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.

FOR THE THREE MONTHS ENDED MARCH 31, 2021 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2020





Revenue

Revenues decreased 18.09% to $422,722 for the three months ended March 31, 2021 as compared to $516,107 for the three months ended March 31, 2020. The primary reason for the decrease in revenue was a decline in sales of ReadyOp hardware products from $230,090 in 2020 to $28,696 in 2021. This decrease was primarily due to one client purchasing $212,000 of ReadyOp ACE IP gateways in 2020.

Subscriptions to the ReadyOp platform increased from $278,697 in 2020 to $387,526 in 2021, or approximately 39%. Consulting fees and related income increased from $0 in 2020 to $6,500 in 2021 due to more training activity in the three months ended March 31, 2021.





Cost of Revenue

Cost of revenues was $73,469 for the three months ended March 31, 2021 as compared to $132,118 for the three months ended March 31, 2020.Gross profits were $349,253 and $383,989 for the three months ended March 31, 2021 and March 31, 2020, respectively. Despite the decrease in revenues, gross profit margins increased from 74% for the three months ended March 31, 2020 to 83% for the three months ended March 31, 2021. The increase in gross profit was primarily due to higher margins associated with sales of subscriptions to the ReadyOp platform.





Operating Expenses

Operating expenses decreased 3.75% to approximately $277,978 for the three months ended March 31, 2021 compared to $288,796 for the three months ended March 31, 2020. The decrease was primarily due to a decrease in selling and offset by increases in administrative expense, research and development and amortization expense. For the three months ended March 31, 2021, selling expenses were $109,272 compared to $141,931 for the three months ended March 31, 2020. This decrease was primarily due to a decrease in advertising expense and offset by an increase in commissions. General and administrative expenses increased by $12,924 or 11.16% as a result of increase in general business expenses offset by a decrease in legal expense. Amortization and depreciation expense increased by 100% from $0 for the three months ended March 31, 2020 to $451 for the three months ended March 31, 2021 due to the depreciation of computer equipment. Research and development expenses were $31,072 for the three months ended March 31, 2020 as compared to $39,538 for the three months ended March 31, 2021. 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. The Company has obtained the exclusive license to develop and market the technology associated with the patent.





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Income from Continuing Operations

The Company's income from operations was $71,122 during the three months ended March 31, 2021 as compared to $93,999 for the three months ended March 31, 2020. The decrease was primarily due to a single large equipment sale in 2020.

Loss from Discontinued Operations

There was no loss from discontinued operations during the three months ended March 31, 2021 compared to a loss of $41,510 for the three months ended March 31, 2020. The reason for the decrease was the deconsolidation of VoiceInterop from the Company in February 2020.

Net Income Attributable to Common Stockholders

Net income attributable to common stockholders was $61,003 for the three months ended March 31, 2021 as compared to a net income of $42,258 for the three months ended March 31, 2020. The increase was primarily due to increased subscriptions to the ReadyOp platform.

FOR THE SIX MONTHS ENDED MARCH 31, 2021 COMPARED TO THE SIX MONTHS ENDED MARCH 31, 2020





Revenue

Revenues from operations were $804,060 for the six months ended March 31, 2021 as compared to $943,902 for the six months ended March 31, 2020. Sales of ReadyOp ACE IP gateways decreased 86% from $286,170 to $40,294 in the six months

ended March 31, 2020 and 2021, respectively. This decrease was primarily due to one client purchasing $212,000 of ReadyOp ACE IP gateways in 2020.

Subscriptions of ReadyOp software increased 24% from $608,381 to $754,866 in the six- month period ended March 31, 2020 and 2021, respectively. Consulting fees and related income decreased from $49,351 in 2020 to $6,500 in 2021 due to less training activity due to COVID in the six months ended March 31, 2021.





Cost of Revenue

Cost of revenues was $133,803 for the six months ended March 31, 2021, as compared to $249,422 for the six months ended March 31, 2020. This decrease was primarily due to higher costs associated with the large ReadyOp ACE IP gateway sale in 2020. Gross profits were $670,257 and $694,480 for the six months ended March 31, 2021 and 2020, respectively. Despite the decrease in revenues, gross profit margins increased to 83% from 74% for the six months ended March 31, 2021 and 2020, respectively. The increase was primarily due to the lower profit margins from sales of ReadyOp ACE IP gateways as compared to higher margins generated from subscriptions of ReadyOp software.





Operating Expenses

Operating expenses decreased 1.46 % to approximately $562,443 for the six months ended March 31, 2021 compared to $570,798 for the six months ended March 31, 2020. For the six months ended March 31, 2021, selling expenses were $270,131 compared to $272,271 for the six months ended March 31, 2020. This slight decrease was primarily due to a decrease in travel and advertising expenses. General and administrative expenses increased by $20,235 or 10.07%. This increase was primarily due to increased payroll expense offset a decrease in legal expense. Amortization and depreciation expense decreased by 91.71% from $10,878 for the three months ended March 31, 2020 to $902 for the six months ended March 31, 2021. Research and development expenses were $86,801 for the six months ended March 31, 2020 as compared to $70,327 for the six months ended March 31, 2021. The decrease was primarily due to decrease in consulting expense and 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.





Income  from Continuing Operations

The Company's income from continuing operations decreased to $106,546 from $118,597 during the six months ended March 31, 2021 as compared to the six months ended March 31, 2020. The primary reason for this decrease was the decrease in revenue generated by a single large sale of the ReadyOp ACE IP gateways in 2020.

Loss from Discontinued Operations

There was no loss from discontinued operations during the six months ended March 31, 2021 compared to a loss of $64,936 for the six months ended March 31, 2020. The reason for the decrease was the deconsolidation of VoiceInterop from the Company in February 2020.

Net Income Attributable to Common Stockholders

Net income attributable to common stockholders was $86,081 and $33,086 for the six months ended March 31, 2021 and 2020, respectively. The increase was primarily due to the lower profit margins from sales of ReadyOp ACE IP gateways generated in 2020 as compared to higher profit margins generated from subscription of ReadyOp software in 2021.





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LIQUIDITY AND CAPITAL RESOURCES

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 of 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.

For the six months ended March 31, 2020, net cash provided in operations of $75,139 was the result of a net income of $53,661, depreciation expense of $10,878, a recovery of bad debt of $13,335, a decrease in accounts receivable of $116,201, a decrease in inventory of $4,732, decrease in prepaid expenses of $23,656 and a decrease in assets from discontinued operations of $9,929. These were offset by a decrease of accounts payable of $47,216, a decrease in accrued expenses of $55,471, a decrease in deferred revenue of $30,382 and an increase in liabilities from discontinued operations of $2,486.

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. Net cash provided by financing activities was $7,102 for the three months March 31, 2020, which was attributable to proceeds from notes payable stockholders and repayment of notes payable to stockholders.

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, 2020 for information regarding our critical accounting estimates.

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