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 JUNE 30, 2025 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2024 Revenue Revenues increased 7.31% to $1,078,530 for the three months ended June 30, 2025 as compared to $1,005,050 for the three months ended June 30, 2024. The primary reason for the increase was an increase in revenue from the ReadyOp platform and the addition of the Alastar platform from $702,446 in 2024 to $948,892 in 2025. There was a decrease in sales of ReadyOp hardware products from $302,604 in 2024 to $17,550 in 2025. Consulting fees and related income increased from $0 in 2024 to $112,088 in 2025 due to an increase in consulting activity. Cost of Revenue Cost of revenues decreased 17.58% to $263,509 for the three months ended June 30, 2025 as compared to $319,728 for the three months ended June 30, 2024. Gross profits were $815,021 and $685,322 for the three months ended June 30, 2025 and 2024, respectively. The primary reason for the decrease was due a decrease in hardware product sales and associated decrease in related costs for the three months ended June 30, 2025. Operating Expenses Operating expenses increased 44.20% to $874,887 for the three months ended June 30, 2025 compared to $606,721 for the three months ended June 30, 2024. The increase was primarily due to administrative expenses and selling expenses. General and administrative expenses increased by $259,118 or 49.59% 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. For the three months ended June 30, 2025, selling expenses were $85,840 compared to $79,913 for the three months ended June 30, 2024. This increase was primarily due to an increase in travel expenses as the Company. Research and development expenses were $2,000 for the three months ended June 30, 2025 and 2024. There was no change in research and development expenses. Other Income The Company's other income increased 43.95% to $9,004 for the three months ended June 30, 2025 as compared to $6,255 in other income for the three months ended June 30, 2024. This increase was due to an increase in interest income on treasury bill investments. (Loss) Income before Income Taxes The Company’s loss before income taxes was $50,862, during the three months ended June 30, 2025, as compared to income of $84,856 before income taxes for the three months ended June 30, 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 $61,093 for the three months ended June 30, 2025 as compared to a net income of $74,625 for the three months ended June 30, 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. FOR THE NINE MONTHS ENDED JUNE 30, 2025 COMPARED TO THE NINE MONTHS ENDED JUNE 30, 2024 Revenue Revenues increased 37.49% to $3,001,557 for the nine months ended June 30, 2025 as compared to $2,183,110 for the nine months ended June 30, 2024. The primary reason for the increase was an increase in revenue from the ReadyOp platform and the addition of the Alastar platform from $1,842,411 in 2024 to $2,680,468 in 2025. There was a decrease in sales of ReadyOp hardware products from $340,699 in 2024 to $90,050 in 2025. Consulting fees and related income increased from $0 in 2024 to $231,039 in 2025 due to an increase in consulting activity. Cost of Revenue Cost of revenues increased 11.15% to $659,098 for the nine months ended June 30, 2025 as compared to $592,975 for the nine months ended June 30, 2024. Gross profits were $2,342,459 and $1,590,135 for the nine months ended June 30, 2025 and 2024, respectively. The primary reason for the increase was due to an increase in ReadyOp and Alastar platform sales and consulting activity. - 13 - Operating Expenses Operating expenses increased 53.12% to $2,493,718 for the nine months ended June 30, 2025 compared to $1,628,603 for the nine months ended June 30, 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 $878,471 or 63.35% 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 nine months. For the nine months ended June 30, 2025, selling expenses were $203,830 compared to $218,062 for the nine months ended June 30, 2024. This decrease was primarily due to a increase in travel expenses as the Company. Research and development expenses were $8,000 for the nine months ended June 30, 2025, as compared to $18,603 for the nine months ended June 30, 2024. This increase was primarily due to research and development expenses. Other Income The Company's other income decreased 63.15% to $23,180 for the nine months ended June 30, 2025 as compared to $62,900 in other income for the nine months ended June 30, 2024. This decrease was due to a decrease in extinguishment of liabilities of $42,941 for the nine months ended June 30, 2024 and an increase in interest income on treasury bill investments of $3,221 for the nine months ended June 30, 2025. (Loss) Income before Income Taxes The Company’s loss before income taxes was $128,079, during the nine months ended June 30, 2025, as compared to income of $24,432 before income taxes for the nine months ended June 30, 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 $158,771 for the nine months ended June 30, 2025 as compared to a net loss of $6,373 for the nine months ended June 30, 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 nine months ended June 30, 2025, net cash used in operations of $68,313 was the result of a net loss of $128,079, depreciation and amortization expense of $16,619, amortization of operating lease of $5,983, increase in provision of credit losses of $20,500, a loss on sale of fixed assets of $483, an increase in prepaid expenses of $65,988 and an increase in accounts payable of $16,463 and an increase in deferred revenue of $12,975. These were offset by a decrease of accounts receivable of $47,808, a decrease in inventory of $11,429, and a decrease in operating lease liability of $6,506. 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 $42,941, 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 $84,300 and an increase in deferred revenue of $301,988. Net cash used in investing activities was $4,768 and $126,185 for the nine months ended June 30, 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. Item 3. Quantitative and Qualitative Disclosures About Market Risk. Not applicable .