What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2021-02-18 compared with 2020-01-14 · 49 added, 154 removed, 48 unchanged (81% of the section changed)

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our common stock has been traded on the OTCPINK since May 1, 2015, under the symbol CLRI. Previously, the shares of our common stock were traded on the OTCQB from May 16, 2013 until May 1, 2015.

The following table sets forth, taking into consideration the one for 3,000 reverse split of our common stock which occurred on December 28, 2012, the high and low bid prices for our common stock on the OTCQB and OTCPINK as reported by various market makers.

The quotations do not reflect adjustments for retail mark-ups, mark-downs, or commissions and may not necessarily reflect actual transactions.

Fiscal 2018 Quarter Ended:

December 31, 2017

March 31, 2018

June 30, 2018

September 30, 2018

Fiscal 2019 Quarter Ended:

December 31, 2018

March 31, 2019

June 30, 2019

September 30, 2019

As of December 30, 2019, we were authorized to issue 5,000,000,000 shares of our common stock, of which 211,994,635 shares were outstanding.

The Company's common stock has been traded on the OTCPINK under the symbol "CLRI." The last price of our common stock as reported on the pink tier of OTC Markets on February 12, 2021 was $0.04476 per share.

As of February 15, 2021, we were authorized to issue 5,000,000,000 shares of our common stock, of which 223,994,635 shares were outstanding.

Our shares of common stock are held by approximately 200 stockholders of record.

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There is no trading market for the shares of our preferred stock.

As of September 30, 2019 we have converted $87,800 of accrued dividends into common stock We do not anticipate paying any cash dividends or other distributions on our common stock in the foreseeable future.

Any future dividends will be declared at the discretion of our board of directors and will depend, among other things, on our earnings, if any, our financial requirements for future operations and growth, and other facts as our board of directors may then deem appropriate.

As of September 30, 2020 we have converted $87,800 of accrued dividends into common stock.

We do not anticipate paying any cash dividends or other distributions on the Company's common stock in the foreseeable future.

Any future dividends will be declared at the discretion of the Company's board of directors and will depend, among other things, on the earnings and financial requirements for future operations and growth, and other facts as the board of directors may then deem appropriate.

See "Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, for a description of our preferred stock and dividend rights pertaining to the preferred stock.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters," for a description of the preferred stock and dividend rights pertaining to the preferred stock.

The Company is obligated to pay dividends on its Series A Convertible Preferred Stock.

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As of September 30, 2020 and 2019, the cumulative arrearage of undeclared dividends totaled $83,071 and $41,921, respectively.

Securities Authorized for Issuance under Equity Compensation Plans

Equity Compensation Plan Information

Plan category

Number of securities to be issued upon exercise of outstanding options, warrants and rights

Weighted-average exercise price of outstanding options, warrants and rights

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)

Equity compensation plans approved by security holders

Equity compensation plans not approved by security holders

Recent Sales of Unregistered Securities

On the dates specified below, we have issued unregistered securities to various creditors and investors.

· On December 18, 2018, the Company sold 3,333,334 shares of common stock to two investors for $100,000 cash.

· On June 18, 2019 a shareholder converted a $25,000 promissory note, $9,712 of accrued interest, and $7,204 of accrued dividends into 1,397,211 shares of common stock at a conversion price of $0.03 per share.

· On June 18, 2019, a shareholder and director converted a $40,000 promissory note and $12,590 of accrued interest into 1,752,988 shares of common stock at a conversion price of $0.03 per share.

· On September 30, 2019, a shareholder and director converted $80,596 of accrued dividends into 1,611,912 shares of common stock at a conversion price of $0.05 per share.

Our unregistered securities were issued in reliance upon an exemption from registration pursuant to Section 4(a)(2) of the Securities Act or Rule 506(c) of Regulation D promulgated under the Securities Act.

Each investor took his securities for investment purposes without a view to distribution and had access to information concerning us and our business prospects, as required by the Securities Act.

Our securities were sold only to an accredited investor, as defined in the Securities Act, and after a thorough discussion.

Finally, our stock transfer agent has been instructed not to transfer any of such securities, unless such securities are registered for resale or there is an exemption with respect to their transfer.

