UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________FORM 10-Q
FORM10-Q
(Mark One) | |
[ | Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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For the quarterly period ended June 30, | |
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[ ] | Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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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.) | |||
8000 North Federal Highway, Boca Raton, Florida | 33487 | ||
(Address of principal executive offices) | (Zip Code) | ||
561-939-3300
(Exact name of registrant as specified in its charter)
Florida65-0958798
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
8000 North Federal Highway, Boca Raton, Florida33487
(Address of principal executive offices) (Zip Code)
561-939-3300
(Registrant’sRegistrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
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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[X] No [ ] 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 | Smaller reporting company |
Emerging growth company ☐ |
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 ]
[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[Yes [ ] No[No [ ]
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common stock Par Value $0.00001 | CLRI | NONE |
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’sissuer's classes of common stock, as of the latest practicable date: 223,994,635227,102,935 shares as of August 14, 2020.13, 2021.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CLEARTRONIC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
CLEARTRONIC, INC. AND SUBSIDIARIES | |||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||
ASSETS | ASSETS | ASSETS | |||||||||
June 30, 2020 | September 30, 2019 | June 30, 2021 | September | ||||||||
(unaudited) |
| (Unaudited) | 30, 2020 | ||||||||
Current assets: | |||||||||||
Cash | $ 62,848 | $ 27,698 | $ | 302,102 | $ | 75,983 | |||||
Accounts receivable, net | 180,115 | 215,956 | 203,145 | 218,615 | |||||||
Inventory | 6,796 | 19,838 | 11,162 | 12,471 | |||||||
Prepaid expenses and other current assets | - | 15,000 | 88,568 | 39,416 | |||||||
Note receivable | 25,000 | - | 25,000 | 25,000 | |||||||
Assets from discontinued operations | - | 4,136 | |||||||||
Total current assets | 274,759 | 282,628 | 629,977 | 371,485 | |||||||
Property and Equipment, net | 8,879 | - | 9,072 | 8,427 | |||||||
Other assets: | |||||||||||
Due from related party | 13,420 | - | 20,968 | 13,420 | |||||||
Other assets | - | 8,656 | |||||||||
ReadyOp software platform (net of amortization) | - | 10,878 | |||||||||
ReadyMed software platform (net of amortization) | 461,918 | - | |||||||||
Total other assets | 475,338 | 19,534 | 20,968 | 13,420 | |||||||
Total assets | $ 758,976 | $ 302,162 | $ | 660,017 | $ | 393,332 | |||||
LIABILITIES AND STOCKHOLDERS' DEFICIT | LIABILITIES AND STOCKHOLDERS' DEFICIT | LIABILITIES AND STOCKHOLDERS' DEFICIT | |||||||||
Current liabilities: | |||||||||||
Accounts payable | $ 236,836 | $ 264,855 | $ | 198,213 | $ | 253,372 | |||||
Accrued expenses | 54,544 | 123,300 | 0- | 43,457 | |||||||
Deferred revenue, current portion | 600,779 | 676,526 | 962,921 | 693,886 | |||||||
Notes payable stockholders | 55,449 | 53,729 | 0- | 48,447 | |||||||
Note payable, current portion | 38,842 | - | 0- | 18,944 | |||||||
Customer deposits | 26,756 | 26,756 | |||||||||
Liabilities from discontinued operations, current portion | - | 184,559 | |||||||||
Total current liabilities | 1,013,206 | 1,329,725 | 1,161,134 | 1,058,106 | |||||||
Long Term Liabilities | |||||||||||
Notes payable stockholders, net of current portion | 16,688 | 39,140 | |||||||||
Note payable, net of current portion | 67,885 | - | 106,727 | 87,783 | |||||||
Deferred revenue, net of current portion | 33,667 | 100,011 | 7,163 | 34,239 | |||||||
Liabilities from discontinued operations, net of current portion | - | 10,667 | |||||||||
Total long term liabilities | 118,240 | 149,818 | 113,890 | 122,022 | |||||||
Total liabilities | 1,131,446 | 1,479,543 | 1,275,024 | 1,180,128 | |||||||
Commitments and Contingencies (See Note 9) | |||||||||||
Commitments and Contingencies (See Note 8) | 0- | 0- | |||||||||
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 | |||||||||||
Series A preferred stock - $.00001 par value; 1,250,000 shares authorized, 512,996 issued and outstanding, respectively. | 5 | 5 | |||||||||
Series B preferred stock - $.00001 par value; 10 shares authorized, 0 shares issued and outstanding, respectively. | 0- | 0- | |||||||||
Series C preferred stock - $.00001 par value; 50,000,000 shares authorized, 3,911,715 and 4,433,375 shares issued and outstanding, respectively | 40 | 45 | |||||||||
Series D preferred stock - $.00001 par value; 10,000,000 shares authorized, 670,904 shares issued and outstanding, respectively. | 7 | 7 | |||||||||
Series E preferred stock - $.00001 par value, 10,000,000 shares authorized, 3,000,000 shares issued and outstanding, respectively. | 30 | 30 | |||||||||
Common stock - $.00001 par value; 5,000,000,000 shares authorized, 226,602,935 and 223,994,635 shares issued and outstanding, respectively | 2,266 | 2,240 | |||||||||
Additional paid-in capital | 15,866,718 | 15,041,522 | 15,266,697 | 15,266,718 | |||||||
Accumulated Deficit | (16,241,515) | (16,221,110) | (15,884,052) | (16,055,841) | |||||||
Total stockholders' deficit | (372,470) | (1,177,381) | (615,007) | (786,796) | |||||||
Total liabilities and stockholders' deficit | $ 758,976 | $ 302,162 | $ | 660,017 | $ | 393,332 | |||||
The accompanying notes are an integral part of these condensed consolidated unaudited financial statements
-1-
CLEARTRONIC, INC. AND SUBSIDIARIES | |||||||
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | |||||||
(Unaudited) | |||||||
For the three | For the three | For the nine | For the nine | ||||
months ended | months ended | months ended | months ended | ||||
June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | ||||
Revenue | $ 375,250 | $ 365,296 | $ 1,319,152 | $ 835,631 | |||
Cost of Revenue | 73,142 | 81,435 | 322,564 | 178,541 | |||
Gross Profit | 302,108 | 283,861 | 996,588 | 657,090 | |||
Operating Expenses: | |||||||
Selling expenses | 116,624 | 155,077 | 388,895 | 410,315 | |||
Administrative expenses | 91,160 | 99,939 | 292,008 | 275,828 | |||
Amortization | 53,050 | 16,299 | 148,960 | 56,943 | |||
Research and development | 28,192 | 44,248 | 114,993 | 157,789 | |||
Total Operating Expenses | 289,026 | 315,563 | 944,856 | 900,875 | |||
Other expense and interest expense | (2,116) | (1,799) | (7,201) | (11,913) | |||
Total Other Income(Expense) | (2,116) | (1,799) | (7,201) | (11,913) | |||
Income/(Loss) from continuing operations before income taxes | 10,966 | (33,501) | 44,531 | (255,698) | |||
Provision for income taxes from continuing operations | - | - | - | - | |||
Income/(Loss) from continuing operations | 10,966 | (33,501) | 44,531 | (255,698) | |||
Discontinued operations | |||||||
Income/(Loss) from discontinued operations | - | 14,337 | (64,936) | (23,752) | |||
Provision for Income taxes from discontinued operations | - | - | - | - | |||
Income/(Loss) from discontinued operations | - | 14,337 | (64,936) | (23,752) | |||
Net Income/(Loss) | 10,966 | (19,164) | (20,405) | (279,450) | |||
Preferred stock dividends Series A Preferred | (10,231) | (10,231) | (30,806) | (30,694) | |||
Net income/(loss) attributable to common stockholders | $ 735 | $ (29,395) | $ (51,211) | $ (310,144) | |||
Net income/(loss) per share - basic and diluted | |||||||
Income/(loss) from Continuing Operations | $ 0.00 | $ (0.00) | $ 0.00 | $ (0.00) | |||
Income/(loss) from discontinued operations | $ - | $ 0.00 | $ (0.00) | $ (0.00) | |||
Net income/(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 | 207,647,935 | 222,355,291 | 206,414,819 | |||
The accompanying notes are an integral part of these condensed consolidated unaudited financial statementsCLEARTRONIC, INC. AND SUBSIDIARIES
-2-CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
CLEARTRONIC, INC. AND SUBSIDIARIES | |||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW | |||
(Unaudited) | |||
For nine months | For nine months | ||
ended | ended | ||
June 30, 2020 | June 30, 2019 | ||
NET LOSS | $ (20,405) | $ (279,450) | |
Adjustments to reconcile net loss to net cash provided by (used in) | |||
operating activities: | |||
Amortization of ReadyOp software platform | 10,878 | 48,897 | |
Amortization of ReadyOp customer list | - | 8,046 | |
Amortization of ReadyMed software platform | 138,082 | - | |
Depreciation expense | 150 | - | |
Provision (Recovery) for bad debt | (13,335) | 22,000 | |
(Increase) decrease in assets: | |||
Accounts receivable | 49,176 |
| (75,011) |
Inventory | 13,042 | 9,106 | |
Prepaid expenses and other current assets | 15,000 | (10,000) | |
Due from related party | (13,420) | - | |
Other assets | 8,656 | - | |
Assets from discontinued operations | 9,929 | (3,051) | |
Increase (decrease) in liabilities: | |||
Accounts payable | (28,019) | (15,927) | |
Accrued expenses | (68,756) | (3,403) | |
Deferred revenue | (142,091) | 140,207 | |
Customer deposit | - | 14,000 | |
Liabilities from discontinued operations | 2,486 | 64,260 | |
Net Cash Provided by (Used in) Operating Activities | (38,627) | (80,326) | |
Cash Flows From Investing Activities | |||
Purchase of fixed assets | (9,029) | - | |
Issuance of note receivable | (25,000) | - | |
Issuance of note receivable - discontinued operations | - | 25,000 | |
Repayment of note receivable - discontinued operations | - | (25,000) | |
Net Cash Used in Investing Activities | (34,029) | - | |
