Annual Report (10-k)

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

____________________________________________________________

FORM 10-K

(Mark One)

☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2021

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________________ to _____________________

Commission File No. 000-55329

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, Suite 100	33487
Boca Raton, Florida
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: [phone]

Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class	Trading Symbol (s)	Name of each exchange on which registered
Common stock, par value $0.00001per share	CLRI	None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

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 preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days. Yes ☒ 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 ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act:

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12(b)-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the registrant's common stock held by non-affiliates of the registrant on February 12, 2021 (based on the closing sale price of $0.04476 per share of the registrant's common stock, as reported on the OTCPINK operated by The OTC Markets Group, Inc. on that date) was approximately $4,570,423. The stock price of $0.04476 at February 12, 2020, takes into account a one for 3,000 reverse stock split on December 28, 2012. Common stock held by each officer and director and by each person known to the registrant to own five percent or more of the outstanding common stock has been excluded in that those persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes. Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. At December 29, 2021 the registrant had outstanding 228,578,995 shares of common stock, par value $0.00001 per share.

 

-i-

Table of Contents

 

PART I
		Page
Item 1.	Business	2
Item 1A.	Risk Factors	5
Item 1B.	Unresolved Staff Comments	5
Item 2.	Property	5
Item 3.	Legal Proceedings	5
Item 4.	Safety Disclosures	5
PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	6
Item 6.	Selected Financial Data	6
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operation	6
Item 7A.	Quantitative and Qualitative Disclosure About Market Risk	9
Item 8.	Financial Statements and Supplementary Data	9
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	9
Item 9A.	Controls and Procedures	9
Item 9B.	Other Information	10
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	10
Item 11.	Executive Compensation	12
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	13
Item 13.	Certain Relationships and Related Transactions, and Director Independence	15
Item 14.	Principal Accountant Fees and Services	15
Item 15.	Exhibits, and Financial Statement Schedules	15
	Signatures	17

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

In light of the risks and uncertainties inherent in all projected operational matters, the inclusion of forward-looking statements in this Form 10-K, should not be regarded as a representation by us or any other person that any of our objectives or plans will be achieved or that any of our operating expectations will be realized. Our revenues and results of operations are difficult to forecast and could differ materially from those projected in the forward-looking statements contained in this Form 10-K, as a result of certain risks and uncertainties including, but not limited to, our business reliance on third parties to provide us with technology, our ability to integrate and manage acquired technology, assets, companies and personnel, changes in market condition, the volatile and intensely competitive environment in the business sectors in which we operate, rapid technological change, and our dependence on key and scarce employees in a competitive market for skilled personnel. These factors should not be considered 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 hereof or to reflect the occurrence of unanticipated events.

 

-1-

PART I

 

Except for historical information, this report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act").  Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses.  Such forward-looking statements include, among others, those statements including the words "expects," "anticipates," "intends," "believes" and similar language.  Our actual results may differ significantly from those projected in the forward-looking statements.  Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the section "Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations."  You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report.  We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances taking place after the date of this document.

 

Item 1. Business.

 

The Company

 

The Company was initially incorporated on November 15, 1999, as Menu Sites, Inc., a Florida corporation.  On March 9, 2001, the Company's name was changed to CNE Communications, Inc.  On October 1, 2004, the name was changed to CNE Industries, Inc. and on March 29, 2005, the name was changed to GlobalTel IP, Inc.  On May 9, 2008, the Company's name was changed to Cleartronic, Inc.

 

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.

 

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).

 

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 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 platforms.

 

ReadyOp™ Software

 

ReadyOp is a proprietary, innovative web-based planning and communications 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.  

 

ReadyOp requires no new or on-site hardware or programming by clients and provides multiple options for communications including radio interoperability using the Company's AudioMate gateways.  Plans and operations can be built and stored securely in ReadyOp on a by-location, region and systemwide basis.  Assets can be listed along with their location, person to contact and other information that may be needed.  Diagrams, charts, maps, pictures, report forms and other documentation can be securely stored yet immediately available securely from any location.  ReadyOp also provides efficient planning and response for responding to disasters and for continuity of operations (COOP) and recovery.  ReadyOp is the COOP platform for multiple organizations including many federal agencies.

 

ReadyMed™ Software

 

In October 2019, the Company acquired the 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-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 recordkeeping to track the healing process of patients, record their recovery and monitor their medications. During the year 2020 this software 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.

 

AudioMate IP Gateways

 

The Company offers a proprietary line of Internet Protocol Gateways branded as AudioMate 360 IP Gateway. The AudioMate 360 IP Gateway was designed to provide an Internet Protocol Gateway to users of unified group communications. The AudioMate 360 IP Gateway is available in different configurations to be used with various types of communications equipment. The AudioMate units are currently being sold directly to end-users by the Company's sales teams and by Value Added Resellers ("VARs"). More than 1,000 end-users in the United States and 18 foreign countries have purchased the Company's AudioMate gateways. Although other devices are available that perform the same or similar functions, we believe that our price for the AudioMate 360 IP Gateway is competitive with prices other companies are charging for similar devices.

 

-2-

Patents and Intellectual Property

 

Our business will be dependent in part on our intellectual property. For projects that are in development, we intend to rely on intellectual property rights afforded by trademark and trade secret laws, as well as confidentiality procedures, licensing arrangements and potential patent filings. These measures are to establish and protect our rights to the technology and other intellectual property. We cannot foretell if these procedures and arrangements will be adequate in protecting our intellectual property.

 

On March 13, 2012, the United States Patent Office notified the Company that U.S. Patent Number 8,135,001 B1 had been granted for the 34 claims of our patent application for Multi Ad Hoc Interoperable Communicating Networks. We may file similar patent applications in additional countries. The claims in the patent application relate to various aspects of the AudioMate 360 IP Gateway. It may be that one or more of the claims are not meaningful. Furthermore, the validity of issued patents is frequently challenged by others.  One or more patent applications may have been filed by others previous to our filing, which encompass the same or similar claims. A patent application does not in and of itself grant exclusive rights. A patent application must be reviewed by the Patent Office of each relevant country prior to issuing as a patent and granting exclusive rights.

 

Because of limited resources, the Company may be unable to protect a patent, either owned or licensed, or to challenge others who may infringe upon a patent.  Because many holders of patents have substantially greater resources and patent litigation is very expensive, we may not have the resources necessary to successfully challenge the validity of patents held by others or withstand claims of infringement or challenges to any patent the Company may possess or obtain. Even if we prevail, the cost and management distraction of litigation could have a material adverse effect on the Company.

 

Internet Protocol Gateways and their related manufacturing processes are covered by a large number of patents and patent applications. Infringement actions may be instituted against the Company if we use or are suspected of using technology, processes or other subject matter that is claimed under patents of others. An adverse outcome in any future patent dispute could subject us to significant liabilities to third parties, require disputed rights to be licensed or require us to cease using the infringed technology.

