UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________
FORM10-Q
FORM 10-Q
(Mark One) | |
[ X ] | Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended | |
[ ] | Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to |
Cleartronic, Inc.
(Exact name of registrant as specified in its charter)
Florida 65-0958798
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
000-55329(Commission File Number)
8000 North Federal Highway, Boca Raton, Florida 33487
(Address of principal executive offices) (Zip Code)
561-939-3300
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
-i-
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X ] No[ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer ____
Accelerated filer ____
Non-accelerated filer [X]
Smaller reporting company [X]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 12(a) of the Exchange Act [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes[ ] No[ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading | Name of each exchange on which registered | |||
Common Par | CLRI | NONE |
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 210,382,723223,994,635 shares as of AugustMay 14, 2019.
2020.
-ii-
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CLEARTRONIC, INC. AND SUBSIDIARIES | |||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||
ASSETS | |||
June 30, | September 30, | ||
2019 | 2018 | ||
(unaudited) |
| ||
Current assets: | |||
Cash | $ 30,440 | $ 413 | |
Accounts receivable, net | 162,671 | 109,660 | |
Inventory | 4,684 | 13,790 | |
Prepaid expenses and other current assets | 688 | 688 | |
Assets from discontinued operations | 3,335 | 285 | |
Total current assets | 201,818 | 124,836 | |
Other assets: | |||
Other assets | 18,656 | 8,656 | |
ReadyOp software platform (net of amortization) | 27,177 | 76,074 | |
ReadyOp customer list (net of amortization) | - | 8,046 | |
Total other assets | 45,833 | 92,776 | |
Total assets | $ 247,651 | $ 217,612 | |
LIABILITIES AND STOCKHOLDERS' DEFICIT | |||
Current liabilities: | |||
Accounts payable | $ 513,198 | $ 502,178 | |
Accrued expenses | 136,763 | 169,673 | |
Deferred revenue, current portion | 489,323 | 354,362 | |
Notes payable stockholders | 83,302 | 147,589 | |
Customer deposits | 26,756 | 12,756 | |
Liabilities from discontinued operations, current portion | 147,791 | 106,806 | |
Total current liabilities | 1,397,133 | 1,293,364 | |
Long Term Liabilities | |||
Deferred revenue, net of current portion | 117,579 | 112,333 | |
Liabilities from discontinued operations, net of current portion | 13,172 | - | |
Total long term liabilities | 130,751 | 112,333 | |
Total liabilities | 1,527,884 | 1,405,697 | |
Commitments and Contingencies (See Note 7) | |||
Stockholders' deficit: | |||
Series A preferred stock - $.00001 par value; 1,250,000 shares authorized, | 5 | 5 | |
512,996 issued and outstanding, respectively. | |||
Series B preferred stock - $.00001 par value; 10 shares authorized, | - | - | |
0 shares issued and outstanding, respectively. | |||
Series C preferred stock - $.00001 par value; 50,000,000 shares authorized, | 45 | 45 | |
4,433,375 shares issued and outstanding, respectively | |||
Series D preferred stock - $.00001 par value; 10,000,000 shares authorized, | 7 | 7 | |
670,904 shares issued and outstanding, respectively. | |||
Series E preferred stock - $.00001 par value, 10,000,000 shares authorized, | 30 | 30 | |
3,000,000 shares issued and outstanding, respectively. | |||
Common stock - $.00001 par value; 5,000,000,000 shares authorized, | 2,104 | 2,039 | |
210,382,723 and 203,899,190 shares issued and outstanding, respectively | |||
Additional paid-in capital | 15,041,538 | 14,854,301 | |
Accumulated Deficit | (16,323,962) | (16,044,512) | |
Total stockholders' deficit | (1,280,233) | (1,188,085) | |
Total liabilities and stockholders' deficit | $ 247,651 | $ 217,612 | |
The accompanying notes are an integral part of these condensed consolidated financial statements
-1-
CLEARTRONIC, INC. AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | ||||||||
For the three | For the three | For the nine | For the nine | |||||
months ended | months ended | months ended | months ended | |||||
June 30, 2019 | June 30, 2018 | June 30, 2019 | June 30, 2018 | |||||
Revenue | $ 365,296 | $ 192,131 | $ 835,631 | $ 561,404 | ||||
Cost of Revenue | 81,435 | 35,749 | 178,541 | 88,456 | ||||
Gross Profit | 283,861 | 156,382 | 657,090 | 472,948 | ||||
Operating Expenses: | ||||||||
Selling expenses | 155,077 | 107,255 | 410,315 | 278,241 | ||||
Administrative expenses | 99,939 | 78,358 | 275,828 | 267,555 | ||||
Amortization | 16,299 | 28,380 | 56,943 | 85,140 | ||||
Research and development | 44,248 | 49,417 | 157,789 | 171,992 | ||||
Total Operating Expenses | 315,563 | 263,410 | 900,875 | 802,928 | ||||
Other Income (Expense) | (1,799) | (3,243) | (11,913) | 2,014 | ||||
Loss from continuing operations before income taxes | (33,501) | (110,271) | (255,698) | (327,966) | ||||
Income taxes from continuing operations | - | - | - | - | ||||
Loss from continuing operations | (33,501) | (110,271) | (255,698) | (327,966) | ||||
Discontinued operations | ||||||||
Income (loss) from discontinued operations | 14,337 | (3,476) | (23,752) | (12,374) | ||||
Income taxes from discontinued operations | - | - | - | - | ||||
Income (loss) from discontinued operations | 14,337 | (3,476) | (23,752) | (12,374) | ||||
Net loss | (19,164) | (113,747) | (279,450) | (340,340) | ||||
Preferred stock dividends Series A Preferred | (10,231) | (10,857) | (30,694) | (33,517) | ||||
Net loss attributable to common stockholders | $ (29,395) | $ (124,604) | $ (310,144) | $ (373,857) | ||||
Net loss per share - basic and diluted | ||||||||
Loss from Continuing Operations | $ (0.00) | $ (0.00) | $ (0.00) | $ (0.00) | ||||
Income (loss) from discontinued operations | $ 0.00 | $ (0.00) | $ (0.00) | $ (0.00) | ||||
Net loss per common share - basic and diluted | $ (0.00) | $ (0.00) | $ (0.00) | $ (0.00) | ||||
Weighted Average of number of shares outstanding | ||||||||
basic and diluted | 207,647,935 | 203,899,190 | 206,414,819 | ��203,899,190 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements
-2-
CLEARTRONIC, INC. AND SUBSIDIARIES | ||||||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW | ||||||
(Unaudited) | ||||||
For the Nine | For the Nine | |||||
Months ended | Months ended | |||||
June 30, 2019 | June 30, 2018 | |||||
NET LOSS | $ (279,450) | $ (340,340) | ||||
Adjustments to reconcile net loss to net cash (used in) provided by | ||||||
operating activities: | ||||||
Amortization of ReadyOp software platform | 48,897 | 48,897 | ||||
Amortization of ReadyOp customer list | 8,046 | 36,243 | ||||
Provision for bad debt | 22,000 | 8,000 | ||||
(Increase) decrease in assets: | ||||||
Accounts receivable | (75,011) | (65,103) | ||||
Inventory | 9,106 | 20,417 | ||||
Prepaid expenses and other current assets | (10,000) | 4,135 | ||||
Assets from discontinued operations | (3,051) | 11,907 | ||||
Increase (decrease) in liabilities: | ||||||
Accounts payable | (15,927) | 8,843 | ||||
Accrued expenses | (3,403) | 99,428 | ||||
Deferred revenue | 140,207 | 124,754 | ||||
Customer deposit | 14,000 | (10,000) | ||||
Liabilities from discontinued operations | 64,260 | 88,527 | ||||
Net Cash (Used in) Provided by Operating Activities | (80,326) | 35,708 | ||||
Cash Flows From Investing Activities | ||||||
Issuance of note receivable - discontinued operations | (25,000) | (50,000) | ||||
Repayment of note receivable - discontinued operations | 25,000 | - | ||||
Net Cash Used in Investing Activities | - | (50,000) | ||||
Cash Flows From Financing Activities | ||||||
Proceeds from issuance of installment loan-discontinued operations | 43,810 | - | ||||
Repayment of installment loan - discontinued operations | (26,966) | - | ||||
Proceeds from notes payable stockholders | 713 | 30,000 | ||||
Repayment of notes payable stockholders | - | (15,782) | ||||
Proceeds from issuance of Common Stock | 100,000 | - | ||||
Dividends paid | (7,204) | - | ||||
Net Cash Provided by Financing Activities | 110,353 | 14,218 | ||||
Net increase (decrease) in cash | 30,027 | (74) | ||||
Cash at beginning of period | 413 | 7,560 | ||||
Cash at end of period | $ 30,440 | $ 7,486 | ||||
SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||
Cash paid for interest | $ 4,771 | $ 1,338 | ||||
Cash paid for taxes | $ - | $ - | ||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||
Common stock issued for conversion of note payable, accrued interest and accrued | ||||||
dividends - related parties | $ 94,506 | $ - |
The accompanying notes are an integral part of these condensed consolidated financial statements
-3-
CLEARTRONIC, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT | |||||||||||||||||||||||||||||
FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2019 | |||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||
Series A Preferred Stock | Series B Preferred Stock | Series C Preferred Stock | Series D Preferred Stock | Series E Preferred Stock | Common Stock | Additional paid-in | Accumulated | Total Stockholders' | |||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | capital | deficit | Deficit | |||||||||||||||
Balance at September 30, 2018 | 512,996 | $ 5 | - | $ - | 4,433,375 | $ 45 | 670,904 | $ 7 | 3,000,000 | $ 30 | 203,899,190 | $ 2,039 | $ 14,854,301 | $ (16,044,512) | $ (1,188,085) | ||||||||||||||
Common stock issued for cash | - | - | - | - | - | - | - | - | - | - | 3,333,334 | 33 | 99,967 | - | 100,000 | ||||||||||||||
Common stock issued for conversion of note payable, accrued interest and dividend - related parties | - | - | - | - | - | - | - | - | - | - | 3,150,199 | 32 | 94,474 | - | 94,506 | ||||||||||||||
Dividends paid | - | - | - | - | - | - | - | - | - | - | - | - | (7,204) | - | (7,204) | ||||||||||||||
Net loss for the nine months ended June 30, 2019 | - | - | - | - | - | - | - | - | - | - | - | - | - | (279,450) | (279,450) | ||||||||||||||
Balance at June 30, 2019 (Unaudited) | 512,996 | $ 5 | - | $ - | 4,433,375 | $ 45 | 670,904 | $ 7 | 3,000,000 | $ 30 | 210,382,723 | $ 2,104 | $15,041,538 | $ (16,323,962) | $ (1,280,233) | ||||||||||||||
Balance at March 31, 201 (Uaudited) | 512,996 | $ 5 | - | $ - | 4,433,375 | $ 45 | 670,904 | $ 7 | 3,000,000 | $ 30 | 207,232,524 | $ 2,072 | $14,954,268 | $ (16,304,798) | $(1,348,371) | ||||||||||||||
Common stock issued for conversion of note payable, accrued interest and dividend - related parties | - | - | - | - | - | - | - | - | - | - | 3,150,199 | 32 | 94,474 | - | 94,506 | ||||||||||||||
Dividends paid | - | - | - | - | - | - | - | - | - | - | - | - | (7,204) | - | (7,204) | ||||||||||||||
Net loss for the three months ended June 30, 2019 | - | - | - | - | - | - | - | - | - | - | - | - | - | (19,164) | (19,164) | ||||||||||||||
Balance at June 30, 2019 (Unaudited) | 512,996 | $ 5 | - | $ - | 4,433,375 | $ 45 | 670,904 | $ 7 | 3,000,000 | $30 | 210,382,723 | $ 2,104 | $ 15,041,538 | $(16,323,962) | $(1,280,233) |
CLEARTRONIC, INC. AND SUBSIDIARIES | |||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
ASSETS | |||||
March 31, 2020 | September 30, 2019 | ||||
(unaudited) |
| ||||
Current assets: | |||||
Cash | $ 109,939 | $ 27,698 | |||
Accounts receivable, net | 108,215 | 215,956 | |||
Accounts receivable - related party, net | 4,875 | - | |||