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) | (26,966) | |
Proceeds from notes payable stockholders | - | 713 | |
Proceeds from notes payable | 156,727 | - | |
Repayment of note payable | �� (50,000) | - | |
Repayment of notes payable stockholders | (20,732) | - | |
Proceeds from loan payable - related party - discontinued operations | 11,362 | - | |
Proceeds from issuance of common stock | - | 100,000 | |
Dividends paid | - | (7,204) | |
Net Cash Provided by Financing Activities | 107,806 | 110,353 | |
Net increase in cash | 35,150 | 30,027 | |
Cash at beginning of period | 27,698 | 413 | |
Cash at end of period | $ 62,848 | $ 30,440 | |
SUPPLEMENTAL CASH FLOW INFORMATION: | |||
Cash paid for interest | $ 4,433 | $ 4,771 | |
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 | $ - | |
Common stock issued for conversion of note payable, accrued interest and accrued dividends - related parties | $ - | $ 94,506 | |
For the Three Months ended June 30, 2021 | For the Three Months ended June 30, 2020 | For the Nine Months ended June 30, 2021 | For the Nine Months ended June 30, 2020 | |||||||||||||
(Restated) | (Restated) | |||||||||||||||
Revenue | $ | 413,868 | $ | 375,250 | $ | 1,217,928 | $ | 1,319,152 | ||||||||
Cost of Revenue | 64,777 | 73,142 | 198,580 | 322,564 | ||||||||||||
Gross Profit | 349,091 | 302,108 | 1,019,348 | 996,588 | ||||||||||||
| ||||||||||||||||
Operating Expenses: | ||||||||||||||||
Selling expenses | 147,483 | 116,624 | 417,614 | 388,895 | ||||||||||||
Administrative expenses | 106,253 | 91,010 | 327,336 | 291,858 | ||||||||||||
Amortization and depreciation | 521 | 150 | 1,423 | 11,028 | ||||||||||||
Research and development | 48,285 | 28,192 | 118,612 | 114,993 | ||||||||||||
Total Operating Expenses | 302,542 | 235,976 | 864,985 | 806,774 | ||||||||||||
| ||||||||||||||||
Gain on the settlement and reversal of accounts payable | 18,430 | 0- | 18,430 | 0- | ||||||||||||
Interest expense, net | 264 | (2,116) | (1,004) | (7,201) | ||||||||||||
Total Other Income(Expense) | 18,694 | (2,116) | 17,426 | (7,201) | ||||||||||||
| ||||||||||||||||
Income from continuing operations before income taxes | 65,243 | 64,016 | 171,789 | 182,613 | ||||||||||||
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Provision for income taxes from continuing operations | 0- | 0- | 0- | 0- | ||||||||||||
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Income from continuing operations | 65,243 | 64,016 | 171,789 | 182,613 | ||||||||||||
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Discontinued operations | ||||||||||||||||
Loss from discontinued operations before income taxes | 0- | 0- | 0- | (64,936) | ||||||||||||
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Provision for Income taxes from discontinued operations | 0- | 0- | 0- | 0- | ||||||||||||
Loss from discontinued operations | 0- | 0- | 0- | (64,936) | ||||||||||||
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Net Income | 65,243 | 64,016 | 171,789 | (117,677) | ||||||||||||
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Preferred stock dividends Series A Preferred | (10,119) | (10,231) | (30,584) | (30,806) | ||||||||||||
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Net income attributable to common stockholders | $ | 55,124 | $ | 53,785 | $ | 141,205 | $ | (86,871) | ||||||||
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Net income per share - basic and diluted | ||||||||||||||||
Income from Continuing Operations | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||
Loss from discontinued operations | 0- | 0- | 0- | (0.00) | ||||||||||||
Net income per common share - basic | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||||
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Net income per common share - diluted | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||||
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Weighted Average of number of shares outstanding - basic | 226,602,935 | 223,994,635 | 224,997,827 | 222,355,291 | ||||||||||||
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Weighted Average of number of shares outstanding - diluted | 600,815,630 | 600,815,630 | 599,210,522 | 599,176,286 | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated unaudited financial statements
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-2-
CLEARTRONIC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
(Unaudited)
CLEARTRONIC, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT | |||||||||||||||||||||||||||||
FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 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 | ||||||||||||||
Deconsolidation of Voiceintrop, Inc. | - | - | - | - | - | - | - | - | - | - | - | - | 225,316 | - | 225,316 | ||||||||||||||
Net loss for the nine months ended June 30, 2020 | - | - | - | - | - | - | - | - | - | - | - | - | - | (20,405) | (20,405) | ||||||||||||||
Balance at June 30, 2020 (Unaudited) | 512,996 | $ 5 | - | $ - | 4,433,375 | $ 45 | 670,904 | $ 7 | 3,000,000 | $ 30 | 223,994,635 | $ 2,240 | $ 15,866,718 | $ (16,241,515) | $ (372,470) | ||||||||||||||
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) | |||||||||||||
Net income for the three months ended June 30, 2020 | - | - | - | - | - | - | - | - | - | - | - | - | - | 10,966 | 10,966 | ||||||||||||||
Balance at June 30, 2020 (Unaudited) | 512,996 | $ 5 | - | $ - | 4,433,375 | $ 45 | 670,904 | $ 7 | 3,000,000 | $ 30 | 223,994,635 | $ 2,240 | $ 15,866,718 | $ (16,241,515) | $ (372,470) | ||||||||||||||
For nine months | For nine months | |||||
ended | ended | |||||
June 30, 2021 | June 30, 2020 | |||||
(Restated) | ||||||
NET INCOME | $ | 171,789 | $ | 117,677 | ||
Cash Flows From Operating Activities | ||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||
Amortization of ReadyOp software platform | 0- | 10,878 | ||||
Depreciation expense | 1,423 | 150 | ||||
Gain on the settlement and reversal of accounts payable | (18,430) | 0- | ||||
Provision (Recovery) for bad debt | 6,000 | (13,335) | ||||
(Increase) decrease in assets: | ||||||
Accounts receivable | 9,470 | 49,176 | ||||
Inventory | 1,309 | 13,042 | ||||
Prepaid expenses and other current assets | (49,152) | 15,000 | ||||
Due from related party | (7,548) | (13,420) | ||||
Other assets | 0- | 8,656 | ||||
Assets from discontinued operations | 0- | 9,929 | ||||
Increase (decrease) in liabilities: | ||||||
Accounts payable | (36,729) | (28,019) | ||||
Accrued expenses | (43,457) | (68,756) | ||||
Deferred revenue | 241,959 | (142,091) | ||||
Liabilities from discontinued operations | 0- | 2,486 | ||||
Net Cash Provided By (Used In) Operating Activities | 276,634 | (38,627) | ||||
| ||||||
Cash Flows From Investing Activities | ||||||
Purchase of fixed assets | (2,068) | (9,029) | ||||
Issuance of note receivable | 0- | (25,000) | ||||
Net Cash Used in Investing Activities | (2,068) | (34,029) | ||||
| ||||||
Cash Flows From Financing Activities | ||||||
Proceeds from issuance of installment loan-discontinued operations | 0- | 43,600 | ||||
Repayment of installment loan - discontinued operations | 0- | (33,151) | ||||
Proceeds from notes payable | 0- | 156,727 | ||||
Repayment of notes payable | 0- | (50,000) | ||||
Repayment of notes payable stockholders | (48,447) | (20,732) | ||||
Proceeds from loan payable - related party - discontinued operations | 0- | 11,362 | ||||
Net Cash (Used in) Provided by Financing Activities | (48,447) | 107,806 | ||||
| ||||||
Net increase in cash | 226,119 | 35,150 | ||||
| ||||||
Cash at beginning of period | 75,983 | 27,698 | ||||
| ||||||
Cash at end of period | $ | 302,102 | $ | 62,848 | ||
| ||||||
SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||
Cash paid for interest | $ | 2,754 | $ | 4,433 | ||
Cash paid for taxes | $ | 0- | $ | 0- | ||
| ||||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||
Operating lease asset obtained for operating lease liability from discontinued operations | $ | 0- | $ | 75,078 | ||
Deconsolidation of Voiceinterop, Inc. | $ | - | $ | 225,316 | ||
The accompanying notes are an integral part of these condensed consolidated unaudited financial statements
-4-
-3-
CLEARTRONIC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2021
(Unaudited)
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, 2019 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) | ||||||||||||||
Series A | Series B | Series C | Series D | Series E | Additional | Total | |||||||||||||||||||||||||||||||||
Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | 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 March 31, 2021 (Unaudited) | 512,996 | $ | 5 | 0- | $ | 0- | 3,911,715 | $ | 40 | 670,904 | $ | 7 | 3,000,000 | $ | 30 | 226,602,935 | $ | 2,266 | $ | 15,266,697 | $ | (15,949,295) | $ | (680,250) | |||||||||||||||
| |||||||||||||||||||||||||||||||||||||||
Net income for the three months ended June 30, 2021 | 0- | 0- | - | - | - | - | - | - | - | - | - | - | - | 65,243 | 65,243 | ||||||||||||||||||||||||
Balance at June 30, 2021 (Unaudited) | 512,996 | $ | 5 | 0- | $ | 0- | 3,911,715 | $ | 40 | 670,904 | $ | 7 | 3,000,000 | $ | 30 | 226,602,935 | $ | 2,266 | $ | 15,266,697 | $ | (15,884,052) | $ | (615,007) | |||||||||||||||
| |||||||||||||||||||||||||||||||||||||||
Series A | Series B | Series C | Series D | Series E | Additional | Total | |||||||||||||||||||||||||||||||||
Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | 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, 2020 | 512,996 | $ | 5 | 0- | $ | 0- | 4,433,375 | $ | 45 | 670,904 | $ | 7 | 3,000,000 | $ | 30 | 223,994,635 | $ | 2,240 | $ | 15,266,718 | $ | (16,055,841) | $ | (786,796) | |||||||||||||||
| |||||||||||||||||||||||||||||||||||||||