 

If trade secrets and other means of protection upon which the Company relies may not adequately protect us, the Companys intellectual property could become available to others. Although we may rely on trade secrets, copyright law, employee and third-party nondisclosure agreements and other protective measures to protect some of our intellectual property, these measures may not provide meaningful protection to the Company.

 

The laws of many foreign countries do not protect intellectual property rights to the same extent as do the laws of the United States, if at all.

 

Exclusive Licensing Agreement

 

On May 5, 2017, the Company entered into an Exclusive Licensing Agreement with Sublicensing Terms (the "Agreement") with the University of South Florida Research Foundation, Inc. ("USFRF") relating to an exclusive license of certain patent rights in connection with one of USFRF's U.S. Patent Applications. Both parties recognize that the research and development work provided by the Company was sufficient for USFRF to enter into the Agreement with the Company.

 

The Agreement is effective April 25, 2017 and continues until the later of the date that no Licensed Patent remains a pending application or an enforceable patent or the date on which the Licensee's obligation to pay royalties expires.

 

The Company paid USFRF a License Issue Fee of $6,000 and $953 as reimbursement of expenses associated with the filing of the Licensed Patent for the year ended September 30, 2021. The company agreed to pay USFRF a royalty of 3% for sales of all Licensed Products and Licensed Processes and agreed to pay USFRF minimum royalty payments as follows:

 

Payment	Year
$1,000	2019
$4,000	2020
$8,000	2021

  -and every year thereafter on the same date, for the life of the agreement.

 

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 as are offered to other purchasers in such financing.

 

Rapid Technological Change Could Render the Company's Products Obsolete

 

The Company's markets are characterized by rapid technological changes, frequent new product introductions and enhancements, uncertain product life cycles, changes in customer requirements, and evolving industry standards.  The introduction of new products embodying new technologies and the emergence of new industry standards could render our existing products obsolete.  The Company's future success will depend upon our ability to continue to develop and introduce new products and services to address the increasingly sophisticated needs of customers.  The Company may experience delays in releasing new products, product enhancements and services in the future which may cause customers and prospective to forego purchase and use of our products and purchase those of competitors.

 

Seasonality of Our Business

 

We do not anticipate that our business will be affected by seasonal factors.

 

-3-

Impact of Inflation

 

We are affected by inflation along with the rest of the economy.  Specifically, our costs to complete our products could rise if specific components needed incur an increase in cost.

 

Manufacturing and Suppliers

 

We have outsourced the manufacturing of our AudioMate 360 IP Gateway. This outsourcing has allowed us to:

 

●	Avoid costly capital expenditures for the establishment of manufacturing operations;

●	Focus on the design, development, sales and support of our products and services; and

●	Leverage the scale, expertise and purchasing power of specialized contract manufacturers.

 

Currently, Company has arrangements for the production of the AudioMate gateways with a contract manufacturer. The reliance on contract manufacturing involves a number of potential risks, including the absence of adequate capacity, ownership of certain elements of electronic designs, and reduced control over delivery schedules.  The Company's contract manufacturer can provide a range of operational and manufacturing services, including component procurement and performing final testing and assembly of our products.  The Company intends to continue use of contract manufacturers to procure components and to maintain adequate manufacturing capacity.

 

Competition

 

The unified group communications industry where the Company's gateways are offered is extremely competitive. The number of companies entering the industry has increased and competitive pricing pressures can negatively impact profit margins. The Company will continue to offer the AudioMate gateways, but primarily in conjunction with the ReadyOp platform in order to provide radio interoperability. Competition for an integrated radio and operations platform is limited and the Company will continue to market the ReadyOp/ReadyMed platform, both with the gateways and without.

 

We are not aware of any direct competitors for ReadyOp and ReadyMed that offer the same combinations of capabilities and function. However, there are similar programs being marketed that appear similar and are sometimes confused with ReadyOp such as WebEOC and Everbridge. ReadyOp provides different capabilities and is priced lower than both of these and in fact, has several clients that use one or even both of these programs in addition to ReadyOp. We may have increased competition in the future. We continue to develop and enhance the ReadyOp/ReadyMed platform to improve the value and increase the potential market size and growth of our client clientele.

 

Sales and Marketing

 

The ReadyOp/ReadyMed platform is currently marketed through a combination of inside salespersons and outside sales groups. We intend to expand the use of commissioned inside and outside salespersons and outside groups when travel and other COVID-related restrictions are eased.

 

The Company markets the unified group communication solutions and AudioMate 360 IP Gateways through VARs and commissioned salespersons. We intend to expand the use of commissioned sales groups and individual sales representatives to market and sell our programs and gateways.

 

Key Personnel of Cleartronic

 

Our future financial success depends to a large degree upon the personal efforts of our key personnel, Michael M. Moore, our Chief Executive Officer (CEO) and Director, and Larry M. Reid, our Chief Financial Officer (CFO), Secretary and Director. They and their designees play the major role in securing persons capable of developing and executing the Company's business strategy. While the Company intends to employ additional executive, development and technical personnel in order to minimize dependency upon any one person, we may not be successful in attracting and retaining the persons needed.

 

At present, Cleartronic has two executive officers, Michael M. Moore and Larry M. Reid. A copy of the employment agreement with Mr. Moore has been previously filed on January 13, 2016 as an exhibit to a Form 10-K. Mr. Moore is paid a base salary of $16,667 per month. See Item 13. "Certain Relationships and Related Transactions and Director Independence."

 

In March 2015, the Company entered into a new employment agreement with the Company's CFO, Larry M. Reid (the "Agreement"). Under the Agreement, Mr. Reid agreed to remit 2.0 billion shares of common stock back to the Company in exchange for 200,000 shares of Series C Convertible Preferred stock with a fair value of $252,000. Mr. Reid is paid a base salary of $8,000 per month. A copy of the employment agreement with Mr. Reid has been previously filed on March 18, 2015 with the SEC as an exhibit to a Form 8-K.

 

-4-

Unless the Company shall have given Mr. Moore or Mr. Reid written notice at least 30 days prior to the Termination Date, the employment agreements automatically renew and continue in effect for additional one-year periods.  The Company has the election at any time after the expiration of the initial term of the Mr. Reid's Agreement to give Mr. Reid notice of Termination.

 

The Financial Results for Cleartronic May Be Affected by Factors Outside of Our Control

 

Our future operating results may vary significantly from quarter to quarter due to a variety of factors, many of which are outside our control. Our anticipated expense levels are based, in part, on our estimates of future revenues and may vary from projections. We may be unable to adjust spending rapidly enough to compensate for any unexpected revenues shortfall. Accordingly, any significant shortfall in revenue in relation to our planned expenditures could materially and adversely affect our business, operating results, and financial condition. Further, we believe that period-to-period comparisons of our operating results are not necessarily a meaningful indication of future performance.