All of the above described investors who received shares of our common stock or preferred stock were provided with access to our filings with the SEC, including the following:

· The information contained in our annual report on Form 10-K under the Exchange Act.

· The information contained in any reports or documents required to be filed by Cleartronic under sections 13(a), 14(a), 14(c), and 15(d) of the Exchange Act since the distribution or filing of the reports specified above.

· A brief description of the securities being offered, and any material changes in our affairs that were not disclosed in the documents furnished.

Purchases of Equity Securities by the Registrant and Affiliated Purchasers

There were no purchases of our equity securities by Cleartronic.

· On June 18, 2019, a shareholder and director converted a $40,000 promissory note and $12,590 of accrued interest into 1,752,988 shares of common stock at a conversion price of $0.03 per share.

· On September 30, 2019, a shareholder and director converted $80,596 of accrued dividends into 1,611,912 shares of common stock at a conversion price of $0.05 per share.

Except for those unregistered securities previously disclosed in reports filed with the Securities Exchange Commission during the period covered by this report, we have not sold any securities under the Securities Act of 1933.

Issuer Purchases of Equity Securities .

Selected Financial Data.

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THE FOLLOWING DISCUSSION SHOULD BE READ TOGETHER WITH THE INFORMATION CONTAINED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES INCLUDED ELSEWHERE IN THIS ANNUAL REPORT ON FORM 10-K.

The following discussion reflects our plan of operation.

Impact of COVID-19 Outbreak

The ongoing COVID-19 global and national health emergency has caused significant disruption in the international and United States economies and financial markets.

In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic.

The spread of COVID-19 has caused illness, quarantines, cancellation of events and travel, business and school shutdowns, reduction in business activity and financial transactions, labor shortages, supply chain interruptions and overall economic and financial market instability.

The COVID-19 pandemic has the potential to significantly impact the Company's supply chain and other service providers.

In addition, a severe prolonged economic downturn could result in a variety of risks to the business, including weakened demand for products and services and a decreased ability to raise additional capital when needed on acceptable terms, if at all.

As the situation continues to evolve, the Company will continue to closely monitor market conditions and respond accordingly.

To date, the Company has not experienced a significant adverse economic impact due to COVID-19.

While travel and other restrictions have been imposed the company has mitigated the situation by teleconferencing, web demos, etc.

However, there is no assurance that we will not have any adverse impact in the future.

The following discussion reflects the Company's plan of operation.

This discussion should be read in conjunction with the financial statements which are attached to this report.

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These statements involve risks and uncertainties.

Our actual results could differ materially from the results described in or implied by these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this report, particularly under the headings Special Note Regarding Forward-Looking Statements.

The actual results could differ materially from the results described in or implied by these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this report, particularly under the headings "Special Note Regarding Forward-Looking Statements."

Unless the context otherwise suggests, "we," "our," "us," and similar terms, as well as references to "Cleartronic," all refer to Cleartronic, Inc.

and our subsidiaries as of the date of this report.

Going Concern

On September 30, 2019, we had current assets of $282,628 and current liabilities of $1,329,725.

Our independent certified public accountants have stated in their report on our audited consolidated financial statements for the fiscal year end that there is a substantial doubt about our ability to continue as a going concern.

In the absence of significant revenue and profits, we will be completely dependent on additional debt and equity financing.

If we are unable to raise needed funds on acceptable terms, we will not be able to execute our business plan, develop or enhance existing services, take advantage of future opportunities, if any, or respond to competitive pressures or unanticipated requirements.

If we do not obtain sufficient capital, we will not be able to continue operations.

As of September 30, 2019, Cleartronic had an accumulated deficit of $16,221,110, which included a net loss of $176,598 reported for the year ended September 30, 2019.

Also, during the year ended September 30, 2019, we used net cash of $69,357 for operating activities.

These factors raise substantial doubt about our ability to continue as a going concern.

While we are attempting to generate revenues, our cash position may not be significant enough to support our daily operations.

Management intends to raise additional funds by way of an offering of our debt or equity securities.

Management believes that the actions presently being taken to further implement our business plan and generate revenues provide the opportunity for Cleartronic to continue as a going concern.

While we believe in the viability of our strategy to generate revenues and in our ability to raise additional funds, we may not be successful.