Series C Convertible Preferred shares exchanged for common shares | - | - | - | - | (521,660) | (5) | - | - | - | - | 2,608,300 | 26 | (21) | - | - | ||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||
Net income for the nine months ended June 30, 2021 | - | - | - | - | - | - | - | - | - | - | - | - | - | 171,789 | 171,789 | ||||||||||||||||||||||||
Balance at June 30, 2021 (Unaudited) | 512,996 | $ | 5 | 0- | $ | 0- | 3,911,715 | $ | 40 | 670,904 | $ | 7 | 3,000,000 | $ | 30 | 226,602,935 | $ | 2,266 | $ | 15,266,697 | $ | (15,884,052) | $ | (615,007) | |||||||||||||||
The accompanying notes are an integral part of these condensed consolidated unaudited financial statements
-5-
-4-
CLEARTRONIC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2020
(Restated and Unaudited)
Series A | Series B | Series C | Series D | Series E | Additional | Total | |||||||||||||||||||||||||||||||||
Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | 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 March 31, 2020 (Restated and Unaudited) | 512,996 | $ | 5 | 0- | $ | 0- | 4,433,375 | $ | 45 | 670,904 | $ | 7 | 3,000,000 | $ | 30 | 223,994,635 | $ | 2,240 | $ | 15,266,718 | $ | (16,167,449) | $ | (898,404) | |||||||||||||||
| |||||||||||||||||||||||||||||||||||||||
Net income for three months ended June 30, 2020 | - | - | - | - | - | - | - | - | - | - | - | - | - | 64,016 | 64,016 | ||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2020 (Restated and Unaudited) | 512,996 | $ | 5 | 0- | $ | 0- | 4,433,375 | $ | 45 | 670,904 | $ | 7 | 3,000,000 | $ | 30 | 223,994,635 | $ | 2,240 | $ | 15,266,718 | $ | (16,103,433) | $ | (834,388) | |||||||||||||||
| |||||||||||||||||||||||||||||||||||||||
Series A | Series B | Series C | Series D | Series E | Additional | Total | |||||||||||||||||||||||||||||||||
Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | 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 | 0- | $ | 0- | 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) | |||||||||||||||
| |||||||||||||||||||||||||||||||||||||||
Deconsolidation of Voiceintrop, Inc. | - | - | - | - | - | - | - | - | - | - | - | - | 225,316 | - | 225,316 | ||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||
Acquisition of ReadyMed platform in exchange for common shares | - | - | - | - | - | - | - | - | - | - | 12,000,000 | 120 | (120) | - | - | ||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||
Net income for nine months ended June 30, 2020 | - | - | - | - | - | - | - | - | - | - | - | - | - | 117,677 | 117,677 | ||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2020 (Restated and Unaudited) | 512,996 | $ | 5 | 0- | $ | 0- | 4,433,375 | $ | 45 | 670,904 | $ | 7 | 3,000,000 | $ | 30 | 223,994,635 | $ | 2,240 | $ | 15,266,718 | $ | (16,103,433) | $ | (834,388) | |||||||||||||||
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, 20202021
(Unaudited)
NOTE 1 - ORGANIZATION
Cleartronic, Inc. (the “Company”"Company") was incorporated in the state of Florida on November 15, 1999. The Company’s subsidiariesAll current operations are VoiceInterop (“VoiceInterop”) andconducted through the Company's wholly owned subsidiary, ReadyOp Communications, Inc. (“ReadyOp”("ReadyOp"). On February 14, 2020, VoiceInterop was deconsolidated.
In, a Florida corporation incorporated on September 2014, the Company formed15, 2014. ReadyOp Communications, Inc. (a Florida corporation), as a wholly owned subsidiary to facilitatefacilitates the marketing and sales of ReadyOp software. The Company’s only operating subsidiary is ReadyOp Communications, Inc.
In November 2016,subscriptions to the Company cancelled its Licensing Agreement with Collabria LLC of Tampa, Florida (”Collabria”)ReadyOp™ and acquired all ofReadyMed ™ platform and 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.
AudioMate IP gateways discussed below.
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 have 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 10)9).
In October 2019, the Company acquired athe ReadyMed 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 basedweb-based secure communicationcommunications platform initially designed for the health carehealthcare industry. This includes hospitals, clinics, doctor's offices, and health insurance companies, workers compensation insurance companies and many other segments of the health carehealthcare industry. It provides hospitals with patient tracking capability withinThe Company offers both the hospital. It allows physiciansReadyOp and ReadyMed capabilities to track patient progress after release fromclients and usually refers to the hospital and allows for secure communication withplatform as ReadyOp to avoid confusion in the patient to track the healing process, record their recovery and monitor their medications.marketplace of two platforms.
-6-
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements contain the consolidated accounts of Cleartronic, Inc. and its subsidiaries,subsidiary, ReadyOp Communications, Inc. and VoiceInterop, Inc. All material intercompany transactions and balances have been eliminated. On February 14, 2020, the deconsolidation of VoiceInterop was completed and transactions through that date are recorded as discontinued operations.operations (See Note 10)9).
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, 20192020 included in the Company’sCompany'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 three and nine months ended June 30, 20202021 are not necessarily indicative of the results that may be expected for the fiscal year endingended September 30, 2020.2021.
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’smanagement's knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results.
Significant estimates include the assumptions used in valuation of deferred tax assets, estimated useful life of intangible assets and property and equipment, valuation of inventory and allowance for doubtful accounts.
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 aton June 30, 20202021 and September 30, 2019.2020.
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.
When a client is invoiced, the amount is recorded as an asset in Accounts Receivable and as Deferred Revenue in Current Liabilities. When payment is received the amount is moved to Cash on the balance sheet. The amount listed as Deferred Revenue is amortized monthly over the license period.
The Company provided $6,000 and $52,000$6,000 allowances for doubtful accounts as of June 30, 20202021 and September 30, 2019,2020, respectively.
-7-
-6-
PROPERTY AND EQUIPMENT
Property and equipment isare recorded at cost and depreciated or amortized using the straight-line method over the estimated useful life of the asset or the underlying lease term for leasehold improvements, whichever is shorter onset the property and equipment is put into service.
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 historical costs of $600,000. ReadyMed is a web based secure communication platform designed for the health care industry. This valuation was based onincludes 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. As of the acquisition date, the Company has recorded an estimated historical cost of the software. The ReadyMed software platform of $600,000based on a preliminary purchase price allocation prepared by management. As a result, during the preliminary purchase price allocation period, which may be up to be amortized over three years, amortization expense recognized forone year from the three month endedacquisition date, the Company may record adjustments to the assets acquired. After the preliminary purchase price allocation period, the Company recorded adjustments to assets acquired subsequent to the purchase price allocation period in the period in which the adjustments were determined. Accordingly, the ReadyMed software platform purchased price was adjusted. As of June 30, 20202021 and 2019 was $53,050 and $0, respectively. The amortization expense for the nine month ended JuneSeptember 30, 2020, the ReadyMed software platform is valued at historical costs of $0 (See Notes 6 and 2019 was $138,082 and $0, respectively.
7).
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,years. The amortization expense recognized for the three monthnine months ended June 30, 20202021 and 20192020 was $0 and $16,299,$10,878, respectively. The amortization expense for the nine monththree months ended June 30, 2021 and 2020 was $0 and 2019 was $10,878 and $48,897,$0, respectively. As of June 30, 2021 and September 30, 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 months ended June 30, 2020 and 2019 was $0 and $0, respectively. The amortization expense for the nine month periods ended June 30, 2020 and 2019 was $0 and $8,046, respectively. As of September 30, 2019, the Collabria customer base has been fully amortized.
CONCENTRATION OF CREDIT RISK
The Company currently maintains cash balances at one FDIC-insured banking institution. Deposits held in noninterest-bearingnon interest-bearing transaction accounts are insured up to a maximum of $250,000 at all FDIC-insured institutions. AtAs of June 30, 20202021 and September 30, 2019,2020, the Company had approximately $0$51,690 and $0, respectively, in excess of FDIC insurance limits.
RESEARCH AND DEVELOPMENT COSTS
The Company expenses research and development costs as incurred.
For the nine months ended June 30, 20202021 and 2019,2020, the Company had $114,993$118,612 and $157,789,$114,993, respectively, in research and development costs from continuing operations.. For the three months ended June 30, 20202021 and 2019,2020, the Company had $28,192$48,285 and $44,248,$28,192, respectively, in research and development costs from continuing operations. costs.