 

Transfer Agent

 

Our transfer agent is ClearTrust, LLC, whose address is 16540 Pointe Village Drive, Suite 206, Lutz, Florida 33558, and telephone number is [phone].

 

Company Contact Information

 

Our principal executive offices are located at 8000 North Federal Highway, Suite 100, Boca Raton, Florida 33487, telephone [phone]. Our email address is [e-mail]. The Cleartronic Internet website is located at www.cleartronic.com. The information contained in our website shall not constitute part of this report.

 

Item 1A. Risk Factors.

 

Not applicable.

 

Item 1B. Unresolved Staff Comments.

 

None.

 

Item 2. Property.

 

We sub-lease approximately 1,700 square feet for our principal offices in Boca Raton, Florida, from VoiceInterop, Inc. The monthly rent is $1,400 and provides for annual increases of base rent of 4% until the expiration date. The lease expires on November 30, 2021.

 

On December 1, 2021, the Company signed a one year lease approximately 2,000 square feet for our principal offices in Boca Raton, Florida. The monthly rent is $2,200. The lease expires on November 30, 2022.

 

Item 3. Legal Proceedings.

 

Cleartronic is not engaged in any litigation 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 action in today's business environment as an unfortunate price of conducting business.

 

Item 4. Safety Disclosures.

 

Not applicable.

-5-

PART II

 

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 

The Company's common stock has been traded on the OTCPINK under the symbol "CLRI." The last price of our common stock as reported on the pink tier of OTC Markets on February 12, 2021 was $0.04476 per share.

 

As of December 29, 2021 we were authorized to issue 5,000,000,000 shares of our common stock, of which 228,578,995 shares were outstanding.  Our shares of common stock are held by approximately 200 stockholders of record.  The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of our common stock whose shares are held in the names of various securities brokers, dealers, and registered clearing agencies.  In addition to our authorized common stock, Cleartronic is authorized to issue 200,000,000 shares of preferred stock, par value $0.00001 per share, of which 7,525,403 shares are issued or outstanding.  There is no trading market for the shares of our preferred stock.

 

Dividends

 

As of September 30, 2021, we have converted $87,800 of accrued dividends into common stock. We do not anticipate paying any cash dividends or other distributions on the Company's common stock in the foreseeable future. Any future dividends will be declared at the discretion of the Company's board of directors and will depend, among other things, on the earnings and financial requirements for future operations and growth, and other facts as the board of directors may then deem appropriate. See "Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters," for a description of the preferred stock and dividend rights pertaining to the preferred stock.

 

The Company is obligated to pay dividends on its Series A Convertible Preferred Stock. Each Series A Preferred Holder is entitled to receive cumulative dividends at the rate of 8% of $1.00 per annum for each outstanding share of Series A Preferred then held by such Series A Preferred Holder, on a pro rata basis. As of September 30, 2021 and 2010, the cumulative arrearage of undeclared dividends totaled $123,998 and $83,071, respectively.

 

Recent Sales of Unregistered Securities

 

Except for those unregistered securities previously disclosed in reports filed with the Securities Exchange Commission during the period covered by this report, we have not sold any securities under the Securities Act of 1933.  

 

Issuer Purchases of Equity Securities

 

None

 

Item 6. Selected Financial Data.

 

Not applicable.

 

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

 

THE FOLLOWING DISCUSSION SHOULD BE READ TOGETHER WITH THE INFORMATION CONTAINED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES INCLUDED ELSEWHERE IN THIS ANNUAL REPORT ON FORM 10-K.

 

Impact of COVID-19 Outbreak

 

The ongoing COVID-19 global and national health emergency has caused significant disruption in the international and United States economies and financial markets. In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. The spread of COVID-19 has caused illness, quarantines, cancellation of events and travel, business and school shutdowns, reduction in business activity and financial transactions, labor shortages, supply chain interruptions and overall economic and financial market instability. The COVID-19 pandemic has the potential to significantly impact the Company's supply chain and other service providers.

 

In addition, a severe prolonged economic downturn could result in a variety of risks to the business, including weakened demand for products and services and a decreased ability to raise additional capital when needed on acceptable terms, if at all. As the situation continues to evolve, the Company will continue to closely monitor market conditions and respond accordingly. To date, the Company has not experienced a significant adverse economic impact due to COVID-19. While travel and other restrictions have been imposed, the company has mitigated the situation by teleconferencing, web demos, etc. However, there is no assurance that we will not have any adverse impact in the future.

 

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The following discussion reflects the Company's plan of operation. This discussion should be read in conjunction with the financial statements which are attached to this report. This discussion contains forward-looking statements, including statements regarding our expected financial position, business and financing plans. These statements involve risks and uncertainties. The actual results could differ materially from the results described in or implied by these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this report, particularly under the headings "Special Note Regarding Forward-Looking Statements."

 

Unless the context otherwise suggests, "we," "our," "us," and similar terms, as well as references to "Cleartronic," all refer to Cleartronic, Inc. and our subsidiaries as of the date of this report.

 

Results of Operations

 

Year Ended September 30, 2021 Compared to Year Ended September 30, 2020.

 

Revenue

 

Revenues from operations were $1,651,297 for the year ended September 30, 2021 as compared to $1,752,024 for the year ended September 30, 2020. Subscriptions of ReadyOp software increased 19.3% from $1,325,623 to $1,581,413 in the year ended September 30, 2020 and 2021, respectively. Sales of ReadyOp ACE IP gateways decreased 90.65% from $333,750 to $31,200 in the year ended September 30, 2020 and 2021, respectively. This decrease was primarily due to one client purchasing $212,000 of ReadyOp ACE IP gateways in 2020. Consulting fees and related income decreased from $49,350 in 2020 to $18,815 in 2021 due to less training activity due to COVID in the year ended September 30, 2021.

 

Cost of Revenue

 

Cost of revenues was $267,298 for the year ended September 30, 2021, as compared to $407,136 for the year ended September 30, 2020. This decrease was primarily due to higher costs associated with the large ReadyOp ACE IP gateway sale in 2020. Gross profits were $1,383,999 and $1,344,888 for the years ended September 30, 2021 and 2020, respectively. Gross profit margin increased to 84% from 77% for the years ended September 30, 2021 and 2020, respectively. The increase was primarily due to higher margins generated from subscriptions of ReadyOp software and lower profit margins from sales of ReadyOp ACE IP gateways.