Inventory | 15,106 | 19,838 | |||
Prepaid expenses and other current assets | - | 15,000 | |||
Assets from discontinued operations | - | 4,136 | |||
Total current assets | 238,135 | 282,628 | |||
Other assets: | |||||
Other assets | - | 8,656 | |||
ReadyOp software platform (net of amortization) | - | 10,878 | |||
ReadyMed software platform (net of amortization) | 514,968 | - | |||
Total other assets | 514,968 | 19,534 | |||
Total assets | $ 753,103 | $ 302,162 | |||
LIABILITIES AND STOCKHOLDERS' DEFICIT | |||||
Current liabilities: | |||||
Accounts payable | $ 217,640 | $ 264,855 | |||
Accrued expenses | 67,829 | 123,300 | |||
Deferred revenue, current portion | 721,822 | 676,526 | |||
Notes payable stockholders | 55,409 | 53,729 | |||
Customer deposits | 26,756 | 26,756 | |||
Liabilities from discontinued operations, current portion | - | 184,559 | |||
Total current liabilities | 1,089,456 | 1,329,725 | |||
Long Term Liabilities | |||||
Notes payable stockholders, net of current portion | 22,750 | 39,140 | |||
Deferred revenue, net of current portion | 24,333 | 100,011 | |||
Liabilities from discontinued operations, net of current portion | - | 10,667 | |||
Total long term liabilities | 47,083 | 149,818 | |||
Total liabilities | 1,136,539 | 1,479,543 | |||
Commitments and Contingencies (See Note 7) | |||||
Stockholders' deficit: | |||||
Series A preferred stock - $.00001 par value; 1,250,000 shares authorized, | 5 | 5 | |||
512,996 issued and outstanding, respectively. | |||||
Series B preferred stock - $.00001 par value; 10 shares authorized, | - | - | |||
0 shares issued and outstanding, respectively. | |||||
Series C preferred stock - $.00001 par value; 50,000,000 shares authorized, | 45 | 45 | |||
4,433,375 shares issued and outstanding, respectively | |||||
Series D preferred stock - $.00001 par value; 10,000,000 shares authorized, | 7 | 7 | |||
670,904 shares issued and outstanding, respectively. | |||||
Series E preferred stock - $.00001 par value, 10,000,000 shares authorized, | 30 | 30 | |||
3,000,000 shares issued and outstanding, respectively. | |||||
Common stock - $.00001 par value; 5,000,000,000 shares authorized, | 2,240 | 2,120 | |||
223,994,635 and 211,994,635 shares issued and outstanding, respectively | |||||
Additional paid-in capital | 15,866,718 | 15,041,522 | |||
Accumulated Deficit | (16,252,481) | (16,221,110) | |||
Total stockholders' deficit | (383,436) | (1,177,381) | |||
Total liabilities and stockholders' deficit | $ 753,103 | $ 302,162 |
The accompanying notes are an integral part of these condensed consolidated unaudited financial statements
-4--1-
CLEARTRONIC, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT | |||||||||||||||||||||||||||||
FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2018 | |||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||
Additional | Total | ||||||||||||||||||||||||||||
Series A Preferred Stock | Series B Preferred Stock | Series C Preferred Stock | Series D Preferred Stock | Series E Preferred Stock | Common Stock | paid-in | Accumulated | Stockholders' | |||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | capital | deficit | Deficit | |||||||||||||||
Balance at September 30, 2017 | 566,496 | $ 6 | 1 | $ - | 2,563,375 | $ 26 | 670,904 | $ 7 | 3,000,000 | $ 30 | 203,899,190 | $ 2,039 | $ 14,854,319 | $ (15,511,703) | $ (655,276) | ||||||||||||||
Series A Convertible Preferred shares exchanged for Series C Convertible Preferred shares | |||||||||||||||||||||||||||||
(53,500) | (1) | - | - | 1,070,000 | 11 | - | - | - | - | - | - | (10) | - | - | |||||||||||||||
Net loss for the nine months ended June 30 ,2018 | - | - | - | - | - | - | - | - | - | - | - | - | - | (340,340) | (340,340) | ||||||||||||||
Balance at June 30, 2018 (Unaudited) | 512,996 | $ 5 | 1 | $ - | 3,633,375 | $ 37 | 670,904 | $ 7 | 3,000,000 | $ 30 | 203,899,190 | $ 2,039 | $ 14,854,309 | $ (15,852,043) | $ (995,616) | ||||||||||||||
Balance March 31, 2018 (Unaudited) | 566,496 | $ 6 | 1 | $ - | 2,563,375 | $ 26 | 670,904 | $ 7 | 3,000,000 | $ 30 | 203,899,190 | $ 2,039 | $ 14,854,319 | $ (15,738,296) | $ (881,869) | ||||||||||||||
Series A Convertible Preferred shares exchanged for Series C Convertible Preferred shares | |||||||||||||||||||||||||||||
(53,500) | (1) | - | - | 1,070,000 | 11 | - | - | - | - | - | - | (10) | - | - | |||||||||||||||
Net loss for the three months ended June 30, 2018 | - | - | - | - | - | - | - | - | - | - | - | - | - | (113,747) | (113,747) | ||||||||||||||
Balance at June 30, 2018 (Unaudited) | 512,996 | $ 5 | 1 | $ - | 3,633,375 | $ 37 | 670,904 | $ 7 | 3,000,000 | $ 30 | 203,899,190 | $ 2,039 | $ 14,854,309 | $ (15,852,043) | $ (995,616) |
CLEARTRONIC, INC. AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | ||||||||
(Unaudited) | ||||||||
For the three | For the three | For the six | For the six | |||||
months ended | months ended | months ended | months ended | |||||
March 31, 2020 | March 31, 2019 | March 31, 2020 | March 31, 2019 | |||||
Revenue | $ 516,107 | $279,003 | $943,902 | $ 470,335 | ||||
Cost of Revenue | 132,118 | 47,984 | 249,422 | 97,106 | ||||
Gross Profit | 383,989 | 231,019 | 694,480 | 373,229 | ||||
Operating Expenses: | ||||||||
Selling expenses | 141,931 | 154,873 | 272,271 | 255,238 | ||||
Administrative expenses | 115,793 | 98,231 | 200,848 | 175,889 | ||||
Amortization | 46,676 | 16,299 | 95,910 | 40,644 | ||||
Research and development | 31,072 | 61,093 | 86,801 | 113,541 | ||||
Total Operating Expenses | 335,472 | 330,496 | 655,830 | 585,312 | ||||
Other expense and interest expense | (1,194) | (6,114) | (5,085) | (10,114) | ||||
Total Other Expense | (1,194) | (6,114) | (5,085) | (10,114) | ||||
Income/(Loss) from continuing operations before income taxes | 47,323 | (105,591) | 33,565 | (222,197) | ||||
Provision for income taxes from continuing operations | - | - | - | - | ||||
Income/(Loss) from continuing operations | 47,323 | (105,591) | 33,565 | (222,197) | ||||
Discontinued operations | ||||||||
Loss from discontinued operations | (41,510) | (43,535) | (64,936) | (38,089) | ||||
Provision for Income taxes from discontinued operations | - | - | - | - | ||||
Loss from discontinued operations | (41,510) | (43,535) | (64,936) | (38,089) | ||||
Net Income/(Loss) | 5,813 | (149,126) | (31,371) | (260,286) | ||||
Preferred stock dividends Series A Preferred | (10,231) | (10,119) | (20,575) | (20,463) | ||||
Net loss attributable to common stockholders | $ (4,418) | $ (159,245) | $ (51,946) | $ (280,749) | ||||
Net income (loss) per share - basic and diluted | ||||||||
Loss from Continuing Operations | $ 0.00 | $ (0.00) | $ 0.00 | $ (0.00) | ||||
Loss from discontinued operations | $ (0.00) | $ (0.00) | $ (0.00) | $ (0.00) | ||||
Net loss per common share - basic and diluted | $ (0.00) | $ (0.00) | $ (0.00) | $ (0.00) | ||||
Weighted Average of number of shares outstanding basic and diluted | 223,994,635 | 207,232,524 | 222,355,291 | 205,913,842 |
The accompanying notes are an integral part of these condensed consolidated unaudited financial statements
-2-
CLEARTRONIC, INC. AND SUBSIDIARIES | |||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW | |||
(Unaudited) | |||
For six months | For six months | ||
ended | ended | ||
March 31, 2020 | March 31, 2019 | ||
NET LOSS | $ (31,371) | $ (260,286) | |
Adjustments to reconcile net loss to net cash provided by (used in) | |||
operating activities: | |||
Amortization of ReadyOp software platform | 10,878 | 32,598 | |
Amortization of ReadyOp customer list | - | 8,046 | |
Amortization of ReadyMed software platform | 85,032 | - | |
Provision (Recovery) for bad debt | (13,335) | 8,000 | |
(Increase) decrease in assets: | |||
Accounts receivable | 116,201 | (43,195) | |
Inventory | 4,732 | (12,828) | |
Prepaid expenses and other current assets | 23,656 | - | |
Assets from discontinued operations | 9,929 | (20,464) | |
Increase (decrease) in liabilities: | |||
Accounts payable | (47,216) | 10,500 | |
Accrued expenses | (55,471) | (56,169) | |
Deferred revenue | (30,382) | 118,792 | |
Customer deposit | - | 14,000 | |
Liabilities from discontinued operations | 2,486 | 73,256 | |
Net Cash Provided by (Used in) Operating Activities | 75,139 | (127,750) | |
Cash Flows From Investing Activities | |||
Issuance of note receivable - discontinued operations | - | 25,000 | |
Repayment of note receivable - discontinued operations | - | (25,000) | |
Net Cash Used in Investing Activities | - | - | |
Cash Flows From Financing Activities | |||
Proceeds from issuance of installment loan-discontinued operations | 43,600 | 43,810 | |
Repayment of installment loan - discontinued operations | (33,151) | (14,550) | |
Proceeds from notes payable | 50,000 | - | |
Repayment of note payable | (50,000) | - | |
Repayment of notes payable stockholders | (14,709) | - | |
Proceeds from loan payable - related party - discontinued operations | 11,362 | - | |
Proceeds from issuance of common stock | - | 100,000 | |
Net Cash Provided by Financing Activities | 7,102 | 129,260 | |
Net increase in cash | 82,241 | 1,510 | |
Cash at beginning of period | 27,698 | 413 | |
Cash at end of period | $ 109,939 | $ 1,923 | |
SUPPLEMENTAL CASH FLOW INFORMATION: | |||
Cash paid for interest | $ 4,433 | $ - | |
Cash paid for taxes | $ - | $ - | |
Supplemental disclosure of non-cash investing and financing activities: | |||
Operating lease asset obtained for operating lease liability from discontinued operations | $ 75,078 | $ - | |
Common stock issued for ReadyMed Platform | $ 600,000 | $ - | |
Deconsolidation of Voiceinterop, Inc. | $ 225,316 | $ - |
The accompanying notes are an integral part of these condensed consolidated unaudited financial statements
-3-
CLEARTRONIC, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT | |||||||||||||||||||||||||||||
FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2020 | |||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||
Additional | Total | ||||||||||||||||||||||||||||
Series A Preferred Stock | Series B Preferred Stock | Series C Preferred Stock | Series D Preferred Stock | Series E Preferred Stock | Common Stock | paid-in | Accumulated | Stockholders' | |||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | capital | deficit | Deficit | |||||||||||||||
Balance at September 30, 2019 | 512,996 | $ 5 | - | - | 4,433,375 | $ 45 | 670,904 | $ 7 | 3,000,000 | $30 | 211,994,635 | $2,120 | $15,041,522 | $(16,221,110) | $ (1,177,381) | ||||||||||||||
Acquisition of ReadyMed platform in exchange for common shares | - | - | - | - | - | - | - | - | - | - | 12,000,000 | 120 | 599,880 | - | 600,000 | ||||||||||||||
Deconsilidation of Voiceintrop, Inc. | - | - | - | - | - | - | - | - | - | - | - | - | 225,316 | - | 225,316 | ||||||||||||||
Net loss for the six months ended March 31, 2020 | - | - | - | - | - | - | - | - | - | - | - | - | - | (31,371) | (31,371) | ||||||||||||||
Balance at March 31 2020 (Unaudited) | 512,996 | $ 5 | - |
| - | 4,433,375 | $ 45 | 670,904 | $ 7 | 3,000,000 | $ 30 | 223,994,635 | $ 2,240 | $ 15,866,718 | $(16,252,481) | $ (383,436) | |||||||||||||
Balance at December 31, 2019 (Unaudited) | 512,996 | $ 5 | - |
| - | 4,433,375 | $ 45 | 670,904 | $ 7 | 3,000,000 | $ 30 | 223,994,635 | $ 2,240 | $ 15,641,402 | $(16,258,294) | $ (614,565) | |||||||||||||
Deconsilidation of Voiceintrop, Inc. | - | - | - | - | - | - | - | - | - | - | - | - | 225,316 | - | 225,316 | ||||||||||||||
