Cleartronic, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. FORWARD-LOOKING STATEMENTS The information set forth in this Management’s Discussion and Analysis contains certain “forward-looking statements,” including, among others (i) expected changes in our revenues and profitability, (ii) prospective business opportunities, and (iii) our strategy for financing our business. Forward-looking statements are statements other than historical information or statements of current condition. Some forward-looking statements may be identified by use of terms such as “believes,” “anticipates,” “intends,” or “expects.” These forward-looking statements relate to our plans, objectives, and expectations for future operations. Although we believe that our expectations with respect to the forward-looking statements are based upon reasonable assumptions within the bounds of our knowledge of our business and operations, in light of the risks and uncertainties inherent in all future projections, the inclusion of forward-looking statements in this prospectus should not be regarded as a representation that our objectives or plans will be achieved. In light of the risks and uncertainties, there can be no assurance that actual results, performance, or achievements will not differ materially from any future results, performance, or achievements expressed or implied by such forward-looking statements. The foregoing review of important factors should not be construed as exhaustive. We undertake no obligation to release publicly the results of any future revisions we may make to forward-looking statements to reflect events or circumstances after the date of this prospectus or to reflect the occurrence of unanticipated events. Overview Cleartronic, Inc. (the “Company”) was incorporated in Florida on November 15, 1999. All current operations are conducted through the Company’s wholly owned subsidiary, ReadyOp Communications, Inc. (“ReadyOp”), a Florida corporation incorporated on September 15, 2014. ReadyOp facilitates the marketing and sales of subscriptions to the ReadyOp ™ and ReadyMed ™ platform and the AudioMate IP gateways discussed below. ReadyOp is a proprietary, innovative web-based planning, communications and operations platform for efficiently and effectively planning, managing, communicating, and directing operations and emergency response. ReadyOp is used by local, state and federal government agencies, corporations, school districts, utilities, hospitals and others to manage and report daily operations as well as the ability to handle incidents and emergency situations. ReadyOp is offered as a software as a service (SAAS) program on an annual contract basis although an increasing number of clients have requested multi-year agreements. In March 2018, the Company approved the spin-off of VoiceInterop, Inc. (“Voiceinterop”), one of the Company’s wholly-owned subsidiaries, into a separate company under a Form S-1 registration filed with the United States Securities and Exchange Commission. In October 2019, the Company acquired the ReadyMed software platform from Collabria LLC. ReadyMed is a web-based secure communications platform initially designed for the healthcare industry. This includes hospitals, clinics, doctor’s offices, health insurance companies, workers compensation insurance companies and many other segments of the healthcare industry. The platform provides caregivers with patient tracking capability and allows physicians and other healthcare entities to track patient progress after medical treatment and/or release from hospital care. The software also enables monitoring and reporting of patients in medium and long-term care. Additionally, the platform provides secure communications capabilities and record keeping to track the healing process of patients, record their recovery and monitor their medications. ReadyMed proved beneficial for multiple clients in the healthcare industry due to the impact of the COVID-19 pandemic. The Company offers both the ReadyOp and ReadyMed capabilities to clients and usually refers to the platform as ReadyOp to avoid confusion in the marketplace of two products. FOR THE THREE MONTHS ENDED DECEMBER 31, 2023 COMPARED TO THE THREE MONTHS ENDED DECEMBER 31, 2022 Revenue Revenues increased 19.62% to $606,047 for the three months ended December 31, 2023 as compared to $506,650 for the three months ended December 31, 2022. The primary reason for the increase was due to an increase in revenue from the ReadyOp platform from $460,244 in 2022 to $589,547 in 2023. Sales of ReadyOp hardware products increased from $6,125 in 2022 to $16,500 in 2023. Consulting fees and related income decreased from $40,281 in 2022 to $0 in 2023 due to less training activity. Cost of Revenue Cost of revenues increased to $95,631 for the three months ended December 31, 2023 as compared to $77,491 for the three months ended December 31, 2022. Gross profits were $510,416 and $429,159 for the three months ended December 31, 2023 and 2022, respectively. Operating Expenses Operating expenses increased 31.15% to $541,149 for the three months ended December 31, 2023 compared to $412,624 for the three months ended December 31, 2022. The increase was primarily due increases in administrative expense and selling expenses. General and Administrative expenses increased by $84,100 or 26.13% as a result of an increase in consulting expenses and employee holiday bonuses. For the three months ended December 31, 2023, selling expenses were $120,235 compared to $67,831 for the three months ended December 31, 2022 due to an increase in commissions expense, allowance for credit losses and an increase in advertising and travel expenses in connection with the trade show. Research and development expenses were $13,559 for the three months ended December 31, 2023, as compared to $21,815 for the three months ended December 31, 2022. This decrease was primarily indirect research and development costs. Other Income/(Expenses) The Company’s other income increased by $47,851 from other income of $549 during the three months ended December 31, 2022, as compared to $48,400 for the three months ended December 31, 2023. This increase was an increase in interest income on note receivable due from a related party, interest income on treasury bill investments and extinguishment of liabilities of $44,052. Income before Income Taxes The Company’s income before income taxes was $17,667, during the three months ended December 31, 2023, as compared to income of $17,084 for the three months ended December 31, 2022. The increase was primarily due to an increase in cost of revenues, administrative and selling expenses, and offset by an increase in sales of ReadyOp licenses and hardware and extinguishment of liabilities. The increased costs were partially due to an increase in the costs of the hardware sold and administrative expenses due to salaries. Net Income Attributable to Common Stockholders Net income attributable to common stockholders was $7,324 for the three months ended December 31, 2023 as compared to a net income of $6,740 for the three months ended December 31, 2022. The increase was primarily due to an increase in sales of ReadyOp licenses and hardware and offset by an increase in cost of revenues, administrative and selling expenses. The increased costs were partially due to an increase in the costs of the hardware sold and administrative expenses due to salaries. LIQUIDITY AND CAPITAL RESOURCES For the three months ended December 31, 2023, net cash provided by operations of $378,588 was the result of a net income of $17,667, depreciation expense of $1,357, amortization of operating lease of $5,982, extinguishment of liabilities of $44,052, increase in provision for credit losses of $29,000, increase in prepaid expenses of $17,756, and an increase in accounts payable of $7,731. These were offset by a decrease in accounts receivable of $40,008, a decrease in inventory of $5,733 and an increase in deferred revenue of $350,204. - 12 - For the three months ended December 31, 2022, net cash used in operations of $188,014 was the result of a net income of $17,084, depreciation expense of $1,080, an increase in accounts payable of $32,933, and a decrease in prepaid expenses of $9,280. These were offset by an increase in accounts receivable of $24,752 and a decrease in deferred revenue of $223,639. Critical Accounting Estimates See “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended September 30, 2023 for information regarding our critical accounting estimates. Item 3. Quantitative and Qualitative Disclosures About Market Risk. Not applicable.