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 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 platforms. On August 1, 2024, the Company acquired a group of similar assets from Alastar, Inc. (“Alastar”) for $50,000. This asset group consisted of cash, prepaids and other current assets, as well as intellectual property including trademarks, software platforms, and a client list. The client list was the only asset ascribed value which was deemed to have continuing value to the Company. The Company has classified this client list as an intangible asset, which will be amortized over 5 years. It is planned that all operations and marketing of the Alastar platform will be conducted in the ReadyOp Communications subsidiary in conjunction with the current ReadyOp and ReadyMed activities. FOR THE THREE MONTHS ENDED DECEMBER 31, 2024 COMPARED TO THE THREE MONTHS ENDED DECEMBER 31, 2023 Revenue Revenues increased 59.61% to $967,324 for the three months ended December 31, 2024 as compared to $606,047 for the three months ended December 31, 2023. The primary reason for the increase was an increase in revenue from the ReadyOp platform and the addition of the Alastar platform from $589,547 in 2023 to $851,476 in 2024. There was also an increase in sales of ReadyOp hardware products from $16,500 in 2023 to $21,395 in 2024. Consulting fees and related income increased from $0 in 2023 to $94,453 in 2024 due to an increase in consulting activity. Cost of Revenue Cost of revenues increased to $214,938 for the three months ended December 31, 2024 as compared to $118,895 for the three months ended December31, 2023. Gross profits were $752,386 and $487,152 for the three months ended December 31, 2024 and 2023, respectively. The primary reason for the increase was due to an increase in ReadyOp and Alastar platform sales and consulting activity. Operating Expenses Operating expenses increased 56.08% to $808,306 for the three months ended December 31, 2024 compared to $517,885 for the three months ended December 31, 2023. The increase was primarily due to administrative expenses, with a slight offset in research and development expenses, and selling expenses. General and administrative expenses increased by $341,736 or 84.17% as a result of the increase in general business expenses, an increase in headcount and personnel related costs associated with the addition of new employees. There were also charitable contributions paid during the three months. For the three months ended December 31, 2024, selling expenses were $53,089 compared to $96,971 for the three months ended December 31, 2023. This decrease was primarily due to a decrease in advertising and travel expenses as the Company. Research and development expenses were $2,000 for the three months ended December 31, 2024, as compared to $13,559 for the three months ended December 31, 2023. This decrease was primarily due to research and development expenses. Other Income/(Expenses) The Company's other income decreased by $41,605 from other income of $6,795 during the three months ended December 31, 2024 as compared to $48,400 in other income for the three months ended December 31, 2023. This decrease was due to a decrease in extinguishment of liabilities of $44,052 for the three months ended December 31, 2023 and an increase in interest income on treasury bill investments of $2,447for the year ended December 31, 2024. (Loss) Income before Income Taxes The Company’s loss before income taxes was $49,125, during the three months ended December 31, 2024, as compared to income of $17,667 income before income taxes for the three months ended December 31, 2023. The increased costs were partially offset by an increase in subscriptions of ReadyOp licenses. - 14 - Net (Loss) Income Attributable to Common Stockholders Net loss attributable to common stockholders was $59,468 for the three months ended December 31, 2024 as compared to a net income of $7,324 for the three months ended December 31, 2023. The decrease was primarily due to an increase in administrative expenses and offset by an increase in sales of ReadyOp licenses The increased costs were partially due to addition of new employees associated with Alastar and costs associated FedRAMP certification . The preferred stock dividends remained consistent. LIQUIDITY AND CAPITAL RESOURCES For the three months ended December 31, 2024, net cash used in operations of $164,714 was the result of a net loss of $49,125, depreciation and amortization expense of $5,483, amortization of operating lease of $5,983, an increase of accounts receivable of $70,019. These were offset by a decrease in accounts payable of $23,394, a decrease in deferred revenue of $39,341, a decrease in inventory of $5,890 and a decrease in prepaid expenses of $6,315. 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. Net cash used in investing activities was $0 and $77,018 for the three months ended December 31, 2024 and 2023, respectively, which was for the purchase of intangible 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, 2024 for information regarding our critical accounting estimates. Item 3. Quantitative and Qualitative Disclosures About Market Risk. Not applicable .