Cleartronic, Inc. 10-K

Item 9A. Controls and Procedures. Evaluation of Disclosure and Controls and Procedures. We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined) in Exchange Act Rules 13a - 15(c) and 15d - 15(e)). Based upon that evaluation, our chief executive officer and chief financial officer concluded that, as of September 30, 2023, our disclosure controls and procedures were effective (1) to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (2) to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to us, including our Chief Executive and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. The term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act (15 U.S.C. 78a , et seq. ) is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. - 6 - Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls over financial reporting will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of inherent limitations in all control systems, internal control over financial reporting may not prevent or detect misstatements, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the registrant have been detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management’s Annual Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. The term internal control over financial reporting is defined as a process designed by, or under the supervision of, the issuer’s principal executive and principal financial officers, or persons performing similar functions, and effected by the issuer’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: ● Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; ● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and ● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer’s assets that could have a material effect on the financial statements. Our management assessed the effectiveness of our internal control over financial reporting as of September 30, 2023. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO-2013) in Internal Control-Integrated Framework. Management concluded that our internal control over financial reporting was effective as of September 30, 2023. Changes in Internal Control Over Financial Reporting. There have been no changes in the registrant’s internal control over financial reporting through the date of this report or during the quarter ended September 30, 2023, that materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. Independent Registered Accountant’s Internal Control Attestation. This report does not include an attestation report of the registrant’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the registrant’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the registrant to provide only management’s report in this report. Item 9B. Other Information. None. PART III Item 10. Directors, Executive Officers and Corporate Governance. The following table sets forth information concerning the directors and executive officers of Cleartronic as of the date of this report: Name Age Position Director Since Richard J. Martin 63 Chairman and Director 2016 Michael M. Moore 68 Chief Executive Officer and Director 2015 Larry M. Reid 78 President, Chief Financial Officer, Secretary and Director 1999 The members of our board of directors are subject to change from time to time by the vote of the stockholders at special or annual meetings to elect directors. Our current board of directors consists of three directors who have expertise in the business of Cleartronic. Based on our continuing profitability, we intend to seek directors and officers who would be able to assist in the execution of our business plan. The foregoing notwithstanding, except as otherwise provided in any resolution or resolutions of the board, directors who are elected at an annual meeting of stockholders, and directors elected in the interim to fill vacancies and newly created directorships, will hold office for the term for which elected and until their successors are elected and qualified or until their earlier death, resignation or removal. Whenever the holders of any class or classes of stock or any series thereof are entitled to elect one or more directors pursuant to any resolution or resolutions of the board, vacancies and newly created directorships of such class or classes or series thereof may generally be filled by a majority of the directors elected by such class or classes or series then in office, by a sole remaining director so elected or by the unanimous written consent or the affirmative vote of a majority of the outstanding shares of such class or classes or series entitled to elect such director or directors. Officers are elected annually by the directors. There are no family relationships among our directors and officers. We may employ additional management personnel, as our board of directors deems necessary. Cleartronic has not identified or reached an agreement or understanding with any other individuals to serve in management positions, but does not anticipate any problem in employing qualified staff. A description of the business experience for the directors and executive officers of Cleartronic is set forth below. Richard J. Martin currently serves as Chairman and Director of Cleartronic, Inc. Prior to joining the Cleartronic team, Martin served as CEO of SMARTLogix, Inc., a petroleum logistics technology company which he founded in 2000. Graduating with an Engineering degree from The University of Buffalo’s School of Engineering, Martin joined the Exxon Management Development Program. Following his tenure at Exxon, he purchased an Exxon distributorship in the Carolinas. Culp Petroleum was transformed into a large regional distribution company. While at Culp, Martin developed and implemented several technologies that have since become industry standards. Martin sold the petroleum business in 2005 and focused his efforts on his technology ventures including the SMARTank division of SMARTLogix. SMARTank grew substantially and the technology was later sold to a public company in 2011. - 7 - Michael M. Moore is currently Chief Executive Officer and a Director of Cleartronic, Inc. He was founder and CEO of Collabria, LLC, a private software development company. Prior to founding Collabria in 2008, Moore for 13 years was CEO of DTNet Group and for seven years served as CEO of Payroll Transfers, Inc. He also was an assistant vice president with both Kidder Peabody and Merrill Lynch. Mr. Moore is an honors graduate of the United States Air Force Academy and served as an Air Force fighter pilot for eight years, flying F-4 and F-16 fighter aircraft. He is also one of six entrepreneurs profiled in the book Daring Visionaries, How Entrepreneurs Build Companies, Inspire Allegiance, and Create Wealth. Larry Reid is the founder of Cleartronic and a co-founder of VoiceInterop. With over thirty years of executive management experience including sales and marketing, operations management, and financial management, from 2001 to 2005 Mr. Reid served as CFO and director of Connectivity, Inc., a manufacturer and distributor of emergency call boxes. He was instrumental in Connectivity’s acquisition by CNE Group, Inc., (an American Stock Exchange listed company) and served as Executive Vice President and Director of CNE from 2003 to 2005. Mr. Reid has broad experience in venture start-ups, raising capital, building organizational synergies, creating and developing joint ventures and strategic partnerships, opening new markets, and driving key business initiatives. Early in his professional career in corporate financial management, Mr. Reid was responsible for raising more than $5 million in start-up capital for Ocurest Laboratories, Inc., a company he co-founded to package and distribute over-the-counter eye drops in a new (patented) eye drop dispenser. He forged Ocurest’s successful IPO in 1996 and helped lead the company’s achieving an estimated 80% market penetration of optical supply retail outlets in the United States. Committees of the Board We do not currently have an Audit, Executive, Finance, Compensation, or Nominating Committee, or any other committee of the Board of Directors. Section 16(a) Beneficial Ownership Reporting Compliance Under Section 16(a) of the Exchange Act, our directors and certain of our officers, and persons holding more than 10 percent of our common stock are required to file forms reporting their beneficial ownership of our common stock and subsequent changes in that ownership with the United States Securities and Exchange Commission. Such persons are also required to furnish Cleartronic with copies of all forms so filed. Based solely upon a review of copies of such forms filed on Forms 3, 4, and 5, and amendments thereto furnished to us, we believe that as of the date of this report, our executive officers, directors and greater than 10 percent beneficial owners have not complied on a timely basis with all Section 16(a) filing requirements. Communication