-8-
REVENUE RECOGNITION AND DEFERRED REVENUES
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.Allocationiv.
Allocation of the transaction price to the performance obligations; and
v.
Recognition of revenue when (or as) the Company satisfies each performance obligation.
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 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.
As of June 30, 2021 and September 30, 2020, respectively, the Company recorded $56,866 and $20,900, respectively, in deferred subscriber costs, which is included as a component of prepaid expense.
In transactions in which hardware is sold to a customer, the Company recognizes the revenue when the hardware has been shipped to the customer. The hardware supplied by the Company does not require a related software license and can be operated and fully functional without the Company’sCompany'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 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 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.
-9--7-
The following table summarizes the revenues for the three and nine months ended June 30, 2020 and 2019, respectively:
| For the three months ended |
| For the nine months ended | ||
| June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | |
Licensing of ReadyOp Software | $351,703 | $258,835 | $952,084 | $683,019 | |
Sale of ReadyOp ACE IP Gateways | 20,880 | 82,755 | 307,050 | 103,755 | |
Licensing of ReadyMed Software | 2,667 | - | 10,667 | - | |
Consulting Income | - | 16,000 | 37,000 | 29,500 | |
Pass-through Income | - | 7,706 | 12,351 | 19,357 | |
Total | $375,250 | $ 365,296 | $1,319,152 | $835,631 | |
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, 20202021 and 2019,2020, we had no options and warrants outstanding.
As of June 30, 2021 and 2020, and 2019, the Companywe had 512,996 shares of Series A Convertible Preferred stock outstanding, which are convertible into 51,299,600 shares of common stock.
As of June 30, 20202021 and 2019,2020, we had 3,911,715 and 4,433,375 shares of Series C Convertible Preferred stock outstanding, respectively, which are convertible into 19,558,575 and 22,166,875 shares of common stock.
stock, respectively.
As of June 30, 20202021 and 2019,2020, 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, 20202021 and 2019,2020, we had 3,000,000 shares of Series E Convertible Preferred stock outstanding which are convertible into 300,000,000 shares of common stock.
-10-The table below details the computation of basic and diluted earnings per share ("EPS") for the three months ended June 30, 2021 and 2020:
For the three months ended June 30, 2021 | For the three months ended June 30, 2020 | |||||
Net income attributable to common stockholders for the period | $ | 55,124 | $ | 53,785 | ||
| ||||||
Weighted average number of shares outstanding | 226,902,935 | 223,994,635 | ||||
| ||||||
Basic earnings per share | $ | 0.00 | $ | 0.00 | ||
The following table sets for the computation of diluted earnings per share:
For the three months ended June 30, 2021 | For the three months ended June 30, 2020 | |||||
Net income attributable to common stockholders for the period | $ | 55,124 | $ | 53,785 | ||
Add: Preferred stock dividends | 10,119 | 10,231 | ||||
| ||||||
Adjusted net income | $ | 65,243 | $ | 64,016 | ||
| ||||||
Weighted average number of shares outstanding | 226,602,935 | 223,994,635 | ||||
Add: Shares issued upon conversion of preferred stock | 374,212,695 | 376,820,995 | ||||
Weighted average number of common and common equivalent shares | 600,815,630 | 600,815,630 | ||||
| ||||||
Diluted earnings per share | $ | 0.00 | $ | 0.00 | ||
-8-
The table below details the computation of basic and diluted earnings per share ("EPS") for the nine months ended June 30, 2021 and 2020:
For the nine months ended June 30, 2021 | For the nine months ended June 30, 2020 | |||||
Net income attributable to common stockholders for the period | $ | 141,205 | $ | 86,871 | ||
| ||||||
Weighted average number of shares outstanding | 224,997,827 | 222,355,291 | ||||
| ||||||
Basic earnings per share | $ | 0.00 | $ | 0.00 | ||
The following table sets for the computation of diluted earnings per share:
For the nine months ended June 30, 2021 | For the nine months ended June 30, 2020 | |||||
Net income attributable to common stockholders for the period | $ | 141,205 | $ | 86,871 | ||
Add: Preferred stock dividends | 30,584 | 30,806 | ||||
| ||||||
Adjusted net income | $ | 171,789 | $ | 117,677 | ||
| ||||||
Weighted average number of shares outstanding | 224,997,827 | 222,355,291 | ||||
Add: Shares issued upon conversion of preferred stock | 374,212,695 | 376,820,995 | ||||
Weighted average number of common and common equivalent shares | 599,210,522 | 599,176,286 | ||||
| ||||||
Diluted earnings per share | $ | 0.00 | $ | 0.00 | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company measures the fair value of its assets and liabilities under ASC topic 820, “Fair"Fair Value Measurements and Disclosures”Disclosures". ASC 820 defines “fair value”"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’sCompany'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 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’smanagement'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’sCompany'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, 20202021 and September 30, 2019,2020, respectively.
EQUITY INSTRUMENTS ISSUED TO PARTIES OTHER THAN EMPLOYEES FOR ACQUIRING GOODS OR SERVICES
The Company accounts for stock-based instruments issued for services in accordance with ASC 718 “Compensation"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 basedequity-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.
-11-
ADVERTISING COSTS
Advertising costs are expensed as incurred. The Company had advertising costs of $5,497$12,583 and $1,797$25,691 during the nine months ended June 30, 2021 and 2020, respectively, and $3,877 and $5,497 during the three months ended June 30, 20202021 and 2019, respectively, and $25,691 and $5,591 during the nine months ended June 30, 2020, and 2019, respectively.
RECENT ACCOUNTING PRONOUNCEMENTS
In February 2016,December 2019, the FASB issued ASU 2016-02, Leases, which2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. The FASB's amendments primarily impact ASC 740, Income Taxes, and may impact both interim and annual reporting periods. ASU 2019-12 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 becamebe effective for fiscal years beginning after December 15, 2018, including2020, and interim periods within those fiscal years.years and early adoption is permitted. The Company adopted this standardis currently evaluating the impact of adopting ASU 2019-12.
All other newly issued accounting pronouncements but not yet effective October 1, 2019 which are fully discussed in Note 9.have been deemed either immaterial or not applicable.
NOTE 3 - PROPERTY AND EQUIPMENT
At June 30, 20202021 and December 31, 2019,September 30, 2020, property and equipment, net, is as follows:
| June 30, 2020 |
| December 31, 2019 |
| June 30, 2021 (Unaudited) | September 30, 2020 | ||||||
Office Equipment | $ | 9,029 |
| $ | - |
| $ | 11,097 | $ | 9,029 | ||
Less: Accumulated Depreciation |
| (150) |
|
| - | (2,025) | (602) | |||||
Total Property and Equipment, net | $ | 8,879 |
| $ | - |
| $ | 9,072 | $ | 8,427 | ||
Depreciation expense for the three months ended June 30, 2021 and 2020, was $521 and $150, respectively.
Depreciation expense for the nine months ended June 30, 2021 and 2020, was $1,423 and 2019, was $150, and $0, respectively
Depreciation expense for the three months ended June 30, 2020 and 2019, was $150 and $0, respectively.
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NOTE 4 - NOTES RECEVABLE
On June 18, 2020, the Company entered into an unsecured note receivable in the amount of $10,000 with a shareholder which bears interest at 6% and matures on August 31, 20202020. The maturity of the note receivable in the amount of $10,000 was extended to August 31, 2021 (See Note 8)7).
As of June 30, 2021, interest receivable was $638.
On June 25, 2020, the Company entered into an unsecured note receivable in the amount of $15,000 with a shareholder which bears interest at 6% and matures on August 31, 20202020. The maturity of the note receivable in the amount of $15,000 was extended to August 31, 2021 (See Note 8)7). As of June 30, 2021, interest receivable was $938.
Interest income for the three months ended June 30, 2021 and 2020 was $395 and $0, respectively.
Interest income for the nine months ended June 30, 2021 and 2020 was $1,167 and $0, respectively.
On July 15, 2021, a shareholder returned 875,000 shares of Company's common stock to the Company in exchange for the two notes receivable in the total sum of $25,000 and $1,576 in interest receivable (See Notes 7 and 11).
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NOTE 5 - 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 acquisition by the Company. Additional revenue has been generated for the Company and management believes revenue will continue to increase each quarter. The Company acquired the ReadyMed software platform in October 2019. The Company believes the acquisition of ReadyMed will also be a prudent purchase and that revenue will increase as a result of the acquisition
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. On May 14, 2020, the Florida Governor signed Executive Order No. 20-123, bringing all Florida counties into Full Phase I reopening. More restrictive proclamations and/or directives may be issued in the future. 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.
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 attain profitable operations. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
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NOTE 6 - NOTES PAYABLE
Notes payable to Stockholders
As of June 30, 20202021 and September 30, 2019,2020, the Company had unsecured notes payable to stockholders totaling $72,137$0 and $92,869,$48,447, respectively. These notes range in interest from 8% to 15% which are payable quarterly. One note with a principal balancesbalance of $17,588 was due on December 31, 2019. The maturity of the note payable in the amount of $17,588 was extended to August 31, 2020.
2020 and was paid in full including $8,002 in accrued interest.
On September 30, 2019, the note holder, who is a shareholder and director, converted $65,000 of a note payable and $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 bears an interest rate of 8%. This note requires a monthly payment of $3,405 for the next 24 months. As of JuneSeptember 30, 2020 and September 30, 2019 the balance due was $54,549 and $75,279, respectively.