Net loss for the three months ended March 31, 2020 | - | - | - | - | - | - | - | - | - | - | - | - | - | 5,813 | 5,813 | ||||||||||||||
Balance at March 31 2020 (Unaudited) | 512,996 | $ 5 | - |
| $ - | 4,433,375 | $ 45 | 670,904 | $ 7 | 3,000,000 | $ 30 | 223,994,635 | $ 2,240 | $ 15,866,718 | $(16,252,481) | $(383,436) | |||||||||||||
The accompanying notes are an integral part of these condensed consolidated unaudited financial statements
-4-
CLEARTRONIC, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT | |||||||||||||||||||||||||||||
FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2019 | |||||||||||||||||||||||||||||
(Unaudited) |
Additional | Total | ||||||||||||||||||||||||||||||
Series A Preferred Stock | Series B Preferred Stock | Series C Preferred Stock | Series D Preferred Stock | Series E Preferred Stock | Common Stock | paid-in | Subscription | Accumulated | Stockholders' | ||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | capital | Receivable | deficit | Deficit | ||||||||||||||||
Balance at September 30, 2018 | 512,996 | $ 5 | - | $ - | 4,433,375 | $ 45 | 670,904 | $ 7 | 3,000,000 | $ 30 | 203,899,190 | $ 2,039 | $14,854,301 | - | $ (16,044,512) | $(1,188,085) | |||||||||||||||
Common stock issued for cash | - | - | - | - | - | - | - | - | - | - | 3,333,334 | 33 | 99,967 | - | - | 100,000 | |||||||||||||||
Net loss for the six months ended March 31, 2019 | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (260,286) | (260,286) | |||||||||||||||
Balance at March 31, 2019 (Unaudited) | 512,996 | $ 5 | - | $ - | 4,433,375 | $ 45 | 670,904 | $ 7 | 3,000,000 | $ 30 | 207,232,524 | $ 2,072 | $14,954,268 | $ - | $ (16,304,798) | $ (1,348,371) | |||||||||||||||
Balance at December 31, 2018 (Unaudited) | 512,996 | $ 5 | - | $ - | 4,433,375 | $ 45 | 670,904 | $ 7 | 3,000,000 | $ 30 | 207,232,524 | $ 2,072 | $14,954,268 | $ (25,000) | $ (16,155,672) | $(1,224,245) | |||||||||||||||
Collection of subscription receivable | - | - | - | - | - | - | - | - | - | - | - | - | - | 25,000 | - | 25,000 | |||||||||||||||
Net loss for the three months ended March 31, 2019 | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (149,126) | (149,126) | |||||||||||||||
Balance at March 31, 2019 (Unaudited) | 512,996 | $ 5 | - | $ - | 4,433,375 | $ 45 | 670,904 | $ 7 | 3,000,000 | $ 30 | 207,232,524 | $2,072 | $14,954,268 | $ - | $ (16,304,798) | $(1,348,371) |
The accompanying notes are an integral part of these condensed consolidated unaudited financial statements
-5-
CLEARTRONIC, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30, 2019March 31, 2020
(unaudited)(Unaudited)
NOTE 1 -ORGANIZATION
Cleartronic, Inc. (the “Company”) was incorporated in the state of Florida on November 15, 1999. The Company’s subsidiaries are VoiceInterop (“VoiceInterop”) and ReadyOp Communications, Inc. (“ReadyOp”). On February 14, 2020, VoiceInterop was deconsolidated.
In September 2014, the Company formed ReadyOp Communications, Inc. (a Florida corporation), as a wholly owned subsidiary to facilitate the marketing of ReadyOp software. The Company’s only operating subsidiary is ReadyOp Communications, Inc.
In November 2016, the Company cancelled its Licensing Agreement with Collabria LLC of Tampa, Florida (”Collabria”) and acquired all of the intellectual property related to Collabria’s command and control software, trade-named ReadyOp. In addition the Company acquired Collabria’s client list. In exchange for these assets the Company issued Collabria 3,000,000 restricted shares of the Company’s Series E Convertible Preferred stock. The Company assumed none of Collabria’s liabilities.
In March 2018, the Company approved the spin-off VoiceInterop into a separate company under a Form S-1 registration to be filed with the United States Securities and Exchange Commission. On May 13, 2019, VoiceInterop filed an S-1 registration with the United States Securities and Exchange Commission. All VoiceInterop transactions ofhave been recorded as discontinued operations. On February 14, 2020, the distribution of shares was approved by FINRA and VoiceInterop was deconsolidated from Cleartronic, Inc. (See Note 8).
In October 2019, the Company acquired a software platform from Collabria LLC. In exchange for this asset, the Company issued 12,000,000 shares of Common stock of the Company. ReadyMed is a web based secure communication platform designed for the health care industry. This includes hospitals, clinics, doctor's offices and health insurance companies and many other segments of the health care industry. It provides hospitals with patient tracking capability within the hospital. It allows physicians to track patient progress after release from the hospital and allows for secure communication with the patient to track the healing process, record their recovery and monitor their medications.
-6-
NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying unaudited interim consolidated financial statements contain the consolidated accounts of Cleartronic, Inc. and its subsidiaries, ReadyOp Communications, Inc. and VoiceInterop, Inc. All material intercompany transactions and balances have been eliminated. AllOn February 14, 2020, the deconsolidation of VoiceInterop was completed and transactions have beenthrough that date are recorded as discontinued operations. (See Note 8)
BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q of Regulation S-K. They may not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements for the year ended September 30, 20182019 included in the Company’s Annual Report on Form 10-K filed with the United States Securities and Exchange Commission. The unaudited interim consolidated financial statements should be read in conjunction with those financial statements included in the Form 10-K. In the opinion of management, all adjustments considered necessary for a fair presentation, consisting solely of normal and recurring adjustments have been made. Operating results for the ninethree and six months ended June 30, 2019March 31, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2019.2020.
USE OF ESTIMATES
In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and operations for the reporting period. Although these estimates are based on management’s knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results.
-6-
Significant estimates include the assumptions used in valuation of deferred tax assets, estimated useful life of intangible assets, valuation of inventory and allowance for doubtful accounts.
-7-
CASH AND CASH EQUIVALENTS
For financial statement purposes, the Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. The Company did not own any cash equivalents at June 30, 2019March 31, 2020 and September 30, 2018.2019.
ACCOUNTS RECEIVABLE
The Company provides an allowance for uncollectible accounts based upon a periodic review and analysis of outstanding accounts receivable balances. Uncollectible receivables are charged to the allowance when deemed uncollectible. Recoveries of accounts previously written off are used to credit the allowance account in the periods in which the recoveries are made.
The Company provided $38,000$6,000 and $16,000$52,000 allowances for doubtful accounts as of June 30, 2019March 31, 2020 and September 30, 2018,2019, respectively.
ASSET ACQUISITION
In October 2019, the Company acquired a software platform from Collabria LLC. In exchange for this asset, the Company issued 12,000,000 shares of Common stock valued at $600,000. This valuation was based on the historical cost of the software. The ReadyMed software platform of $600,000 to be amortized over three years, amortization expense recognized for the three month periods ended March 31, 2020 and 2018 was $46,676 and $0, respectively. The amortization expense for the six month periods ended March 31, 2020 and 2019 was $85,032 and $0, respectively.
In November 2016, the Company acquired the ReadyOp software platform and the Collabria customer base from Collabria LLC. In exchange for these assets the Company issued 3,000,000 shares of restricted Series E Convertible Preferred stock valued at $292,240. This valuation was based on internal calculations and validated by a third party valuation expert. The ReadyOp software platform was valued at $195,600 to be amortized over three years, amortization expense recognized for the three month periods ended June 30,March 31, 2020 and 2019 was $0 and 2018 was $16,299, and $16,297, respectively. The amortization expense for the ninesix month periods ended June 30,March 31, 2020 and 2019 was $10,878 and 2018 was $48,897 and $48,897,$32,598, respectively. As of March 31, 2020, ReadyOp software platform has been fully amortized.
The Collabria customer base was valued at $96,640 to be amortized over two years, amortization expense recognized for the three month periodsmonths ended June 30,March 31, 2020 and 2019 and 2018 was $0 and $12,083,$0, respectively. The amortization expense for the ninesix month periods ended JuneMarch 31, 2020 and 2019 was $0 and $8,046, respectively. As of September 30, 2019, and 2018 was $8,046 and $36,243, respectively.the Collabria customer base has been fully amortized.
-8-
CONCENTRATION OF CREDIT RISK
The Company currently maintains cash balances at one FDIC-insured banking institution. Deposits held in noninterest-bearing transaction accounts are insured up to a maximum of $250,000 at all FDIC-insured institutions. At March 31, 2020 and September 30, 2019, the Company had approximately $0 and $0, respectively in excess of FDIC insurance limits.
RESEARCH AND DEVELOPMENT COSTS
The Company expenses research and development costs as incurred.
For the ninesix months ended June 30,March 31, 2020 and 2019, and 2018, the Company had $157,789$86,801 and $171,992,$113,541, respectively, in research and development costs from continuing operations. For the three months ended June 30,March 31, 2020 and 2019, and 2018, the Company had $44,248,$31,072 and $49,417,$61,093, respectively, in research and development costs from continuing operations.
-7-
REVENUE RECOGNITION AND DEFERRED REVENUES
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, "Revenue from Contracts with Customers (Topic 606)," which supersedes the revenue recognition requirements in Accounting Standards Codification 605, "Revenue Recognition." This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU No. 2015-14, which deferred the effective date of the new revenue standard by one year, and allowed entities the option to early adopt the new revenue standard as of the original effective date. There have been multiple standards updates amending this guidance or providing corrections or improvements on issues in the guidance. The requirements for these standards relating to Topic 606 are effective for interim and annual periods beginning after December 15, 2017. This standard permitted adoption using one of two transition methods, either the retrospective or modified retrospective transition method. The Company adopted these standards at the beginning of fiscal year 2019 using the modified retrospective method. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The adoption of these standards did not have a material impact on the Company's condensed consolidated statements of operations during the nine months ended June 30, 2019.