with Directors Stockholders and other interested parties may contact any of our directors by writing to them at Cleartronic, Inc., at 8000 North Federal Highway, Suite 100, Boca Raton, Florida 33487, Attention: Corporate Secretary. The Company’s Board has approved a process for handling letters received by us and addressed to any of our directors. Under that process, the Secretary reviews all such correspondence and regularly forwards to the directors a summary of all such correspondence, together with copies of all such correspondence that, in the opinion of the Secretary, deal with functions of the board or committees thereof or that he otherwise determines requires their attention. Directors may at any time review a log of all correspondence received by us that are addressed to members of the board and request copies of such correspondence. Conflicts of Interest With respect to transactions involving real or apparent conflicts of interest, we have not adopted any written policies and procedures. Code of Ethics for Senior Executive Officers and Senior Financial Officers We have not adopted a Code of Ethics for Senior Executive Officers and Senior Financial Officers. Item 11. Executive Compensation. Summary of Cash and Certain Other Compensation At present, Cleartronic has two executive officers, Michael M. Moore and Larry M. Reid. Michael M. Moore is the Chief Executive Officer of the Company. The Company executed an Employment Agreement with Mr. Moore on November 28, 2016. Under the Agreement, Mr. Moore agreed that he shall carry out the strategic plans and policies as established by our business plan. Mr. Moore will advise us from time to time on organization, hiring, mergers, and execution of our business plan. Mr. Moore is paid a base salary of $16,667 per month. Unless Cleartronic shall have given Mr. Moore written notice at least 30 days prior to the Termination Date, the Agreement shall automatically renew and continue in effect for additional one-year periods (and all provisions of this anniversary from such original Termination Date shall thereafter be designated as the “Termination Date” for all purposes under the Agreement, provided, however, that we may, at our election at any time after the expiration of the initial term of the Agreement, give Mr. Moore notice of Termination, in which event he shall continue to receive, as severance pay, six months of his base salary, if any, or the amount due through the next “Termination Date”, whichever is less. Mr. Moore may terminate the Agreement without severance pay upon 10 days written notice to the Company. The Company executed an Employment Agreement with Mr. Reid on March 13, 2015. The Employment Agreement replaces the previously executed Employment Agreement with Mr. Reid. Pursuant to the Employment Agreement (the “Agreement”), Cleartronic and Mr. Reid agreed that for a one year period beginning on March 13, 2015, we employed Mr. Reid to perform services for us both on and offsite. The last day of the one year period shall be the “Termination Date” for purposes of the Agreement. Termination of the agreement can be made by either party without penalty upon 10 days written notice. Pursuant to the Agreement, Cleartronic and Mr. Reid agreed that for a one year period beginning on November 28, 2016, Mr. Reid to perform services for us both on and offsite. The last day of the one year period shall be the “Termination Date” for purposes of the Agreement. Unless Cleartronic shall have given Mr. Reid written notice at least 30 days prior to the Termination Date, the Agreement shall automatically renew and continue in effect for additional one-year periods (and all provisions of this anniversary from such original Termination Date shall thereafter be designated as the “Termination Date” for all purposes under the Agreement, provided, however, that we may, at our election at any time after the expiration of the initial term of the Agreement, give Mr. Reid notice of Termination, in which event he shall continue to receive, as severance pay, six months of his base salary, if any, or the amount due through the next “Termination Date”, whichever is less. Mr. Reid may terminate the Agreement without severance pay upon 10 days written notice to the Company. Under the Agreement, Mr. Reid agreed that he shall carry out the strategic plans and policies as established by our business plan. Mr. Reid will advise us from time to time on organization, hiring, mergers, and execution of our business plan. Summary Compensation Table The following table sets forth, for our named executive officers for the two completed fiscal years ended September 30, 2023, and 2022: Name and Principal Position Year Salary ($) Bonus ($) Stock Awards ($) Option Awards ($) Non-Equity Incentive Plan Compensation ($) Nonqualified deferred compensation earnings ($) All Other Compensation ($) Total ($) Larry M. Reid (1) 2022 104,000 5,500 -0- -0- -0- -0- -0- 109,500 2023 104,000 400 -0- -0- -0- -0- -0- 104,400 Michael Moore (2) 2022 208,462 20,812 -0- -0- -0- -0- -0- 229,274 2023 220,000 3,100 -0- -0- -0- -0- -0- 223,100 (1) Mr. Reid is our Chief Financial Officer, Secretary, and a director. (2) Mr. Moore is our CEO and a director. - 8 - Outstanding Equity Awards at Fiscal Year-End Our Executive Officers have not received any equity awards for the years ended September 30, 2023 and 2022. Director Compensation Our Directors have not received compensation for the years September 30, 2023 and 2022. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The following table presents information regarding the beneficial ownership of all shares of our common stock and preferred stock as of the date of this report by: ● Each person who owns beneficially outstanding shares of our preferred stock; ● Each director; ● Each named executive officer; and ● All directors and officers as a group. Shares of Common Stock Beneficially Owned (2) Shares of Preferred Stock Beneficially Owned (2) Name of Beneficial Owner (1) Number Percent Number Percent Larry M. Reid (3) 5,016,325 2.19 % 511,225 5.93 % Michael Moore (4) 5,702,988 2.50 % 3,000,000 34.18 % Richard J. Martin 1,868,202 0.82 % 1,582,966 18.37 % All directors and officers as a group (one person) 12,587,515 5.51 % 5,094,199 59.12 % (1) Unless otherwise indicated, the address for each of these stockholders is c/o Cleartronic, Inc., at 8000 North Federal Highway, Suite 100, Boca Raton, Florida 33487. Also, unless otherwise indicated, each person named in the table above has the sole voting and investment power with respect to our shares of common stock or preferred stock which he beneficially owns. (2) Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission. As of the date of this report, we have 5,000,000,000 authorized shares of common stock, par value $0.00001 per share, of which 228,578,995 shares were issued and outstanding. As of the date of this report, we have 71,250,010 authorized and designated shares of preferred stock, par value $0.00001 per share, of which 7,525,403 shares were issued and outstanding. Mr. Reid owns 511,525 shares of Series C Preferred stock. See below for a description of our preferred stock and voting rights. Mr. Martin owns 512,996 shares of our Series A Preferred stock and 1,070,000 shares of our Series C Preferred stock. (3) Mr. Reid is our president, chief financial officer, principal accounting officer, secretary, and director. (4) Mr. Moore is our Chief Executive Officer and a director. Mr. Moore owns 5,702,988 shares of our common stock and 3,000,000 shares of our Series E Preferred stock. Other than as stated herein, there are no arrangements or understandings, known to us, including any pledge by any person of our securities: ● The operation of which may at a subsequent date result in a change in control of Cleartronic; or ● With respect to the election of directors or other matters. Preferred Stock As of the date of this report, we have 200,000,000 authorized shares of preferred stock, par value $0.00001 per share, of which 7,317,403 shares were issued and outstanding. There are currently 5 series of preferred stock designated as follows: ● 1,250,000 shares have been designated as Series A Preferred Stock, 512,996 of which are issued and outstanding; ● 10 shares have been designated as Series B Preferred Stock, none of which is issued and outstanding; ● 50,000,000 shares have been designated as Series C Preferred Stock, 3,133,503 of which are issued and outstanding; and ● 10,000,000 shares have been designated Series D Preferred stock, of which 670,904 are issued and outstanding; and ● 10,000,000 shares have been designated Series E Preferred stock, of which 3,000,000 are issued and outstanding. Pursuant to our Articles of Incorporation establishing our preferred stock: ● A holder of shares of the Series A Preferred Stock is entitled to the number of votes equal to the number of shares of the Series A Preferred Stock