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 JUNE 30, 2021 COMPARED TO THE THREE MONTHS ENDED JUNE
30, 2020
Revenue
Revenues increased 10.29% to $413,868 for the three months ended June 30, 2021
as compared to $375,250 for the three months ended June 30, 2020. The primary
reason for the increase in revenue was due to an increase subscriptions to the
ReadyOp platform increased from $349,570 in 2020 to $402,918 in 2021, or
approximately 15.55% and slightly offset by a decrease in sales of ReadyOp
hardware products from $20,880 in 2020 to $8,550 in 2021. Installation revenue
and related income decreased from $4,800 in 2020 to $2,400 in 2021 due to less
training activity in the three months ended June 30, 2021.
Cost of Revenue
Cost of revenues was $64,777 for the three months ended June 30, 2021 as
compared to $73,142 for the three months ended June 30, 2020.Gross profits were
$349,091 and $302,108 for the three months ended June 30, 2021 and June 30,
2020, respectively. Gross profit margins increased from 81% for the three months
ended June 30, 2020 to 84% for the three months ended June 30, 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 increased 28.21% to $302,542 for the three months ended June
30, 2021 compared to $235,976 for the three months ended June 30, 2020. The
increase was primarily due increases in selling, administrative expense,
research and development and amortization expense. For the three months ended
June 30, 2021, selling expenses were $147,483 compared to $116,624 for the three
months ended June 30, 2020. This increase was primarily due to a decrease in
advertising expense and offset by an increase in commissions and travel
expenses. General and administrative expenses increased by $15,243 or 16.75% as
a result of increase in general business expenses. Amortization and depreciation
expense increased by 247.73% from $150 for the three months ended June 30, 2020
to $521 for the three months ended June 30, 2021 due to the depreciation of
computer equipment. Research and development expenses were $28,192 for the three
months ended June 30, 2020 as compared to $48,285 for the three months ended
June 30, 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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Other Income/(Expenses)
The Company's other income increased to $18,694 from other expense of ($2,116)
during the three months ended June 30, 2021 as compared to the three months
ended June 30, 2020. The primary reason for this increase was the settlement of
certain accounts payable, with an offset in interest expense.
Income from Continuing Operations
The Company's income from operations was $65,243 during the three months ended
June 30, 2021 as compared to $64,016 for the three months ended June 30, 2020.
The increase was primarily due to an increase in subscription of ReadyOp
software in 2021 and gain on settlement of old accounts payable and an offset by
an increase in operating expenses.
Net Income Attributable to Common Stockholders
Net income attributable to common stockholders was $55,124 for the three months
ended June 30, 2021 as compared to a net income of $53,785 for the three months
ended June 30, 2020. The increase was primarily due to increased subscriptions
to the ReadyOp platform.
FOR THE NINE MONTHS ENDED JUNE 30, 2021 COMPARED TO THE NINE MONTHS ENDED JUNE
30, 2020
Revenue
Revenues from operations were $1,217,928 for the nine months ended June 30, 2021
as compared to $1,319,152 for the nine months ended June 30, 2020. Sales of
ReadyOp ACE IP gateways decreased 91% from $307,050 to $28,950 in the nine
months ended June 30, 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 20% from $957,751 to $1,157,784 in
the nine- month period ended June 30, 2020 and 2021, respectively. Consulting
fees and related income decreased from $49,351 in 2020 to $26,394 in 2021 due to
less training activity due to COVID in the nine months ended June 30, 2021.
Cost of Revenue
Cost of revenues was $198,580 for the nine months ended June 30, 2021, as
compared to $322,564 for the nine months ended June 30, 2020. This decrease was
primarily due to higher costs associated with the large ReadyOp ACE IP gateway
sale in 2020. Gross profits were $1,019,348 and $996,588 for the nine months
ended June 30, 2021 and 2020, respectively. Despite the decrease in revenues,
gross profit margins increased to 84% from 76% for the nine months ended June
30, 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 increased 7.22 % to approximately $864,985 for the nine
months ended June 30, 2021 compared to $806,774 for the nine months ended June
30, 2020. For the nine months ended June 30, 2021, selling expenses were
$417,614 compared to $388,895 for the nine months ended June 30, 2020. This
increase is primarily due to an increase in travel expenses and slightly offset
by the decrease in advertising expenses. General and administrative expenses
increased by $35,478 or 12.16%. This increase was primarily due to increased
payroll expense offset a decrease in legal expense. Amortization and
depreciation expense decreased by 87.10% from $11,028 for the three months ended
June 30, 2020 to $1,423 for the nine months ended June 30, 2021. Research and
development expenses were $114,993 for the nine months ended June 30, 2020 as
compared to $118,612 for the nine months ended June 30, 2021. The increase was
primarily due to increase 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.
Other Income/(Expenses)
The Company's other income increased to $17,426 from other expense of ($7,201)
during the nine months ended June 30, 2021 as compared to the nine months ended
June 30, 2020. The primary reason for this increase was the settlement of
certain accounts payable, with an offset in interest expense.
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Income from Continuing Operations
The Company's income from continuing operations decreased to $171,789 from
$182,613 during the nine months ended June 30, 2021 as compared to the nine
months ended June 30, 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 nine months ended June
30, 2021 compared to a loss of $64,936 for the nine months ended June 30, 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 $141,205 and $86,871 for the
nine months ended June 30, 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.
LIQUIDITY AND CAPITAL RESOURCES
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.
For the nine months ended June 30, 2020, net cash used in operations of $38,627
was the result of a net income of $117,677, depreciation expense of $10,878,
depreciation expense of $150, a recovery of bad debt of $13,335, a decrease in
accounts receivable of $49,176, a decrease in inventory of $13,042, an increase
in prepaid expenses of $15,000, a decrease in other assets of $8,656 and a
decrease in assets from discontinued operations of $9,929. These were offset by
a decrease of accounts payable of $28,019, a decrease in accrued expenses of
$68,756, a decrease in deferred revenue of $142,091.
Net cash used in investing activities was $2,068 for the nine months ended June
30, 2021, which was a purchase of fixed assets compared to net cash used in
investing activities was $34,029 for the nine months ended June 30, 2020, which
was attributable to the issuance of note receivable of $25,000 and purchase of
fixed assets of $9,029.
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. Net
cash provided by financing activities was $107,806 for the nine months June 30,
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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