The Company revenue recognition policy follows guidance from Accounting Standards Codification (ASC) 606, Revenue from contract with customers. Revenue is recognized when the Company transferred promised goods and services to the customer and in the amount that reflect the consideration to which the company expected to be entitled in exchange for those goods and services.
The Company applies the following five-step model in order to determine this amount:
i. Identification of Contact with a customer;
ii. Identify the performance obligation of the contract
iii. Determine transaction price;
iv.Allocation of the transaction price to the performance obligations; and
v. Recognition of revenue when (or as) the Company satisfies each performance obligation.
-9-
The Company generates revenue primarily through the sale of integrated hardware and software licenses. The portion of the contract that is associated with ongoing hosting and related customer service is amortized monthly over the license period. The Company incurs certain incremental contract costs (referred to as deferred subscriber acquisition costs, net) including selling expenses (primarily commissions) related to acquiring customers. Deferred subscriber acquisition costs, net are included in prepaid and expenses and other current assets on the condensed consolidated balance sheet. Commissions paid in connection with acquiring new customers are determined based on the value of the contractual fees. Deferred subscriber acquisition costs will be amortized over the license period.
In transactions in which hardware is sold to thea customer, the Company recognizes the revenue overwhen the hardware has been shipped to the customer. The hardware supplied by the Company does not require a related software license periodand can be operated and fully functional without the Company’s software.
From time to time clients request special training meetings. We send employees to these meeting and charge our clients on a per diem basis. These charges are recorded as the hardware cannot be used without a license and has no other alternative use.consulting fees on our income statement.;
The Company allocates the transaction price to each performance obligation based on a relative standalone selling price. Revenue associated with the sale and installation of system licenses is recognized once installation is complete.
Customer billings for services not yet rendered are deferred and recognized as revenue as services are provided. These fees are recorded as current deferred revenue on the condensed consolidated balance sheet as the Company expects to satisfy any remaining performance obligations as well as recognize the related revenue within the next twelve months. Accordingly, the Company has applied the practical expedient regarding deferred revenue to exclude the value of remaining performance obligations if (i) the contract has an original expected term of one year or less or (ii) the Company recognizes revenue in proportion to the amount it has the right to invoice for services performed.
The adoption of this standard did not have a material impact onfollowing table summarizes the Company's condensed consolidated statements of operations duringrevenues for the ninethree and six months ended June 30, 2019.March 31, 2020 and 2019, respectively:
-8-
For the three months ended | For the six months ended | ||||
March 31, 2020 | March 31, 2019 | March 31, 2020 | March 31, 2019 | ||
Licensing of ReadyOp Software | $ 278,697 | $ 233,851 | $608,381 | $424,183 | |
Sale of ReadyOp ACE IP Gateways | 230,090 | 20,000 | 286,170 | 21,000 | |
Consulting Income | 7,000 | 13,500 | 37,000 | 13,500 | |
Pass-through Income | 320 | 11,652 | 12,351 | 11,652 | |
Total | $ 516,107 | $ 279,003 | $943,902 | $470,335 |
EARNINGS PER SHARE
Basic income (loss) per common share is calculated using the weighted average number of shares outstanding during the periods reported. Diluted earnings per share include the weighted average effect of all dilutive securities outstanding during the periods presented. Diluted per share loss is the same as basic per share loss when there is a loss from continuing operations. Accordingly, for purposes of dilutive earnings per share, the Company excluded the effect of warrants and options.
As of June 30,March 31, 2020 and 2019, and 2018, we had no options and warrants outstanding.
As of June 30,March 31, 2020 and 2019, and 2018, the Company had 512,996 and 512,996 shares of Series A Convertible Preferred stock outstanding, respectively. As of June 30, 2019, 512,996 shares of Series A Convertible Preferred stock outstandingwhich are convertible into 51,299,600 shares of common stock. As of June 30, 2018, 40,750 shares of Series A Preferred stock was convertible into 4,075,000 shares of common, the balance was subject to a two-year waiting period before conversion.
As of June 30,March 31, 2020 and 2019, and 2018, we had 4,433,375 and 3,633,375 shares of Series C Convertible Preferred stock outstanding, respectively, which are convertible into 22,166,875 and 18,166,875 shares of common stock, respectively.stock.
As of June 30,March 31, 2020 and 2019, and 2018, we had 670,904 shares of Series D Preferred stock outstanding which are convertible into 3,354,520 shares of common stock.
As of June 30,March 31, 2020 and 2019, we had 3,000,000 shares of Series E Convertible Preferred stock outstanding which are convertible into 300,000,000 shares of common stock. As of June 30, 2018, we had 3,000,000 Series E Convertible Preferred stock outstanding which were subject to a two-year waiting period before conversion.
-10-
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company adoptedmeasures the fair value of its assets and liabilities under ASC topic 820, “Fair Value Measurements and Disclosures” (ASC 820), formerly SFAS No. 157 “Fair Value Measurements,” effective January 1, 2009.. ASC 820 defines “fair value” as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There was no impact relating to the adoption of ASC 820 to the Company’s consolidated financial statements.
ASC 820 also describes three levels of inputs that may be used to measure fair value:
§Level 1: Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities traded in active markets.
§Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
§Level 3: Inputs that are generally observable. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.
Financial instruments consist principally of cash, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses and deferred revenue. The carrying amounts of such financial instruments in the accompanying condensed consolidated balance sheet approximate their fair values due to their relatively short-term nature. The fair value of long-term debt is based on current rates at which the Company could borrow funds with similar remaining maturities. The carrying amounts approximate fair value. It is management’s opinion that the Company is not exposed to any significant currency or credit risks arising from these financial instruments.
-9-
INVENTORY
Inventory consists of components held for assembly and finished goods held for resale or to be utilized for installation in projects. Inventory is valued at lower of cost or net realizable value on a first-in, first-out basis. The Company’s policy is to record a reserve for technological obsolescence or slow-moving inventory items. The Company only carries finished goods to be shipped along with completed circuit boards and parts necessary for final assembly of finished product. All existing inventory is considered current and usable. The Company recorded no reserve for obsolete inventory as of June 30, 2019March 31, 2020 and September 30, 2018,2019, respectively.
-11-
EQUITY INSTRUMENTS ISSUED TO PARTIES OTHER THAN EMPLOYEESFOR ACQUIRING GOODS OR SERVICES
The Company accounts for stock-based instruments issued for services in accordance with ASC 718 “Compensation – Stock Compensation.” ASC 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity based compensation issued. The value of the portion of a stock award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method.
ADVERTISING COSTS
Advertising costs are expensed as incurred. The Company had advertising costs of $1,797$14,816 and $883$1,497 during the three months ended June 30,March 31, 2020 and 2019, and 2018, respectively, and $5,591$20,194 and $4,827$3,794 during the ninesix months ended June 30,March 31, 2020 and 2019, and 2018, respectively.
RECENT ACCOUNTING PRONOUNCEMENTS
In February 2016, the Financial Accounting Standards Board ("FASB")FASB issued Accounting Standards Update ("ASU") No.ASU 2016-02,Leases,, which will amend current lease accounting to require lessees to recognize (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model. This standard will bebecame effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, "Revenue from Contracts with Customers (Topic 606)," which supersedes the revenue recognition requirements in Accounting Standards Codification 605, "Revenue Recognition." This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU No. 2015-14, which deferred the effective date of the new revenue standard by one year, and allowed entities the option to early adopt the new revenue standard as of the original effective date. There have been multiple standards updates amending this guidance or providing corrections or improvements on issues in the guidance. The requirements for these standards relating to Topic 606 are effective for interim and annual periods beginning after December 15, 2017. This standard permitted adoption using one of two transition methods, either the retrospective or modified retrospective transition method. The Company adopted these standards at the beginning of fiscal yearthis standard effective October 1, 2019 using the modified retrospective method. The comparative information has not been restated and continues to be reported under the accounting standardswhich are fully discussed in effect for those periods.
In June 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2018-07, "Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting." This ASU relates to the accounting for non-employee share-based payments. The amendment in this Update expands the scope of Topic 718 to include all share-based payment transactions in which a grantor acquired goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The ASU excludes share-based payment awards that relate to (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, revenue from Contracts from Customers. The share-based payments are to be measured at grant-date fair value of the equity instruments that the entity is obligated to issue when the good or service has been delivered or rendered and all other conditions necessary to earn the right to benefit from the equity instruments have been satisfied. This standard will be effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our consolidated results of operations, cash flows or financial condition. The adoption of these standards did not have a material impact on the Company's condensed consolidated statements of operations during the nine months ended June 30, 2019.Note 7.
NOTE 3 -GOING CONCERN
The Company's unaudited condensed consolidated financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company believes the acquisition of the ReadyOp software platform was a prudent purchase by the Company. Additional revenue has been generated for the Company and management believes revenue will continue to increase each quarter. In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management is currently seeking funding from significant shareholders and outside funding sources sufficient to meet its minimal operating expenses. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its capital funding plans.
On January 30, 2020, the World Health Organization declared the coronavirus outbreak a "Public Health Emergency of International Concern" and on March 10, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of the coronavirus include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of public places and businesses. The coronavirus and actions taken to mitigate it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company operates. While the closures and limitations on movement, domestically and internationally, are expected to be temporary, if the outbreak continues on its current trajectory the duration of the supply chain disruption could reduce the availability, or result in delays, of materials or supplies to and from the Company, which in turn could materially interrupt the Company's business operations. Given the speed and frequency of the continuously evolving developments with respect to this pandemic, the Company cannot reasonably estimate the magnitude of the impact to its consolidated results of operations.
-12-
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
-10-
NOTE 4 - NOTES PAYABLE
Notes payable to Stockholders
As of June 30, 2019March 31, 2020 and September 30, 2018,2019, the Company had unsecured notes payable to stockholders totaling $83,302$78,159 and $147,589,$92,869, respectively. These notes range in interest from 8% to 15% which are payable quarterly. Three notesOne note with a principal balances totaling $65,000 mature on June 30, 2019, and are currently in default. The remaining note maturesof $17,588 is due on December 31, 2019. As of the date of this report, the note is currently in default.
On June 18,September 30, 2019, the note holdersholder converted $65,000 of notesnote payable $22,302and $10,279 of accrued interest into an installment promissory note with a principal balance of $75,279. The note is due on September 30, 2021 and $7,204bears an interest rate of accrued dividends into 3,150,199 shares8%. This note requires a monthly payment of common stock at a conversion price$3,405 for the next 24 months. As of $0.03 per share (See Note 5March 31, 2020 and 6).
In October 2017September 30, 2019 the balance due was $60,571 and February 2018, the Company repaid the principal amount of a note payable totaling $15,782 to a shareholder.
In October 2017, the Company issued two promissory notes to a shareholder and director in the amount of $15,000 each. The notes bear 8% interest and mature on June 30, 2019.$75,279, respectively.
Interest expense on the notes payable to stockholders was $3,990$2,936 and $3,243$3,922 for the three months ended June 30,March 31, 2020 and 2019, and 2018, respectively, and $11,155$5,085 and $10,081$7,165 for the ninesix months ended June 30,March 31, 2020 and 2019, and 2018, respectively.
Installment Loan Payable
On December 14, 2018, VoiceInterop entered into a Business Loan Agreement with WebBank whereby VoiceInterop borrowed $59,751, of this amount $15,491 was recorded as debt issuance cost. The agreement calls for 308 installments of $194 paid over 432 days. The debt issuance cost is amortized over the life of the loan. As of June 30,March 31, 2020, the remaining loan balance of $18,429 was paid in full from the note payable dated October 8, 2019.