Our ability to continue as a going concern is dependent upon our capability to further implement our business plan and generate revenues.

Results of Operations

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Revenues increased 50% to $1,752,024 in 2020, from $1,164,191 during 2019.

This increase of approximately $381,959 was primarily due to increased sales of the ReadyOp software platform.

This increase of $587,833 was primarily due to increase in the number of customers of the ReadyOp/ReadyMed software platform.

Revenue from our other subsidiary, VoiceInterop, Inc., decreased approximately 68% to $27,698 from $87,254.

VoiceInterop was deconsolidated on February 14, 2020.

Cost of Revenues and Gross Margins.

Cost of revenues increased from $246,117 in 2019, to $407,136 in 2020.

Gross margins increased by approximately 39% from $918,074 in 2019 to $658,588 in 2018.

The primary reason for the increase in gross margin was due to lowering cost of revenue related to ReadyOp software subscriptions.

Gross margins increased from $918,074 in 2019 to $1,344,888 in 2020.

Gross Profit as a percentage of Revenue decreased from 79% in 2019 to 77% in 2020.

The decrease was primarily due to the lower profit margins from sales of ReadyOp ACE (AudioMate) IP gateways as compared to higher margins generated from licensing of ReadyOp software.

Operating Expenses.

Operating expenses increased approximately 11% in 2019, to $1,225,734 compared to $1,104,229 during 2018.

Operating expenses decreased approximately 10% in 2020 to $1,105,956 compared to $1,225,734 during 2019.

Operating expenses include selling expenses, administrative expenses, research and development costs and amortization expense.

Selling Expenses.

Selling expenses increased approximately 42% from $420,123 in 2018, to $595,825 in 2019, primarily due to increased travel expenses and trade show costs.

Administrative Expenses.

Administrative expenses remain fairly consistent from $348,330 in 2018, to $348,960 in 2019.

Research and Development Expenses.

Research and development expenses decreased approximately 7% to $207,707 in 2019, from $222,256 in 2018, due to decreased development expense related to a technology license agreement with the University of South Florida Research Foundation and decreased expense associated with the ReadyOP software platform.

Amortization Expenses.

Amortization expense was $73,242 in 2019 and $113,520 in 2018 a decrease of 35%.

The decrease was primarily due to the ReadyOp Customer List which was fully amortized in 2019.

Selling expenses decreased approximately 11% from $595,825 in 2019 to $530,853 in 2020, primarily due to decreased travel expenses during to the Covid-19 pandemic.

Amortization expense decreased by $61,762 or 84%, primarily due to amortization expenses associated with the ReadyOp software platform which has been fully amortized.

The $55,105 decrease in research and development expense was associated with the Company's development of the "Rectenna" project.

The decrease was primarily due to research of the Rectenna technology being substantially completed during the year.

The Company intends to devote future development funds to commercialize the Rectenna-related technology.

Other Income and Other Expense.

Interest and other expense increased from $13,324 in 2018 to $17,871 in 2019.

The increase was primarily due to an increase in interest expense.

Other income of approximately $253,480 was attributable to the settlement of old accounts payable.

Net losses were $176,598 and $532,809 for 2019 and 2018, respectively.

Interest and other expense decreased from $17,871 in 2019 to $8,727 in 2020.

The decrease was primarily due to payment of outstanding liabilities.

Other income in 2019 of $253,480 was attributable to the settlement of old accounts payable.

Loss from Discontinued Operations.

Losses from discontinued operations were $64,936 and $104,547 for 2020 and 2019, respectively.

Net Income / Loss.

Net income was $165,269 for 2020 and net loss of $176,598 for 2019.

On a basis of EBITDA, the Company had EBITDA from continuing operations of $250,412 in 2020 and $19,062 in 2019, a 1,214% increase.

Liquidity and Capital Resources

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Net cash used in operating activities for the fiscal year ended September 30, 2020, was $1,802 as compared to $69,357 for the fiscal year ended September 30, 2019.

We funded our operating activities during the most recent fiscal year through investing and financing activities that generated net proceeds of approximately $96,642.

At September 30, 2019, our total liabilities were $1,479,543, which included $264,855 in accounts payable, $123,300 in accrued expenses, $92,869 in notes payable stockholders, $26,756 in customer deposits and $776,537 in deferred revenue.

