortized but are tested for impairment at least annually. Management has determined that the intellectual property have
an indefinite life and do not consider the value of intellectual property recorded in the accompanying consolidated balance sheets
to be impaired as of December 31, 2020 and September 30, 2020. 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 it is carrying amount. The
qualitative factors evaluated by the Company include: macro-economic conditions of the local business environment, overall financial
performance, and other entity specific factors as deemed appropriate. If, through this qualitative assessment, the conclusion is
made that it is more likely than not that a reporting unit’s fair value is less than it is carrying amount, a two-step impairment
test is performed. Management determined, by assessing the qualitative factors, that it is more likely than not that the fair value
of the reporting unit is greater than it carries value. Management does not consider the value of goodwill recorded in the accompanying
consolidated balance sheets to be impaired as of December 31, 2020 and September 30, 2020. Goodwill consists of the following:
December
31, September
30,
TMN Goodwill $ 1,094,702 $ 1,094,702
Forta Goodwill 7,380,603 7,380,603
Total Goodwill $ 8,475,305 $ 8,475,305 Income Taxes The Company records federal and state income,
which requires an asset and liability approach for financial accounting and reporting for income taxes based on tax effects of
differences between the financial statement and tax basis of assets and liabilities. The Company accounts for all uncertain tax
positions in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
740 – Income Taxes (“ASC 740”). ASC 740 provides guidance on de-recognition, classification, interest and penalties
and disclosure related to uncertain income tax positions. The Company recognizes accrued interest and penalties related to unrecognized
tax benefits as a component of income tax expense. There was no accrued interest, penalties or uncertain tax positions as of December
31, 2020 and September 30, 2020. From time to time, the Company is audited by
taxing authorities. These audits could result in proposed assessments of additional taxes. The Company believes that its tax positions
comply in all material respects with applicable tax law. However, tax law is subject to interpretation, and interpretations by
taxing authorities could be different from those of the Company, which could result in the imposition of additional taxes. The
Company’s Federal returns since 2016 are still subject for examination by taxing authorities. Earnings Per Share Basic earnings per common share is computed
by dividing net earnings available to common stockholders by the weighted average number of common shares outstanding for the reporting
period. Average number of common shares were 83,618,412 and 41,495,070 for the three months ended December 31, 2020 and 2019, respectively
. For the three months ended December 31, 2020,
approximately 3,626,446 common stock equivalents were not added to the diluted average shares because inclusion of such equivalents would
be antidilutive. For the three months ended December 31, 2019, approximately 2,161,605 common stock equivalents were not added
to the diluted average shares because inclusion of such equivalents would be antidilutive. Revenue Recognition The Company adopted the Financial Accounting
Standards Board ("FASB") issued Accounting Standards Updates (“ASU”) ASU 2014-09, Revenue from Contracts
with Customers October 1, 2019 on a modified basis. As the initial adoption of the standard did not have a material impact on the
Company's financial condition or results of operations, no cumulative effect was recognized at the date of initial application.
The Company also had no significant changes to systems, processes, or controls. The Company derives its revenues primarily
from the following activities: Investment Management Fees, Securities Brokerage Commissions, Tax Master Network subscriptions,
Tax Operating System subscriptions, Financial Advisor subscriptions, Tax BluePrint sales, and Insurance Sales. Investment management fees are recognized as
services are provided by the Company. Investment management fees include fees earned from assets under management by providing
professional services to manage clients’ investments. Fees are generally paid quarterly, in advance, for each quarter or
monthly in arrears. Revenues are earned over the period in which the service is provided, which is typically monthly. The Company generates services income which
is recognized when consulting and other professional services are performed by the Company (primarily from TMN and MPath). Income
is recognized as services are delivered. 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. Trade accounts receivable are carried only
for investment management fees that are paid in arrears. The allowance for doubtful accounts was $0 and $0 as of December 31, 2020
and 2019, respectively. In the normal course of business, the Company
extends credit on an unsecured basis to its customers, substantially all of whom are located in the United States of America. The
Company does not believe that it is exposed to any significant risk of loss on accounts receivable. Sofos 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. Revenue is recognized as earned, at the end of each period. Forta generates commission revenue from
the sale of annuities and premiums on life insurance policies held by third parties. The revenue is recognized on a trade date
basis for commission revenue and upon acceptance of insurance policies by insurers. MPath generates revenue from insurance marketing
services for insurance agents, including sourcing of insurance policies through selling agreements. Tax Master Network has five levels of network
subscription services that are charged and collected on a month-to-month basis. None of these programs come with a long-term commitment
or contract, and there is no up-front payment beyond the monthly subscription fee. Cancellations are processed within the month
requested and memberships are closed at the end of the period for which the most recent payment was made. Members are not entitled
to refunds for unused memberships. Any subscription fees paid for a future period are deferred in the financial statements. TMN
also sells Tax Blueprint®. These are tax planning strategies guides, to save customers taxes through the implementation of
the recommended tax strategies. After an initial assessment, the customers pay half of the year one tax savings. A contract liability
is recognized when the customer payment is received. Revenue is deferred until the customer reviews and accepts the final Tax Blueprint®