held by such holder multiplied by one on all matters submitted to a vote of our stockholders. Each one share of our Series A Preferred Stock shall be convertible into 100 shares of our common stock. Each holder of Series A Preferred Stock is entitled to receive cumulative dividends at the rate of 8% of $1.00 per annum on each outstanding share of Series A Preferred Stock then held by such holder, on a pro rata basis. ● A holder of shares of the Series B Preferred Stock is entitled one vote per share on all matters submitted to a vote of our stockholders. If at least one share of Series B Preferred Stock is issued and outstanding, then the total aggregate issued shares of Series B Preferred Stock at any given time, regardless of their number, shall have voting rights equal to two times the sum of the total number of shares of our common stock which are issued and outstanding at the time of voting, plus the total number of shares of any shares of our preferred stock which are issued and outstanding at the time of voting. A holder of shares of the Series B Preferred Stock shall have no conversion rights or rights to dividends. ● A holder of shares of the Series C Preferred Stock is entitled, to the number of votes equal to the number of shares of the Series C Preferred Stock held by such holder multiplied by 5 on all matters submitted to a vote of our stockholders. In addition, the holders of our Series C Preferred Stock shall be entitled to receive dividends when, as and if declared by the Board of Directors, in its sole discretion. No dividends have been declared. Finally, each one share of our Series C Preferred Stock shall be convertible into five shares of our common stock. ● A holder of shares of the Series D Preferred Stock is entitled, to the number of votes equal to the number of shares of the Series D Preferred Stock held by such holder multiplied by 5 on all matters submitted to a vote of our stockholders. In addition, the holders of our Series D Preferred Stock shall be entitled to receive dividends when, as and if declared by the Board of Directors, in its sole discretion. No dividends have been declared. Finally, each one share of our Series D Preferred Stock shall be convertible into five shares of our common stock. ● A holder of shares of the Series E Preferred Stock is entitled, to the number of votes equal to the number of shares of the Series E Preferred Stock held by such holder multiplied by 100 on all matters submitted to a vote of our stockholders. In addition, the holders of our Series E Preferred Stock shall be entitled to receive dividends when, as and if declared by the Board of Directors, in its sole discretion. No dividends have been declared. Finally, each one share of our Series E Preferred Stock shall be convertible into 100 shares of our common stock. Item 13. Certain Relationships and Related Transactions and Director Independence. None - 9 - Item 14. Principal Accounting Fees and Services. Change in Audit Firms On October 6, 2022, Liggett & Webb P.A. (“L&W”) resigned as the independent auditors of Cleartronic, Inc., a company incorporated under the laws of the State of Florida (the “Company”). The Company’s Board of Directors accepted L&W’s resignation on October 6, 2022. The reports of L&W on the financial statements of the Company as of and for the fiscal year ended September 30, 2021 did not contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the Company’s most recent fiscal years and the subsequent interim period through October 6, 2022, there were no disagreements with L&W on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement(s), if not resolved to the satisfaction of L&W, would have caused it to make reference to the subject matter of the disagreement(s) in connection with its report. During the Company’s most recent fiscal years and the subsequent period through October 6, 2022, there were no reportable events of the type described in Item 304(a)(1)(v) of Regulation S-K. The Company provided L&W with a copy of the foregoing disclosure and requested L&W to furnish the Company with a letter addressed to the Securities and Exchange Commission stating whether it agrees with the statements made therein. A copy of such letter furnished by L&W is filed as Exhibit 16.1 to the form 8-K filed by the Company. On December 7, 2022, the Board of Directors of the Company approved the engagement of Assurance Dimensions (“Assurance”) as the Company’s independent registered public accounting firm for the audit of the Company’s annual report on Form 10-K for the year ended September 30, 2022. Audit Fees The aggregate fees billed by Liggett & Webb, P.A. for professional services rendered for the audit and reviews of our financial statements for the fiscal years ended September 30, 2022, was $48,000. The aggregate fees billed by Assurance Dimensions for professional services rendered for the audit and review of our financial statements for the fiscal year ended September 30, 2022, was $30,000. The aggregate fees billed by Assurance Dimensions for professional services rendered for the audit and review of our financial statements for the fiscal year ended September 30, 2023, was $50,000. Audit Related Fees The aggregate audit-related fees billed by Liggett & Webb, P.A. for professional services rendered for the audit of our annual financial statements for the fiscal year ended September 30, 2022 was $4,000. Tax Fees The aggregate tax fees billed by Liggett & Webb, P.A. professional services rendered for tax services for the fiscal year ended September 30, 2023 and 2022 was $1,500 and $1,500, respectively. All Other Fees There were no other fees billed by Assurance Dimensions (“Assurance”) for professional services rendered during the fiscal year ended September 30, 2023, other than as stated under the captions Audit Fees, Audit-Related Fees, and Tax Fees. There were no other fees billed by Ligget & Webb, P.A. for professional services rendered during the fiscal years ended September 30, 2023 and 2022, other than as stated under the captions Audit Fees, Audit-Related Fees, and Tax Fees. Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors Given the small size of our Board, our Board acts as our Audit Committee. Our Board pre-approves all audit and permissible non-audit services. These services may include audit services, audit-related services, tax services, and other services. Our Board approves these services on a case-by-case basis. - 10 - PART IV Item 15. Exhibits, Financial Statement Schedules. (a) All financial statements are included in Item 8 of this report. (b) All financial statement schedules required to be filed by Item 8 of this report and the exhibits contained in this report are included in Item 8 of this report. (c) The following exhibits are attached to this report: Exhibit No. Identification of Exhibit 3.1** Articles of Incorporation, filed as exhibit 3.01 to the registrant’s registration statement on Form SB-2 on July 3, 2006, Commission File Number 333-135585. 3.2** Articles of Amendment to Articles of Incorporation filed March 12, 2001, filed as exhibit 3.02 to the registrant’s registration statement on Form SB-2 on July 3, 2006, Commission File Number 333-135585. 3.3** Articles of Amendment to Articles of Incorporation filed October 4, 2004, filed as exhibit 3.03 to the registrant’s registration statement on Form SB-2 on July 3, 2006, Commission File Number 333-135585. 3.4** Articles of Amendment to Articles of Incorporation filed March 31, 2005, filed as exhibit 3.04 to the registrant’s registration statement on Form SB-2 on July 3, 2006, Commission File Number 333-135585. 3.5** Articles of Amendment to Articles of Incorporation filed May 9, 2008, filed as exhibit 3.02 to the registrant’s registration statement on Form S-1 on May 28, 2008, Commission File Number 333-135585. 3.6** Articles of Amendment to Articles of Incorporation filed June 28, 2010, filed as exhibit 3.7 to the registrant’s Form 10-Q on February 14, 2011, Commission File Number 333-135585. 3.7** Articles of Amendment to Articles of Incorporation filed May 6, 2011, filed as exhibit 3.1 to the registrant’s Form 8-K on May 6, 2011, Commission File Number 333-135585. 3.8** Articles of Amendment to Articles of Incorporation filed April 19, 2012, filed as exhibit 3.09 to the registrant’s Form 10-Q on May 14, 2012, Commission File Number 333-135585. 3.9** Articles of Amendment to Articles of Incorporation filed September 7, 2012, filed as exhibit 3.1 to the registrant’s Form 8-K on September 7, 2012, Commission File Number 333-135585. 3.10** Articles of Amendment to Articles of Incorporation filed September 19, 2012, filed as exhibit 3.1 to the registrant’s Form 8-K on September 19, 2012, Commission File Number 333-135585. 3.11** Articles of Amendment to Articles of Incorporation filed October 5, 2012, filed as exhibit 3.1 to the registrant’s Form 8-K on October 5, 2012, Commission File Number 333-135585. 