-13-
On October 8, 2019, VoiceInterop entered into a Business Loan Agreement with WebBank whereby VoiceInterop borrowed $56,680, of this amount $13,080 was recorded as debt issuance cost. The debt issuance cost is amortized over the life of the loan. The agreement calls for 308 installments of $184 paid over 432 days. The Company used $18,429 of loan proceeds to pay off the remaining loan balance of WebBank loan dated December 14, 2018. As of February 14, 2020, the loan balance is $24,092,$31,269, net of debt issuance cost of $8,499.$10,688. The amount is included in VoiceInterop deconsolidation as of February 14, 2020 (See Note 8).
Note Payable
On December 2, 2019, the Company issued a promissory note in the amount of $50,000. The note bear 6% interest and matured on February 29, 2020. As of March 31, 2020 the loan balance of $50,000 and interest of $732 was paid in full.
Loan Payable – related party
During the six months ended March 31, 2020, the Company owed $16,262 to two officers, of which $7,262 is included in liabilities from discontinued operations. The loan is non-interest bearing and payable on demand. As of March 31, 2020 the loan balance of $9,000 was paid in full and $7,626 included in labilities from discontinued operations (seewas deconsolidated as of February 14, 2020. (See Note 6 and 8).
NOTE 5 -EQUITY TRANSACTIONS
Common stock issued for cash
In December 2018, the Company sold 3,333,334 shares of common stock to unrelated parties for $100,000$75,000 in cash.cash of which $25,000 was received by the Company on January 15, 2019.
-11-
Common stock issued for notes payableReady Med Platform
On June 18,In October 2019, the note holders converted $65,000 of notes payable, $22,302 of accrued interest and $7,204 of accrued dividends into 3,150,199Company acquired the software platform from Collabria LLC, a related party. In exchange for these assets the Company issued 12,000,000 shares of commonCommon stock valued at the historical cost of the asset of $600,000 (See Note 4)2).
-14-
Preferred Stock Dividends
As of June 30, 2019March 31, 2020 and September 30, 2018,2019, the cumulative arrearage of undeclared dividends for Series A Preferred stock totaled $112,173$62,496 and $88,683,$41,920, respectively.
As discussed above, on June 18, 2019, the shareholder converted $7,204 of accrued dividends into shares of common stock (See Note 4 and 6).
Preferred stock issued for acquisition of assets
In November, 2016, the Board of Directors approved the Asset Purchase Agreement between the Company and Collabria LLC (“Collabria”). Under the terms of the Agreement, the Company acquired all of the intellectual property of Collabria, including its ReadyOp command, control and communication platform trade named ReadyOp (the “ReadyOp Platform”). In addition, the Company acquired Collabria’s customer base (“Collabria Client List”). The Company assumed no liabilities of Collabria under this Agreement. The terms of the Agreement called for the Company to issue 3,000,000 (Three million) shares of restricted Series E Convertible Preferred stock to Collabria with a fair value of $292,240. As of March 1, 2019, each one (1) share of Series E Preferred shall be convertible into one hundred (100) shares of fully paid and non-assessable Common Stock at the sole option of the holder of Series E Preferred.
Subscription Agreements between VoiceInterop, Inc., our wholly-owned subsidiary and private investors
During the year ended September 30, 2018, Voiceinterop committed to sell 600,000 shares of its common stock to private investors for $68,000. The shares issuance is contingent upon a spin-off of the Company from Cleartronic, Inc. into a separate company. As of June 30, 2019, $68,000 is recorded as due to unrelated parties asFebruary 14, 2020, the spin-off has not been completed and the shares have not been issued. This amount is included in liabilities from discontinued operationsissued (See Note 8).
Declaration of Stock Dividend
On April 23, 2018, the board of Directors declared a stock dividend for common stock shareholders and for certain shareholdersclasses of preferred stock shareholder of the Company. That each common shareholder would receive .075 shares of VoiceInterop common stock for each one (1) share of Cleartronic stock held by the shareholder, and that each shareholder of Series C and D Preferred stock shall receive .375 shares of VoiceInterop common stock for each one (1) share of Series C or Series D Preferred stock held by the shareholder.
The record date of the dividend distribution shall be defined as the first business day following an effective statement from the United States Securities and Exchange Commission (“SEC”) regarding a pending S-1 filing. On May 13, 2019 Voiceinterop filed an S-1 registration statement with the SEC. AsSEC which was approved on November 14, 2019. On February 14, 2020, the Company distributed 17,819,827 shares of the dateVoiceInterop common stock to its shareholders (See Note 8). The Company recorded $225,316 to additional paid in capital for deconsolidation of this report, the S-1 registration statement has not yet been approved by the SEC.VoiceInterop, Inc.
-15-
-12-
NOTE 6 -RELATED PARTY TRANSACTIONS
The Company leases its office space from another entity that is also a stockholder. Rent expense paid to the related party was $11,947$7,794 and $11,652$12,025 for the three months ended June 30,March 31, 2020 and 2019, and 2018, respectively. Rent expense paid to the related party was $35,643$22,154 and $34,657$23,696 for the ninesix months ended June 30,March 31, 2020 and 2019, and 2018, respectively.
In October 2017 and February 2018, the Company repaid the principal amount of a note payable totaling $15,782 to a shareholder.
In October 2017, the Company issued two promissory notes to a shareholder and director in the amounts of $15,000 each. The notes bear interest at 8% per annum and mature June 30, 2019. The note was converted to an installment promissory note on September 30, 2019 (See below and Note 4).
On June 18,During the three months ended December 31, 2019, the note holders converted $65,000Company owed $16,262 to two officers, of noteswhich $7,262 is included in liabilities from discontinued operations. The loan is non-interest bearing and payable $22,302on demand. As of accrued interestMarch 31, 2020 the loan balance of $9,000 was paid in full and $7,204$7,262 included in liabilities from discontinued operations was deconsolidated as of accrued dividends into 3,150,199 shares of common stockFebruary 14, 2020 (See Note 4 and 5)8).
On December 17, 2018, VoiceInterop enteredSeptember 30, 2019, the note holder converted $65,000 of note payable and $10,279 of accrued interest into an unsecuredinstallment promissory note. The note withis due on September 30, 2021 and bears an interest rate of 8%. The note requires a shareholder which bears interest at 35%monthly payment of $3,405 for the next 24 months. As of March 31, 2020 and matures on February 10, 2019. On February 14,September 30, 2019 the Company granted a 30 day extension to the shareholder. On March 6, 2019, a shareholder repaid the full principal amount of $25,000 along with $1,770 in accrued interest of a promissory note held by the Company. The interest income is included in income from discontinued operationsbalance due was $60,571 and $75,279, respectively (See Note 8)4).
NOTE 7 - COMMITMENTS AND CONTINGENCIES
Obligation Under Operating Lease
The Company leases approximately 1,700 square feet for its principal offices in Boca Raton, Florida at a monthly rental of approximately $3,500, which expired in November 2018. VoiceInterop executed a new 3-year lease with its current landlord on December 1, 2018 for the same office space. The lease provided one month free as a concession. The monthly rent is $3,630 and provides for annual increases of base rent of 4% until the expiration date. The lease expires on November 30, 2021.
Rent expense incurred during the ninethree months ended June 30,March 31, 2020 and 2019 was $7,794 and 2018 was $35,643 and $52,331,$12,025, respectively. Rent expense incurred during the threesix months ended June 30,March 31, 2020 and 2019 was $22,154 and 2018 was $11,947 and $17,345,$23,696, respectively.
-16-
VoiceInterop subleases part of its office space to two entities for approximately $1,150$1, 150 per month. Sublease rental income received during the three and ninesix months ended June 30, 2019March 31, 2020 was $2,870$2,300 and $8,616,$5,750, respectively.
-13-The Company adopted the new lease guidance effective October 1, 2019 using the modified retrospective transition approach, applying the new standard to all of its leases existing at the date of initial application which is the effective date of adoption. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before October 1. 2019. We elected the package of practical expedients which permits us to not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) any initial direct costs for any existing leases as of the effective date. We did not elect the hindsight practical expedient which permits entities to use hindsight in determining the lease term and assessing impairment. The adoption of the lease standard did not change our previously reported consolidated statements of operations and did not result in a cumulative catch-up adjustment to opening equity. The adoption of the new guidance resulted in the recognition of operating lease assets of $75,078 and lease liability of $79,171.
The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. In calculating the present value of the lease payments, the Company elected to utilize its incremental borrowing rate based on the remaining lease terms as of the October 1, 2019 adoption date. This rate was determined to be 23% and the Company determined the initial present value, at inception, of $79,171.
Operating lease asset and operating lease liability are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The operating lease asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred, if any.
The Company has elected the practical expedient to combine lease and non-lease components as a single component. The lease expense is recognized over the expected term on a straight-line basis. Operating leases are recognized on the balance sheet as operating lease asset, current operating lease liability and non-current operating lease liability.
The new standard also provides practical expedients and certain exemptions for an entity’s ongoing accounting. We have elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases where the initial lease term is one year or less or for which the operating lease asset at inception is deemed immaterial, we will not recognize operating lease asset or lease liability. Those leases are expensed on a straight line basis over the term of the lease.
-17-
As of February 14, 2020 the operating lease liabilities of $66,114 and lease assets of $62,226 were included in liabilities from discontinued operations and were deconsolidated.
Revenue and Accounts Receivable Concentration
No customer accounted for more than 10% of the Company’s revenue for the ninesix months ended June 30, 2019.March 31, 2020. One customer accounted for 11%13% of the Company’s revenue for the ninesix months ended June 30, 2018.March 31, 2019. As of June 30, 2019, three customersMarch 31, 2020 two customer accounted for approximately 24%, 13% and 11%54% of the Company’s total outstanding accounts receivable.receivable with each customer represented 32% and 22%. As of September 30, 2018,March 31, 2019, two customers accounted for 13% and 11%approximately 39% of the Company’s total outstanding accounts receivable.receivable with each customer represented 25% and 14%
Major Supplier and Sole Manufacturing Source
During 2014, the Company developed a proprietary interoperable communications solution. The Company relies on no major supplier for its products and services. The Company has contracted with a single local manufacturing facility to provide completed circuit boards used in the assembly of its IP gateway devices. Interruption to the manufacturing source presents additional risk to the Company. The Company believes that other commercial facilities exist at competitive rates to match the resources and capabilities of its existing manufacturing source.
Employment Agreements
In December 2016, the Board of Directors accepted the resignation of Larry M. Reid as Chief Executive Officer of the corporation and appointed Mr. Reid as Chief Financial Officer. The Board also appointed Michael M. Moore as Chief Executive Officer.
-18-
Under the terms of an employment agreement effective on November 28, 2016, Mr. Moore as CEO receives an annual salary of $200,000. The term of agreement is for a one-year period beginning on the effective date and shall automatically renew and continue in effect for additional one-year periods.
Under the terms of an employment agreement effective on March 13, 2015, Mr. Reid as CFO receives an annual salary of $96,000. The term of agreement is for a one-year period beginning on the effective date and shall automatically renew and continue in effect for additional one-year periods.
Exclusive Licensing Agreement
On May 5, 2017, the Company entered into an Exclusive Licensing Agreement with Sublicensing Terms (the “Agreement”) with the University of Southern Florida Research Foundation, Inc. (“USFRF”) relating to an exclusive license of certain patent rights in connection with one of USFRF’s U.S. Patent Applications. Both parties recognize that the research and development work provided by the Company was sufficient for USFRF to enter into the Agreement with the Company.
The Agreement is effective April 25, 2017 and continues until the later of the date that no Licensed Patent remains a pending application or an enforceable patent or the date on which the Licensee’s obligation to pay royalties expires.