Based on our VoiceInterop business and the acquisition of the ReadyOp software platform and the Collabria client list we have developed a business plan.

The business plan calls for us to continue to market and sell unified communications hardware and software directly to enterprise customers.

We intend to market the ReadyOp ™ software through commissioned sales representatives.

We believe these sales will increase the sales of the AudioMate 360 IP Gateway

We believe that in order to fund our business plan, we will need approximately $1,380,000 in new equity or debt capital.

In the past, in addition to revenues and deferred revenues, we have obtained funds from the private sale of our debt and equity securities.

We have also had discussions with several securities broker-dealers with respect to a private or public offering of our securities.

Although none of such discussions has resulted in any funding, we intend to continue to have such discussions in the future.

We also intend to continue to seek private financing from certain of our existing stockholders and others.

Our current operating expenses are approximately $115,000 per month.

In order for us to cover our monthly operating expenses, we must generate approximately $175,000 per month in revenue.

Accordingly, in the absence of sufficient revenues, we must raise $115,000 in equity or debt capital each month to cover our overhead expenses.

In order to remain in business for one year without any revenues, we must secure $1,380,000 in equity or debt capital.

If we are unsuccessful in securing sufficient capital or revenues, we will be unable to continue our business activities.

Adjusted earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") from continuing operations increased from earnings of $19,062 to earnings of $250,412 in 2020.

At September 30, 2020, our total liabilities were $1,180,128, which included $253,372 in accounts payable, $43,457 in accrued expenses, $48,447 in notes payable stockholders, $106,727 in Paycheck Protection note payable and $728,125 in deferred revenue.

Deferred revenues are comprised of revenues from our annual ReadyOp subscriptions which are recognized over the period of the contract that is typically twelve months.

Investing Activities

Net cash used in investing activities was $34,029 for fiscal year ended September 30, 2020, and $0 in 2019.

Net cash used in 2020 included the issuance of a Note Receivable for $25,000 and fixed asset purchases of $9,029.

Financing Activities

Net cash provided by financing activities was $84,116 during fiscal 2020.

The increase was primarily due to proceeds received from note payable part of Cares Act Paycheck Protection Program of $106,727, proceeds from issuance net of repayment of installment note of $10,449 and proceeds from loan payable - related party of $11,362 included discontinued operations.

Net cash also included repayment of a stockholder note payable of $94,422 and proceeds from a stockholder note payable of $50,000.

Net cash provided by financing activities was $96,642 during fiscal 2019.

This included $43,810 from installment loan-discontinued operations less repayment of installment loan of $39,964, proceeds from the issuance of common stock of $100,000 less dividends paid of $7,204.

Net cash provided by financing activities was approximately $14,218 during fiscal year 2018.

This included proceeds from Note Payable Stockholders of $30,000 less repayment of notes payable stockholder of $15,782.

Critical Accounting Policies

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These estimates and assumptions are affected by management's application of accounting policies.

Critical accounting policies include revenue recognition and impairment of long-lived assets.

Revenue Recognition and Deferred Revenues

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2014-09, "Revenue from Contracts with Customers (Topic 606),"

which supersedes the revenue recognition requirements in Accounting Standards Codification 605, "Revenue Recognition."

This ASU is based on the principle that revenue is recognized to depict the transfer of 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.

The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract.

In August 2015, the FASB issued ASU No.

2015-14, which deferred the effective date of the new revenue standard by one year, and allowed entities the option to early adopt the new revenue standard as of the original effective date.

There have been multiple standards updates amending this guidance or providing corrections or improvements on issues in the guidance.

The requirements for these standards relating to Topic 606 are effective for interim and annual periods beginning after December 15, 2017.

This standard permitted adoption using one of two transition methods, either the retrospective or modified retrospective transition method.

The Company adopted these standards at the beginning of fiscal year 2019 using the modified retrospective method.

The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

The adoption of these standards did not have a material impact on the Company's consolidated statements of operations during the year ended September 30, 2019.

The Company revenue recognition policy follows guidance from Accounting Standards Codification (ASC) 606, Revenue from contract with customers.