3.12** Articles of Amendment to Articles of Incorporation filed December 28, 2013, filed as exhibit 3.12 to the registrant’s Form 8-K on January 14, 2014, Commission File Number 333-135585. 3.13** Bylaws, filed as exhibit 3.05 to the registrant’s registration statement on Form SB-2 on July 3, 2006, Commission File Number 333-135585. 3.14** Amended and Restated Bylaws, filed as exhibit 3.1 to the registrant’s Form 8-K on July 26, 2010, Commission File Number 333-135585. 10.1** Employment Agreement dated October 5, 2012, between Larry M. Reid and the registrant, filed as exhibit 10.1 to the registrant’s Form 8-K on October 12, 2012, Commission File Number 333-135585. 10.2** Lease Agreement dated November 30, 2014, between BGNP Associates, LLC and Cleartronic, Inc, filed as Exhibit 10.10 to the registrant’s Form 10-K on January 13, 2015, Commission File Number 000-55329 10.3** Employment Agreement dated March 13, 2015, between Larry M. Reid and the registrant, filed as Exhibit 10.1 to the registrant’s Form 8-K on March 18, 2015, Commission File Number 000-55329 10.4** Subscription Agreement between registrant and private accredited investor dated March 31, 2015 for purchase of 278,743 shares of Series D Convertible Preferred stock, filed as exhibit 10.1 to the registrant’s Form 8-K on April 10, 2015, Commission File Number 000-55329 10.5** Subscription Agreement between registrant and private accredited investor dated March 31, 2015 for purchase of 270,024 shares of Series D Convertible Preferred stock, filed as exhibit 10.2 to the registrant’s Form 8-K on April 10, 2015, Commission File Number 000-55329 10.6** Subscription Agreement between registrant and private accredited investor dated March 31, 2015 for purchase of 278,743 shares of Series D Convertible Preferred stock, filed as exhibit 10.3 to the registrant’s Form 8-K on April 10, 2015, Commission File Number 000-55329 10.7** Promissory Note date November 24, 2015 in the original amount of $50,000 issued to Mr. Marc Moore filed as exhibit 10.18 to the registrant’s Form 10-K on January 13, 2016, Commission File 000-55329. 10.8** Asset Purchase Agreement dated November 29, 2016 between the registrant and Collabria LLC. Filed as an exhibit to the registrant’s Form 8-K on December 5, 2016. 10.9** Employment Agreement dated November 28, 2016 between the registrant and Mr. Moore. 10.10** Promissory Note dated September 27, 2017 in the amount of $35,000 issued to Richard Martin. 10.11** Promissory Note dated October 12, 2017 in the amount of $15,000 issued to Richard Martin 10.12** Installment Note dated September 30, 2019 in the amount of $75,279 issued to Richard Martin 10.13** Lease Agreement dated December 1, 2018 , between BGNP Associates, LLC and VoiceInterop, Inc. 10.14** Promissory Note dated December 2, 2019 in the amount of $50,000 issued to Mr. John F. Marek. 31.1* Certification of Michael M. Moore, Chief Executive Officer of Cleartronic, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of Larry M. Reid, Chief Financial Officer and Principal Accounting Officer of Cleartronic, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002. 32.1* Certification of Michael M. Moore, Chief Executive Officer of Cleartronic, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002. 32.1* Certification of Larry M. Reid, Chief Financial Officer and Principal Accounting Officer of Cleartronic, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002. 101 XBRL Instance Document (XBRL tags are embedded within the Inline iXBRL document) *Filed herewith. **Previously filed. - 11 - SIGNATURES In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CLEARTRONIC, INC. Date: December 21, 2023 By /s/ Michael M. Moore Michael M. Moore, Chief Executive Officer By /s/ Larry M. Reid Larry M. Reid, Chief Financial Officer and Principal Accounting Officer Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date: December 21, 2023 By /s/ Michael M. Moore Michael M. Moore, Chief Executive Officer By /s/ Larry M. Reid Larry M. Reid, Chief Financial Officer and Principal Accounting Officer - 12 - REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID 5036 ) To the Board of Directors and Stockholders of Cleartronic, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Cleartronic, Inc. (the Company) as of September 30, 2023 and 2022, and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flow for each of the years in the two-year period ended September 30, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2023 and 2022, and the results of its operations and its cash flows each of the years in the two-year period ended September 30, 2023, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Valuation of accounts receivable Description of the Matter As described in Note 2 to the consolidated financial statements, the Company provides an allowance for credit losses based upon a periodic review and analysis of outstanding accounts receivable balances. Uncollectible receivables are charged to the allowance when deemed uncollectible. Recoveries of accounts previously written off are used to credit the allowance account in the periods in which the recoveries are made. How We addressed the Matter in our Audit The primary procedures performed included evaluating the methodologies used in the determination of allowance for credit losses and reviewing historical data, collections and other inputs used by the Company as well as subsequent collections. Based on our procedures we deemed the Company’s treatment of accounts receivable and the corresponding allowance for credit losses to be appropriate as of September 30, 2023. Assurance Dimensions We have served as the Company’s auditor since 2022. Margate, Florida December 21, 2023 F- 1 CLEARTRONIC, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS September 30, 2023 September 30, 2022 Current assets: Cash and cash equivalents $ 516,955 $ 468,167 Accounts receivable, net of an allowance for credit losses of $ 63,665 as of September 30, 2023 and $ 18,000 as of September 30, 2022 545,573 538,030 Inventory 21,913 21,097 Prepaid expenses and other current assets 68,522 53,611 Interest receivable - related party 2,724 - Total current assets 1,155,687 1,080,905 Property and Equipment, net 16,526 15,142 Intangible Assets, net 44,373 - Operating lease - right-of-use asset 29,914 - - Other assets: Due from related party 53,302 53,302 Total other assets 53,302 53,302 Total assets $ 1,299,802 $ 1,149,349 LIABILITIES AND STOCKHOLDERS’ EQUITY/(DEFICIT) Current liabilities: Accounts payable and accrued expenses $ 85,858 $ 75,217 Deferred revenue, current portion 1,105,580 1,012,211 Operating lease liability 24,580 - Total current liabilities 1,216,018 1,087,428 Long term liabilities: Deferred revenue, net of current portion 72,100 113,300 Operating lease liability - long term 6,507 - Total long term liabilities 78,607 113,300 Total liabilities 1,294,625 1,200,728 Commitments and Contingencies (See Note 6) Stockholders’ equity/(deficit): Series A preferred stock - $ .00001 par value; 1,250,000 shares authorized, 512,996 issued and outstanding, respectively. 5 5 Series B preferred stock - $ .00001 par value; 10 shares authorized, 0 shares issued and outstanding, respectively.c - - Series C preferred stock - $ .00001 par value; 50,000,000 shares authorized, 3,133,503 and 3,341,503 shares issued and outstanding, respectively. 32 34 Series D preferred stock - $ .00001 par value; 10,000,000 shares authorized, 670,904 shares issued and outstanding, respectively. 7 7 Series E preferred stock - $ .00001 par value, 10,000,000 shares authorized, 3,000,000 shares issued and outstanding, respectively. 30 30 Common stock - $ .00001 par value; 5,000,000,000 shares authorized, 229,160,695 and 228,120,695, shares issued and outstanding, respectively. 