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 JUNE 30, 2024 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2023 Revenue Revenues increased 79.35% to $1,005,050 for the three months ended June 30, 2024 as compared to $560,374 for the three months ended June 30, 2023. The primary reason for the increase was due to an increase in revenue from the ReadyOp platform from $527,074 in 2023 to $702,446 in 2024. In addition, Sales of ReadyOp hardware products increased from $15,200 in 2023 to $288,204 in 2024. Consulting fees and related income decreased from $18,100 in 2023 to $14,400 in 2024 due to less training activity. Cost of Revenue Cost of revenues increased to $319,728 for the three months ended June 30, 2024 as compared to $132,312 for the three months ended June 30, 2023. Gross profits were $685,322 and $428,062 for the three months ended June 30, 2024 and 2023, respectively. The primary reason for the increase was due to an increase in ReadyOp hardware product sales. Operating Expenses Operating expenses increased 44.41% to $606,721 for the three months ended June 30, 2024 compared to $420,128 for the three months ended June 30, 2023. The increase was primarily due increases in administrative expense and selling expenses. Administrative expenses increased by $168,592 or 47.64% as a result of an increase in consulting expenses and employee salaries, due to new hires. For the three months ended June 30, 2024, selling expenses were $79,913 compared to $62,873 for the three months ended June 30, 2023, due to an increase in advertising and travel expenses in connection with trade show appearances. Research and development expenses were $2,000 for the three months ended June 30, 2024, as compared to $2,000 for the three months ended June 30, 2023. Other Income/(Expenses) The Company’s other income increased by $5,569 from other income of $686 during the three months ended June 30, 2023, as compared to $6,255 for the three months ended June 30, 2024. This increase was an increase in interest income on note receivable due from a related party and interest income on treasury bill investments. Income before Income Taxes The Company’s income before income taxes was $84,856, during the three months ended June 30, 2024, as compared to income of $8,620 for the three months ended June 30, 2023. 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. 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 $74,625 for the three months ended June 30, 2024 as compared to a net loss of $1,611 for the three months ended June 30, 2023. 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. - 13 - FOR THE NINE MONTHS ENDED JUNE 30, 2024 COMPARED TO THE NINE MONTHS ENDED JUNE 30, 2023 Revenue Revenues increased 38.37% to $2,183,110 for the nine months ended June 30, 2024 as compared to $1,577,692 for the nine months ended June 30, 2023. The primary reason for the increase was due to an increase in revenue from the ReadyOp platform from $1,480,287 in 2023 to $1,842,411 in 2024. Sales of ReadyOp hardware products increased from $37,325 in 2023 to $326,299 in 2024. Consulting fees and related income decreased from $60.080 in 2023 to $14,400 in 2024 due to less training activity. Cost of Revenue Cost of revenues increased to $592,975 for the nine months ended June 30, 2024 as compared to $324,363 for the nine months ended June 30, 2023. Gross profits were $1,590,135 and $1,253,329 for the nine months ended June 30, 2024 and 2023, respectively. The primary reason for the increase was due to an increase in ReadyOp hardware product sales. Operating Expenses Operating expenses increased 41.14% to $1,629,714 for the nine months ended June 30, 2024 compared to $1,154,709 for the nine months ended June 30, 2023. The increase was primarily due to increases in administrative and selling expenses. General and Administrative expenses increased by $417,230 or 42.98% as a result of an increase in consulting expenses and employee salaries, due to new hires. For the nine months ended June 30, 2024, selling expenses were $218,062 compared to $154,521 for the nine months ended June 30, 2024 due to an increase allowance for credit losses and advertising and travel expenses in connection with trade show appearances. Research and development expenses were $18,603 for the nine months ended June 30, 2024, as compared to $25,815 for the nine months ended June 30, 2023. This decrease was primarily indirect research and development costs. Other Income/(Expenses) The Company’s other income increased by $62,098 from other income of $1,913 during the nine months ended June 30, 2023, as compared to $64,011 for the nine months ended June 30, 2024. This increase was an increase in interest income on a 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 $24,432, during the nine months ended June 30, 2024, as compared to income of $100,533 for the nine months ended June 30, 2023. 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 hardware sold and administrative expenses due to increased salaries for new employee hires. Net Income Attributable to Common Stockholders Net loss attributable to common stockholders was $6,373 for the nine months ended June 30, 2024 as compared to a net income of $69,839 for the nine months ended June 30, 2023. The decrease 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 nine months ended June 30, 2024, net cash provided by operations of $398,421 was the result of a net income of $24,432, depreciation expense of $5,140, amortization of operating lease of $17,948, extinguishment of liabilities of $44,052, increase in provision for credit losses of $9,000, increase in prepaid expenses of $5,137, a decrease in accounts receivable of $129,880, an increase in inventory of $107,997 . These were offset by an increase in accounts payable of $85,411 and an increase in deferred revenue of $301,988. For the nine months ended June 30, 2023, net cash used in operations of $35,234 was the result of a net income of $100,533, depreciation expense of $3,694, amortization of operating lease of $11,966, an increase in accounts payable of $11,942, and a decrease in inventory of $668. These were offset by an increase in accounts receivable of $71,083, increase in prepaid expenses of $39,745 and a decrease in deferred revenue of $42,137. Net cash used in investing activities was $126,185 and $6,435 for the nine months ended June 30, 2024 and 2023, respectively, which was for the purchase of intangible and fixed assets. 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 .