 

Operating Expenses

 

Operating expenses increased 4.73% to approximately $1,158,318 for the year ended September 30, 2021 compared to $1,105,956 for the year ended September 30, 2020. For the year ended September 30, 2021, selling expenses were $571,242 compared to $530,853 for the year ended September 30, 2020. This increase is primarily due to an increase in travel expenses and slightly offset by the decrease in advertising expenses. General and administrative expenses increased by $6,265 or 1.52%. Amortization and depreciation expense decreased by 81.45% from $11,480 for the year ended September 30, 2020 to $2,129  for the year ended September 30, 2021. Research and development expenses were $152,602 for the year ended September 30, 2020 as compared to $167,661 for the year ended September 30, 2021. The increase was primarily due to increase in consulting expense and expenses associated with the development of a new technology associated with a patent owned by the University of South Florida Research Foundation. The Company has obtained the exclusive license to develop and market the technology associated with the patent.

 

Other Income/(Expenses)

 

The Company's other income increased to $135,417 from other expense of ($8,727) during the year ended September 30, 2021, as compared to the year ended September 30, 2020. The primary reason for this increase was the settlement of certain accounts payable, gain on forgiveness of PPP loan and slightly offset by the decreased interest expense.

 

Income from Continuing Operations

 

The Company's income from continuing operations increased to $361,098 from $230,205 during the year ended September 30, 2021 as compared to the year ended September 30, 2020. The increase was primarily due to higher margins generated from subscriptions of ReadyOp software.

 

Loss from Discontinued Operations

 

There was no loss from discontinued operations during the year ended September 30, 2021 compared to a loss of $64,936 for the year ended September 30, 2020. The reason for the decrease was the deconsolidation of VoiceInterop from the Company in February 2020.

 

-7-

Net Income Attributable to Common Stockholders

 

Net income attributable to common stockholders was $320,171 and $124,119 for the years ended September 30, 2021 and 2020, respectively. The increase was primarily due to gain on forgiveness of PPP loan and higher profit margins generated from subscription of ReadyOp software in 2021.

 

LIQUIDITY AND CAPITAL RESOURCES

 

For the year ended September 30, 2021, net cash provided by operations of $378,558 was the result of a net income of $361,098, depreciation expense of $2,129, provision of bad debt of $10,000, gain on forgiveness on PPP loan of $106,727, gain on settlement and reversal of accounts payable of $29,965, an increase in accounts receivable of $111,630, an increase in prepaid expenses of $9,541, an increase in due from related parties of $31,381 and a slight increase in inventory of $2,182. These were offset by a decrease of accounts payable of $63,458, a decrease in accrued expenses of $43,457 and an increase in deferred revenue of $403,671.

 

For the year ended September 30, 2020, net cash used in operations of $1,802 was the result of a net income of $165,269, depreciation expense of $602, recovery of bad debt of $13,335, a decrease in accounts receivable of $10,676, a decrease in inventory of $7,367, an increase in prepaid expenses of $15,760, and a decrease in assets from discontinued operations of $9,929. These were offset by a decrease of accounts payable of $11,483, a decrease in accrued expenses of $79,843, a decrease in deferred revenue of $48,412, a decrease in customer deposit of $26,756 and an increase in liabilities from discontinued operations of $2,486.

 

Net cash used in investing activities was $5,093 for the year ended September 30, 2021, which was a purchase of fixed assets as compared to net cash used in investing activities, which was $34,029 for the year ended September 30, 2020, which was attributable to the issuance of notes receivable of $25,000 and purchase of fixed assets of $9,029.

 

Net cash used in financing activities was $48,447 for the year ended September 30, 2021 which was a repayment of a stockholder note payable of $48,447. Net cash provided by financing activities was $84,116 for the year ended September 30, 2020, which was attributable to proceeds from PPP loan, proceeds from notes payable stockholders and repayment of notes payable to stockholders.

 

Critical Accounting Estimates

 

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and make estimates and assumptions that affect our reported amounts of assets, liabilities, revenue and expenses, and the related disclosures of contingent liabilities. We base our estimates on historical experience and other assumptions that we believe are reasonable in the circumstances. Actual results may differ from these estimates.

 

The following critical accounting policies affect our more significant estimates and assumptions used in preparing our consolidated financial statements.

 

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.

 

INVENTORY

 

Inventory consists of components held for assembly and finished goods held for resale or to be utilized for installation in projects. Inventory is valued at lower of cost or net realizable value on a first-in, first-out basis. The Company's policy is to record a reserve for technological obsolescence or slow-moving inventory items. The Company only carries finished goods to be shipped along with completed circuit boards and parts necessary for final assembly of finished product. All existing inventory is considered current and usable.

 

Recent Accounting Pronouncements

 

The recent accounting standards that have been issued or proposed by Financial Accounting Standard Board (FASB) or other standard setting bodies that do not require adoption until a future date are not expected to have a material impact on the financial statement upon adoption.  

 

-8-

The recent accounting pronouncements are described in Note 2 to the consolidated financial statement appearing elsewhere in this report.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements.

 

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

 

Not applicable.

 

Item 8. Financial Statements and Supplementary Data.

The financial statements and related notes are included as part of this report as indexed in the appendix on page F-1, et seq.

 

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

 

None

 

Item 9A. Controls and Procedures.

 

Evaluation of Disclosure and Controls and Procedures. We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined) in Exchange Act Rules 13a - 15(c) and 15d - 15(e)). Based upon that evaluation, our chief executive officer and chief financial officer concluded that, as of September 30, 2021, our disclosure controls and procedures were  effective (1) to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms and (2) to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to us, including our Chief Executive and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

 

The term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act (15 U.S.C. 78a, et seq.) is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls over financial reporting will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of inherent limitations in all control systems, internal control over financial reporting may not prevent or detect misstatements, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the registrant have been detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Management's Annual Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

 

-9-

The term internal control over financial reporting is defined as a process designed by, or under the supervision of, the issuer's principal executive and principal financial officers, or persons performing similar functions, and effected by the issuer's board of directors, management and other personnel, 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 and includes those policies and procedures that:

 

●	Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

●	Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and

●	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer's assets that could have a material effect on the financial statements.

 

Our management assessed the effectiveness of our internal control over financial reporting as of September 30, 2021.  In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO-2013) in Internal Control-Integrated Framework.

 

Changes in Internal Control Over Financial Reporting. There have been no changes in the registrant's internal control over financial reporting through the date of this report or during the quarter ended September 30, 2021, that materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

 

Independent Registered Accountant's Internal Control Attestation. This report does not include an attestation report of the registrant's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the registrant's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the registrant to provide only management's report in this report.

 

Remediation plans for material weaknesses over internal controls. Our plans to mitigate material weaknesses in disclosure controls and procedures for future filings will be dependent on our ability to obtain adequate financing to fund development of our financial reporting infrastructure. At this time it is not cost beneficial for us to utilize capital to focus on mitigating financial reporting weaknesses; however, we expect to implement a plan for remediation of these deficiencies when sufficient funding to implement such a plan is available.

 

Item 9B. Other Information.

 

None.

 

PART III

 

Item 10. Directors, Executive Officers and Corporate Governance.