2,291 2,281 Additional paid-in capital 15,240,104 15,240,112 Accumulated Deficit ( 15,237,292 ) ( 15,293,848 ) Total stockholders’ equity (deficit) 5,177 ( 51,379 ) Total liabilities and stockholders’ equity/(deficit) $ 1,299,802 $ 1,149,349 The accompanying notes are an integral part of these consolidated financial statements F- 2 CLEARTRONIC, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the Year Ended September 30, 2023 For the Year Ended September 30, 2022 Revenue $ 2,131,955 $ 2,017,563 Cost of Revenue 316,163 334,138 Gross Profit 1,815,792 1,683,425 Operating Expenses: Selling expenses 425,498 272,521 Administrative expenses 1,303,980 1,033,796 Depreciation and amortization expense 5,051 3,732 Research and development 27,314 19,742 Total Operating Expenses 1,761,843 1,329,791 Gain on the settlement and reversal of accounts payable - 47,792 Interest income/expense, net 2,607 ( 531 ) Total Other Income/(Expenses) 2,607 47,261 Income before income taxes 56,556 400,895 Provision for income taxes from continuing operations - - Net Income 56,556 400,895 Preferred stock dividends Series A Preferred ( 41,038 ) ( 41,037 ) Net income( loss) attributable to common stockholders $ 15,518 $ 359,858 Net income (loss) per common share - basic $ 0.00 $ 0.00 Net income (loss) per common share - diluted $ 0.00 $ 0.00 Weighted Average of number of shares outstanding - basic 228,786,339 228,239,979 Weighted Average of number of shares outstanding - diluted 599,107,974 599,601,614 The accompanying notes are an integral part of these consolidated financial statements F- 3 CLEARTRONIC, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW For the Year Ended September 30, 2023 For the Year Ended September 30, 2022 NET INCOME $ 56,556 $ 400,895 Cash Flows From Operating Activities Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization expense 5,051 3,732 Amortization of operating lease - right-of-use asset 17,949 - Gain on the settlement and reversal of accounts payable - ( 47,792 ) Provision for credit losses 97,994 14,000 (Increase) decrease in assets: Accounts receivable ( 105,537 ) ( 231,785 ) Inventory ( 816 ) ( 6,444 ) Prepaid expenses and other current assets ( 17,635 ) ( 6,228 ) Due from related party - ( 8,501 ) Increase (decrease) in liabilities: Accounts payable 10,640 ( 36,943 ) Deferred revenue 52,169 ( 6,285 ) Right-of-use assets and lease liabilities, net ( 16,776 ) - Net Cash Provided by Operating Activities 99,595 74,649 Cash Flows From Investing Activities Purchase of fixed assets ( 6,434 ) ( 7,483 ) Purchase of intangible assets ( 44,373 ) - Net Cash Used in Investing Activities ( 50,808 ) ( 7,483 ) Cash Flows From Financing Activities - - Net (decrease) increase in cash 48,788 67,166 Cash at beginning of year 468,167 401,001 Cash at end of year $ 516,955 $ 468,167 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest $ 117 $ 53 Cash paid for taxes $ 400 $ 690 Supplemental disclosure of non-cash investing and financing activities: Cancellation of 458,300 shares of common stock $ - $ 5 Series C Convertible Preferred shares exchanged for common stock $ 10 $ - Operating lease right of use asset recorded on adoption of ASC 842 $ 47,863 $ - The accompanying notes are an integral part of these consolidated financial statements F- 4 CLEARTRONIC, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY/(DEFICIT) FOR THE YEARS ENDED SEPTEMBER 30, 2023 AND 2022 Series A Preferred Stock Series B Preferred Stock Series C Preferred Stock Series D Preferred Stock Series E Preferred Stock Common Stock Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Additional paid-in capital Accumulated deficit Stockholders’ (Deficit)/Equity Balance at September 30, 2021 512,996 $ 5 - $ - 3,341,503 $ 34 670,904 $ 7 3,000,000 $ 30 228,578,995 $ 2,286 $ 15,240,107 $ ( 15,694,743 ) $ ( 452,274 ) Share cancellation - - - - - - - - - - ( 458,300 ) ( 5 ) 5 - - Net income for the year ended September 30, 2022 - - - - - - - - - - - - 400,895 400,895 Balance at September 30, 2022 512,996 $ 5 - $ - 3,341,503 $ 34 670,904 $ 7 3,000,000 $ 30 228,120,695 $ 2,281 $ 15,240,112 $ ( 15,293,848 ) $ ( 51,379 ) Series C Convertible Preferred shares exchanged for common stock - - - - ( 208,000 ) ( 2 ) - - - - 1,040,000 10 ( 8 ) - - Net income for the year ended September 30, 2023 - - - - - - - - - - - - - 56,556 56,556 Balance at September 30, 2023 512,996 $ 5 - $ - 3,133,503 $ 32 670,904 $ 7 3,000,000 $ 30 229,160,695 $ 2,291 $ 15,240,104 $ ( 15,237,292 ) $ 5,177 The accompanying notes are an integral part of these consolidated financial statements F- 5 CLEARTRONIC, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements September 30, 2023 and 2022 NOTE 1 - ORGANIZATION 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 ™ platforms and the AudioMate IP gateways discussed below. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial statements contain the consolidated accounts of Cleartronic, Inc. and its subsidiary, ReadyOp Communications, Inc. All material intercompany transactions and balances have been eliminated. USE OF ESTIMATES In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and operations for the reporting period. Although these estimates are based on management’s knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results. Significant estimates include the assumptions used in valuation of deferred tax assets, estimated useful life of property and equipment, valuation of inventory and allowance for credit losses. CASH AND CASH EQUIVALENTS For financial statement purposes, the Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. The Company has investments Treasury Bills. The Treasury Bills have remaining terms ranging from four-week month to thirteen weeks on September 30, 2023. Treasury Bills with an original maturity date of three months or less are included within cash and cash equivalents on the balance sheet at September 30, 2023. 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. PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consist primarily of deferred subscriber costs and prepaid expenses. Deferred subscriber costs totalling $ 38,250 and $ 38,250 at September 30, 2023 and September 30, 2022, respectively. Prepaid expenses totalling $ 30,272 and $ 15,361 at September 30, 2023 and September 30, 2022, respectively. PROPERTY AND EQUIPMENT Property and equipment are recorded at cost and depreciated or amortized using the straight-line method over the estimated useful life of the asset or the underlying lease term for leasehold improvements, whichever is shorter or when the property and equipment is put into service. INTANGIBLE ASSETS The Company’s intangible assets consist of fees paid to outside consulting services that are assisting us in obtaining FedRAMP certification. At September 30, 2023, The Company had intangible assets with a cost of approximately $ 44,373 , with finite lives. The Company amortizes intangible assets with finite lives over the shorter of their estimated useful or legal life. The useful life is reevaluated for each reporting period. For the year ended September 30, 2023, no amortization expense was recorded. The Company evaluates intangible assets with finite lives for impairment at least annually or when events or changes in circumstances indicate that an impairment may exist. The Company determined that none of its intangible assets were impaired during the year ended September 30, 2023. CONCENTRATION OF CREDIT RISK The Company currently maintains cash balances at one FDIC-insured banking institution. Deposits held in non interest-bearing transaction accounts are insured up to a maximum of $ 250,000 at all FDIC-insured institutions. As of September 30, 2023 and September 30, 2022, the Company had $ 118,140 and $ 208,135 , respectively, in excess of FDIC insurance limits. RESEARCH AND DEVELOPMENT COSTS The Company expenses research and development costs as incurred. For the years ended September 30, 2023 and 2022, the Company had $ 27,314 and $ 19,742 respectively, in research and development costs. Salary expenses for the year ended September 30, 2022 were reclassified for consistency with the current year presentation. F- 6 REVENUE RECOGNITION AND DEFERRED REVENUES The Company revenue recognition policy follows guidance from Accounting Standards Codification (“ASC”) 606, Revenue from contract with customers. Revenue is recognized when the Company has transferred promised goods and services to the customer and in the amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. The Company applies the following five-step model in order to determine this amount: i. Identification of Contact with a customer; ii. Identify the performance obligation of the contract iii. Determine transaction price; iv. Allocation of the transaction price to the performance obligations; and v. Recognition of revenue when (or as) the Company satisfies each performance obligation. The Company generates revenue primarily through the sale of software licenses and integrated hardware. 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 expensed as incurred on the date the revenue associated with the cost is recognized. In transactions in which hardware is sold to a customer, the Company recognizes the revenue when the hardware has been shipped to the customer. The hardware supplied by the Company does not require a related software license and can be operated and fully functional without the Company’s software. From time to time clients request special training meetings. We send employees to these meeting and charge our clients on a per diem basis. These charges are recorded as consulting fees on our income statement. 