Cleartronic, Inc. 10-K

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. 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 September 30, 2023 was $0.0281 per share. As of September 30, 2023 we were authorized to issue 5,000,000,000 shares of our common stock, of which 229,160,695 shares were outstanding. Our shares of common stock are held by approximately 218 stockholders of record. The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of our common stock whose shares are held in the names of various securities brokers, dealers, and registered clearing agencies. In addition to our authorized common stock, Cleartronic has designated 200,000,000 shares of preferred stock, par value $0.00001 per share, of which 7,317,403 shares are issued or outstanding. There is no trading market for the shares of our preferred stock. Dividends 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 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. Each Series A Preferred Holder is entitled to receive cumulative dividends at the rate of 8% of $1.00 per annum for each outstanding share of Series A Preferred then held by such Series A Preferred Holder, on a pro rata basis. As of September 30, 2023 and 2022, the cumulative arrearage of undeclared dividends totalled $206,181 and $165,144, respectively. Recent Sales of Unregistered Securities 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 None Item 6. Selected Financial Data. Not applicable. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 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. MANAGEMENT DISCUSSION 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. This discussion contains forward-looking statements, including statements regarding our expected financial position, business and financing plans. These statements involve risks and uncertainties. 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. Results of Operations YEAR ENDED SEPTEMBER 30, 2023 COMPARED TO THE YEAR ENDED SEPTEMBER 30, 2022 Revenue Revenues increased 5.67% to $2,131,955 for the year ended September 30, 2023 as compared to $2,017,563 for the year ended September 30, 2022. The primary reason for the increase was an increase in revenue from the ReadyOp platform from $1,818,035 in 2022 to $2,022,550 in 2023. There was also an increase in sales of ReadyOp hardware products from $33,800 in 2022 to 48,325 in 2023. Consulting fees and related income decreased from $86,000 in 2022 to $32,850 in 2023 due primarily to a decrease in sales of thermal scanners as these were primarily purchased by clients for operations during the COVID 19 pandemic. Cost of Revenue Cost of revenues decreased to $316,163 for the year ended September 30, 2023 as compared to $334,138 for the year ended September 30, 2022. Gross profits were $1,815,792 and $1,683,425 for the years ended September 30, 2023 and September 30, 2022, respectively. Gross profit margins increased to 85.17% for the year ended September 30, 2023 from 83.44% for the year ended September 30, 2022. Operating Expenses Operating expenses increased 32.49% to $1,761,843 for the year ended September 30, 2023 compared to $1,329,791 for the year ended September 30, 2022. The increase was primarily due to administrative expenses and selling expenses. General and administrative expenses increased by $270,184 or 26.14% as a result of the increase in general business expenses, an increase in headcount and personnel related costs associated with the addition of new employees. In addition, the Company’s paid fees to outside consulting services that are assisting us in obtaining FedRAMP certification. For the year ended September 30, 2023, $59,324 was paid in connection with FedRamp certification. There were also charitable contributions and employee holiday bonuses paid during the year. For the year ended September 30, 2023, selling expenses were $425,498 compared to $272,521 for the year ended September 30, 2022. This increase was primarily due expenses associated with a trade show hosted by the Company and bad debt expense. There was also an increase in advertising and travel expenses as the Company increased its sales and marketing efforts following the COVID 19 pandemic. Research and development expenses were $27,314 for the year ended September 30, 2023, as compared to $19,742 for the year ended September 30, 2022. This increase was primarily due to research and development expenses. Other Income/(Expenses) The Company’s other income decreased by $44,654 from other income of $2,607 during the year ended September 30, 2023 as compared to $47,261 in other expenses for the year ended September 30, 2022. The primary reason for this decrease was an increase in interest income on note receivable due from a related party and offset by a settlement of certain accounts payable for the year ended September 30, 2022. - 5 - Income before Income Taxes The Company’s income before income taxes was $56,556, during the year ended September 30, 2023, as compared to $400,895 for the year ended September 30, 2022. The decrease was primarily due to expensing audit expenses, a move of the corporate headquarters, the addition of new employees, employee related costs and costs associated with FedRAMP certification. The increased costs were partially offset by an increase in subscriptions of ReadyOp licenses. Net Income Attributable to Common Stockholders Net income attributable to common stockholders was $15,518 for the year ended September 30, 2023 as compared to a net income of $359,858 for the year ended September 30, 2022. The decrease was primarily due to an increase in administrative and offset by an increase in sales of ReadyOp licenses. The increased costs were partially due expenses related to a move of the corporate headquarters and the addition of new employees. The preferred stock dividends remained consistent. Liquidity and Capital Resources For the year ended September 30, 2023, net cash provided in operations of $99,595 was the result of a net income of $56,556, depreciation and amortization expense of $5,051, amortization of operating lease of $17,949, provision of bad debt of $97,994, an increase in accounts payable of $10,640, and a decrease in inventory of $816. These were offset by an increase in accounts receivable of $105,537, increase in prepaid expenses of $17,635 and an increase in deferred revenue of $52,169. For the year ended September 30, 2022, net cash used in operations of $74,649 was the result of a net income of $400,895, depreciation expense of $3,732, provision of bad debt of $14,000, gain on settlement and reversal of accounts payable of $47,792, an increase in accounts receivable of $231,785, and a decrease of accounts payable of $36,943. These were offset by an increase in inventory of $6,444, an increase in prepaid expenses of $6,228, and an increase in deferred revenue of $6,285. Net cash used in investing activities was $50,807 for the year ended September 30, 2023 which was for the purchase of fixed assets of $6,434, and intangible assets of $44,374. Net cash used in investing activities was $ $7,483 for the year ended 2022, which was for the purchase of fixed assets of $7,483. Critical Accounting Estimates We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and make estimates and assumptions that affect our reported amounts of assets, liabilities, revenue and expenses, and the related disclosures of contingent liabilities. We base our estimates on historical experience and other assumptions that we believe are reasonable in the circumstances. Actual results may differ from these estimates. The following critical accounting policies affect our more significant estimates and assumptions used in preparing our consolidated financial statements. Accounts Receivable and Allowance for Credit Losses The Company maintains current receivable amounts with most of its customers. The Company regularly monitors and assesses its risk of not collecting amounts owed by customers. This evaluation is based upon an analysis of current and past due amounts, along with relevant history and facts particular to the customer. The Company records its allowance for credit losses based on the results of this analysis. The analysis requires the Company to make significant estimates and as such, changes in facts and circumstances could result in material changes in the allowance for credit losses. The Company considers as past due any receivable balance not collected within its contractual terms. The Company provided $63,665 and $18,000 allowances for doubtful accounts as of September 30, 2023, and September 30, 2022, respectively. Inventory Inventory consists of components held for assembly and finished goods held for resale or to be utilized for installation in projects. Inventory is valued at lower of cost or net realizable value on a first-in, first-out basis. The Company’s policy is to record a reserve for technological obsolescence or slow-moving inventory items. The Company only carries 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. Recent Accounting Pronouncements 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 We do not have any off-balance sheet arrangements. Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Not applicable. Item 8. Financial Statements and Supplementary Data. The financial statements and related notes are included as part of this report as indexed in the appendix on page F-1, et seq . Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None