$48,447. As of June 30, 2021, the note balance was paid in full.
Interest expense on the notes payable to stockholders was $2,116$0 and $1,799$2,116 for the three months ended June 30, 2021 and 2020, and 2019, respectively,respectively.
Interest expense on the notes payable to stockholders was $2,040 and $7,201 and $11,913 for the nine months ended June 30, 20202021 and 2019,2020, respectively.
June 30, 2021 | September 30, | |||||
(Unaudited) | 2020 | |||||
Note payable stockholder | $ | 0- | $ | 48,447 | ||
Less: current portion | 0- | (48,447) | ||||
Long-term note payable | $ | 0- | $ | 0- | ||
Installment Loan Payable - Discontinued Operations
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 overDuring the life of the loan. As of Juneyear ended September 30, 2020, the remainingCompany 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 September 30, 2020, the loan balance of $18,429$9,000 was paid in full from the note payable dated October 8, 2019.
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 $31,269, net of debt issuance cost of $10,688. The amount isand $7,262 included in VoiceInterop deconsolidationliabilities from discontinued operations was deconsolidated as of February 14, 2020 (See Note 10)Notes 7 and 9).
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Note Payable
– PPP Loan
On June 10, 2020, the Company, was granted a loan (the “Loan”"Loan") from Bank of America, N.A., in the aggregate amount of $106,727, pursuant to the Paycheck Protection Program (the “PPP”"PPP") under Division A, Title I of the CARES Act, which was enacted March 27, 2020.
The Loan, which was in the form of a Note dated on or about June 10, 2020 issued by the Borrower, matures on or about June 10, 2025 and bears interest at an approximate rate of 1% per annum. The Note may be prepaid by the Borrower at any time prior to maturity with no prepayment penalties. Funds from the Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations incurred before February 15, 2020. The Company intends to use the entire Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. On July 20, 2021, the loan was 100% forgiven by the SBA. As a result, the Company will record a gain on debt forgiveness t of PPP loan in the amount of $106,727 in the fourth quarter of 2021. (See Note 11).
June 30, 2021 | September 30, | |||||
(Unaudited) | 2020 | |||||
Note payable (PPP Loan) | $ | 106,727 | $ | 106,727 | ||
Less: current portion | 0- | (18,944) | ||||
Long-term note payable | $ | 106,727 | $ | 87,783 | ||
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 June 30, 2020 the loan balance of $50,000 and interest of $732 was paid in full.full at maturity on February 29, 2020.
Loan Payable - related party-11-
During the nine months ended June 30, 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 June 30, 2020 the loan balance of $9,000 was paid in full and $7,626 included in labilities from discontinued operations was deconsolidated as of February 14, 2020. (See Note 8 and 10).
NOTE 76 - EQUITY TRANSACTIONS
Common stock issued for cash
In December 2018, the Company sold 3,333,334 shares of common stock to unrelated parties for $75,000 in cash of which $25,000 was received by the Company on January 15, 2019.
Common stock issued for Ready Med Platform
In October 2019, the Company acquired the software platform from Collabria LLC, a related party. In exchange for these assets the Company issued 12,000,000 shares of Common stock valued at the historical cost of the asset of $600,000$0 (See Note 2)Notes 2 and 7).
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Preferred Stock Dividends
As of June 30, 20202021 and September 30, 2019,2020, the cumulative arrearage of undeclared dividends for Series A Preferred stock totaled $72,726$113,655 and $41,920,$83,071, respectively.
Common stock issued for Conversion of C Preferred
Subscription Agreements between VoiceInterop, Inc., our wholly-owned subsidiary and private investors
DuringOn March 17, 2021, the year ended September 30, 2018, VoiceInterop committed to sell 600,000holders of Series C preferred stock, converted 521,660 shares of its common stock to private investors for $68,000. TheSeries C Preferred Stock into 2,608,300 shares issuance is contingent upon a spin-off of the Company from Cleartronic, Inc. into a separate company. As of February 14, 2020, the spin-off has been completed and the shares have been issued (See Note 10).Common Stock.
Declaration of Stock Dividend
On April 23, 2018, the board of Directors declared a stock dividend for common stock shareholders and for certain classes 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”("SEC") regarding a pending S-1 filing. On
On May 13, 2019 VoiceInterop filed an S-1 registration statement with the SEC which was approved on November 14, 2019. On February 14, 2020, the Company distributed 17,819,827 shares of VoiceInterop common stock to its shareholders (See Note 10)9). The Company recorded $225,316 to additional paid in capital for deconsolidation of VoiceInterop, Inc.
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NOTE 87 - RELATED PARTY TRANSACTIONS
The Company leases its office space from VoiceInterop the Company’sCompany's former wholly owned subsidiary and now 96% owned by our shareholders.shareholders for approximately $1,400 per month. On February 14, 2020, VoiceInterop was deconsolidated and is no longer our subsidiary. Rent expense paid to the related party was $4,905 and $11,947 forduring the three months ended June 30, 2021 and June 30, 2020 was $4,473, and 2019,$4,905, respectively. Rent expense paid to the related party was $27,059 and $35,643 forincurred during the nine months ended June 30, 2021 and 2020 was $13,428 and 2019, respectively.
$27,059, respectively (See Note 8).
In October 2017,2019, the Company acquired a software platform from Collabria LLC. In exchange for this asset, the Company issued two promissory notes to a shareholder12,000,000 shares of Common stock valued at $0 (See Notes 2 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 6).
During the three monthsyear ended December 31, 2019,September 30, 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 JuneSeptember 30, 2020, the loan balance of $9,000 was paid in full and $7,262 included in liabilities from discontinued operations was deconsolidated as of February 14, 2020 (See Note 6Notes 5 and 10)9).
On September 30, 2019, the note holder, who is a shareholder and director, converted $65,000 of note payable and $10,279 of accrued interest into an installment promissory note. The note is due on September 30, 2021 and bears an interest rate of 8%. The note requires a monthly payment of $3,405 for the next 24 months. As of JuneSeptember 30, 2020, and September 30, 2019 the balance due was $54,549 and $75,279, respectively$48,447. As of June 30, 2021, the note balance was paid in full (See Note 6)5).
On June 18, 2020, the Company entered into an unsecured note receivable in the amount of $10,000 with a shareholder which bears interest at 6% and matures on August 31, 20202020. The maturity of the note receivable in the amount of $10,000 was extended to August 31, 2021 (See Note 4).
On June 25, 2020, the Company entered into an unsecured note receivable in the amount of $15,000 with a shareholder which bears interest at 6% and matures on August 31, 20202020. The maturity of the note receivable in the amount of $15,000 was extended to August 31, 2021 (See Note 4).
On July 15, 2021, a shareholder returned 875,000 shares of Company's common stock to the Company in exchange for the two notes receivable in the total sum of $25,000 and $1,576 in interest receivable (See Notes 4 and 11).
As of June 30, 2020,2021, the Company advanced $13,420$20,968 to VoiceInterop, the Company’sCompany's former wholly owned subsidiary and now 96% owned by our shareholders. The amount is included in due from related party on the consolidated balance sheet. The amount is due on demand and bears interest at 5% effective June 30, 2021.
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NOTE 98 - 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. Upon the deconsolidation, the Company subleases the office space from VoiceInterop at approximately $1,400 per month.
Rent expense incurred during the three months ended June 30, 2021 and 2020 was $4,473 and 2019 was $4,905, and $11,947, respectively.
Rent expense incurred during the nine months ended June 30, 2021 and 2020 was $13,428 and 2019 was $27,059, and $35,643, respectively.
VoiceInterop subleases part of its office space to two entities for approximately $1,150 per month and is included in income from discontinued operations. Sublease rental income received during the period from October 1, 2019 through February 14, 2020 (deconsolidation date), was $5,750.
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.
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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.
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’sCompany's revenue for the nine months ended June 30, 2021. No customer accounted for more than 10% of the Company's revenue for the nine months ended June 30, 2020. No customer accounted for 10% of the Company’s revenue for the nine months ended June 30, 2019. As of June 30, 2020 two2021, one customer accounted for approximately 27%17% of the Company’sCompany's total outstanding accounts receivable. As of September 30, 2020, two customers accounted for approximately 29% of the Company's total outstanding accounts receivable with each customer representing 14%18% and 13%11%, respectively. As of June 30, 2019, three customers accounted for approximately 24%, 13%, and 11% of the Company’s total outstanding accounts receivable.
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.
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.
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Exclusive Licensing Agreement
On May 5, 2017, the Company entered into an Exclusive Licensing Agreement with Sublicensing Terms (the “Agreement”"Agreement") with the University of Southern Florida Research Foundation, Inc. (“USFRF”("USFRF") relating to an exclusive license of certain patent rights in connection with one of USFRF’sUSFRF'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’sLicensee's obligation to pay royalties expires.
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 |
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.
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.
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As of JuneSeptember 30, 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.-13-
NOTE 109 – 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 distributedistributed to its shareholders owning Common Stock and Series C and D Preferred stock an aggregate of 17,819,827 shares of shares of Common Stock of VoiceInterop. That eachEach common shareholder would receivereceived .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 .375received 0.375 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. On November 14, 2019, VoiceInterop, Inc’s.,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 filing the review is not been completed. No dividends can be distributed until that review is completed and approved by FINRA. On February 14, 2020, the distribution of shares was approved by FINRA and completed and deconsolidation was completed.