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. As of September 30, 2023 and September 30, 2022, respectively, the Company recorded $ 1,177,680 and $ 1,125,511 , respectively, in deferred revenue. DISAGGREGATED REVENUE The following table sets forth the approximate net sales by primary category: Schedule of disaggregated revenue For the years ended September 30, 2023 September 30, 2022 Licensing of ReadyOp Software $ 2,022,550 $ 1,818,035 Hardware Sales and Consulting 109,405 199,528 Total $ 2,131,955 $ 2,017,563 DEFERRED REVENUE The following table provides a summary of the changes included in deferred revenue during the year ended September 30, 2023 and September 30, 2022: Schedule of deferred revenue For the year ended September 30, 2023 For the year ended September 30, 2022 Beginning balance $ 1,125,511 $ 1,131,796 Additions to deferred liability (1) 2,184,124 2,011,278 Deductions to deferred liability (2) ( 2,131,955 ) ( 2,017,563 ) Ending balance $ 1,177,680 $ 1,125,511 (1) Customer billings for services not yet rendered (2) Revenue recognized in the current year related to the deferred liability EARNINGS PER SHARE Earnings per share (“EPS”) are the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. EPS is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16, basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by adding both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants. Pursuant to ASC Paragraphs 260-10-45-45-21 through 260-10-45-45-23 Diluted EPS shall be based on the most advantageous conversion rate or exercise price from the standpoint of the security holder. The dilutive effect of outstanding call options and warrants (and their equivalents) issued by the reporting entity shall be reflected in diluted EPS by application of the treasury stock method unless the provisions of paragraphs 260-10-45-35 through 45-36 and 260-10-55-8 through 55-11 require that another method be applied. Equivalents of options and warrants include non-vested stock granted to employees, stock purchase contracts, and partially paid stock subscriptions (see paragraph 260–10–55–23). Anti-dilutive contracts, such as purchased put options and purchased call options, shall be excluded from diluted EPS. Under the treasury stock method: a. Exercise of options and warrants shall be assumed at the beginning of the period (or at time of issuance, if later) and common shares shall be assumed to be issued. b. The proceeds from exercise shall be assumed to be used to purchase common stock at the average market price during the period. (See paragraphs 260-10-45-29 and 260-10-55-4 through 55-5.) c. The incremental shares (the difference between the number of shares assumed issued and the number of shares assumed purchased) shall be included in the denominator of the diluted EPS computation. As of September 30, 2023 and 2022, we had no options and warrants outstanding. As of September 30, 2023 and 2022, we had 512,996 shares of Series A Convertible Preferred stock outstanding, which are convertible into 51,299,600 shares of common stock. F- 7 As of September 30, 2023 and 2022, we had 3,133,503 and 3,341,503 shares of Series C Convertible Preferred stock outstanding, respectively, which are convertible into 15,947,515 and 16,707,515 shares of common stock, respectively. As of September 30, 2023 and 2022, we had 670,904 shares of Series D Preferred stock outstanding which are convertible into 3,354,520 shares of common stock. As of September 30, 2023 and 2022, we had 3,000,000 shares of Series E Convertible Preferred stock outstanding which are convertible into 300,000,000 shares of common stock. The table below details the computation of basic and diluted earnings per share (“EPS”) for the years ended September 30, 2023 and 2022: Schedule of diluted earnings per share For the year ended September 30, 2023 For the year ended September 30, 2022 Net income attributable to common stockholders for the period $ 15,518 $ 359,858 Weighted average number of shares outstanding 228,786,339 228,239,979 Basic earnings per share $ 0.00 $ 0.00 The following table sets for the computation of diluted earnings per share: Schedule of computation of diluted earnings per share For the year ended September 30, 2023 For the year ended September 30, 2022 Net income attributable to common stockholders for the period $ 15,518 $ 359,858 Add: Preferred stock dividends 41,038 41,037 Adjusted net income $ 56,556 $ 400,895 Weighted average number of shares outstanding 228,786,339 228,239,979 Add: Shares issued upon conversion of preferred stock 370,321,635 371,361,635 Weighted average number of common and common equivalent shares 599,107,974 599,601,614 Diluted earnings per share $ 0.00 $ 0.00 FAIR VALUE OF FINANCIAL INSTRUMENTS The Company measures the fair value of its assets and liabilities under ASC topic 820, “Fair Value Measurements and Disclosures”. ASC 820 defines “fair value” as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There was no impact relating to the adoption of ASC 820 to the Company’s consolidated financial statements. ASC 820 also describes three levels of inputs that may be used to measure fair value: - Level 1: Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities traded in active markets. - Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. - Level 3: Inputs that are generally observable. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. Financial instruments consist principally of cash, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses and deferred revenue. The carrying amounts of such financial instruments in the accompanying consolidated balance sheet approximate their fair values due to their relatively short-term nature. The carrying amounts approximate fair value. It is management’s opinion that the Company is not exposed to any significant currency or credit risks arising from these financial instruments. As of September 30, 2023 and 2022, we held no assets that were required to be measured at fair value on a recurring basis. There were no transfers between levels in the fair value hierarchy during fiscal 2023 and 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. The Company recorded no reserve for obsolete inventory as of September 30, 2023 and September 30, 2022, respectively. At September 30, 2023 inventory was $ 21,913 of raw materials. At September 30, 2022, inventory was $ 21,097 of raw materials. ADVERTISING COSTS Advertising costs are expensed as incurred. The Company had advertising costs of $ 95,373 and $ 51,318 during the years ended September 30, 2023 and 2022, respectively. F- 8 RECENT ADOPTED ACCOUNTING PRONOUNCEMENTS Troubled Debt Restructurings and Vintage Disclosures In March 2022, the Financial Accounting Standards Board (the “FASB”) issued ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”), which eliminates the accounting guidance on troubled debt restructurings (“TDRs”) for creditors in ASC 310, Receivables (Topic 310), and requires entities to provide disclosures about current period gross write-offs by year of origination. Also, ASU 2022-02 updates the requirements related to accounting for credit losses under ASC 326, Financial Instruments – Credit Losses (Topic 326), and adds enhanced disclosures for creditors with respect to loan refinancings and restructurings for borrowers experiencing financial difficulty. ASU 2022-02 was effective for the Company October 1, 2022. The adoption of ASU 2022-02 did not have a material impact on the Company’s consolidated financial statements. RECENT ISSUED ACCOUNTING PRONOUNCEMENTS The Company continues to monitor new accounting pronouncements issued by the FASB and does not believe any accounting pronouncements issued through the date of this report will have a material impact on the Company’s Financial Statements. In the current year, the Company adjusted its classification of selling and administrative expenses in the Statement of Operations. For comparative purposes, amounts in the prior years have been reclassified to conform to current year presentations. These reclassifications had no effect on previously reported results of operations or retained earnings. LEASE ACCOUNTING We determine if an arrangement is a lease, or contains a lease, at inception and record the leases in our financial statements upon lease commencement, which is the date when the underlying asset is made available for use by the lessor. We have a lease agreement with lease and non-lease components and have elected to utilize the practical expedient to account for lease and non-lease components together as a single combined lease component, from both a lessee and lessor perspective with the exception of direct sales-type leases and production equipment classes embedded in supply agreements. From a lessor perspective, the timing and pattern of transfer are the same for the non-lease components and associated lease component and, the lease component, if accounted for separately, would be classified as an operating lease. We have elected not to present short-term leases on the balance sheet as these leases have a lease term of 12 months or less at lease inception and do not contain purchase options or renewal terms that we are reasonably certain to exercise. All other lease assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because our