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.

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 DECEMBER 31, 2022 COMPARED TO THE THREE MONTHS ENDED DECEMBER 31, 2021





Revenue

Revenues decreased 2.41% to $506,650 for the three months ended December 31, 2022 as compared to $519,185 for the three months ended December 31, 2021. The primary reason for the decrease was due to a decrease in sales of ReadyOp hardware products from $32,000 in 2021 to $6,125 in 2022. Revenue from the ReadyOp platform increased from $449,500 in 2021 to $460,244 in 2022. Consulting fees and related income increased from $37,685 in 2021 to $40,281 in 2022 due to more training activity and conference income.





Cost of Revenue

Cost of revenues decreased to $77,491 for the three months ended December 31, 2022 as compared to $92,236 for the three months ended December 31, 2021. Gross profits were $429,159 and $426,949 for the three months ended December 31, 2022 and December 31, 2021, respectively. Gross profit margins increased from 82% for the three months ended December 31, 2021 to 85% for the three months ended December 31, 2022. The increase in gross profit and gross profit margin was primarily due to the increase in sales of subscriptions to the ReadyOp platform and the decrease in sales of hardware products.





Operating Expenses

Operating expenses increased 12.57% to $412,624 for the three months ended December 31, 2022 compared to $366,534 for the three months ended December 31, 2021. The increase was primarily due increases in administrative expense and slightly offset by decrease in selling expenses. General and administrative expenses increased by $193,983 or 151.65% as a result of the increase in general business expenses. This increase was primarily due to salary expenses included as part of general business expenses, charitable contributions, and employee holiday bonuses. For the three months ended December 31, 2022, selling expenses were $67,831 compared to $188,545 for the three months ended December 31, 2021. This decrease was primarily due to a decrease in commissions expense with an offset by an increase in advertising and travel expenses. Research and development expenses were $49,260 for the three months ended December 31, 2021, as compared to $21,815 for the three months ended December 31, 2022. The increase was primarily due to a decrease in expenses associated with the development of a new technology associated with a patent owned by the University of South Florida Research Foundation. The Company has obtained the exclusive license to develop and market the technology associated with the patent.





Other Income/(Expenses)

The Company's other income increased by $717 from other income of $542 during the three months ended December 31, 2022 as compared to $168 in other expenses, for the three months ended December 31, 2021. The primary reason for this increase was an increase in interest income on note receivable due from a related party.





Income before Income Taxes

The Company's income before income taxes was $17,084, during the three months ended December 31, 2022, as compared to $60,247 for the three months ended December 31, 2021. The decrease was primarily due to an increase in administrative and research and development expenses and a decrease in sales of ReadyOp hardware products. The increased costs were partially increase in subscription of ReadyOp software and consulting income in 2022.

Net Income Attributable to Common Stockholders

Net income attributable to common stockholders was $6,740 for the three months ended December 31, 2022 as compared to a net income of $49,903 for the three months ended December 31, 2021. The decrease was primarily due to an increase in administrative and research and development expenses and a decrease in sales of ReadyOp hardware products. The increased costs were partially due to an in increase in subscriptions of ReadyOp software and consulting income in 2022 while preferred stock dividends remained consistent.

LIQUIDITY AND CAPITAL RESOURCES

For the three months ended December 31, 2022, net cash used in operations of $188,014 was the result of a net income of $17,084, depreciation expense of $1,080, an increase in accounts payable of $32,933, and a decrease in prepaid expenses of $9,280. These were offset by an increase in accounts receivable of $24,752 and a decrease in deferred revenue of $223,639.


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For the three months ended December 31, 2021, net cash used in operations of $17,849 was the result of a net income of $60,247, depreciation expense of $814, an increase in accounts payable of $26,406, a decrease in accounts receivable of $46,867, a decrease in prepaid expenses of $33,364. These were offset by an increase in inventory of $6,588, an increase in due from related party of $6,386, and a decrease in deferred revenue of $172,573.

Net cash used in investing activities was $0 and $5,058 for the three months ended December 31, 2022 and 2021, respectively, which was for the purchase of fixed assets.





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 December 31, 2022 for information regarding our critical accounting estimates.

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