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The Company recorded $225,316 to additional paid in capital for deconsolidation of VoiceInterop, Inc. and discontinued operations are not presented.
The following table illustrates the reporting of the discontinued operations included in the Statements of Operations for the period from October 1, 2019 to February 14, 2020 and for the nine months period ended June 30, 2019.
| For the period from | For the Nine |
| October 1, 2019 to | Months Ended |
| February 14, 2020 | June 30, 2019 |
| (Unaudited) | (Unaudited) |
|
|
|
Revenue | $ 27,698 | $ 75,721 |
Cost of Revenue | 12,383 | 25,395 |
Gross Profit | 15,315 | 50,326 |
| ||
Operating Expenses: | ||
Selling expenses | 3,862 | 10,200 |
Administrative expenses | 24,151 | 18,374 |
Professional Fees | 50,007 | 48,271 |
Total Operating Expenses | 78,020 | 76,845 |
| ||
Loss from operations | (62,705) | (26,519) |
| ||
Other Income (Expense) | ||
Other Income | 5,750 | 19,947 |
Interest and other expense | (7,981) | (17,180) |
Total Other Income (Expense) | (2,231) | 2,767 |
| ||
Loss Before Income Taxes | (64,936) | (23,752) |
Provision for Income Taxes | - | - |
Loss from discontinued operations | $ (64,936) | $ (23,752) |
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For the period From | |||
October 1, 2019 to | |||
February 14, 2020 | |||
(Unaudited) | |||
| |||
Revenue | $ | 27,698 | |
Cost of Revenue | 12,383 | ||
Gross Profit | 15,315 | ||
| |||
Operating Expenses: | |||
Selling expenses | 3,862 | ||
Administrative expenses | 24,151 | ||
Professional Fees | 50,007 | ||
Total Operating Expenses | 78,020 | ||
| |||
Loss from operations | (62,705) | ||
| |||
Other Income (Expense) | |||
Other Income | 5,750 | ||
Interest and other expense | (7,981) | ||
Total Other Income (Expense) | (2,231) | ||
| |||
Loss Before Income Taxes | (64,936) | ||
Provision for Income Taxes | 0- | ||
Loss from discontinued operations | $ | (64,936) | |
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On February 14, 2020, the Company recorded $225,316 to additional paid in capital for deconsolidation of VoiceInterop, Inc. and discontinued operations are not presented.
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 |
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February 14, | |||
2020 | |||
(Unaudited) | |||
Current assets: | |||
Cash | $ | 2,279 | |
Accounts Receivable | 4,780 | ||
Operating lease asset, net | 62,226 | ||
| |||
Total Assets from discontinued operations | $ | 69,285 | |
| |||
Current liabilities: | |||
Accounts payable and accrued expenses | $ | 92,236 | |
Operating lease liability, current | 33,941 | ||
Deferred revenue, current portion | 17,357 | ||
Deferred rent, current portion | 0- | ||
Installment loan, net, current portion | 31,269 | ||
Due to related parties | 11,362 | ||
Due to unrelated parties | 68,000 | ||
Total Current liabilities from discontinued operations | 254,165 | ||
| |||
Long Term Liabilities | |||
Deferred revenue, net of current | 8,263 | ||
Operating lease liability, net of current | 32,173 | ||
Total Long term liabilities from discontinued operations | 40,436 | ||
| |||
Total Liabilities from discontinued operations | $ | 294,601 | |
Loan Payable - related party
During the year ended September 30, 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 September 30, 2020, the loan balance of $9,000 was paid in full and $7,626 included in liabilities from discontinued operations was deconsolidated as of February 14, 2020.
Operating lease asset and liability
The Company leases its office space from VoiceInterop the Company's former wholly owned subsidiary and now 96% owned by our shareholders. On February 14, 2020, VoiceInterop was deconsolidated and is no longer our subsidiary. Rent expense paid to the related party was $13,428 and $27,059 for the nine months ended June 30, 2021 and 2020, respectively.
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.
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NOTE 10 - RESTATEMENT
The Company is restating its Condensed Consolidated Unaudited Statement of Operations, Condensed Consolidated Unaudited Statement of Cash Flow, and Condensed Consolidated Unaudited Statement of Changes in Stockholders' Deficit for the three and nine months ended June 30, 2020. The restatement shows the previously filed financial statements, the restatement adjustments and as restated columns for the Condensed Consolidated Unaudited Statement of Operations, Condensed Consolidated Unaudited Statement of Cash Flow, and Condensed Consolidated Unaudited Statement of Changes in Stockholders' Deficit for the three and nine months ended June 30, 2020. The restatement of our financial statements in this Form 10-Q reflects the correction of certain identified miscalculations related to the valuation of the ReadyMed software platform acquired in October 2019.
The table below present the impact of the restatement in the Company's condensed consolidated unaudited financial statements:
For the Three Months ended June 30, 2020 | ||||||||||
(Unaudited) | ||||||||||
As previously reported | Adjustment | As Restated | ||||||||
Statement of Operations | ||||||||||
Administrative expense | $ | 91,160 | $ | (150) | * | $ | 91,010 | |||
Amortization and depreciation | $ | 53,050 | $ | (52,900) | * | $ | 150 | |||
Total Operating Expense | $ | 289,026 | $ | (53,050) | $ | 235,976 | ||||
Income from continuing operations before income taxes | $ | 10,966 | $ | 53,050 | $ | 64,016 | ||||
Net Income | $ | 10,966 | $ | 53,050 | $ | 64,016 | ||||
Net Income attributable to common stockholders | $ | 735 | $ | 53,050 | $ | 53,785 | ||||
| ||||||||||
Income from continuing operations | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||
Net Income per common share - basic and diluted | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||
For the Nine Months ended June 30, 2020 (Unaudited) | ||||||||||
As previously reported | Adjustment | As Restated | ||||||||
Statement of Operations | ||||||||||
Administrative expense | $ | 292,008 | $ | (150) | * | $ | 291,858 | |||
Amortization and depreciation | $ | 148,960 | $ | (137,932) | * | $ | 11,028 | |||
Total Operating Expense | $ | 944,856 | $ | (138,082) | $ | 806,774 | ||||
Income from continuing operations before income taxes | $ | 44,531 | $ | 138,082 | $ | 182,613 | ||||
Net Income/(Loss) | $ | (20,405) | $ | 138,082 | $ | 117,677 | ||||
Net Income/(Loss) attributable to common stockholders | $ | (51,211) | $ | 138,082 | $ | 86,871 | ||||
| ||||||||||
Income from continuing operations | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||
Net Income/(Loss) per common share - basic and diluted | $ | (0.00) | $ | 0.00 | $ | 0.00 | ||||
June 30, 2020 (Unaudited) | |||||||||
As previously reported | Adjustment | As Restated | |||||||
Statement of Changes in Stockholders’ Deficit | |||||||||
Additional Paid in Capital | $ | 15,866,718 | $ | (600,000) | $ | 15,266,718 | |||
Accumulated Deficit | $ | (16,241,515) | $ | 138,082 | $ | (16,103,433) | |||
Total Stockholders’ Deficit | $ | (372,470) | $ | (461,918) | $ | (834,388) | |||
Total Liabilities and Stockholders’ Deficit | $ | 758,976 | $ | (461,918) | $ | 297,058 | |||
June 30, 2020 (Unaudited) | |||||||||
As previously reported | Adjustment | As Restated | |||||||
Statement of Cash Flow | |||||||||
Net Income/(Loss) | $ | (20,405) | $ | 138,082 | $ | 117,677 | |||
Amortization of ReadyMed software platform | $ | 138,082 | $ | (138,082) | $ | - | |||
| |||||||||
Supplemental disclosures of non-cash investing and financing activities: | |||||||||
Common stock issued for ReadyMed platform | $ | 600,000 | $ | (600,000) | $ | 0- | |||
| |||||||||
* Reclassification Certain reclassifications have been made to the 2020 financial statement amounts and disclosures to conform to the 2021 presentation. | |||||||||
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NOTE 11 - SUBSEQUENT EVENTS
On July 20, 2021, the loan was 100% forgiven by the SBA. As a result, the Company will record a gain on debt forgiveness of the PPP loan in the amount of $106,727 in the fourth quarter of 2021 (See Note 5).
On July 8, 2021, a holder of Series C preferred stock, converted 275,000 shares of Series C Convertible Preferred Stock into 1,375,000 shares of Common Stock.
On July 15, 2021, a shareholder returned 875,000 shares of Company's common stock to the Company in exchange for the two notes receivable in the total sum of $25,000 and $1,576 in interest receivable (See Notes 4 and 7).
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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, limited face to face meetings with clients and restrictive travel conditions, and social distancing with fellow employees. On May 14, 2020, the Florida Governor signed Executive Order No. 20-123, bringing all Florida counties into Full Phase I reopening. More restrictive proclamations and/or directives may be issued in the future. 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. 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.
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Overview
Cleartronic, Inc. (the “Company”) was incorporated in Florida on November 15, 1999. The Company operatesAll current operations are conducted through itsthe Company’s wholly owned subsidiary, ReadyOp Communications, Inc. ("ReadyOp"(“ReadyOp”)., a Florida corporation incorporated on September 15, 2014.ReadyOp facilitates the marketing and sales of subscriptions to the ReadyOp™ and ReadyMed™ platform and the AudioMate IP gateways discussed below.