-14-
The Company paid USFRF a License Issue Fee of $3,000 and $7,253 as reimbursement of expenses associated with the filing of the Licensed Patent. The Company agreed to complete the first commercial sale of products to the retail customer on or before January 31, 2019 or USFRF has the right to terminate the agreement. In addition, the Company agreed that it will have made and tested a prototype by August 31, 2018 or USFRF has the right to terminate the agreement. The company agreed to pay USFRF a royalty of 3% for sales of all Licensed Products and Licensed Processes and agreed to pay USFRF minimum royalty payments as follows:
Payment | Year |
$1,000 | 2019 |
$4,000 | 2020 |
$8,000 | 2021 |
-and every year thereafter on the same date, for the life of the agreement.
-19-
In the event the Company proposes to sell any Equity Securities, then USFRF will have the right to purchase 5% of the securities issued in such offering on the same terms and conditions are offered to other purchasers in such financing.
As of March 31, 2020, the Company has recorded $2,000 for the minimum royalty for the fiscal year ended 2020.
As of September 30, 2019, the Company has recorded $1,000 for the minimum royalty for the fiscal year ended 2019.
NOTE 8 – DISCONTINUED OPERATIONS
In March 2018, the Company approved the spin-off Voiceinterop into a separate company under a Form S-1 registration to be filed with the United States Securities and Exchange Commission.
On April 23, 2018, the board of Directors declared a stock dividend for certain shareholders of the Company. The Company will distribute to its shareholders owning Common Stock and Series C and D Preferred stock an aggregate of 17,697,44817,819,627 shares of shares of Common Stock of Voiceinterop. That each common shareholder would receive .075 shares of Voiceinterop common stock for each one (1) share of Cleartronic stock held by the shareholder, and that each shareholder of Series C and D Preferred stock shall receive .375 shares of Voiceinterop common stock for each one (1) share of Series C or Series D Preferred stock held by the shareholder.
The record date of the dividend distribution shall be defined as the first business day following an effective statement from the United States Securities and Exchange Commission (“SEC”) regarding a pending S-1 filing. On May 13, 2019 Voiceinterop filed an S-1 registration statement with the SEC. AsOn November 14, 2019, Voiceinterop, Inc’s., S-1 Registration Statement was declared effective by Securities and Exchange Commission.
The Company’s history is being reviewed by the Financial Industry Regulatory Authority (“FINRA”) and as of the date of this report,filing the S-1 registration statement hasreview is not yetbeen completed. No dividends can be declared effectivedistributed until that review is completed and approved by FINRA. On February 14, 2020, the SEC. Becausedistribution of this pending registration, all VoiceInterop transactions have been recorded as discontinued operations.shares was approved by FINRA and completed and deconsolidation was completed.
-15-
As of June 30, 2019 and September 30, 2018, assets and liabilities from discontinued operations are listed below:
June 30, | September 30, | ||
2019 | 2018 | ||
(unaudited) |
| ||
Current assets: | |||
Cash | $ 1,735 | $ 285 | |
Accounts receivable, net | 1,600 | - | |
Assets from discontinued operations | $ 3,335 | $ 285 | |
Current liabilities: | |||
Accounts payable and accrued expenses | $ 38,885 | $ 10,086 | |
Deferred revenue, current portion | 16,413 | 28,720 | |
Deferred rent, current portion | 401 | - | |
Installment loan, net, current portion | 24,092 | - | |
Due to unrelated parties | 68,000 | 68,000 | |
Current liabilities from discontinued operations | 147,791 | 106,806 | |
Long Term Liabilities | |||
Deferred revenue, net of current | 11,282 | - | |
Deferred rent, long term portion | 1,890 | - | |
Long term liabilities from discontinued operations | 13,172 | - | |
Liabilities from discontinued operations | $ 160,963 | $ 106,806 |
-16--20-
The following table illustrates the reporting of the discontinued operations included in the Statements of Operations for the period from January 1, 2020 to February 14, 2020 and for the three month periodsmonths ended June 30, 2019 and 2018:March 31, 2019.
For the period |
| |||||||
For the three | For the three | From January 1, 2020 | For the Three | |||||
months ended | months ended | to | Months Ended | |||||
June 30, 2019 | June 30, 2018 | February 14, 2020 | March 31 , 2020 | |||||
(Unaudited) | (Unaudited) | |||||||
Revenue | $ 18,661 | $ 32,899 | $ 14,555 | $ 11,509 | ||||
Cost of Revenue | 2,294 | 823 | Cost of Revenue | 10,633 | 14,107 | |||
Gross Profit | 16,367 | 32,076 | Gross Profit | 3,922 | (2,598) | |||
Operating Expenses: | Operating Expenses: | |||||||
Selling expenses | 3,130 | 3,845 | Selling expenses | 3,079 | 2,364 | |||
Administrative expenses and professional fees | (5,002) | 31,107 | ||||||
Administrative expenses | Administrative expenses | 3,204 | 32,046 | |||||
Professional Fees | Professional Fees | 41,449 | 13,005 | |||||
Total Operating Expenses | ( 1,872) | 35,552 | Total Operating Expenses | 47,732 | 47,415 | |||
Income (Loss) from operations | 18,239 | (3,476) | ||||||
Loss from operations | Loss from operations | (43,810) | (50,013) | |||||
Other Income (Expense) | Other Income (Expense) | |||||||
Other Income | 4,851 | - | Other Income | 2,300 | 13,500 | |||
Interest and other expense | (8,753) | - | Interest and other expense | - | (7,022) | |||
Total Other (Expense) | (3,902) | - | ||||||
Total Other Income (Expense) | Total Other Income (Expense) | 2,300 | 6,478 | |||||
Income (Loss) Before Income Taxes | 14,337 | (3,476) | ||||||
Loss Before Income Taxes | Loss Before Income Taxes | (41,510) | (43,535) | |||||
Provision for Income Taxes | - | - | Provision for Income Taxes | - | - | |||
Income (Loss) from discontinued operations | $ 14,337 | $ (3,476) | ||||||
Loss from discontinued operations | Loss from discontinued operations | $ (41,510) | $ (43,535) |
-17--21-
The following table illustrates the reporting of the discontinued operations included in the Statements of Operations for the nine month periodsperiod from October 1, 2019 to February 14, 2020 and for the six months period ended June 30, 2019March 31, 2019.
For the period from | For the Six | |
October 1, 2019 to | Months Ended | |
February 14, 2020 | March 31, 2019 | |
(Unaudited) | (Unaudited) | |
Revenue | $ 27,698 | $ 57,060 |
Cost of Revenue | 12,383 | 23,101 |
Gross Profit | 15,315 | 33,959 |
Operating Expenses: | ||
Selling expenses | 3,862 | 7,070 |
Administrative expenses | 24,151 | 43,642 |
Professional Fees | 50,007 | 28,005 |
Total Operating Expenses | 78,020 | 78,717 |
Loss from operations | (62,705) | (44,758) |
Other Income (Expense) | ||
Other Income | 5,750 | 15,096 |
Interest and other expense | (7,981) | (8,427) |
Total Other Income (Expense) | (2,231) | 6,669 |
Loss Before Income Taxes | (64,936) | (38,089) |
Provision for Income Taxes | - | - |
Loss from discontinued operations | $ (64,936) | $ (38,089) |
-22-
On February 14, 2020, the Company recorded $225,316 to additional paid in capital for deconsolidation of VoiceInterop, Inc. and 2018.discontinued operations are not presented.
For the nine | For the nine | |||
months ended | months ended | |||
June 30, 2019 | June 30, 2018 | |||
Revenue | $ 75,721 | $ 167,661 | ||
Cost of Revenue | 25,395 | 88,556 | ||
Gross Profit | 50,326 | 79,105 | ||
Operating Expenses: | ||||
Selling expenses | 10,200 | 20,140 | ||
Administrative expenses and professional fees | 66,645 | 71,339 | ||
Total Operating Expenses | 76,845 | 91,479 | ||
Loss from operations | (26,519) | (12,374) | ||
Other Income (Expense) | ||||
Other Income | 19,947 | - | ||
Interest and other (expense) | (17,180) | - | ||
Total Other Income | 2,767 | - | ||
Loss Before Income Taxes | (23,752) | (12,374) | ||
Provision for Income Taxes | - | - | ||
Loss from discontinued operations | $ (23,752) | $ (12,374) |
February 14, | September 30, | ||
2020 | 2019 | ||
(Unaudited) | |||
Current assets: | |||
Cash | $ 2,279 | $ 4,136 | |
Accounts Receivable | 4,780 | - | |
Operating lease asset, net | 62,226 | - | |
| |||
Total Assets from discontinued operations | $ 69,285 | $ 4,136 | |
Current liabilities: | |||
Accounts payable and accrued expenses | $ 92,236 | $ 77,584 | |
Operating lease liability, current | 33,941 | - | |
Deferred revenue, current portion | 17,357 | 23,492 | |
Deferred rent, current portion | - | 896 | |
Installment loan, net, current portion | 31,269 | 14,587 | |
Due to related parties | 11,362 | - | |
Due to unrelated parties | 68,000 | 68,000 | |
Total Current liabilities from discontinued operations | 254,165 | 184,559 | |
Long Term Liabilities | |||
Deferred revenue, net of current | 8,263 | 9,987 | |
Deferred rent, long term portion | - | 680 | |
Operating lease liability, net of current | 32,173 | - | |
Deferred revenue, current portion | - | - | |
Total Long term liabilities from discontinued operations | 40,436 | 10,667 | |
Total Liabilities from discontinued operations | $ 294,601 | $ 195,226 |
-18--23-
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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.
Impact of COVID-19 Outbreak
On January 30, 2020, the World Health Organization declared the coronavirus outbreak a “Public Health Emergency of International Concern” and on March 10, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of the coronavirus include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of public places and businesses. The coronavirus and actions taken to mitigate it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company operates. While the closures and limitations on movement, domestically and internationally, are expected to be temporary, if the outbreak continues on its current trajectory the duration of the supply chain disruption could reduce the availability, or result in delays, of materials or supplies to and from the Company, which in turn could materially interrupt the Company’s business operations. Given the speed and frequency of the continuously evolving developments with respect to this pandemic, the Company cannot reasonably estimate the magnitude of the impact to its consolidated results of operations. We have taken every precaution possible to ensure the safety of our employees. Those precautions include, working remotely, no face to face meetings with clients, no public transportation travel, and social distancing with fellow employees.
Additionally, it is reasonably possible that estimates made in the financial statements have been, or will be, materially and adversely impacted in the near term as a result of these conditions.
Overview
Cleartronic, Inc. (the “Company”) was incorporated in Florida on November 15, 1999. The Company operates through twoits wholly owned subsidiaries, VoiceInterop, Inc. andsubsidiary ReadyOp Communications, Inc. ("ReadyOp").
In November, 2016, the Board of Directors approved the Asset Purchase Agreement between the Company and Collabria LLC (“Collabria”). Under the terms of the Agreement, the Company acquired the intellectual property of Collabria, including its ReadyOp command, control and communication platform trade named ReadyOp™ (the “ReadyOp Platform”). In addition, the Company acquired Collabria’s customer base (“Collabria Client List”). The Company assumed no liabilities of Collabria under this Agreement. The terms of the Agreement called for the Company to issue 3,000,000 (Three million) shares of the registrant’s Series E Convertible Preferred stock to Collabria. Shares of the Series E Convertible Preferred have the following conversion rights and provisions: After a period of two (2) years following the date of issuance, each one (1) share of Series E Preferred shall be convertible into one hundred (100) shares of fully paid and non-assessable Common Stock at the sole option of the holder of Series E Preferred. As a result of this Agreement the Licensing Agreement between Collabria and the Company was cancelled effective November 30, 2016. The ReadyOp software will be marketed, sold and supported through the Company’s subsidiary ReadyOp Communications, Inc.