document and returns an executed delivery agreement. The Company received revenue from Sofos’
operations that are primarily from investment management fees, including money management fees. Investment management fees are
based upon a percentage of assets under management and totaled $408,473 and $424,326 or the three months ended December 31, 2020
and 2019, respectively. The Company received revenue from Forta’s
operations for the three months ended December 31, 2020 including:
Investment Advisory fees $ 430,556
Commission-based transactions 268,098
Insurance and Other Service Revenue 46,454
Total Revenue $ 745,108 The Company received revenue from TMN’s
operations from the following major sources for the three months ended December 31,:
2020 2019
TMN membership subscriptions $ 228,664 $ 159,401
Tax Blueprints 127,500 24,000
Commissions/Referrals 25,301 11,224
Total $ 381,464 $ 194,625 The Company received revenue from MPath’s
operations from insurance sales of $172,602 and $0 for the three months ended December 31, 2020 and 2019, respectively. Advertising and Marketing Marketing costs are charged to operations when
incurred. Marketing expenses were $20,546 and $21,113 for the three months ended December 31, 2020 and 2019, respectively. Stock-Based Compensation The Company recognizes the fair value of stock-based
compensation awards as wages in the accompanying statements of operations for employee grants, commissions for non-employee grants,
and stock appreciation rights grants, on a straight-line basis over the vesting period, using the Black-Scholes option pricing
model, which is based on risk-free rate of 0.59% in the quarter ended December 31, 2020 and 1.49% to 2.55% in 2019, dividend yield
of 0%, expected life of 10 years and volatility of 35% to 40% in 2020 and 100% in 2019 respectively. SAR awards are new this year
and are being treated as a liability award while the options are being treated as equity awards. While the fair value of the options
are based on the Black Scholes assumptions included here, the SAR awards are based on assumptions at period end and are treated
as liability awards. Forfeitures are recorded as they occur.” Use of Estimates The preparation of the consolidated financial
statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported assets and liabilities
and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of
revenues and expenses during the reporting period. Actual results could differ from these estimates. Adjustments The accompanying unaudited consolidated financial
statements have been prepared by the Company in accordance with generally accepted accounting principles in the United States (“GAAP”),
pursuant to the applicable rules and regulations of the SEC. The information furnished herein reflects all adjustments (consisting
only of normal recurring adjustments) that are, in the opinion of management, necessary to present a fair statement of the financial
position and operating results of the Company as of and for the respective periods. However, these operating results are not necessarily
indicative of the results expected for a full fiscal year or any other future period. Certain information and footnote disclosures
normally included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and
regulations. However, management of the Company believes, to the best of their knowledge, that the disclosures herein are adequate
to make the information presented not misleading. The Company has determined that there were no subsequent events that would require
adjustments to the accompanying consolidated financial statements through the date the financial statements were issued. The accompanying
unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements of
the Company for the fiscal year ended September 30, 2020, included in its Annual Report on Form 10K. 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. For the three months ended December 31, 2020,
the Company reported $1,707,677 in revenue, a net loss of $194,360, use of cash of $51,762, and an accumulated deficit of $7,185,150.
These operating results raise substantial doubt about our ability to continue as a going concern. The financial statements do not
include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the outcome of these uncertainties. On May 8, 2020, the Company received a PPP
loan in the amount of $283,345. Additionally, on May 15, 2020, Forta received a PPP loan in the amount of $377,700. PPP loans bear
a fixed interest rate of 1% over a two-year term, are guaranteed by the federal government, and do not require collateral. The
loans may be forgiven, in part or whole, if the proceeds are used to retain and pay employees and for other qualifying expenditures.
The Company expects that the full proceeds of the PPP loans will be eligible for forgiveness, which would result in an increase
in capital of $661,045. Company’s plans for expansion include
attracting additional clients through marketing efforts with its current and future brokerage, investment management and insurance
agent representatives, as well as increasing the TMN membership and the investment advisory activity of the members to increase
assets under management and Company’s revenue. Future growth plans will include efforts to increase advisory headcount through
recruiting of individuals advisors and groups of advisors. There is no guaranty that the Company will achieve these objectives. Future Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13 Financial
Instruments-Credit Losses, which amends how entities will measure credit losses for most financial assets and certain other instruments
that are not measured at fair value through net income, which applies to trade accounts receivable and the calculation of the allowance
for uncollectible accounts receivable. The new standard will become effective for the Company for fiscal years beginning after
December 31, 2019, with early adoption permitted. In November of 2019, the FASB issued ASU 2019-10 Financial Instruments—Credit
Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, which deferred the effective
date of ASU Topic No. 2016-13 to fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact
of the adoption of this accounting guidance will have on the consolidated financial statements. Since the Company currently uses
an expected loss from customers method, the Company does not anticipate the adoption of ASU 2016-13 will have a material impact
on the Company's financial condition or results of operations. In January 2017, the FASB issued ASU No. 2017-04
Intangibles-Goodwill and Other Simplifying the Test for Goodwill Impairment, which provides guidance to simplify the subsequent
measurement of goodwill by eliminating the Step 2 procedure from the goodwill impairment test. The new guidance was effective for
the Company beginning October 1, 2020. |