 

The following table sets forth information concerning the directors and executive officers of Cleartronic as of the date of this report:

 

Name	Age	Position	Director Since
Richard J. Martin	62	Chairman and Director	2016
Michael M. Moore	67	Chief Executive Officer and Director	2015
Larry M. Reid	77	President, Chief Financial Officer, Secretary and Director	1999

 

-10-

The members of our board of directors are subject to change from time to time by the vote of the stockholders at special or annual meetings to elect directors. Our current board of directors consists of three directors who have expertise in the business of Cleartronic. Upon receipt of sufficient funds either from revenues or through receipt of funds from debt or sales of our common stock and preferred stock, we intend to seek directors and officers who would be able to assist in the execution of our business plan.

 

The foregoing notwithstanding, except as otherwise provided in any resolution or resolutions of the board, directors who are elected at an annual meeting of stockholders, and directors elected in the interim to fill vacancies and newly created directorships, will hold office for the term for which elected and until their successors are elected and qualified or until their earlier death, resignation or removal.

 

Whenever the holders of any class or classes of stock or any series thereof are entitled to elect one or more directors pursuant to any resolution or resolutions of the board, vacancies and newly created directorships of such class or classes or series thereof may generally be filled by a majority of the directors elected by such class or classes or series then in office, by a sole remaining director so elected or by the unanimous written consent or the affirmative vote of a majority of the outstanding shares of such class or classes or series entitled to elect such director or directors. Officers are elected annually by the directors. There are no family relationships among our directors and officers.

 

We may employ additional management personnel, as our board of directors deems necessary. Cleartronic has not identified or reached an agreement or understanding with any other individuals to serve in management positions, but does not anticipate any problem in employing qualified staff.

 

A description of the business experience for the directors and executive officers of Cleartronic is set forth below.

 

Richard J. Martin currently serves as Chairman and Director of Cleartronic, Inc. Prior to joining the Cleartronic team, Martin served as CEO of SMARTLogix, Inc., a petroleum logistics technology company which he founded in 2000. Graduating with an Engineering degree from The University of Buffalo's School of Engineering, Martin joined the Exxon Management Development Program. Following his tenure at Exxon, he purchased an Exxon distributorship in the Carolinas. Culp Petroleum was transformed into a large regional distribution company. While at Culp, Martin developed and implemented several technologies that have since become industry standards. Martin sold the petroleum business in 2005 and focused his efforts on his technology ventures including the SMARTank division of SMARTLogix. SMARTank grew substantially and the technology was later sold to a public company in 2011.

 

Michael M. Moore is currently Chief Executive Officer and a Director of Cleartronic, Inc. He was founder and CEO of Collabria, LLC, a private software development company. Prior to founding Collabria in 2008, Moore for 13 years was CEO of DTNet Group and for seven years served as CEO of Payroll Transfers, Inc. He also was an assistant vice president with both Kidder Peabody and Merrill Lynch. Mr. Moore is an honors graduate of the United States Air Force Academy and served as an Air Force fighter pilot for eight years, flying F-4 and F-16 fighter aircraft. He is also one of six entrepreneurs profiled in the book Daring Visionaries, How Entrepreneurs Build Companies, Inspire Allegiance, and Create Wealth.

 

Larry Reid is the founder of Cleartronic and a co-founder of VoiceInterop. With over thirty years of executive management experience including sales and marketing, operations management, and financial management, from 2001 to 2005 Mr. Reid served as CFO and director of Connectivity, Inc., a manufacturer and distributor of emergency call boxes. He was instrumental in Connectivity's acquisition by CNE Group, Inc., (an American Stock Exchange listed company) and served as Executive Vice President and Director of CNE from 2003 to 2005. Mr. Reid has broad experience in venture start-ups, raising capital, building organizational synergies, creating and developing joint ventures and strategic partnerships, opening new markets, and driving key business initiatives. Early in his professional career in corporate financial management, Mr. Reid was responsible for raising more than $5 million in start-up capital for Ocurest Laboratories, Inc., a company he co-founded to package and distribute over-the-counter eye drops in a new (patented) eye drop dispenser. He forged Ocurest's successful IPO in 1996 and helped lead the company's achieving an estimated 80% market penetration of optical supply retail outlets in the United States.

 

Committees of the Board

 

We do not currently have an Audit, Executive, Finance, Compensation, or Nominating Committee, or any other committee of the Board of Directors.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Under Section 16(a) of the Exchange Act, our directors and certain of our officers, and persons holding more than 10 percent of our common stock are required to file forms reporting their beneficial ownership of our common stock and subsequent changes in that ownership with the United States Securities and Exchange Commission.  Such persons are also required to furnish Cleartronic with copies of all forms so filed.

 

Based solely upon a review of copies of such forms filed on Forms 3, 4, and 5, and amendments thereto furnished to us, we believe that as of the date of this report, our executive officers, directors and greater than 10 percent beneficial owners have not complied on a timely basis with all Section 16(a) filing requirements.

 

Communication with Directors

 

Stockholders and other interested parties may contact any of our directors by writing to them at Cleartronic, Inc., at 8000 North Federal Highway, Suite 100, Boca Raton, Florida 33487, Attention: Corporate Secretary.

 

-11-

The Company's Board has approved a process for handling letters received by us and addressed to any of our directors.  Under that process, the Secretary reviews all such correspondence and regularly forwards to the directors a summary of all such correspondence, together with copies of all such correspondence that, in the opinion of the Secretary, deal with functions of the board or committees thereof or that he otherwise determines requires their attention.  Directors may at any time review a log of all correspondence received by us that are addressed to members of the board and request copies of such correspondence.

 

Conflicts of Interest

 

With respect to transactions involving real or apparent conflicts of interest, we have not adopted any written policies and procedures.

 

Code of Ethics for Senior Executive Officers and Senior Financial Officers

 

We have not adopted a Code of Ethics for Senior Executive Officers and Senior Financial Officers.

 

Item 11. Executive Compensation.

 

Summary of Cash and Certain Other Compensation

 

At present, Cleartronic has two executive officers, Michael M. Moore and Larry M. Reid. Michael M. Moore is the Chief Executive Officer of the Company. The Company executed an Employment Agreement with Mr. Moore on November 28, 2016. Under the Agreement, Mr. Moore agreed that he shall carry out the strategic plans and policies as established by our business plan. Mr. Moore will advise us from time to time on organization, hiring, mergers, and execution of our business plan. Mr. Moore is paid a base salary of $16,667 per month.

 

Unless Cleartronic shall have given Mr. Moore written notice at least 30 days prior to the Termination Date, the Agreement shall automatically renew and continue in effect for additional one-year periods (and all provisions of this anniversary from such original Termination Date shall thereafter be designated as the "Termination Date" for all purposes under the Agreement, provided, however, that we may, at our election at any time after the expiration of the initial term of the Agreement, give Mr. Moore notice of Termination, in which event he shall continue to receive, as severance pay, six months of his base salary, if any, or the amount due through the next "Termination Date", whichever is less. Mr. Moore may terminate the Agreement without severance pay upon 10 days written notice to the Company.

