FORWARD-LOOKING STATEMENTS
The information set forth in this Management's Discussion and Analysis contains
certain "forward-looking statements," including, among others (i) expected
changes in our revenues and profitability, (ii) prospective business
opportunities, and (iii) our strategy for financing our business.
Forward-looking statements are statements other than historical information or
statements of current condition. Some forward-looking statements may be
identified by use of terms such as "believes," "anticipates," "intends," or
"expects." These forward-looking statements relate to our plans, objectives, and
expectations for future operations. Although we believe that our expectations
with respect to the forward-looking statements are based upon reasonable
assumptions within the bounds of our knowledge of our business and operations,
in light of the risks and uncertainties inherent in all future projections, the
inclusion of forward-looking statements in this prospectus should not be
regarded as a representation that our objectives or plans will be achieved. In
light of the risks and uncertainties, there can be no assurance that actual
results, performance, or achievements will not differ materially from any future
results, performance, or achievements expressed or implied by such
forward-looking statements. The foregoing review of important factors should not
be construed as exhaustive. We undertake no obligation to release publicly the
results of any future revisions we may make to forward-looking statements to
reflect events or circumstances after the date of this prospectus or to reflect
the occurrence of unanticipated events.
Overview
Cleartronic, Inc. (the "Company") was incorporated in Florida on November 15,
1999. All current operations are conducted through the Company's wholly owned
subsidiary, ReadyOp Communications, Inc. ("ReadyOp"), a Florida corporation
incorporated on September 15, 2014.ReadyOp facilitates the marketing and sales
of subscriptions to the ReadyOp™ and ReadyMed™ platform and the AudioMate IP
gateways discussed below.
ReadyOp is a proprietary, innovative web-based planning, communications and
operations platform for efficiently and effectively planning, managing,
communicating, and directing operations and emergency response. ReadyOp is used
by local, state and federal government agencies, corporations, school districts,
utilities, hospitals and others to manage and report daily operations as well as
the ability to handle incidents and emergency situations. ReadyOp is offered as
a software as a service (SAAS) program on an annual contract basis although an
increasing number of clients have requested multi-year agreements.
In March 2018, the Company approved the spin-off of VoiceInterop, Inc.
("Voiceinterop"), one of the Company's wholly-owned subsidiaries, into a
separate company under a Form S-1 registration filed with the United States
Securities and Exchange Commission. Therefore, the Company has presented the
operations of this subsidiary as discontinued operations.
In October 2019, the Company acquired the ReadyMed software platform from
Collabria LLC. ReadyMed is a web-based secure communications platform initially
designed for the healthcare industry. This includes hospitals, clinics, doctor's
offices, health insurance companies, workers compensation insurance companies
and many other segments of the healthcare industry. The platform provides
caregivers with patient tracking capability and allows physicians and other
healthcare entities to track patient progress after medical treatment and/or
release from hospital care. The software also enables monitoring and reporting
of patients in medium and long-term care. Additionally, the platform provides
secure communications capabilities and record keeping to track the healing
process of patients, record their recovery and monitor their medications.
ReadyMed has proved beneficial for multiple clients in the healthcare industry
due to the impact of the COVID-19 pandemic. The Company offers both the ReadyOp
and ReadyMed capabilities to clients and usually refers to the platform as
ReadyOp to avoid confusion in the marketplace of two products.
FOR THE THREE MONTHS ENDED MARCH 31, 2021 COMPARED TO THE THREE MONTHS ENDED
MARCH 31, 2020
Revenue
Revenues decreased 18.09% to $422,722 for the three months ended March 31, 2021
as compared to $516,107 for the three months ended March 31, 2020. The primary
reason for the decrease in revenue was a decline in sales of ReadyOp hardware
products from $230,090 in 2020 to $28,696 in 2021. This decrease was primarily
due to one client purchasing $212,000 of ReadyOp ACE IP gateways in 2020.
Subscriptions to the ReadyOp platform increased from $278,697 in 2020 to
$387,526 in 2021, or approximately 39%. Consulting fees and related income
increased from $0 in 2020 to $6,500 in 2021 due to more training activity in the
three months ended March 31, 2021.
Cost of Revenue
Cost of revenues was $73,469 for the three months ended March 31, 2021 as
compared to $132,118 for the three months ended March 31, 2020.Gross profits
were $349,253 and $383,989 for the three months ended March 31, 2021 and March
31, 2020, respectively. Despite the decrease in revenues, gross profit margins
increased from 74% for the three months ended March 31, 2020 to 83% for the
three months ended March 31, 2021. The increase in gross profit was primarily
due to higher margins associated with sales of subscriptions to the ReadyOp
platform.
Operating Expenses
Operating expenses decreased 3.75% to approximately $277,978 for the three
months ended March 31, 2021 compared to $288,796 for the three months ended
March 31, 2020. The decrease was primarily due to a decrease in selling and
offset by increases in administrative expense, research and development and
amortization expense. For the three months ended March 31, 2021, selling
expenses were $109,272 compared to $141,931 for the three months ended March 31,
2020. This decrease was primarily due to a decrease in advertising expense and
offset by an increase in commissions. General and administrative expenses
increased by $12,924 or 11.16% as a result of increase in general business
expenses offset by a decrease in legal expense. Amortization and depreciation
expense increased by 100% from $0 for the three months ended March 31, 2020 to
$451 for the three months ended March 31, 2021 due to the depreciation of
computer equipment. Research and development expenses were $31,072 for the
three months ended March 31, 2020 as compared to $39,538 for the three months
ended March 31, 2021. The increase was primarily due to expenses associated with
the development of a new technology associated with a patent owned by the
University of South Florida Research Foundation. The Company has obtained the
exclusive license to develop and market the technology associated with the
patent.