-24-
In March 2018, the Company approved the spin-off of VoiceInterop, Inc.(“Voiceinterop”) into a separate company under a Form S-1 registration to be filed with the United States Securities and Exchange Commission. The Company is moving forwardOn May 13, 2019, VoiceInterop filed an S-1 registration with the spin-off of VoiceInterop, Inc.United States Securities and Exchange Commission. On November 14, 2019, the S-1 registration statement was declared effective by the Securities and Exchange Commission. Therefore, the Company has presented the operations of this subsidiary as discontinued operations. The Company has requested and received approval by the Financial Industry Regulatory Authority (“FINRA”) for the distribution of VoiceInterop’s shares of common stock totaling 17,819,827 shares as a dividend to the Company’s shareholders. Shareholders of record as of November 20, 2019 of the Company’s common stock and Series C and Series D Preferred stock will receive shares of VoiceInterop’s common stock. The distribution was completed on February 14, 2020.
In October 2019, the Company acquired the ReadyMed software platform from Collabria LLC, a communications software company based in Tampa, Florida. ReadyMed is a web based secure communication platform designed for the health care industry. This includes hospitals, clinics, doctor’s offices and health insurance companies and many other segments of the health care. It provides hospitals with patient tracking capability within the hospital. It allows physicians to track patient progress after release from the hospital and allows for secure communication with the patient to track the healing process, record their recovery and monitor their progress.
The Acquisition Agreement provides for the acquisition of substantially all the assets and business operations of ReadyMed (the “Acquisition”). The assets acquired include the software platform, templates and forms for numerous business categories in the health care industry, and all contacts created by ReadyMed interested in licensing the ReadyMed platform. As consideration for the Acquisition, Cleartronic issued 12 million shares of its common stock to Collabria which valued at historical cost of $600,000.
FOR THE THREE MONTHS ENDED JUNE 30, 2019MARCH 31, 20120 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2018MARCH 31, 2019
Revenue
Revenues increased to $365,296$516,107 for the three months ended June 30, 2019March 31, 2020 as compared to $192,131$279,003 for the three months ended June 30, 2018.March 31, 2019. The primary reasonsreason for the increase in revenue was due to the increase in sales of ReadyOp software from $185,341 in 2018 to $258,837 in 2019, or approximately 39%, and an increase in sales of ReadyOp ACE IP gateways from $1,000$2,000 in 2019 to $82,755, for the three month periods ended June 30, 2018 and 2019, respectively. Deferred$230,090 in 2020. This increase was primarily due to one client purchasing $212,000 of ReadyOp ACE IP gateways. ReadyOp software revenue also increased by approximately 30%19% from $233,851 in 2019 to $606,902 as of June 30, 2019 as compared to $466,695 as of September 30, 2018. Approximately 95% of our licenses sold are for one-year terms.$278,697 in 2020.
-19-
Cost of Revenue
Cost of revenues was $81,435$132,118 for the three months ended June 30, 2019March 31, 2020 as compared to $35,749$47,984 for the three months ended June 30, 2018.March 31, 2019. Gross profits were $283,861$383,989 and $156,382$231,019 for the three months ended June 30,March 31, 2020 and 2019, and 2018, respectively. GrossDespite the increase in revenues, gross margins decreaseddeclined approximately 9% from 81%83% for the three months ended June 30, 2018March 31, 2019 compared to 78%74% for the three months ended June 30, 2019.March 31, 2020. The primary reason for the decrease in gross profit margins was primarily due to lower margins associated withfrom sales of the Company’s ReadyOp ACE IP Gateways.gateways which generate lower profit margins as compared to the licensing of ReadyOp software.
-25-
Operating Expenses
Operating expenses increased approximately 20%2% to approximately $315,563$335,472 for the three months ended June 30, 2019March 31, 2020 compared to $263,410$330,496 for the three months ended June 30, 2018.March 31, 2019. For the three months ended June 30, 2019,March 31, 2020, selling expenses increaseddecreased to $155,077$141,931 from $107,255$154,873 for the three months ended June 30, 2018.March 31, 2019. The slight increase was primarily due to increases in administrative and amortization expense offset by decreases in selling expense and in research and development expense. General and administrative expenses increased by $17,562 or approximately 18%. The increase is primarily due to an overall increase in operations. Research and development expenses were $31,072 for the three months ended March 31, 2020 as compared to $61,093 for the three months ended March 31, 2019. The decrease of 49% is primarily due to completing the development of our "Rectenna" project. Amortization expense increased by $30,377 or 186% primarily due to the acquisition of the ReadyMed software platform from Collabria, LLC valued at the historical cost of $600,000.
Income (Loss) from Continuing Operations
The Company's income from continuing operations increased to $47,323 during the three months ended March 31, 2020 as compared to a loss of $105,591 for the three months ended March 31, 2019. The primary reason for the increase was increases in sales of ReadyOp ACE IP gateways accompanied by increases in licensing of ReadyOp software.
Loss from Discontinued Operations
Loss from discontinued operations, decreased to $41,510 during the three months ended March 31, 2020 compared to a loss of $43,535 for the three months ended March 31, 2019. Decrease is due to the Company completing the spinoff of Voiceinterop, Inc. Therefore, Voiceinterop was deconsolidated on February 14, 2020. The result from operations for the second quarter of 2020 only includes the discontinued operations through February 14, 2020 resulting in a decrease on overall loss from discontinued operations.
Net Loss Attributable to Common Shareholders
Net loss attributable to common shareholders was $4,418 for the three months ended March 31, 2020 as compared to a net loss of $159,245 for the three months ended March 31, 2019. The decrease was primarily due to the increase in income from continuing operations for the three months ended March 31, 2020, which was $47,323 as compared to a loss of $105,591 for the three months ended March 31, 2019 . Net loss per common share was $(0.00) and $(0.00) for the three months ended March 31, 2020 and 2019, respectively.
-26-
FOR THE SIX MONTHS ENDED MARCH 31, 2020 COMPARED TO THE SIX MONTHS ENDED MARCH 31, 2019
Revenue
Revenues from operations were $943,902 for the six months ended March 31, 2020 as compared to $470,335 for the six months ended March 31, 2019. The increase was primarily due to hiring additionalthe increase in licensing of ReadyOp software which increased 43% from $424,183 to $608,381 in the six- month period ended March 31, 2019 and 2020, respectively. In addition, sales of ReadyOp ACE IP gateways increased 1,262% from $21,000 to $286,170 in the six- month period ended March 31, 2019 and marketing personnel2020, respectively.
Cost of Revenue
Cost of revenues was $249,422 for the six months ended March 31, 2020, as compared to $97,106 for the six months ended March 31, 2019. This increase was primarily due to higher costs associated with the ReadyOp ACE IP gateway due to higher costs for parts and materials. Gross profits were $694,480 and $373,229 for the six months ended March 31, 2020 and 2019, respectively. Despite the increase in revenues, gross margins decreased slightly to 73% from 79% for the six months ended March 31, 2020 and 2019, respectively. The decreases was primarily due to the lower profit margins from sales of ReadyOp ACE IP gateways as compared to higher margins generated from licensing of ReadyOp software.
Operating Expenses
Operating expenses for the six months ended March 31, 2020 were $655,830 compared to $585,312 for the six months ended March 31, 2019. For the six months ended March 31, 2020, selling expenses increased to $272,271 from $255,238 for the six months ended March 31, 2019. The 7% increase was primarily due to increased travel expenses prior to the Covid-19 pandemic. Amortization expense increased by $55,266 or 136%, primarily due to amortization expenses associated with the marketingacquisition of ReadyOp software. Administrative expenses increasedthe ReadyMed software platform from Collabria LLC valued at the historical cost of $600,000. Increases were also offset by $21,581 or approximately 27% which was a result of increased professional fees associated with the spin-off of VoiceInterop. Researchdecrease in research and development expenses were $44,248 forexpense as the three months ended June 30, 2019 as compared to $49,417 for the three months ended June 30, 2018. The decrease of approximately 10% was primarily due to lower expenses associated withCompany completed 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.“Rectenna” project.
LossIncome (Loss) from Continuing Operations
The Company’s lossincome from continuing operations decreasedincreased to $33,501$33,565 during the threesix months ended June 30, 2019March 31, 2020 as compared to $110,271a loss of $222,197 for the threesix months ended June 30, 2018.March 31, 2019. The primary reason for the decreasethis increase was due to the increase in gross profitrevenue generated by sales of approximately 81% from $156,382 to $283,861 in the three months ended June 30, 2018ReadyOp ACE IP gateway and 2019, respectively. licensing of ReadyOp software.
Income (Loss)Loss from Discontinued Operations
IncomeLoss from discontinued operations, was $14,337increased to $64,939 during the threesix months ended June 30, 2019March 31, 2020 compared to a loss of $3,476$38,089 for the threesix months ended June 30, 2018.March 31, 2019. The primary reason for the increase was due to decreased revenue generated by VoiceInterop. Revenue was $27,698 was for six months ended March 31, 2020 as compared to $57,060 in the significantsix months ended March 31, 2019. Decrease in revenue was due to decrease in licensing of ReadyOp software offset in part by the increase in hardware revenues. Loss for discontinued operations also increased to $62,705 from $44,758 which was primarily attributable to the increase in professional fees offset by decrease in administrative expenses. The professional fees increased due to filing of Registration statement and decrease in administrative of approximately $36,109. This decrease wasexpense is due to the Company negotiatingcompleting the professional fees andspinoff of Voiceinterop, Inc. Therefore, Voiceinterop was able to receive a reduction in feesdeconsolidated on February 14, 2020. The result from operations for the three monthsquarter ended June 30, 2019. TheMarch 31, 2020 only includes the discontinued operations through February 14, 2020 resulting in a decrease was offset by the decrease in revenues generated by VoiceInterop in the same period.on overall loss from discontinued operations.
-27-
Net Loss Attributable to Common Stockholders
Net loss attributable to common stockholders was $29,395$51,946 and $280,749 for the threesix months ended June 30,March 31, 2020 and 2019, as compared to a net loss of $124,604 for the three months ended June 30, 2018.respectively. The primary reason for the decrease was primarily due to the increase in gross profit of approximately 81% from $156,382 to $283,361 inwhich was $694,480 and $373,229 for the threesix months ended June 30, 2018 and 2019, respectively.
-20-
FOR THE NINE MONTHS ENDED JUNE 30, 2019 COMPARED TO THE NINE MONTHS ENDED JUNE 30, 2018
Revenue
Revenues from operations were $835,631 for the nine months ended June 30, 2019 as compared to $561,404 for the nine months ended June 30, 2018. The increase was primarily due to a steady increase in sales of the ReadyOp software platform and increased sales of ReadyOp IP Gateways.
Cost of Revenue
Cost of revenues was $178,541 for the nine months ended June 30, 2019, as compared to $88,456 for the nine months ended June 30, 2018. This increase was a result of the increase in revenue for the same period. Gross profits were $657,090 and $472,948 for the nine months ended June 30, 2019 and 2018, respectively. Gross margins decreased to 79% for the nine months ended June 30, 2019 from 84% for the nine months ended June 30, 2018. The decrease in gross margins was primarily due to lower profit margins associated with sales of ReadyOp IP Gateways.