lease does not provide an implicit rate of return, we used our incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease payments. In general, leases, where we are the lessee, may include options to extend the lease term. These leases may include options to terminate the lease prior to the end of the agreed upon lease term. For purposes of calculating lease liabilities, lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. Lease expense for operating leases is recognized on a straight-line basis over the lease term as cost of revenues or operating expenses depending on the nature of the leased asset. Certain operating leases provide for annual increases to lease payments based on an index or rate. We calculate the present value of future lease payments based on the index or rate at the lease commencement date. Differences between the calculated lease payment and actual payment are expensed as incurred. Amortization of finance lease assets is recognized over the lease term as cost of revenues or operating expenses depending on the nature of the leased asset. On December 2, 2022, and effective on January 1, 2023, the Company signed a two-year lease of 1,145 square feet for our principal offices in Clearwater, Florida. The monthly rent is $ 2,134 in year one and increases to $ 2,198 in year two. The lease expires on December 31, 2024. The tables below present information regarding the Company’s operating lease assets and liabilities at September 30, 2023: Schedule of operating lease assets and liabilities September 30, 2023 September 30, 2022 Assets Operating lease -right-of-use assets-non-current $ 29,914 $ - Liabilities Operating lease liability $ 31,087 $ - Weighted-average remaining lease term (years) 1.25 - Weighted-average discount rate 8 % - The componets of lease expense were as follows: Operating lease cost Amorization on right-of-use operating lease asset $ 17,949 $ - Lease liability expense in connection with obligation repayment 2,429 - Total operating lease costs $ 20,378 $ - Supplemental cash outflows information related to operation lease was as follows: Operating cash outflows from operating lease (obligation payment) $ 19,206 $ - Right-of-use asset obtained in exchange for new operating lease liability $ 47,863 $ - At September 30, 2023, the Company has no financing leases as defined in ASC 842, “Leases.” F- 9 Future minimum lease payments required under leases that have initial or remaining non-cancelable lease terms in excess of one year at September 30, 2023: Schedule of future minimum lease payments required under leases 2024 $ 26,184 2025 6,594 Total undiscounted cash flows 32,778 Less: amount representing interest ( 1,691 ) Present value of operating lease liability 31,087 Less: current portion of operation lease liability 24,580 Long-term operating lease liability $ 6,507 NOTE 3 – PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS At September 30, 2023 and September 30, 2022, property and equipment, net, is as follows: Schedule of property and equipment net For the year ended September 30, 2023 For the year ended September 30, 2022 Office Equipment $ 28,040 $ 21,605 Less: Accumulated Depreciation ( 11,514 ) ( 6,463 ) Total Property and Equipment, net $ 16,526 $ 15,142 At September 30, 2023 and September 30, 2022, intangible assets, net, is as follows: Schedule of intangible assets For the year ended September 30, 2023 For the year ended September 30, 2023 Intangible Assets 44,373 - Total Intangible Assets, net $ 44,373 $ - Depreciation and amortization expense for the years ended September 30, 2023 and 2022, was $ 5,051 and $ 3,732 , respectively. NOTE 4 - EQUITY TRANSACTIONS Preferred Stock Dividends As of September 30, 2023 and September 30, 2022, the cumulative arrearage of undeclared dividends for Series A Preferred stock totaled $ 205,658 and $ 165,144 , respectively and $ 41,038 for the year ended September 30, 2023. As of the date of this report, we have 200,000,000 authorized shares of preferred stock, par value $ 0.00001 per share, of which 7,373,403 shares were issued and outstanding. There are currently 5 series of preferred stock designated as follows: ● 1,250,000 shares have been designated as Series A Preferred Stock, 512,996 of which are issued and outstanding; ● 10 shares have been designated as Series B Preferred Stock, none of which is issued and outstanding; ● 50,000,000 shares have been designated as Series C Preferred Stock, 3,133,503 of which are issued and outstanding; and ● 10,000,000 shares have been designated Series D Preferred stock, of which 670,904 are issued and outstanding; and ● 10,000,000 shares have been designated Series E Preferred stock, of which 3,000,000 are issued and outstanding. Pursuant to our Articles of Incorporation establishing our preferred stock: ● A holder of shares of the Series A Preferred Stock is entitled to the number of votes equal to the number of shares of the Series A Preferred Stock held by such holder multiplied by one on all matters submitted to a vote of our stockholders. Each one share of our Series A Preferred Stock shall be convertible into 100 shares of our common stock. Each holder of Series A Preferred Stock is entitled to receive cumulative dividends at the rate of 8 % of $ 1.00 per annum on each outstanding share of Series A Preferred Stock then held by such holder, on a pro rata basis. ● A holder of shares of the Series B Preferred Stock is entitled to one vote per share on all matters submitted to a vote of our stockholders. If at least one share of Series B Preferred Stock is issued and outstanding, then the total aggregate issued shares of Series B Preferred Stock at any given time, regardless of their number, shall have voting rights equal to two times the sum of the total number of shares of our common stock which are issued and outstanding at the time of voting, plus the total number of shares of any shares of our preferred stock which are issued and outstanding at the time of voting. A holder of shares of the Series B Preferred Stock shall have no conversion rights or rights to dividends. ● A holder of shares of the Series C Preferred Stock is entitled to the number of votes equal to the number of shares of the Series C Preferred Stock held by such holder multiplied by 5 on all matters submitted to a vote of our stockholders. In addition, the holders of our Series C Preferred Stock shall be entitled to receive dividends when, as and if declared by the Board of Directors, in its sole discretion. No dividends have been declared. Finally, each one share of our Series C Preferred Stock shall be convertible into five shares of our common stock. ● A holder of shares of the Series D Preferred Stock is entitled to the number of votes equal to the number of shares of the Series D Preferred Stock held by such holder multiplied by 5 on all matters submitted to a vote of our stockholders. In addition, the holders of our Series D Preferred Stock shall be entitled to receive dividends when, as and if declared by the Board of Directors, in its sole discretion. No dividends have been declared. Finally, each one share of our Series D Preferred Stock shall be convertible into five shares of our common stock. ● A holder of shares of the Series E Preferred Stock is entitled to the number of votes equal to the number of shares of the Series E Preferred Stock held by such holder multiplied by 100 on all matters submitted to a vote of our stockholders. In addition, the holders of our Series E Preferred Stock shall be entitled to receive dividends when, as and if declared by the Board of Directors, in its sole discretion. No dividends have been declared. Finally, each one share of our Series E Preferred Stock shall be convertible into 100 shares of our common stock. Common stock issued for Conversion of C Preferred During the year ended September 30, 2023, the holder of Series C preferred stock, converted 208,000 shares of Series C Preferred Stock into 1,040,000 shares of Common Stock at the stated conversion rate with no gain or loss recognized. F- 10 Cancellation of Shares During the year ended September 30, 2022, the Company canceled an aggregate of 458,300 shares of its common stock due to share issuance in error by the Company. Stock repurchase program On January 6, 2023, the Board of Directors approved a stock repurchase program pursuant to which the Company may repurchase shares of its outstanding common stock. The repurchase program may be extended, suspended, or discontinued at any time. As of September 30, 2023, no common stock was repurchased. NOTE 5 - RELATED PARTY TRANSACTIONS Through December 1, 2021, the Company leased its office space from VoiceInterop, the Company’s former wholly owned subsidiary and now 96 % owned by our shareholders for approximately $ 1,400 per month. On February 14, 2020, VoiceInterop was deconsolidated and is no longer our subsidiary. Rent expense incurred during the years ended