Cleartronic, Inc. 10-Q/A

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. FORWARD-LOOKING STATEMENTS The information set forth in this Management’s Discussion and Analysis contains certain “forward-looking statements,” including, among others (i) expected changes in our revenues and profitability, (ii) prospective business opportunities, and (iii) our strategy for financing our business. Forward-looking statements are statements other than historical information or statements of current condition. Some forward-looking statements may be identified by use of terms such as “believes,” “anticipates,” “intends,” or “expects.” These forward-looking statements relate to our plans, objectives, and expectations for future operations. Although we believe that our expectations with respect to the forward-looking statements are based upon reasonable assumptions within the bounds of our knowledge of our business and operations, in light of the risks and uncertainties inherent in all future projections, the inclusion of forward-looking statements in this prospectus should not be regarded as a representation that our objectives or plans will be achieved. In light of the risks and uncertainties, there can be no assurance that actual results, performance, or achievements will not differ materially from any future results, performance, or achievements expressed or implied by such forward-looking statements. The foregoing review of important factors should not be construed as exhaustive. We undertake no obligation to release publicly the results of any future revisions we may make to forward-looking statements to reflect events or circumstances after the date of this prospectus or to reflect the occurrence of unanticipated events. Overview Cleartronic, Inc. (the “Company”) was incorporated in Florida on November 15, 1999. All current operations are conducted through the Company’s wholly owned subsidiary, ReadyOp Communications, Inc. (“ReadyOp”), a Florida corporation incorporated on September 15, 2014.ReadyOp facilitates the marketing and sales of subscriptions to the ReadyOp ™ and ReadyMed ™ platform and the AudioMate IP gateways discussed below. ReadyOp is a proprietary, innovative web-based planning, communications and operations platform for efficiently and effectively planning, managing, communicating, and directing operations and emergency response. ReadyOp is used by local, state and federal government agencies, corporations, school districts, utilities, hospitals and others to manage and report daily operations as well as the ability to handle incidents and emergency situations. ReadyOp is offered as a software as a service (SAAS) program on an annual contract basis although an increasing number of clients have requested multi-year agreements. In March 2018, the Company approved the spin-off of VoiceInterop, Inc. (“Voiceinterop”), one of the Company’s wholly-owned subsidiaries, into a separate company under a Form S-1 registration filed with the United States Securities and Exchange Commission. Therefore, the Company has presented the operations of this subsidiary as discontinued operations. In October 2019, the Company acquired the ReadyMed software platform from Collabria LLC. ReadyMed is a web-based secure communications platform initially designed for the healthcare industry. This includes hospitals, clinics, doctor’s offices, health insurance companies, workers compensation insurance companies and many other segments of the healthcare industry. The platform provides caregivers with patient tracking capability and allows physicians and other healthcare entities to track patient progress after medical treatment and/or release from hospital care. The software also enables monitoring and reporting of patients in medium and long-term care. Additionally, the platform provides secure communications capabilities and record keeping to track the healing process of patients, record their recovery and monitor their medications. ReadyMed has proved beneficial for multiple clients in the healthcare industry due to the impact of the COVID-19 pandemic. The Company offers both the ReadyOp and ReadyMed capabilities to clients and usually refers to the platform as ReadyOp to avoid confusion in the marketplace of two products. FOR THE THREE MONTHS ENDED DECEMBER 31, 2021 COMPARED TO THE THREE MONTHS ENDED DECEMBER 31, 2020 Revenue Revenues increased 36.15% to $519,185 for the three months ended December 31, 2021 as compared to $381,338 for the three months ended December 31, 2020. The primary reason for the increase in revenue was due to an increase subscriptions to the ReadyOp platform increased from $369,740 in 2020 to $449,500 in 2021, or approximately 21.57% and slightly offset by a decrease in sales of ReadyOp hardware products from $5,800 in 2020 to $2,000 in 2021. Consulting fees and related income increased from $5,798 in 2020 to $67,685 in 2021 due to more training activity and sale of thermal scanners in the three months ended December 31, 2021. Cost of Revenue Cost of revenues was $92,236 for the three months ended December 31, 2021 as compared to $60,334 for the three months ended December 31, 2020. Gross profits were $426,949 and $321,004 for the three months ended December 31, 2021 and December 31, 2020, respectively. Gross profit margins decreased from 84% for the three months ended December 31, 2020 to 82% for the three months ended December 31, 2021. The decrease in gross profit was primarily due to higher costs associated with sales of subscriptions to the ReadyOp platform. Operating Expenses Operating expenses increased 28.85% to $366,534 for the three months ended December 31, 2021 compared to $284,465 for the three months ended December 31, 2020. The increase was primarily due increases in selling, administrative expense, research and development and depreciation expense. For the three months ended December 31, 2021, selling expenses were $188,545 compared to $160,859 for the three months ended December 31, 2020. This increase was primarily due to an increase in advertising, travel and commissions expense. General and administrative expenses increased by $35,549 or 38.49% as a result of increase in general business expenses. Depreciation expense increased by 80.49% from $451 for the three months ended December 31, 2020 to $814 for the three months ended December 31, 2021 due to the additional computer equipment purchased during the period. Research and development expenses were $30,789 for the three months ended December 31, 2020 as compared to $49,260 for the three months ended December 31, 2021. The increase was primarily due to expenses associated with the development of a new technology associated with a patent owned by the University of South Florida Research Foundation and an increase in salary. The Company has obtained the exclusive license to develop and market the technology associated with the patent. Other Expenses The Company's other expenses decreased to $168 from other expense of $1,115 during the three months ended December 31, 2021 as compared to the three months ended December 31, 2020. The primary reason for this decrease was a decrease in interest expense as the notes payable were fully repaid in the prior year. Income from Operations The Company’s income from operations was $60,247 during the three months ended December 31, 2021 as compared to $35,424 for the three months ended December 31, 2020. The increase was primarily due to an increase in subscription of ReadyOp software in 2021 and an offset by an increase in operating expenses. -12- Net Income Attributable to Common Stockholders Net income attributable to common stockholders was $49,903 for the three months ended December 31, 2021 as compared to a net income of $25,078 for the three months ended December 31, 2020. The increase was primarily due to increased subscriptions to the ReadyOp platform. LIQUIDITY AND CAPITAL RESOURCES For the three months ended December 31, 2021, net cash used in operations of $17,849 was the result of a net income of $60,247, a decrease in accounts receivable of $46,867, and an increase of accounts payable of $26,406. These were offset by an increase in inventory of $6,588, a decrease in prepaid expenses of $33,364, and a decrease in deferred revenue of $172,573. For the three months ended December 31, 2020, net cash used in operations of $1,927 was the result of a net income of $35,424, provision of bad debt of $16,500, a decrease in accounts receivable of $40,900, and a decrease in inventory of $594. These were offset by an increase in prepaid expenses of $14,404, a decrease of accounts payable of $14,870, and a decrease in deferred revenue of $70,540. Net cash used in investing activities was $5,058 for the three months ended December 31, 2021, which was a purchase of fixed assets. Net cash used in financing activities was $15,615 for the three months ended December 31, 2020 which was a repayment of a stockholder note payable of $15,615. Critical Accounting Estimates See “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended September 30, 2021 for information regarding our critical accounting estimates. Item 3. Quantitative and Qualitative Disclosures About Market Risk. Not applicable.