Operating Expenses
Operating expenses for the nine months ended June 30, 2019 were $900,875 compared to $802,928 for the nine months ended June 30, 2018, an increase of approximately 12%. This increase was primarily due to an increase in selling expenses from $278,241 to $410,315 for the nine months period ended June 30, 2018 and 2019, respectively. This increase of approximately 47% was due to the hiring of additional marketing personel for the ReadyOp software platform partially offset by a decrease in amortization and research and development expenses. Amortization expense declined from $85,140 to $56,943 in the nine months ended June 30, 2018 and 2019, respectively. The decline was due to the ReadyOp customer list being fully amortized in the nine months ended June 30, 2019. Research and development expenses declined approximately 8% from $171,992 in 2018 to $157,789 in the nine months ended June 30, 2019, primarily due to lower 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.
Loss from Continuing Operations
The Company’s loss from continuing operations decreased to $255,698 during the nine months ended June 30, 2019 as compared to a loss of $327,966 for the nine months ended June 30, 2018. The primary reason for this decrease was the increase in gross profit for the nine months ended June 30, 2019 as compared to the comparable period in 2018.
Loss from Discontinued Operations
Loss from discontinued operations, increased to $23,752 during the nine months ended June 30, 2019 as compared to a loss of $12,374 for the nine months ended June 30, 2018. The primary reason for the increase was due to decreased revenue generated by VoiceInterop, offset by a decrease in operating expenses as a result of a reduction in professional fees in the nine months ended June 30, 2019. Revenue was $75,721 was for nine months ended June 30, 2019 compared to $167,662 in the nine months ended June 30, 2018.
Net Loss Attributable to Common Stockholders
Net loss attributable to common stockholders was $310,144 and $373,857 for the nine months ended June 30, 2019 and 2018, respectively. The decrease was primarily due to an increase in gross profit of approximately 38%, from $472,948 to $657,090 in the nine months ended June 30, 2018March 31, 2020 and 2019 respectively. Net loss per common share was ($0.00)$(0.00) and ($0.00)$(0.00) for the ninesix months ended June 30,March 31, 2020 and 2019 and 2018, respectively.
-21-
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $75,139 for the six months ended March 31, 2020 compared to net cash used in operating activities was $80,326$127,750 for the ninesix months ended June 30, 2019March 31, 2019. This decrease was attributable to the lower net loss of $31,371 for the six months ended March 31, 2020 as compared to net cash provided by operating activities of $35,708$260,286 for the ninesix months ended June 30, 2018. This increase was mainly attributable to an increaseMarch 31, 2019, and decreases in accounts receivable and inventory and an increase in amortization expense offset by decreases in accounts payable, offset by increases inaccrued expenses and deferred revenue and customer deposits.revenue.
Net cash provided by financing activities was $110,353$7,102 for the ninesix months ended June 30, 2019March 31, 2020 compared to $14,218$129,260 for the ninesix months ended June 30, 2018.March 31, 2019. The increasedecrease was primarily due to proceeds of $100,000 received from the issuance Common Stockof common stock in the amount of $100,000.six months ended March 31, 2019.
Our obligations are being met on a month-to-month basis as cash becomes available. We have made a concentrated effort to restructure the company through the issuance of Preferred stock for cash and for the acquisition of the ReadyOp software platform. We believe that the ReadyOp software platform will putcontinue to grow on a quarter to quarter basis putting the Company in a better position to become cash flow positive. We also believe that the ReadyMed software platform will provide additional revenue. It is now being used by both the Departments of Health in two states. We believe that the spin-off of VoiceInterop will also benefit the Company as VoiceInterop operations will no longer be a drain on cash flow. There can be no assurance that the Company’s efforts in this restructure will be successful or that present flow of cash will be sufficient to meet current and future obligations.
We have incurred losses since our inception and will continue to require additional capital to fund operations and development. As such, our ability to pay our already incurred obligations is mostly dependent on the Company being able to have substantially increased revenues and raising substantial additional capital through the sale of its equity or debt securities. There can be no assurance that the Company will be successful in accomplishing anythese actions.
On January 30, 2020, the World Health Organization declared the coronavirus outbreak a "Public Health Emergency of International Concern" and on March 10, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of the foregoing.
In the past,coronavirus include restrictions on travel, and quarantines in additioncertain areas, and forced closures for certain types of public places and businesses. The coronavirus and actions taken to revenuesmitigate it have had and deferred revenues, we have obtained funds from the private sale of our debt and equity securities. We intendare expected to continue to seek private financinghave an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company operates. While the closures and limitations on movement, domestically and internationally, are expected to be temporary, if the outbreak continues on its current trajectory the duration of the supply chain disruption could reduce the availability, or result in delays, of materials or supplies to and from existing stockholdersthe Company, which in turn could materially interrupt the Company's business operations. Given the speed and others as may be neededfrequency of the continuously evolving developments with respect to increase sales and marketing efforts or acquire new technologies and other assets.this pandemic, the Company cannot reasonably estimate the magnitude of the impact to its consolidated results of operations.
The costs to operate our current business are approximately $110,000 per month. In order for us to cover our monthly operating expenses, we would have to generate revenues of approximately $180,000$150,000 per month. Accordingly,However, in the absence of revenues,revenue, we will needwould significantly reduce operations to secure $180,000 in equity or debt capital each month to cover our overhead expenses.a minimal sustainment level that would require approximately $25,000 per month. In order to remain in business for one year without any additional revenues we would need to secure $1,320,000 in equity or debt capital. If we are unsuccessful in securing sufficient capital or revenues, we would have to cease business in approximately 90 days.$300,000. The Company’s current accounts receivable and pending invoices exceed this amount.
-28-
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, 20182019 for information regarding our critical accounting estimates.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.applicable
-22-
Item 4. Controls and Procedures.
An evaluation was conducted by the registrant’s Chief Executive Officer (CEO)our chief executive officer (“CEO”) and Chief Financial Officer (CFO)chief financial officer (“CFO”) of the effectiveness of the design and operation of the registrant’sour disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of June 30, 2019.March 31, 2020. Based on that evaluation, the CEO and CFO concluded that the registrant’sa change in our controls and procedures were effective as of such dateis needed to ensure that information required to be disclosed in the reports that the registrant fileswe file or submitssubmit under the Securities Exchange Act of 1934 (i) is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms.forms, and (ii) is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosures.
Management is aware that there is a lack of segregation of duties due to the small number of employees dealing with general administrative and financial matters. Management is preparing a travel and entertainment policy that provides for approval of these expenses by independent parties, as required in the SEC rules cited above. The CEO's travel and other expenses will be approved by the Chairman of the Board. For all other employees, the CEO and CFO will approve those expenses. Therefore, we will have adequate controls and segregation of duties over the approval of all expenses reimbursed to employees and consultants as required by the SEC regulation.
Change in Internal Controls over Financial Reporting
There was no change in the registrant's internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a–15 or Rule 15d–15 under the Securities Exchange Act of 1934 that occurred during the registrant's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
-29-
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There have been no material developments during the quarter ended June 30, 2019March 31, 2020 in any material legal proceedings to which we are a party or of which any of our property is subject.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
In June 2019, two shareholders converted $65,000 in notes payable, $22,302 of accrued interest and $7,204 of accrued dividends into 3,150,199 shares of common stock.None
The registrant claimed exemption from the registration provisions of the Securities Act of 1933 with respect to the securities pursuant to Section 4(2) thereof inasmuch as no public offering was involved. The shares were not offered or sold by means of: (i) any advertisement, article, notice or other communication published in any newspaper, magazine or similar medium, or broadcast over television or radio, (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising, or (iii) any other form of general solicitation or advertising and the purchases were made for investment and not with a view to distribution. The purchaser was, at the time of the purchase, an accredited investor, as that term is defined in Regulation D under the Securities Act of 1933, and had access to sufficient information concerning the registrant and the offering.
Item 3. Defaults upon Senior Securities
As of June 30, 2019, the Company had unsecured notes payable to stockholders totaling $65,000. These notes bear interest at 8% which are payable quarterly and mature on June 30, 2019. These notes are currently in default.None
-23-
Item 5. Other Information
None
-30-
Item 6. Exhibits.
Exhibit Number | Description | |
Articles of Incorporation (1) | ||
Articles of Amendment to Articles of Incorporation, filed March 12, 2001. (1) | ||
Articles of Amendment to Articles of Incorporation, filed October 4, 2004. (1) | ||
Articles of Amendment to Articles of Incorporation, filed March 31, 2005. (1) | ||
Articles of Amendment to Articles of Incorporation, filed May 9, 2008. (2) | ||
Articles of Amendment to Articles of Incorporation, filed June 28, 2010. (3) | ||
Articles of Amendment to Articles of Incorporation, filed May 6, 2011. (4) | ||
Bylaws. (1) | ||
Articles of Amendment to the Articles of Incorporation, filed April 19, 2012 (5) | ||
Articles of Amendment to the Articles of Incorporation, filed on September 7, 2012 (6) | ||
Articles of Amendment to the Articles of Incorporation, filed on September 19, 2012 (7) | ||
Articles of Amendment to the Articles of Incorporation, filed on October 5, 2012 (8) | ||
Section 302 Certification by the Corporation’s Principal Executive Officer * | ||
Section 302 Certification by the Corporation’s Principal Financial Officer * | ||
Section 906 Certification by the Corporation’s Principal Executive Officer and Principal Financial Officer * | ||
101 | XBRL Interactive Exhibit Tables | |
| Filed herewith.* |
-24-
(1) | Filed as an exhibit to the registrant’s registration statement on Form SB-2 filed with the Securities and Exchange Commission on July 3, 2006 and hereby incorporated by reference. |
(2) | Filed as an exhibit to Amendment No. 6 to the registrant’s registration statement on Form S-1 filed with the Securities and Exchange Commission on May 28, 2008, and hereby incorporated by reference |
(3) | Filed as an exhibit to the registrant's quarterly report on Form 10-Q filed with the Securities and Exchange Commission on February 14, 2011 and hereby incorporated by reference. |
(4) | Filed as an exhibit to the registrant's current report on Form 8-K filed with the Securities and Exchange Commission on May 6, 2011 and hereby incorporated by reference. |
(5) | Filed as an exhibit to the registrant's quarterly report on Form 10-Q filed with the Securities and Exchange Commission on May 15, 2012 and hereby incorporated by reference. |
(6) | Filed as an exhibit to the registrant's current report on Form 8-K filed with the Securities and Exchange Commission on September 7, 2012 and hereby incorporated by reference. |
(7) | Filed as an exhibit to the registrant's current report on Form 8-K filed with the Securities and Exchange Commission on September 19, 2012 and hereby incorporated by reference. |
(8) | Filed as an exhibit to the registrant's current report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2012 and hereby incorporated by reference. |
-25--31-
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CLEARTRONIC, INC. | |
May 15, 2020
Cleartronic, Inc.
August 14, 2019
By:/s/Michael M. Moore
Michael M. Moore
Principal Executive Officer
By:/s/ Larry M. ReiReidd
Larry M. Reid
Principal Financial Officer and
Chief Accounting Officer
-32-
-26-
Exhibit 31.1
CERTIFICATION
I, Michael M. Moore, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Cleartronic, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. I am the only certifying officer responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Board of Directors:
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 14, 2019May 15, 2020
/s/ Michael M. Moore
Michael M. Moore, Principal Executive Officer
-33-
Exhibit
CERTIFICATION
I, Larry Reid, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Cleartronic, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. I am the only certifying officer responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Board of Directors:
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 14, 2019May 15, 2020
/s/ Larry M. Reid
Larry Reid, Principal Financial Officer
-34-
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of Cleartronic, Inc. (the “Company”), does hereby certify, to such officer’s knowledge, that the Quarterly Report on Form 10-Q for the quarter ended June 30, 2019March 31, 2020 of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
August 14, 2019May 15, 2020
By: /s/ Michael M. Moore
Michael M. Moore
Principal Executive Officer
By: /s/ Larry M. Reid
Larry M. Reid
Principal Financial Officer
-35-