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 MARCH 31, 2025 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2024 Revenue Revenues increased 67.08% to $955,703 for the three months ended March 31, 2025 as compared to $572,013 for the three months ended March 31, 2024. The primary reason for the increase was an increase in revenue from the ReadyOp platform and the addition of the Alastar platform from $550,418 in 2024 to $880,275 in 2025. There was a decrease in sales of ReadyOp hardware products from $21.595 in 2024 to $11.300 in 2024. Consulting fees and related income increased from $0 in 2024 to $64,129 in 2025 due to an increase in consulting activity. Cost of Revenue Cost of revenues increased 1.71% to $180,651 for the three months ended March 31, 2025 as compared to $177,616 for the three months ended March 31, 2024. Gross profits were $775,052 and $394,397 for the three months ended March 31, 2025 and 2024, 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 111.33% to $810,525 for the three months ended March 31, 2025 compared to $383,537 for the three months ended March 31, 2024. The increase was primarily due to administrative expenses, research and development expenses, and selling expenses. General and administrative expenses increased by $375,924 or 104.43% 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 March 31, 2025, selling expenses were $64,901 compared to $17,914 for the three months ended March 31, 2024. This increase was primarily due to a increase in travel expenses as the Company. Research and development expenses were $4,000 for the three months ended March 31, 2025, as compared to $3,044 for the three months ended March 31, 2024. This increase was primarily due to research and development expenses. Other Income The Company's other income decreased 21.11% to $7,381 for the three months ended March 31, 2025 as compared to $9,356 in other income for the three months ended March 31, 2024. This decrease was due to a decrease in interest income on treasury bill investments. (Loss) Income before Income Taxes The Company’s loss before income taxes was $28,092, during the three months ended March 31, 2025, as compared to income of $20,216 before income taxes for the three months ended March 31, 2024. The increased costs were partially offset by an increase in subscriptions of ReadyOp licenses. Net (Loss) Income Attributable to Common Stockholders Net loss attributable to common stockholders was $38,210 for the three months ended March 31, 2025 as compared to a net income of $9,985 for the three months ended March 31, 2024. 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. - 14 - FOR THE SIX MONTHS ENDED MARCH 31, 2025 COMPARED TO THE SIX MONTHS ENDED MARCH 31, 2024 Revenue Revenues increased 63.24% to $1,923,027 for the six months ended March 31, 2025 as compared to $1,178,060 for the six months ended March 31, 2024. The primary reason for the increase was an increase in revenue from the ReadyOp platform and the addition of the Alastar platform from $1,139,965 in 2024 to $1,731,751 in 2025. There was a decrease in sales of ReadyOp hardware products from $38,095 in 2024 to $32,695 in 2024. Consulting fees and related income increased from $0 in 2024 to $158,581 in 2025 due to an increase in consulting activity. Cost of Revenue Cost of revenues increased 44.77% to $395,589 for the six months ended March 31, 2025 as compared to $273,247 for the six months ended March 31, 2024. Gross profits were $1,527,438 and $904,813 for the six months ended March 31, 2025 and 2024, 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 75.28% to $1,618,831 for the six months ended March 31, 2025 compared to $923,575 for the six months ended March 31, 2024. The increase was primarily due to administrative expenses with a slight offset decrease in research and development expenses, and selling expenses. General and administrative expenses increased by $717,660 or 93.69% 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 six months. For the six months ended March 31, 2025, selling expenses were $117,990 compared to $138,149 for the six months ended March 31, 2024. This decrease was primarily due to a increase in travel expenses as the Company. Research and development expenses were $6,000 for the six months ended March 31, 2025, as compared to $16,603 for the six months ended March 31, 2024. This increase was primarily due to research and development expenses. Other Income The Company's other income decreased 74.97% to $14,176 for the six months ended March 31, 2025 as compared to $56,645 in other income for the six months ended March 31, 2024. This decrease was due to a decrease in extinguishment of liabilities of $42,941 for the six months ended March 31, 2024 and an increase in interest income on treasury bill investments of $10,601 for the six months ended March 31, 2025. (Loss)Income before Income Taxes The Company’s loss before income taxes was $77,217, during the six months ended March 31, 2025, as compared to income of $37,883 before income taxes for the six months ended March 31, 2024. The increased costs were partially offset by an increase in subscriptions of ReadyOp licenses. Net (Loss) Income Attributable to Common Stockholders Net loss attributable to common stockholders was $97,678 for the six months ended March 31, 2025 as compared to a net income of $17,309 for the six months ended March 31, 2024. 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 six months ended March 31, 2025, net cash used in operations of $124,945 was the result of a net loss of $77,217, depreciation and amortization expense of $11,205, amortization of operating lease of $5,983, an increase of accounts receivable of $102,503, and an increase in accounts payable of $68,895. These were offset by a decrease in inventory of $6,611, decrease in deferred revenue of $36,396, a decrease in prepaid expenses of $4,983 and a decrease in operating lease liability of $6,506. For the six months ended March 31, 2024, net cash provided by operations of $290,255 was the result of a net income of $38,994, depreciation expense of $2,847, amortization of operating lease of $11,965, extinguishment of liabilities of $44,052, increase in provision for credit losses of $15,000, increase in prepaid expenses of $28,582, an increase in accounts receivable of $80,976, an increase in inventory of $9,260 . These were offset by a decrease in accounts payable of $47,430, an increase in deferred revenue of $399,646 and a decrease in operating lease liability of $11,949. Net cash used in investing activities was $4,768 and $133,621 for the six months ended March 31, 2025 and 2024, respectively, which was for the purchase of fixed and 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. - 15 - Item 3. Quantitative and Qualitative Disclosures About Market Risk. Not applicable .