September 30, 2023 and 2022 was $ 22,722 and $ 26,973 , respectively (See Note 6). During the years ended September 30, 2023 and 2022, the Company paid $ 36,000 and $ 39,000 , respectively, to a related party consultant. As of December 31, 2022, the Company advanced $ 53,302 to VoiceInterop, the Company’s former wholly owned subsidiary and now 96 % owned by our shareholders. The amount is included in due from related party on the consolidated balance sheet. The amount is due on September 30, 2024, and bears interest at 5 % effective October 1, 2022. As of September 30, 2023, the Company recorded $ 2,724 in interest receivable – related party. NOTE 6 - COMMITMENTS AND CONTINGENCIES Obligation Under Operating Lease On December 2, 2022, and effective on January 1, 2023, the Company signed a two-year lease of 1,145 square feet for our principal offices in Clearwater, Florida. The monthly rent is $ 2,134 in year one and increases to $ 2,198 in year two. The lease expires on December 31, 2024. On January 1, 2023, upon adoption of ASC 842, the Company will recognize right-to-use assets as operating leases and operating lease obligations. On December 1, 2021, the Company signed a one year lease approximately 2,000 square feet for our principal offices in Boca Raton, Florida. The monthly rent is $ 2,200 . The lease expired on November 30, 2022 . Rent expense incurred during the years ended September 30, 2023 and 2022 was $ 22,722 and $ 26,973 , respectively. Revenue and Accounts Receivable Concentration For the year ended September 30, 2023, one customer accounted for 11.13 % of the Company’s revenues. No customer accounted for more than 10 % of the Company’s revenue for the year ended September 30, 2022. As of September 30, 2023, no customers accounted for more than 10 % of the Company’s total outstanding accounts receivable. As of September 30, 2022, no customer accounted for more than 10 % of the Company’s total outstanding accounts receivable. Major Supplier and Sole Manufacturing Source The Company relies on no major supplier for its products. The Company has contracted with local manufacturing facilities to provide completed circuit boards used in the assembly of its IP gateway devices. Interruption of adequate supply of components, primarily computer chips, to the manufacturing source presents additional risk to the Company. The Company believes that additional commercial facilities exist at competitive rates to match the resources and capabilities of its existing manufacturing source, but the current worldwide shortage of computer chips does limit our ability to supply our proprietary radio gateways to clients and other buyers. Employment Agreements In December 2016, the Board of Directors accepted the resignation of Larry M. Reid as Chief Executive Officer of the corporation and appointed Mr. Reid as Chief Financial Officer. The Board also appointed Michael M. Moore as Chief Executive Officer. Under the terms of an employment agreement effective on November 28, 2016, Mr. Moore as CEO receives an annual salary of $ 200,000 . The term of agreement is for a one-year period beginning on the effective date and shall automatically renew and continue in effect for additional one-year periods. Effective April 20, 2022, the annual compensation increased to $ 220,000 . Under the terms of an employment agreement effective on March 13, 2015, Mr. Reid as CFO receives an annual salary of $ 96,000 . The term of agreement is for a one-year period beginning on the effective date and shall automatically renew and continue in effect for additional one-year periods. Effective October 1, 2021, the annual compensation increased to $ 104,000 . Exclusive Licensing Agreement On May 5, 2017, the Company entered into an Exclusive Licensing Agreement with Sublicensing Terms (the “Agreement”) with the University of South Florida Research Foundation, Inc. (“USFRF”) relating to an exclusive license of certain patent rights in connection with one of USFRF’s U.S. Patent Applications. Both parties recognize that the research and development work provided by the Company was sufficient for USFRF to enter into the Agreement with the Company. The Agreement is effective April 25, 2017 and continues until the later of the date that no Licensed Patent remains a pending application or an enforceable patent or the date on which the Licensee’s obligation to pay royalties expires. The Company agreed to pay USFRF a royalty of 3 % for sales of all Licensed Products and Licensed Processes and agreed to pay USFRF minimum royalty payments of $8,000 for fiscal year 2022 and thereafter on the same date, for the life of the agreement. In the event the Company proposes to sell any Equity Securities, then USFRF will have the right to purchase 5 % of the securities issued in such offering on the same terms and conditions are offered to other purchasers in such financing. As of September 30, 2023 and 2022, the Company has recorded $ 6,000 and $ 8,000 for the minimum royalty for the fiscal year ended 2023 and 2022. F- 11 NOTE 7 - DEFERRED INCOME TAXES The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets and liabilities are expected to be realized or settled. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized. Uncertain tax positions are recognized only when the Company believes it is more likely than not that the tax position will be upheld on examination by the taxing authorities based on the merits of the position. The Company has no material unrecognized tax benefits and no adjustments to its consolidated financial position, results of operations or cash flows were required as of September 30, 2023 and 2022. The Company filed consolidated tax returns for the years ended September 30, 2023 and 2022, which are subject to examination by federal and state tax jurisdictions. No income tax returns are currently under examination by taxing authorities. The Company recognizes interest and penalties, if any, related to uncertain tax positions in income tax expense. The Company did not have any accrued interest or penalties associated with uncertain tax positions as of September 30, 2023 and 2022. The Company’s U.S. federal income tax returns for tax years 2020 through 2023 are subject to examination by the Internal Revenue Service. The Company calculates its deferred tax assets based upon its consolidated net operating loss (“NOL”) carryovers available to offset future taxable income, net of other tax credit(s) or tax deferred liabilities, if any. No deferred tax assets for the years ended September 30, 2023 and 2022 have been recorded since any available deferred tax assets are fully offset by increases in its valuation allowances. The Company increased its valuation allowance based on its history of consolidated net losses. At September 30, 2023, the Company has an adjusted net operating loss carryforward of approximately $13,608,000 that expire through 2040. Should a cumulative change in the ownership of more than 50% occur within a three-year period, there could be an annual limitation on the use of the net operating loss carryforwards. Deferred income taxes reflect the tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes plus any available consolidated, net deferred tax credits. Significant components of the Company’s net deferred income tax assets at September 30, 2023 and 2022, respectively are as follows: Schedule of deferred income tax assets September 30, 2023 September 30, 2022 Depreciation $ 1,750 $ 2,842 Allowance for credit losses 40,717 15,880 Net operating loss carryforward 3,449,013 3,493,201 Net deferred income tax asset 3,491,480 3,511,923 Less: valuation allowance ( 3,491,480 ) ( 3,511,923 ) Total deferred income tax assets $ - $ - A reconciliation of the Federal and respective State income tax rate as a percentage of income before taxes is as follows: Schedule of income tax rate as a percentage September 30, 2023 September 30, 2022 Federal statutory taxes $ 11,224 $ 79,558 State income taxes, net of federal benefit 3,111 22,049 Change in tax estimates 26,586 850 Less: Valuation allowance, non-deductible items 3,267 2,100 Change in valuation allowance ( 44,188 ) ( 104,557 ) $ - 0 - $ - 0 - September 30, 2023 September 30, 2022 Federal statutory Income tax rate 21.00 % 21.00 % State taxes, net of federal benefit 4.35 % 4.35 % Effective rate of deferred tax asset 25.35 % 25.35 % Less: Valuation allowance ( 25.35 %) ( 25.35 %) Effective income tax rate 0.00 % 0.00 % Management has determined that it is more likely than not that the Company will not use the NOL carryforward and has a 100 % valuation allowance against the deferred asset. The reserve is based on historical experience of the Company’s operations as it has not recognized net income in its current incarnation and there is no indication of any events or conditions that would show that trend will not continue due to the Company’s current expectation of expense requirements. F- 12