In November, 2016,ReadyOp is a proprietary, innovative web-based planning, communications and operations platform for efficiently and effectively planning, managing, communicating, and directing operations and emergency response. ReadyOp is used by local, state and federal government agencies, corporations, school districts, utilities, hospitals and others to manage and report daily operations as well as the Boardability to handle incidents and emergency situations. ReadyOp is offered as a software as a service (SAAS) program on an annual contract basis although an increasing number of 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 Preferredclients 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.requested multi-year agreements.
In March 2018, the Company approved the spin-off of VoiceInterop, Inc.(“VoiceInterop”Voiceinterop”), one of the Company’s wholly-owned subsidiaries, 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. 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.LLC. ReadyMed is a web basedweb-based secure communicationcommunications platform initially designed for the health carehealthcare industry. This includes hospitals, clinics, doctor’s offices, and health insurance companies, workers compensation insurance companies and many other segments of the health care. Ithealthcare industry. The platform provides hospitalscaregivers with patient tracking capability within the hospital. Itand allows physicians and other healthcare entities to track patient progress after medical treatment and/or release from hospital care. The software also enables monitoring and reporting of patients in medium and long-term care. Additionally, the hospitalplatform provides secure communications capabilities and allows for secure communication with the patientrecord keeping to track the healing process of patients, record their recovery and monitor their progress.
The Acquisition Agreement providesmedications. ReadyMed has proved beneficial 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 categoriesmultiple clients in the health carehealthcare industry due to the impact of the COVID-19 pandemic. The Company offers both the ReadyOp and all contacts created by ReadyMed interestedcapabilities to clients and usually refers to the platform as ReadyOp to avoid confusion in licensing the ReadyMed platform. As consideration for the Acquisition, Cleartronic issued 12 million sharesmarketplace of its common stock to Collabria which valued at historical cost of $600,000.two products.
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FOR THE THREE MONTHS ENDED JUNE 30, 20202021 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 20192020
Revenue
Revenues increased 10.29% to $375,250$413,868 for the three months ended June 30, 20202021 as compared to $365,296 for the three months ended June 30, 2019. The primary reason for the increase in revenue was due to an increase in licensing of ReadyOp Software from $258,835 in 2019 to $354,370 in 2020, an increase of approximately 37% and offset by decrease in sales of ReadyOp ACE IP gateways of $61,875. The overall increase in revenues is primarily due to the increase in the number of customers for three months ended June 30, 2020.
Cost of Revenue
Cost of revenues was $73,142 for the three months ended June 30, 2020 as compared to $81,435 for the three months ended June 30, 2019. Gross profits were $302,108 and $283,861 for the three months ended June 30, 2020 and 2019, respectively. Gross margins increased approximately 3% from 78% for the three months ended June 30, 2019 compared to 81%$375,250 for the three months ended June 30, 2020. The primary reason for the increase was from a greater portion ofin revenue was due to an increase subscriptions to the ReadyOp platform increased from licensing fees$349,570 in 2020 to $402,918 in 2021, or approximately 15.55% and slightly offset by a decrease in sales of ReadyOp hardware products from $20,880 in 2020 to $8,550 in 2021. Installation revenue and related income decreased from $4,800 in 2020 to $2,400 in 2021 due to less training activity in the Company’sthree months ended June 30, 2021.
Cost of Revenue
Cost of revenues was $64,777 for the three months ended June 30, 2021 as compared to $73,142 for the three months ended June 30, 2020.Gross profits were $349,091 and $302,108 for the three months ended June 30, 2021 and June 30, 2020, respectively. Gross profit margins increased from 81% for the three months ended June 30, 2020 to 84% for the three months ended June 30, 2021. The increase in gross profit was primarily due to higher margins associated with sales of subscriptions to the ReadyOp software.platform.
Operating Expenses
Operating expenses decreased approximately 8%increased 28.21% to approximately $289,026$302,542 for the three months ended June 30, 20202021 compared to $315,563$235,976 for the three months ended June 30, 2019.2020. The slight decreaseincrease was primarily due to decreaseincreases in selling, and administrative andexpense, research and development expense offset by increase inand amortization expense. For the three months ended June 30, 2020,2021, selling expenses decreasedwere $147,483 compared to $116,624 from $155,077 for the three months ended June 30, 2020. This increase was primarily due to decreased travel expenses during to the Covid-19 pandemic. General and administrative expenses decreased by $8,779 or approximately 9%. The decrease is primarily due to a decrease in professional fees and general operating expensesadvertising expense and offset by an increase in commissions and travel expenses. General and administrative expenses increased by $15,243 or 16.75% as a slightresult of increase attributablein general business expenses. Amortization and depreciation expense increased by 247.73% from $150 for the three months ended June 30, 2020 to fees required in connection with filings with$521 for the Securities and Exchange Commission.three months ended June 30, 2021 due to the depreciation of computer equipment. Research and development expenses were $28,192 for the three months ended June 30, 2020 as compared to $44,248$48,285 for the three months ended June 30, 2019.2021. The decrease of 36% isincrease was primarily due to completingexpenses associated with the development of our "Rectenna" project. Amortizationa new technology associated with a patent owned by the University of South Florida Research Foundation. The Company has obtained the exclusive license to develop and market the technology associated with the patent.
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Other Income/(Expenses)
The Company's other income increased to $18,694 from other expense increased by $36,751 or 225% primarily dueof ($2,116) during the three months ended June 30, 2021 as compared to the acquisitionthree months ended June 30, 2020. The primary reason for this increase was the settlement of the ReadyMed software platform from Collabria, LLC valued at the historical cost of $600,000. certain accounts payable, with an offset in interest expense.
Income (Loss) from Continuing Operations
The Company's income from continuing operations increased to $10,966was $65,243 during the three months ended June 30, 20202021 as compared to a loss of $(33,501)$64,016 for the three months ended June 30, 2019.2020. The primary reason for the increase was increasesprimarily due to an increase in licensingsubscription of ReadyOp software in 2021 and gain on settlement of old accounts payable and an offset by a decreasean increase in sales of ReadyOp ACE IP gateways.
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Loss from Discontinued Operationsoperating expenses.
Loss from discontinued operations, decreasedNet Income Attributable to $0 during the three months ended June 30, 2020 comparedCommon Stockholders
Net income attributable to income of $14,337common stockholders was $55,124 for the three months ended June 30, 2019. Decrease is due2021 as compared to the Company completing the spinoffa net income of VoiceInterop, Inc. Therefore, VoiceInterop was deconsolidated on February 14, 2020. The result from operations for the third quarter of 2020 does not include the discontinued operations from VoiceInterop.
Net Loss Attributable to Common Shareholders
Net income attributable to common shareholders was $735$53,785 for the three months ended June 30, 2020 as compared to a net loss of $(29,395) for the three months ended June 30, 2019.2020. The increase was primarily due to increased subscriptions to the increase in income from continuing operations for the three months ended June 30, 2020, which was $10,966 as compared to a loss of $(33,501) for the three months ended June 30, 2019. Net loss per common share was $(0.00) and $(0.00) for the three months ended June 30, 2020 and 2019, respectively.ReadyOp platform.
FOR THE NINE MONTHS ENDED JUNE 30, 20202021 COMPARED TO THE NINE MONTHS ENDED JUNE 30, 20192020
Revenue
Revenues from operations were $1,217,928 for the nine months ended June 30, 2021 as compared to $1,319,152 for the nine months ended June 30, 2020 as compared2020. Sales of ReadyOp ACE IP gateways decreased 91% from $307,050 to $835,631 for$28,950 in the nine months ended June 30, 2019. The increase2020 and 2021, respectively. This decrease was primarily due to the increase in licensing of ReadyOp software which increased 41% from $683,019 to $962,751 in the nine month ended June 30, 2019 and 2020, respectively. In addition, salesone client purchasing $212,000 of ReadyOp ACE IP gateways in 2020. Subscriptions of ReadyOp software increased 196%20% from $103,755$957,751 to $307,050$1,157,784 in the ninenine- month period ended June 30, 20192020 and 2021, respectively. Consulting fees and related income decreased from $49,351 in 2020 respectively. The overall increaseto $26,394 in revenues is primarily2021 due to the increaseless training activity due to COVID in the number of customers for nine months ended June 30, 2020.2021.
Cost of Revenue
Cost of revenues was $198,580 for the nine months ended June 30, 2021, as compared to $322,564 for the nine months ended June 30, 2020, as compared to $178,541 for the nine months ended June 30, 2019.2020. This increasedecrease was primarily due to higher costs associated with the large ReadyOp ACE IP gateway due to higher costs for parts and materials.sale in 2020. Gross profits were $996,588$1,019,348 and $657,090$996,588 for the nine months ended June 30, 20202021 and 2019,2020, respectively. Despite the increasedecrease in revenues, gross profit margins decreased slightlyincreased to 76%84% from 79%76% for the nine months ended June 30, 20202021 and 2019,2020, respectively. The decreasesincrease was primarily due to the lower profit margins from sales of ReadyOp ACE IP gateways as compared to higher margins generated from licensingsubscriptions of ReadyOp software.
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Operating Expenses
Operating expenses increased 7.22 % to approximately $864,985 for the nine months ended June 30, 2020 were $944,8562021 compared to $900,875$806,774 for the nine months ended June 30, 2019.2020. For the nine months ended June 30, 2020,2021, selling expenses decreasedwere $417,614 compared to $388,895 from $410,315 for the nine months ended June 30, 2019. The 5%2020. This increase is primarily due to an increase in travel expenses and slightly offset by the decrease in advertising expenses. General and administrative expenses increased by $35,478 or 12.16%. This increase was primarily due to decreased travel expenses during to the Covid-19 pandemic. Amortizationincreased payroll expense increased by $42,796 or 27%, primarily due to amortization expenses associated with the acquisition of the ReadyMed software platform from Collabria LLC valued at the historical cost of $600,000. Theoffset a decrease in researchlegal expense. Amortization and developmentdepreciation expense was due to the Company cutting back on development of the “Rectenna” project. The Company believes it has uncovered new usesdecreased by 87.10% from $11,028 for the “Rectenna” and intends to devote future research and development funds to commercialize these new uses.