 

The Company executed an Employment Agreement with Mr. Reid on March 13, 2015. The Employment Agreement replaces the previously executed Employment Agreement with Mr. Reid. Pursuant to the Employment Agreement (the "Agreement"), Cleartronic and Mr. Reid agreed that for a one year period beginning on March 13, 2015, we employed Mr. Reid to perform services for us both on and offsite. The last day of the one year period shall be the "Termination Date" for purposes of the Agreement. Termination of the agreement can be made by either party without penalty upon 10 days written notice. Pursuant to the Agreement, Cleartronic and Mr. Reid agreed that for a one year period beginning on November 28, 2016, Mr. Reid to perform services for us both on and offsite. The last day of the one year period shall be the "Termination Date" for purposes of the Agreement.

 

Unless Cleartronic shall have given Mr. Reid written notice at least 30 days prior to the Termination Date, the Agreement shall automatically renew and continue in effect for additional one-year periods (and all provisions of this anniversary from such original Termination Date shall thereafter be designated as the "Termination Date" for all purposes under the Agreement, provided, however, that we may, at our election at any time after the expiration of the initial term of the Agreement, give Mr. Reid notice of Termination, in which event he shall continue to receive, as severance pay, six months of his base salary, if any, or the amount due through the next "Termination Date", whichever is less. Mr. Reid may terminate the Agreement without severance pay upon 10 days written notice to the Company. Under the Agreement, Mr. Reid agreed that he shall carry out the strategic plans and policies as established by our business plan.  Mr. Reid will advise us from time to time on organization, hiring, mergers, and execution of our business plan.

 

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Summary Compensation Table

 

The following table sets forth, for our named executive officers for the two completed fiscal years ended September 30, 2021, and 2020:

 

Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	Nonqualified deferred compensation earnings ($)	All Other Compensation ($)	Total ($)
Larry M. Reid (1)	2020	96,000	15,356	-0-	-0-	-0-	-0-	-0-	111,356
	2021	96,000	2,000	-0-	-0-	-0-	-0-	-0-	98,000
Michael Moore (2)	2020	200,000	-0-	-0-	-0-	-0-	-0-	-0-	200,000
	2021	200,000	1,000	-0-	-0-	-0-	-0-	-0-	201,000

(1) Mr. Reid is our Chief Financial Officer, Secretary, and a director.

(2) Mr. Moore is our CEO and a director.

 

Outstanding Equity Awards at Fiscal Year-End

 

Our Executive Officers have not received any equity awards for the years ended September 30, 2021 and 2020.

 

Director Compensation

 

Our Directors have not received compensation for the years September 30, 2021 and 2020.

 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 

The following table presents information regarding the beneficial ownership of all shares of our common stock and preferred stock as of the date of this report by:

 

●	Each person who owns beneficially outstanding shares of our preferred stock;

●	Each person who owns beneficially outstanding shares of our preferred stock;

●	Each director;

●	Each named executive officer; and

●	All directors and officers as a group.

 

	Shares of Common Stock Beneficially Owned (2)		Shares of Preferred Stock Beneficially Owned (2)
Name of Beneficial Owner (1)	Number	Percent	Number	Percent
Larry M. Reid (3)	5,016,325	2.20%	511,225	5.93%
Marc Moore (4)	5,702,988	2.50%	3,000,000	34.18%
Richard J. Martin	1,868,202	0.82%	1,582,966	18.37%
All directors and officers as a group (one person)	12,587,515	5.52%	5,094,199	59.12%

(1) Unless otherwise indicated, the address for each of these stockholders is c/o Cleartronic, Inc., at 8000 North Federal Highway, Suite 100, Boca Raton, Florida 33487. Also, unless otherwise indicated, each person named in the table above has the sole voting and investment power with respect to our shares of common stock or preferred stock which he beneficially owns.

(2) Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission.  As of the date of this report, we have 5,000,000,000 authorized shares of common stock, par value $0.00001 per share, of which 228,578,995 shares were issued and outstanding.  As of the date of this report, we have 71,250,010 authorized and designated shares of preferred stock, par value $0.00001 per share, of which 7,525,403 shares were issued and outstanding.  Mr. Reid owns 511,525 shares of Series C Preferred stock.  See below for a description of our preferred stock and voting rights. Mr. Martin owns 512,996 shares of our Series A Preferred stock and 1,070,000 shares of our Series C Preferred stock.

(3) Mr. Reid is our president, chief financial officer, principal accounting officer, secretary, and director.

(4) Mr. Moore is our Chief Executive Officer and a director. Mr. Moore owns 5,702,988 shares of our common stock and 3,000,000 shares of our Series E Preferred stock.

 

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Other than as stated herein, there are no arrangements or understandings, known to us, including any pledge by any person of our securities:

 

●	The operation of which may at a subsequent date result in a change in control of Cleartronic; or

●	With respect to the election of directors or other matters.

 

Preferred Stock

 

As of the date of this report, we have 200,000,000 authorized shares of preferred stock, par value $0.00001 per share, of which 7,525,403 shares were issued and outstanding. There are currently 5 series of preferred stock designated as follows:

 

●	1,250,000 shares have been designated as Series A Preferred Stock, 512,996 of which are issued and outstanding;

●	10 shares have been designated as Series B Preferred Stock, none of which is issued and outstanding;

●	50,000,000 shares have been designated as Series C Preferred Stock, 3,341,503 of which are issued and outstanding; and

●	10,000,000 shares have been designated Series D Preferred stock, of which 670,904 are issued and outstanding; and

●	10,000,000 shares have been designated Series E Preferred stock, of which 3,000,000 are issued and outstanding.

 

Pursuant to our Articles of Incorporation establishing our preferred stock:

 

●

A holder of shares of the Series A Preferred Stock is entitled to the number of votes equal to the number of shares of the Series A Preferred Stock held by such holder multiplied by one on all matters submitted to a vote of our stockholders.  Each one share of our Series A Preferred Stock shall be convertible into 100 shares of our common stock.  Each holder of Series A Preferred Stock is entitled to receive cumulative dividends at the rate of 8% of $1.00 per annum on each outstanding share of Series A Preferred Stock then held by such holder, on a pro rata basis.

●

A holder of shares of the Series B Preferred Stock is entitled one vote per share on all matters submitted to a vote of our stockholders.  If at least one share of Series B Preferred Stock is issued and outstanding, then the total aggregate issued shares of Series B Preferred Stock at any given time, regardless of their number, shall have voting rights equal to two times the sum of the total number of shares of our common stock which are issued and outstanding at the time of voting, plus the total number of shares of any shares of our preferred stock which are issued and outstanding at the time of voting.  A holder of shares of the Series B Preferred Stock shall have no conversion rights or rights to dividends.

