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 DECEMBER 31, 2022 COMPARED TO THE THREE MONTHS ENDED
DECEMBER 31, 2021
Revenue
Revenues decreased 2.41% to $506,650 for the three months ended December 31,
2022 as compared to $519,185 for the three months ended December 31, 2021. The
primary reason for the decrease was due to a decrease in sales of ReadyOp
hardware products from $32,000 in 2021 to $6,125 in 2022. Revenue from the
ReadyOp platform increased from $449,500 in 2021 to $460,244 in 2022. Consulting
fees and related income increased from $37,685 in 2021 to $40,281 in 2022 due to
more training activity and conference income.
Cost of Revenue
Cost of revenues decreased to $77,491 for the three months ended December 31,
2022 as compared to $92,236 for the three months ended December 31, 2021. Gross
profits were $429,159 and $426,949 for the three months ended December 31, 2022
and December 31, 2021, respectively. Gross profit margins increased from 82% for
the three months ended December 31, 2021 to 85% for the three months ended
December 31, 2022. The increase in gross profit and gross profit margin was
primarily due to the increase in sales of subscriptions to the ReadyOp platform
and the decrease in sales of hardware products.
Operating Expenses
Operating expenses increased 12.57% to $412,624 for the three months ended
December 31, 2022 compared to $366,534 for the three months ended December 31,
2021. The increase was primarily due increases in administrative expense and
slightly offset by decrease in selling expenses. General and administrative
expenses increased by $193,983 or 151.65% as a result of the increase in general
business expenses. This increase was primarily due to salary expenses included
as part of general business expenses, charitable contributions, and employee
holiday bonuses. For the three months ended December 31, 2022, selling expenses
were $67,831 compared to $188,545 for the three months ended December 31, 2021.
This decrease was primarily due to a decrease in commissions expense with an
offset by an increase in advertising and travel expenses. Research and
development expenses were $49,260 for the three months ended December 31, 2021,
as compared to $21,815 for the three months ended December 31, 2022. The
increase was primarily due to a decrease in expenses associated with the
development of a new technology associated with a patent owned by the University
of South Florida Research Foundation. The Company has obtained the exclusive
license to develop and market the technology associated with the patent.
Other Income/(Expenses)
The Company's other income increased by $717 from other income of $542 during
the three months ended December 31, 2022 as compared to $168 in other expenses,
for the three months ended December 31, 2021. The primary reason for this
increase was an increase in interest income on note receivable due from a
related party.
Income before Income Taxes
The Company's income before income taxes was $17,084, during the three months
ended December 31, 2022, as compared to $60,247 for the three months ended
December 31, 2021. The decrease was primarily due to an increase in
administrative and research and development expenses and a decrease in sales of
ReadyOp hardware products. The increased costs were partially increase in
subscription of ReadyOp software and consulting income in 2022.
Net Income Attributable to Common Stockholders
Net income attributable to common stockholders was $6,740 for the three months
ended December 31, 2022 as compared to a net income of $49,903 for the three
months ended December 31, 2021. The decrease was primarily due to an increase in
administrative and research and development expenses and a decrease in sales of
ReadyOp hardware products. The increased costs were partially due to an in
increase in subscriptions of ReadyOp software and consulting income in 2022
while preferred stock dividends remained consistent.
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended December 31, 2022, net cash used in operations of
$188,014 was the result of a net income of $17,084, depreciation expense of
$1,080, an increase in accounts payable of $32,933, and a decrease in prepaid
expenses of $9,280. These were offset by an increase in accounts receivable of
$24,752 and a decrease in deferred revenue of $223,639.
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For the three months ended December 31, 2021, net cash used in operations of
$17,849 was the result of a net income of $60,247, depreciation expense of
$814, an increase in accounts payable of $26,406, a decrease in accounts
receivable of $46,867, a decrease in prepaid expenses of $33,364. These were
offset by an increase in inventory of $6,588, an increase in due from related
party of $6,386, and a decrease in deferred revenue of $172,573.
Net cash used in investing activities was $0 and $5,058 for the three months
ended December 31, 2022 and 2021, 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 December 31, 2022 for information
regarding our critical accounting estimates.
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