Income (Loss) from Continuing Operations
The Company’s income from continuing operations increased to $44,531 during the ninethree months ended June 30, 2020 as compared to a loss of $(255,698)$1,423 for the nine months ended June 30, 2019. The primary reason for this increase was the increase in revenue generated by sales of the ReadyOp ACE IP gateway2021. Research and licensing of ReadyOp software.
Loss from Discontinued Operations
Loss from discontinued operations, increased to $64,936 during the period from October 1, 2019 to February 14, 2020 compared to a loss of $23,752 for the nine months ended June 30, 2019. The primary reason for the increase was due to decreased revenue generated by VoiceInterop. Revenue was $27,698 during the period from October 1, 2019 to February 14, 2020 as compared to $75,721 in the nine months ended June 30, 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 $64,936 from $23,752 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 expense 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 quarter ended June 30, 2020 only includes the discontinued operations from the period from October 1, 2019 through February 14, 2020 resulting in a decrease on overall loss from discontinued operations.
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Net Loss Attributable to Common Stockholders
Net loss attributable to common stockholders was $(51,211) and $(310,144) for the nine months ended June 30, 2020 and 2019, respectively. The decrease was primarily due to the increase in gross profit which was $996,588 and $657,090 for the nine months ended June 30, 2020 and 2019 respectively. Net loss per common share was $(0.00) and $(0.00) for the nine months ended June 30, 2020 and 2019 respectively.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities was $38,627 for the nine months ended June 30, 2020 compared to net cash used in operating activities was $80,326 for the nine months ended June 30, 2019. This decrease was attributable to the lower net loss of $20,405development expenses were $114,993 for the nine months ended June 30, 2020 as compared to $279,450$118,612 for the nine months ended June 30, 2019,2021. The increase was primarily due to increase in consulting expense and decreasesexpenses associated with the development of a new technology associated with a patent owned by the University of South Florida Research Foundation. The Company has obtained the exclusive license to develop and market the technology associated with the patent.
Other Income/(Expenses)
The Company's other income increased to $17,426 from other expense of ($7,201) during the nine months ended June 30, 2021 as compared to the nine months ended June 30, 2020. The primary reason for this increase was the settlement of certain accounts payable, with an offset in interest expense.
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Income from Continuing Operations
The Company's income from continuing operations decreased to $171,789 from $182,613 during the nine months ended June 30, 2021 as compared to the nine months ended June 30, 2020. The primary reason for this decrease was the decrease in revenue generated by a single large sale of the ReadyOp ACE IP gateways in 2020.
Loss from Discontinued Operations
There was no loss from discontinued operations during the nine months ended June 30, 2021 compared to a loss of $64,936 for the nine months ended June 30, 2020. The reason for the decrease was the deconsolidation of VoiceInterop from the Company in February 2020.
Net Income Attributable to Common Stockholders
Net income attributable to common stockholders was $141,205 and $86,871 for the nine months ended June 30, 2021 and 2020, respectively. The increase was primarily due to the lower profit margins from sales of ReadyOp ACE IP gateways generated in 2020 as compared to higher profit margins generated from subscription of ReadyOp software in 2021.
LIQUIDITY AND CAPITAL RESOURCES
For the nine months ended June 30, 2021, net cash provided by operations of $276,634 was the result of a net income of $171,789, depreciation expense of $1,423, provision of bad debt of $6,000, a decrease in accounts receivable of $9,470 and a slight decrease in inventory of $1,309. These were offset by an increase in prepaid expenses of $49,152, a decrease of accounts payable of $36,729, a decrease in accrued expenses of $43,457 and an increase in amortizationdeferred revenue of $241,959.
For the nine months ended June 30, 2020, net cash used in operations of $38,627 was the result of a net income of $117,677, depreciation expense of $10,878, depreciation expense of $150, a recovery of bad debt of $13,335, a decrease in accounts receivable of $49,176, a decrease in inventory of $13,042, an increase in prepaid expenses of $15,000, a decrease in other assets of $8,656 and a decrease in assets from discontinued operations of $9,929. These were offset by decreases ina decrease of accounts payable of $28,019, a decrease in accrued expenses andof $68,756, a decrease in deferred revenue.revenue of $142,091.
Net cash used in investing activities was $2,068 for the nine months ended June 30, 2021, which was a purchase of fixed assets compared to net cash used in investing activities was $34,029 for the nine months ended June 30, 2020, compared to net cash used in investing activities was $0 for the nine months ended June 30, 2019. This increasewhich was attributable to the issuance of note receivable of $25,000 and purchase of fixed assets of $9,029$9,029.
Net cash used in financing activities was $48,447 for the nine months ended June 30, 2020.
2021 which was a repayment of a stockholder note payable of $48,447. Net cash provided by financing activities was $107,806 for the nine months ended June 30, 2020, compared to $110,353 for the nine months ended June 30, 2019. The increasewhich was primarily dueattributable to proceeds received from notenotes payable part of Cares Act Paychecks Protection Program of $106,727, note payable from unrelated party of $50,000, proceeds from issuance net of repayment of installment note of $10,449 and proceeds from loan payable - related party of $11,362 included discontinued operations and offset by the repayment of note payable of $50,000stockholders and repayment of stockholder notenotes payable of $20,732 during the nine months ended June 30, 2020. The decrease was primarily due to proceeds of $100,000 received from the issuance of common stock, proceeds from issuance net of repayment of installment note included discontinued operations of $16,844, proceeds from note payable of $713 and offset by dividends paid of $7,204 in the nine months ended June 30, 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 continue to grow on a quarter to quarter basis putting the Company in a better position to become cash flow positive. We also believe that theReadyMed software platform will provide additional revenue. It is now being used by 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.
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We have incurred losses since our inception and 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 these 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 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. On May 14, 2020, the Florida Governor signed Executive Order No. 20-123, bringing all Florida counties into Full Phase I reopening. More restrictive proclamations and/or directives may be issued in the future. 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.
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 $150,000 per month. However, in the absence of revenue, we would significantly reduce operations to 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 approximately $300,000. The Company’s current accounts receivable and pending invoices exceed this amount.stockholders.
Critical Accounting Estimates
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations –- Critical Accounting Estimates” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended September 30, 20192020 for information regarding our critical accounting estimates.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicableapplicable.
Item 4. Controls and Procedures.
An evaluation was conducted by our chief executive officer (“CEO”)the registrant’s Chief Executive Officer (CEO) and chief financial officer (“CFO”)Chief Financial Officer (CFO) of the effectiveness of the design and operation of ourthe registrant’s 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, 2020.2021. Based on that evaluation, the CEO and CFO concluded that a change in ourthe registrant’s controls and procedures is neededwere effective as of such date to ensure that information required to be disclosed in the reports that we filethe registrant files or submitsubmits 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, 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.forms.
Change in Internal Controls over Financial Reporting
There was no change in the registrant'sregistrant’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'sregistrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant'sregistrant’s internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There have been no material developments during the quarter ended June 30, 2020Cleartronic is not engaged in any materiallitigation at the present time and management is unaware of any claims or complaints that could result in future litigation. Management will seek to minimize disputes with the Company’s customers but recognizes the inevitability of legal proceedings to which we are a party oraction in today’s business environment as an unfortunate price of which any of our property is subject.conducting business.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
NoneOn July 8, 2021, a holder of Series C preferred stock, converted 275,000 shares of Series C Convertible Preferred Stock into 1,375,000 shares of Common Stock.
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 in as much 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. Each of the purchasers was, at the time of the purchaser’s respective 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.
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Item 3. Defaults uponUpon Senior Securities
None
Item 5. Other Information
None
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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) |
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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 * | |
| XBRL Instance Document (XBRL tags are embedded within the Inline XBRL document)* |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document* |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document* |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document.* |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document* |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document* |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit |
Filed herewith.* |
| (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 |
(4) | Filed as an exhibit to the |
(5) | Filed as an exhibit to the |
(6) | Filed as an exhibit to the |
(7) | Filed as an exhibit to the |
(8) | Filed as an exhibit to the |
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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. | ||
| ||
| August 16, 2021 | ||
| By: | /s/ Michael M. Moore | |
| Michael M. Moore | ||
| Principal Executive Officer | ||
| By: | /s/ Larry M. Reid | |
| Larry M. Reid | ||
| Principal Financial Officer and | ||
| Chief Accounting Officer | ||
August 14, 2020 -21-
By: /s/ Michael M. Moore
Michael M. Moore
Principal Executive Officer
By:/s/ Larry M. Reid
Larry M. Reid
Principal Financial Officer and
Chief Accounting Officer
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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, 2020
/s/ Michael M. Moore
Michael M. Moore, Principal Executive Officer
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Exhibit 31.2
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, 2020
/s/ Larry M. Reid
Larry Reid, Principal Financial Officer
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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, 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, 2020
By: /s/ Michael M. Moore
Michael M. Moore
Principal Executive Officer
By: /s/ Larry M. Reid
Larry M. Reid
Principal Financial Officer
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