●

A holder of shares of the Series C Preferred Stock is entitled, to the number of votes equal to the number of shares of the Series C Preferred Stock held by such holder multiplied by 5 on all matters submitted to a vote of our stockholders.  In addition, the holders of our Series C Preferred Stock shall be entitled to receive dividends when, as and if declared by the Board of Directors, in its sole discretion.  No dividends have been declared.  Finally, each one share of our Series C Preferred Stock shall be convertible into five shares of our common stock.

●

A holder of shares of the Series D Preferred Stock is entitled, to the number of votes equal to the number of shares of the Series D Preferred Stock held by such holder multiplied by 5 on all matters submitted to a vote of our stockholders.  In addition, the holders of our Series D Preferred Stock shall be entitled to receive dividends when, as and if declared by the Board of Directors, in its sole discretion.  No dividends have been declared.  Finally, each one share of our Series D Preferred Stock shall be convertible into five shares of our common stock.

●

A holder of shares of the Series E Preferred Stock is entitled, to the number of votes equal to the number of shares of the Series E Preferred Stock held by such holder multiplied by 100 on all matters submitted to a vote of our stockholders.  In addition, the holders of our Series E Preferred Stock shall be entitled to receive dividends when, as and if declared by the Board of Directors, in its sole discretion.  No dividends have been declared.  Finally, each one share of our Series E Preferred Stock shall be convertible into 100 shares of our common stock.

 

-14-

Item 13. Certain Relationships and Related Transactions and Director Independence.

 

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.

 

Item 14. Principal Accounting Fees and Services.

 

Audit Fees

 

The aggregate fees billed by Liggett & Webb, P.A. for professional services rendered for the audit and reviews of our financial statements for the fiscal years ended September 30, 2021 and 2020 were $46,000 and $46,000, respectively.

 

Audit Related Fees

 

The aggregate audit-related fees billed by Liggett & Webb, P.A. for professional services rendered for the audit of our annual financial statements for the fiscal years ended September 30, 2021 and 2020 was $3,000 and $3,300, respectively.

 

Tax Fees

 

The aggregate tax fees billed by Liggett & Webb, P.A. professional services rendered for tax services for the fiscal years ended September 30, 2021 and 2020 was $1,200 and $1,200, respectively.

 

All Other Fees

 

There were no other fees billed by Liggett & Webb, P.A. for professional services rendered during the fiscal years ended September 30, 2021 and 2020, other than as stated under the captions Audit Fees, Audit-Related Fees, and Tax Fees.

 

Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

 

Given the small size of our Board, our Board acts as our Audit Committee. Our Board pre-approves all audit and permissible non-audit services. These services may include audit services, audit-related services, tax services, and other services. Our Board approves these services on a case-by-case basis.

 

PART IV

 

Item 15. Exhibits, Financial Statement Schedules.

 

(a) All financial statements are included in Item 8 of this report.

 

(b) All financial statement schedules required to be filed by Item 8 of this report and the exhibits contained in this report are included in Item 8 of this report.

 

-15-

 

(c) The following exhibits are attached to this report:

 

Exhibit No.	Identification of Exhibit
3.1**	Articles of Incorporation, filed as exhibit 3.01 to the registrant's registration statement on Form SB-2 on July 3, 2006, Commission File Number 333-135585.
3.2**	Articles of Amendment to Articles of Incorporation filed March 12, 2001, filed as exhibit 3.02 to the registrant's registration statement on Form SB-2 on July 3, 2006, Commission File Number 333-135585.
3.3**	Articles of Amendment to Articles of Incorporation filed October 4, 2004, filed as exhibit 3.03 to the registrant's registration statement on Form SB-2 on July 3, 2006, Commission File Number 333-135585.
3.4**	Articles of Amendment to Articles of Incorporation filed March 31, 2005, filed as exhibit 3.04 to the registrant's registration statement on Form SB-2 on July 3, 2006, Commission File Number 333-135585.
3.5**	Articles of Amendment to Articles of Incorporation filed May 9, 2008, filed as exhibit 3.02 to the registrant's registration statement on Form S-1 on May 28, 2008, Commission File Number 333-135585.
3.6**	Articles of Amendment to Articles of Incorporation filed June 28, 2010, filed as exhibit 3.7 to the registrant's Form 10-Q on February 14, 2011, Commission File Number 333-135585.
3.7**	Articles of Amendment to Articles of Incorporation filed May 6, 2011, filed as exhibit 3.1 to the registrant's Form 8-K on May 6, 2011, Commission File Number 333-135585.
3.8**	Articles of Amendment to Articles of Incorporation filed April 19, 2012, filed as exhibit 3.09 to the registrant's Form 10-Q on May 14, 2012, Commission File Number 333-135585.
3.9**	Articles of Amendment to Articles of Incorporation filed September 7, 2012, filed as exhibit 3.1 to the registrant's Form 8-K on September 7, 2012, Commission File Number 333-135585.
3.10**	Articles of Amendment to Articles of Incorporation filed September 19, 2012, filed as exhibit 3.1 to the registrant's Form 8-K on September 19, 2012, Commission File Number 333-135585.
3.11**	Articles of Amendment to Articles of Incorporation filed October 5, 2012, filed as exhibit 3.1 to the registrant's Form 8-K on October 5, 2012, Commission File Number 333-135585.
3.12**	Articles of Amendment to Articles of Incorporation filed December 28, 2013, filed as exhibit 3.12 to the registrant's Form 8-K on January 14, 2014, Commission File Number 333-135585.
3.13**	Bylaws, filed as exhibit 3.05 to the registrant's registration statement on Form SB-2 on July 3, 2006, Commission File Number 333-135585.
3.14**	Amended and Restated Bylaws, filed as exhibit 3.1 to the registrant's Form 8-K on July 26, 2010, Commission File Number 333-135585.
10.1**	Employment Agreement dated October 5, 2012, between Larry M. Reid and the registrant, filed as exhibit 10.1 to the registrant's Form 8-K on October 12, 2012, Commission File Number 333-135585.
10.2**	Lease Agreement dated November 30, 2014, between BGNP Associates, LLC and Cleartronic, Inc, filed as Exhibit 10.10 to the registrant's Form 10-K on January 13, 2015, Commission File Number 000-55329
10.3**	Employment Agreement dated  March 13, 2015, between Larry M. Reid and the registrant, filed as Exhibit 10.1 to the registrant's Form 8-K on March 18, 2015, Commission File Number 000-55329
10.4**	Subscription Agreement between registrant and private accredited investor dated March 31, 2015 for purchase of 278,743 shares of Series D Convertible Preferred stock, filed as exhibit 10.1 to the registrant's Form 8-K on April 10, 2015, Commission File Number 000-55329
10.5**	Subscription Agreement between registrant and private accredited investor dated March 31, 2015 for purchase of 270,024 shares of Series D Convertible Preferred stock, filed as exhibit 10.2 to the registrant's Form 8-K on April 10, 2015, Commission File Number 000-55329
10.6**	Subscription Agreement between registrant and private accredited investor dated March 31, 2015 for purchase of 278,743 shares of Series D Convertible Preferred stock, filed as exhibit 10.3 to the registrant's Form 8-K on April 10, 2015, Commission File Number 000-55329

