Item 2. Management’s Discussion and Analysis
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, Alastar platforms and the AudioMate IP gateways discussed below.
ReadyOp™ Software
ReadyOp is a proprietary, innovative web-based planning and
communications 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.
ReadyOp requires no new or on-site hardware or programming by clients
and provides multiple options for communications including radio interoperability using the Company's AudioMate gateways. Plans
and operations can be built and stored securely in ReadyOp on a by-location, region and systemwide basis. Assets can be listed along
with their location, person to contact and other information that may be needed. Diagrams, charts, maps, pictures, report forms
and other documentation can be securely stored yet immediately available securely from any location. ReadyOp also provides efficient
planning and response for responding to disasters and for continuity of operations (COOP) and recovery. ReadyOp is the COOP platform
for multiple organizations including many federal agencies.
ReadyMed™ Software
In October 2019, the Company acquired the ReadyMed software platform
from Collabria LLC. In exchange for this asset, the Company issued 12,000,000 shares of Common stock of the Company. 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 recordkeeping to track the healing process of patients, record
their recovery and monitor their medications. During the COVID-19 pandemic this software proved beneficial to multiple federal and state
agencies and clients in 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 products.
Alastar Software
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.
The Company continues to support the clients who were using Alastar
prior to the acquisition plus add additional new clients. Additionally, the Company has been transitioning much of the Alastar functionality
into the ReadyOp platform as well as enhance the capabilities for existing and new clients. The Company plans to continue the transition
and enhancement activities for at least the next two years.
AudioMate IP Gateways
The Company offers a proprietary line of Internet Protocol Gateways
branded as AudioMate 360 IP Gateway. The AudioMate 360 IP Gateway was designed to provide an Internet Protocol Gateway to users of unified
group communications. The AudioMate units are currently being sold directly to end-users by the Company's sales teams and by Value Added
Resellers ("VARs"). More than 1,000 end-users in the United States and 18 foreign countries have purchased the Company's AudioMate
gateways. Although other devices are available that perform the same or similar functions, we believe that our price for the AudioMate
360 IP Gateway is competitive with prices other companies are charging for similar devices.
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.
FOR THE THREE MONTHS ENDED DECEMBER 31, 2025 COMPARED TO THE THREE
MONTHS ENDED DECEMBER 31, 2024
Revenue
Revenues increased 29.48% to $1,252,539 for the three months ended
December 31, 2025 as compared to $967,324 for the three months ended December 31, 2024. The primary reason for the increase was an increase
in revenue from the ReadyOp and Alastar platforms from $851,301 in 2024 to $1,004,282 in 2025. There was also an increase in sales of
ReadyOp hardware products from $21,395 in 2024 to $29,500 in 2025. Consulting fees and related income increased from $94,628 in 2024 to
$218,757 in 2025 due to an increase in consulting activity.
Cost of Revenue
Cost of revenues decreased to $174,963 for the three months ended December
31, 2025 as compared to $214,938 for the three months ended December31, 2024. The primary reason for the decrease was due to a decrease
in expenses associated with trade show attendance and other marketing expenses. Gross profits were $1,077,576 and $752,386 for the
three months ended December 31, 2025 and 2024, respectively.
Operating Expenses
Operating expenses increased 10.70% to $894,787 for the three months
ended December 31, 2025 compared to $808,306 for the three months ended December 31, 2024. 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 $113,733 or 15.21% 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, 2025, selling expenses were
$25,927 compared to $53,089 for the three months ended December 31, 2024. This decrease was primarily due to a decrease in advertising
and off set by a slight increase in travel expenses as the Company and recovery of credit losses associated with bad debt write off.
Research and development expenses were $2,000 for the three months
ended December 31, 2025, as compared to $2,000 for the three months ended December 31, 2024. There was no change in research and development
expenses.
Other Income/(Expenses)
The Company's other income increased by $5,222 from other income of
$6,795 during the three months ended December 31, 2024 as compared to $12,017 in other income for the three months ended December 31,
2025. This increase was due to an increase in interest income on treasury bill investments of $9,084 for the three months ended December
31, 2025.
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Income (Loss) before Income Taxes
The Company’s income before income taxes was $194,806, during
the three months ended December 31, 2025, as compared to loss of $49,125 income before income taxes for the three months ended December
31, 2024 due to the increase in revenue that was partially offset by the increase in the Company’s operating expenses.
Net Income (Loss) Income Attributable to Common Stockholders
Net income attributable to common stockholders was $184,463 for the
three months ended December 31, 2025 as compared to a net loss of $59,468 for the three months ended December 31, 2024. The increase was
primarily due to an increase in revenue which was partially offset by an increase in operating expenses. The increased costs were partially
due to addition of new employees associated with Alastar . The preferred stock dividends remained consistent.
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended December 31, 2025, net cash provided in
operations of $147,634 was the result of a net income of $194,806, depreciation and amortization expense of $5,393, an increase of accounts
receivable of $86,849. These were offset by a decrease in accounts payable of $43,900, a recovery of credit losses of $27,828, a decrease
in deferred revenue of $45,489, a decrease in inventory of $2,152 and an increase in prepaid expenses of $24,349.
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.
Net cash used in investing activities was $1,613 and $0 for the three
months ended December 31, 2025 and 2024, respectively, which was for the purchase of 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, 2025 for information regarding our critical accounting estimates.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable
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