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 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.

FOR THE THREE MONTHS ENDED JUNE 30, 2022 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2021





Revenue

Revenues increased 30.02% to $538,102 for the three months ended June 30, 2022 as compared to $413,868 for the three months ended June 30, 2021. The primary reason for the increase in revenue was due to an increase subscriptions to the ReadyOp platform increased from $405,318 in 2021 to $459,983 in 2022, or approximately 13.49% and an increase in sales of ReadyOp hardware products from $8,550 in 2021 to $16,350 in 2022. Consulting fees and related income increased from $0 in 2021 to $61,769 in 2022 due to more training activity and conference income.





Cost of Revenue

Cost of revenues was $89,938 for the three months ended June 30, 2022 as compared to $64,777 for the three months ended June 30, 2021. Gross profits were $448,164 and $349,091 for the three months ended June 30, 2022 and June 30, 2021, respectively. Gross profit margins decreased from 84% for the three months ended June 30, 2021 to 83% for the three months ended June 30, 2022. The decrease in gross profit was primarily due to higher costs associated with sales of subscriptions to the ReadyOp platform.





Operating Expenses

Operating expenses increased 8.75% to $329,003 for the three months ended June 30, 2022 compared to $302,542 for the three months ended June 30, 2021. The increase was primarily due increases in selling and depreciation expense and administrative expense slightly offset by decrease in research and development. For the three months ended June 30, 2022, selling expenses were $173,822 compared to $147,483 for the three months ended June 30, 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 increased by $1,046 or 0.98% as a result of increase in general business expenses. Depreciation expense increased by 84.07% from $521 for the three months ended June 30, 2021 to $959 for the three months ended June 30, 2022 due to the additional computer equipment purchases. Research and development expenses were $48,285 for the three months ended June 30, 2021 as compared to $46,923 for the three months ended June 30, 2022. The decrease was primarily due to decrease in expenses associated with the development of a new technology associated with a patent owned by the University of South Florida Research Foundation slightly offset by an increase in salary. The Company has obtained the exclusive license to develop and market the technology associated with the patent.



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Other Income/(Expenses)

The Company's other income increased by $28,965 from other income of $47,659 during the three months ended June 30, 2022 as compared to $18,694 for the three months ended June 30, 2021. The primary reason for this increase was an increase in interest expense as the notes payable were fully repaid in the prior year and the settlement of certain accounts payable.





Income before Income Taxes

The Company's income before income taxes was $166,820, during the three months ended June 30, 2022 as compared to $65,243 for the three months ended June 30, 2021. The 155.69% increase was primarily due to an increase in subscription of ReadyOp software in 2022, an increase in consulting fees and conference income, a gain on settlement of certain accounts payable offset by an increase in operating and marketing expenses.

Net Income Attributable to Common Stockholders

Net income attributable to common stockholders was $156,588 for the three months ended June 30, 2022 as compared to a net income of $55,124 for the three months ended June 30, 2021. The 184.07% increase was primarily due to primarily due to an increase in subscription of ReadyOp software in 2022, increase in consulting fees and conference income, a gain on settlement of certain accounts payable offset by an increase in operating and marketing expenses while preferred stock dividend remained consistent.

FOR THE NINE MONTHS ENDED JUNE 30, 2022 COMPARED TO THE NINE MONTHS ENDED JUNE 30, 2021





Revenue

Revenues increased 25.45% to $1,527,910 for the nine months ended June 30, 2022 as compared to $1,217,928 for the nine months ended June 30, 2021. The primary reason for the increase in revenue was due to an increase subscriptions to the ReadyOp platform increased from $1,162,584 in 2021 to $1,370,606 in 2022, or approximately 17.89%. There was a slight offset by a decrease in sales of ReadyOp hardware products from $28,950 in 2021 to $27,850 in 2022. Consulting fees and related income increased from $26,394 in 2021 to $129,454 in 2022 due to more training activity, conference income, and sale of thermal scanners in the nine months ended June 30, 2022.





Cost of Revenue

Cost of revenues was $248,074 for the nine months ended June 30, 2022 as compared to $198,580 for the nine months ended June 30, 2021. Gross profits were $1,279,836 and $1,019,348 for the nine months ended June 30, 2022 and June 30, 2021, respectively, an increase of 25.55%. Gross profit margins remained the same at 84% for the nine months ended June 30, 2021 and for the nine months ended June 30, 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 14.97% to $994,503 for the nine months ended June 30, 2022 compared to $864,985 for the nine months ended June 30, 2021. The increase was primarily due increases in selling, administrative expense, research and development and depreciation expense. For the nine months ended June 30, 2022, selling expenses were $498,232 compared to $417,614 for the nine months ended June 30, 2021. This increase was primarily due to an increase in advertising, travel and commissions expense. General and administrative expenses increased by $23,003 or 7.03% as a result of increase in general business expenses. Depreciation expense increased by 92.06% from $1,423 for the nine months ended June 30, 2021 to $2,733 for the nine months ended June 30, 2022 due to the additional computer equipment purchased during the period. Research and development expenses were $118,612 for the nine months ended June 30, 2021 as compared to $143,199 for the nine months ended June 30, 2022. The increase was primarily due to decrease in expenses associated with the development of a new technology associated with a patent owned by the University of South Florida Research Foundation offset by an increase in salary. The Company has obtained the exclusive license to develop and market the technology associated with the patent.





Other Income/(Expense)

The Company's other income increased by $29,964 from other income of $47,390 during the nine months ended June 30, 2022 as compared to $17,426 for the nine months ended June 30, 2021. The primary reason for this increase was a decrease in interest expense as the notes payable were fully repaid in the prior year and the settlement of certain accounts payable.





Income before Income Taxes

The Company's income before income taxes was $332,723 during the nine months ended June 30, 2022 as compared to $171,789 for the nine months ended June 30, 2021, an increase of 93.68%. The increase was primarily due to an increase in subscription of ReadyOp software in 2022, increase in consulting fees and conference income, a gain on settlement of certain accounts payable offset by increase in operating expenses.


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Net Income Attributable to Common Stockholders

Net income attributable to common stockholders was $302,028 for the nine months ended June 30, 2022 as compared to a net income of $141,205 for the nine months ended June 30, 2021. The increase was primarily due to an increase in subscription of ReadyOp software in 2022, increase in consulting fees and conference income, a gain on settlement of certain accounts payable, offset by increase in operating expenses while preferred stock dividend remained consistent.

LIQUIDITY AND CAPITAL RESOURCES

For the nine months ended June 30, 2022, net cash used in operations of $168,898 was the result of a net income of $332,723, depreciation expense of $2,733, provision of bad debt of $8,000, gain on settlement and reversal of accounts payable of $47,792, an increase in accounts receivable of $148,650, and an increase of accounts payable of $3,687. These were offset by an decrease in inventory of $1,564, a decrease in prepaid expenses of $20,658, and a decrease in deferred revenue of $333,320.

For the nine months ended June 30, 2021, net cash provided by operations of $276,634 was the result of a net income of $171,789, depreciation expense of $1,423, provision of bad debt of $6,000, a decrease in accounts receivable of $9,470 and a slight decrease in inventory of $1,309. These were offset by an increase in prepaid expenses of $49,152, a decrease of accounts payable of $36,729, a decrease in accrued expenses of $43,457 and an increase in deferred revenue of $241,959.

Net cash used in investing activities was $5,058 and $2,068 for the nine months ended June 30, 2022 and 2021, respectively, which was for the purchase of fixed assets.

Net cash used in financing activities was $48,447 for the nine months ended June 30, 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.

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