Revenue is recognized when the Company transferred promised goods and services to the customer and in the amount that reflect the consideration to which the company expected to be entitled in exchange for those goods and services.

-The Company applies the following five-step model in order to determine this amount:

-Identification of Contact with a customer;

-Identify the performance obligation of the contract

-Determine transaction price;

-Allocation of the transaction price to the performance obligations;

-Recognition of revenue when (or as) the Company satisfies each performance obligation.

The Company generates revenue primarily through the sale of integrated hardware and software licenses.

The portion of the contract that is associated with ongoing hosting and related customer service is amortized monthly over the license period.

The Company incurs certain incremental contract costs (referred to as deferred subscriber acquisition costs, net) including selling expenses (primarily commissions) related to acquiring customers.

Deferred subscriber acquisition costs, net are included in prepaid and expenses and other current assets on the consolidated balance sheet.

Commissions paid in connection with acquiring new customers are determined based on the value of the contractual fees.

Deferred subscriber acquisition costs will be amortized over the license period.

In transactions in which hardware is sold to the customer, the Company recognizes revenue over the related software license period as the hardware cannot be used without a license and has no other alternative use.

The Company allocates the transaction price to each performance obligation based on a relative standalone selling price.

Revenue associated with the sale and installation of system licenses is recognized once installation is complete.

Customer billings for services not yet rendered are deferred and recognized as revenue as services are provided.

These fees are recorded as current deferred revenue on the consolidated balance sheet as the Company expects to satisfy any remaining performance obligations as well as recognize the related revenue within the next twelve months.

Accordingly, the Company has applied the practical expedient regarding deferred revenue to exclude the value of remaining performance obligations if (i) the contract has an original expected term of one year or less or (ii) the Company recognizes revenue in proportion to the amount it has the right to invoice for services performed.

The adoption of this standard did not have a material impact on the Company's consolidated statements of operations during the year ended September 30, 2019.

Inventory consists of finished goods to be shipped along with completed circuit boards and parts necessary for final assembly of finished product.

All existing inventory is considered current and usable and no reserve for obsolescence was carried for the years ended September 30, 2019 and 2018.

Critical accounting policies are described in Note 2 to the consolidated financial statement appearing elsewhere in this report.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases, which will amend current lease accounting to require lessees to recognize (i) a lease liability, which is a lessees obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessees right to use, or control the use of, a specified asset for the lease term.

ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors;

however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model.

This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

The adoption of ASU 2016-02 will have a material impact on its balance sheet as the Company will record material assets and obligations primarily related to its office space lease.

The Company expects to record right-of-use and the corresponding operating lease liability of approximately $79,000 based on the present value of the remaining minimum rental payments using discount rates as of the application date.

The Company also expects to record the right of use assets of approximately $75,000 based upon the operations lease liability adjusted deferred rent.

The amount will be included in assets and liabilities from discontinued operations.

The Company does not expect to have a material impact on its statement of income or statement of cash flows.

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2014-09, "Revenue from Contracts with Customers (Topic 606),"

which supersedes the revenue recognition requirements in Accounting Standards Codification 605, "Revenue Recognition."

In August 2015, the FASB issued ASU No.

2015-14, which deferred the effective date of the new revenue standard by one year, and allowed entities the option to early adopt the new revenue standard as of the original effective date.

There have been multiple standards updates amending this guidance or providing corrections or improvements on issues in the guidance.

The requirements for these standards relating to Topic 606 are effective for interim and annual periods beginning after December 15, 2017.

This standard permitted adoption using one of two transition methods, either the retrospective or modified retrospective transition method.

The Company adopted these standards at the beginning of fiscal year 2019 using the modified retrospective method.

The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

The adoption of these standards did not have a material impact on the Company's consolidated statements of operations during the year ended September 30, 2019.

The recent accounting standards that have been issued or proposed by Financial Accounting Standard Board (FASB) or other standard setting bodies that do not require adoption until a future date are not expected to have a material impact on the financial statement upon adoption.

The recent accounting pronouncements are described in Note 2 to the consolidated financial statement appearing elsewhere in this report.

Off-Balance Sheet Arrangements

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

What changed 10-K

Item 5. Market for Registrant’s Common Equity