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Income from Continuing Operations
The Company's income from operations was $71,122 during the three months ended
March 31, 2021 as compared to $93,999 for the three months ended March 31, 2020.
The decrease was primarily due to a single large equipment sale in 2020.
Loss from Discontinued Operations
There was no loss from discontinued operations during the three months ended
March 31, 2021 compared to a loss of $41,510 for the three months ended March
31, 2020. The reason for the decrease was the deconsolidation of VoiceInterop
from the Company in February 2020.
Net Income Attributable to Common Stockholders
Net income attributable to common stockholders was $61,003 for the three months
ended March 31, 2021 as compared to a net income of $42,258 for the three months
ended March 31, 2020. The increase was primarily due to increased
subscriptions to the ReadyOp platform.
FOR THE SIX MONTHS ENDED MARCH 31, 2021 COMPARED TO THE SIX MONTHS ENDED MARCH
31, 2020
Revenue
Revenues from operations were $804,060 for the six months ended March 31, 2021
as compared to $943,902 for the six months ended March 31, 2020. Sales of
ReadyOp ACE IP gateways decreased 86% from $286,170 to $40,294 in the six months
ended March 31, 2020 and 2021, respectively. This decrease was primarily due to
one client purchasing $212,000 of ReadyOp ACE IP gateways in 2020.
Subscriptions of ReadyOp software increased 24% from $608,381 to $754,866 in
the six- month period ended March 31, 2020 and 2021, respectively. Consulting
fees and related income decreased from $49,351 in 2020 to $6,500 in 2021 due to
less training activity due to COVID in the six months ended March 31, 2021.
Cost of Revenue
Cost of revenues was $133,803 for the six months ended March 31, 2021, as
compared to $249,422 for the six months ended March 31, 2020. This decrease was
primarily due to higher costs associated with the large ReadyOp ACE IP gateway
sale in 2020. Gross profits were $670,257 and $694,480 for the six months ended
March 31, 2021 and 2020, respectively. Despite the decrease in revenues, gross
profit margins increased to 83% from 74% for the six months ended March 31, 2021
and 2020, respectively. The increase was primarily due to the lower profit
margins from sales of ReadyOp ACE IP gateways as compared to higher margins
generated from subscriptions of ReadyOp software.
Operating Expenses
Operating expenses decreased 1.46 % to approximately $562,443 for the six months
ended March 31, 2021 compared to $570,798 for the six months ended March 31,
2020. For the six months ended March 31, 2021, selling expenses were $270,131
compared to $272,271 for the six months ended March 31, 2020. This slight
decrease was primarily due to a decrease in travel and advertising expenses.
General and administrative expenses increased by $20,235 or 10.07%. This
increase was primarily due to increased payroll expense offset a decrease in
legal expense. Amortization and depreciation expense decreased by 91.71% from
$10,878 for the three months ended March 31, 2020 to $902 for the six months
ended March 31, 2021. Research and development expenses were $86,801 for the six
months ended March 31, 2020 as compared to $70,327 for the six months ended
March 31, 2021. The decrease was primarily due to decrease in consulting expense
and expenses associated with the development of a new technology associated with
a patent owned by the University of South Florida Research Foundation. The
Company has obtained the exclusive license to develop and market the technology
associated with the patent.
Income from Continuing Operations
The Company's income from continuing operations decreased to $106,546 from
$118,597 during the six months ended March 31, 2021 as compared to the six
months ended March 31, 2020. The primary reason for this decrease was the
decrease in revenue generated by a single large sale of the ReadyOp ACE IP
gateways in 2020.
Loss from Discontinued Operations
There was no loss from discontinued operations during the six months ended March
31, 2021 compared to a loss of $64,936 for the six months ended March 31, 2020.
The reason for the decrease was the deconsolidation of VoiceInterop from the
Company in February 2020.
Net Income Attributable to Common Stockholders
Net income attributable to common stockholders was $86,081 and $33,086 for the
six months ended March 31, 2021 and 2020, respectively. The increase was
primarily due to the lower profit margins from sales of ReadyOp ACE IP gateways
generated in 2020 as compared to higher profit margins generated from
subscription of ReadyOp software in 2021.
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LIQUIDITY AND CAPITAL RESOURCES
For the six months ended March 31, 2021, net cash provided by operations of
$77,654 was the result of a net income of $106,546, depreciation expense of
$902, provision of bad debt of $5,000, a decrease in accounts receivable of
$57,515 and a slight decrease in inventory of $5,486. These were offset by an
increase in prepaid expenses of $14,289, a decrease of accounts payable of
$21,582, a decrease in accrued expenses of $43,457 and a decrease in deferred
revenue of $18,467.
For the six months ended March 31, 2020, net cash provided in operations of
$75,139 was the result of a net income of $53,661, depreciation expense of
$10,878, a recovery of bad debt of $13,335, a decrease in accounts receivable of
$116,201, a decrease in inventory of $4,732, decrease in prepaid expenses of
$23,656 and a decrease in assets from discontinued operations of $9,929. These
were offset by a decrease of accounts payable of $47,216, a decrease in accrued
expenses of $55,471, a decrease in deferred revenue of $30,382 and an increase
in liabilities from discontinued operations of $2,486.
Net cash used in financing activities was $48,447 for the six months ended March
31, 2021 which was a repayment of a stockholder note payable of $48,447. Net
cash provided by financing activities was $7,102 for the three months March 31,
2020, which was attributable to proceeds from notes payable stockholders and
repayment of notes payable to stockholders.
Critical Accounting Estimates
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations - Critical Accounting Estimates" in Part II, Item 7 of our Annual
Report on Form 10-K for the year ended September 30, 2020 for information
regarding our critical accounting estimates.
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