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. Therefore, the Company has presented the operations of this subsidiary as discontinued operations.

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 has 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.





                                      -15-

FOR THE THREE MONTHS ENDED MARCH 31, 2022 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2021





Revenue

Revenues increased 11.33% to $470,623 for the three months ended March 31, 2022 as compared to $422,722 for the three months ended March 31, 2021. The primary reason for the increase in revenue was due to an increase subscriptions to the ReadyOp platform increased from $387,526 in 2021 to $461,123 in 2021, or approximately 18.99% and slightly offset by a decrease in sales of ReadyOp hardware products from $14,600 in 2021 to $9,500 in 2022. Consulting fees and related income decreased from $20,596 in 2021 to $0 in 2022 due to less training activity and no sales of thermal scanners in the three months ended March 31, 2022. The thermal scanner sales were directly related to COVID prevention procedures. As the COVID pandemic exposure decreased, the demand for thermal scanners likewise decreased.





Cost of Revenue

Cost of revenues was $65,900 for the three months ended March 31, 2022 as compared to $73,469 for the three months ended March 31, 2021. Gross profits were $404,723 and $349,253 for the three months ended March 31, 2022 and March 31, 2021, respectively. Gross profit margins increased from 83% for the three months ended March 31, 2021 to 86% for the three months ended March 31, 2022. The increase in gross profit was primarily due to lower costs associated with sales of subscriptions to the ReadyOp platform.





Operating Expenses

Operating expenses increased 7.55% to $298,966 for the three months ended March 31, 2022 compared to $277,978 for the three months ended March 31, 2021. The increase was primarily due increases in selling, administrative expense, research and development and depreciation expense. For the three months ended March 31, 2022, selling expenses were $135,865 compared to $109,272 for the three months ended March 31, 2021. This increase was primarily due to an increase in advertising, travel and commissions expense plus the cost of a security review required for selling to government agencies. General and administrative expenses decreased by $13,592 or 10.56% as a result of decrease in general business expenses. Depreciation expense increased by 112.86% from $451 for the three months ended March 31, 2021 to $960 for the three months ended March 31, 2022 due to the additional computer equipment purchases. Research and development expenses were $39,538 for the three months ended March 31, 2021 as compared to $47,016 for the three months ended March 31, 2022. The increase was primarily due to expenses associated with the development of a new technology associated with a patent owned by the University of South Florida Research Foundation and an increase in salary. The Company has obtained the exclusive license to develop and market the technology associated with the patent.





Other Expenses

The Company's other expenses decreased by $52 from other expense of $101 during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021. The primary reason for this decrease was a decrease in interest expense as the notes payable were fully repaid in the prior year.





Income before Income Taxes

The Company's income before income taxes was $105,656, during the three months ended March 31, 2022 as compared to $71,122 for the three months ended March 31, 2021. The 48.56% increase was primarily due to an increase in subscription of ReadyOp software in 2021 and an offset by an increase in operating expenses.





                                      -16-

Net Income Attributable to Common Stockholders

Net income attributable to common stockholders was $95,537 for the three months ended March 31, 2022 as compared to a net income of $61,003 for the three months ended March 31, 2021. The 56.61% increase was primarily due to increased subscriptions to the ReadyOp platform.

FOR THE SIX MONTHS ENDED MARCH 31, 2022 COMPARED TO THE SIX MONTHS ENDED MARCH 31, 2021





Revenue

Revenues increased 23.10% to $989,808 for the six months ended March 31, 2022 as compared to $804,060 for the six months ended March 31, 2021. The primary reason for the increase in revenue was due to a increase subscriptions to the ReadyOp platform increased from $757,266 in 2021 to $910,623 in 2022, or approximately 20.25%. There was a slight offset by a decrease in sales of ReadyOp hardware products from $20,400 in 2021 to $11,500 in 2022. Consulting fees and related income increased from $26,394 in 2021 to $67,685 in 2022 due to more training activity and sale of thermal scanners in the six months ended March 31, 2022.





Cost of Revenue

Cost of revenues was $158,136 for the six months ended March 31, 2022 as compared to $133,803 for the six months ended March 31, 2021. Gross profits were $831,672 and $670,257 for the six months ended March 31, 2022 and March 31, 2021, respectively, an increase of 24.08%. Gross profit margins increased from 82% for the six months ended March 31, 2021 to 84% for the six months ended March 31, 2022. The increase in gross profit was primarily due to an increase in the sales of subscriptions to the ReadyOp platform and to lower costs associated with sales of the subscriptions.





Operating Expenses

Operating expenses increased 18.32% to $665,500 for the six months ended March 31, 2022 compared to $562,443 for the six months ended March 31, 2021. The increase was primarily due increases in selling, administrative expense, research and development and depreciation expense. For the six months ended March 31, 2022, selling expenses were $324,410 compared to $270,131 for the six months ended March 31, 2021. This increase was primarily due to an increase in advertising, travel and commissions expense. General and administrative expenses increased by $21,957 or 9.93% as a result of increase in general business expenses. Depreciation expense increased by 96.67% from $902 for the six months ended March 31, 2021 to $1,774 for the six months ended March 31, 2022 due to the additional computer equipment purchased during the period. Research and development expenses were $70,327 for the six months ended March 31, 2021 as compared to $96,276 for the six months ended March 31, 2022. The increase was primarily due to expenses associated with the development of a new technology associated with a patent owned by the University of South Florida Research Foundation and an increase in salary. The Company has obtained the exclusive license to develop and market the technology associated with the patent.





Other Expenses

The Company's other expenses decreased to $269 from other expense of $1,268 during the six months ended March 31, 2022 as compared to the six months ended March 31, 2021. The primary reason for this decrease was a decrease in interest expense as the notes payable were fully repaid in the prior year.





                                      -17-



Income before Income Taxes

The Company's income before income taxes was $165,903 during the six months ended March 31, 2022 as compared to $106,546 for the six months ended March 31, 2021, an increase of 55.71%. The increase was primarily due to an increase in subscription of ReadyOp software in 2022 and offset by a lesser percentage increase in operating expenses.

Net Income Attributable to Common Stockholders

Net income attributable to common stockholders was $145,440 for the six months ended March 31, 2022 as compared to a net income of $86,081 for the six months ended March 31, 2021. The increase was primarily due to increased subscriptions to the ReadyOp platform.

LIQUIDITY AND CAPITAL RESOURCES

For the six months ended March 31, 2022, net cash used in operations of $12,165 was the result of a net income of $165,903, a decrease in accounts receivable of $29,434, and a decrease of accounts payable of $6,922. These were offset by an increase in inventory of $4,595, a decrease in prepaid expenses of $11,343, and a decrease in deferred revenue of $200,601.

For the six months ended March 31, 2021, net cash provided by operations of $77,654 was the result of a net income of $106,546, depreciation expense of $902, provision for bad debt of $5,000, a decrease in accounts receivable of $57,515 and a slight decrease in inventory of $5,486. These were offset by an increase in prepaid expenses of $14,289, a decrease of accounts payable of $21,582, a decrease in accrued expenses of $43,457 and a decrease in deferred revenue of $18,467.

Net cash used in investing activities was $5,058 for the six months ended March 31, 2022, which was a purchase of fixed assets.

Net cash used in financing activities was $48,447 for the six months ended March 31, 2021, which was a repayment of a stockholder note payable of $48,447.





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, 2021 for information regarding our critical accounting estimates.

© Edgar Online, source Glimpses