10.7**	Promissory Note date November 24, 2015 in the original amount of $50,000 issued to Mr. Marc Moore filed as exhibit 10.18 to the registrant's Form 10-K on January 13, 2016, Commission File 000-55329.
10.8**	Asset Purchase Agreement dated November 29, 2016 between the registrant and Collabria LLC. Filed as an exhibit to the registrant's Form 8-K on December 5, 2016.
10.9**	Employment Agreement dated November 28, 2016 between the registrant and Mr. Moore.
10.10**	Promissory Note dated September 27, 2017 in the amount of $35,000 issued to Richard Martin.
10.11**	Promissory Note dated October 12, 2017 in the amount of $15,000 issued to Richard Martin
10.12**	Installment Note dated September 30, 2019 in the amount of $75,279 issued to Richard Martin
10.13**	Lease Agreement dated December 1, 2018 , between BGNP Associates, LLC and VoiceInterop, Inc.
10.14**	Promissory Note dated December 2, 2019 in the amount of $50,000 issued to Mr. John F. Marek.
31.1*	Certification of Michael M. Moore, Chief Executive Officer of Cleartronic, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Larry M. Reid, Chief Financial Officer and Principal Accounting Officer of Cleartronic, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Michael M. Moore, Chief Executive Officer of Cleartronic, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Larry M. Reid, Chief Financial Officer and Principal Accounting Officer of Cleartronic, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.
101	XBRL Instance Document (XBRL tags are embedded within the Inline iXBRL document)

____________

*Filed herewith.

**Previously filed.

 

-16-

SIGNATURES

 

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

CLEARTRONIC, INC.

 

Date: December 29, 2021 

 

 By /s/ Michael M. Moore

 Michael M. Moore, Chief Executive Officer

 

By /s/ Larry M. Reid

 Larry M. Reid, Chief Financial Officer and

 Principal Accounting Officer

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Date: December 29, 2021

 

By /s/ Michael M. Moore

 Michael M. Moore, Chief Executive Officer

 

By /s/ Larry M. Reid

 Larry M. Reid, Chief Financial Officer and

 Principal Accounting Officer

 

-17-

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Cleartronic, Inc.:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Cleartronic, Inc. (the Company) as of September 30, 2021 and 2020, and the related consolidated statements of operations, stockholders' deficit, and cash flows for each of the years in the two-year period ended September 30, 2021, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the two-year period ended September 30, 2021, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of accounts receivable

As described in Note 2 to the consolidated financial statements, 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.

Auditing management's estimate of the allowance for doubtful accounts was highly judgmental as it involved our assessment of the historical data, collections and other inputs used by the Company.

To test the allowance for doubtful accounts, we performed audit procedures that included, among others, evaluating the methodologies used in the determination of allowance for doubtful account and the historical data, collections and other inputs used by the Company as well as the subsequent collections.

/s/ Liggett & Webb, P.A.

We have served as the Company’s auditor since 2016.

Boynton Beach, Florida

December 29, 2021

F-1

CLEARTRONIC, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ASSETS
		September 30, 2021				September 30, 2020
Current assets:
Cash		$	401,001			$	75,983
Accounts receivable, net			320,245				218,615
Inventory			14,653				12,471
Prepaid expenses and other current assets			47,383				39,416
Note receivable			-				25,000
Total current assets			783,282				371,485
Property and Equipment, net			11,391				8,427
Other assets:
Due from related party			44,801				13,420
Total other assets			44,801				13,420
Total assets		$	839,474			$	393,332
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable		$	159,952			$	253,372
Accrued expenses			-				43,457
Deferred revenue, current portion			977,296				693,886
Notes payable stockholders			-				48,447
Note payable, current portion			-				18,944
Total current liabilities			1,137,248				1,058,106
Long Term Liabilities
Note payable, net of current portion			-				87,783
Deferred revenue, net of current portion			154,500				34,239
Total long term liabilities			154,500				122,022
Total liabilities			1,291,748				1,180,128
Commitments and Contingencies (See Note 8)			-				-
Stockholders' deficit:
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.			-				-
Series C preferred stock - $.00001 par value; 50,000,000 shares authorized, 3,341,503 and 4,433,375 shares issued and outstanding, respectively			34				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, 228,078,995 and 223,994,635 shares issued, respectively			2,286				2,240
228,578,995 and 223,994,635 shares outstanding, respectively			-				-
Additional paid-in capital			15,240,107				15,266,718
Accumulated Deficit			(15,694,743)				(16,055,841)
Total stockholders' deficit			(452,274)				(786,796)
Total liabilities and stockholders' deficit		$	839,474			$	393,332

The accompanying notes are an integral part of these consolidated financial statements

F-2

CLEARTRONIC, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

		For the year ended September 30, 2021				For the year ended September 30, 2020
Revenue		$	1,651,297			$	1,752,024
Cost of Revenue			267,298				407,136
Gross Profit			1,383,999				1,344,888
Operating Expenses:
Selling expenses			571,242				530,853
Administrative expenses			417,286				411,021
Amortization and depreciation			2,129				11,480
Research and development			167,661				152,602
Total Operating Expenses			1,158,318				1,105,956
Gain on the settlement and reversal of accounts payable			29,965				-
Gain on forgiveness of PPP loan			106,727				-
Interest expense, net			(1,275)				(8,727)
Total Other Income (Expense)			135,417				(8,727)
Income from continuing operations before income taxes			361,098				230,205
Provision for income taxes from continuing operations			-				-
Income from continuing operations			361,098				230,205
Discontinued operations
Loss from discontinued operations			-				(64,936)
Provision for Income taxes from discontinued operations			-				-
Loss from discontinued operations			-				(64,936)
Net Income			361,098				165,269
Preferred stock dividends Series A Preferred			(40,927)				(41,150)
Net income attributable to common stockholders		$	320,171			$	124,119
Net income per share - basic and diluted
Income from Continuing Operations			0.00				0.00
Loss from discontinued operations			-				(0.00)
Net income per common share - basic		$	0.00			$	0.00
Net income per common share - diluted		$	0.00			$	0.00
Weighted Average of number of shares outstanding - basic			226,520,440				220,978,242
Weighted Average of number of shares outstanding - diluted			597,882,075				597,799,237

The accompanying notes are an integral part of these consolidated financial statements

F-3

CLEARTRONIC, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOW

		For the year ended September 30, 2021				For the year ended September 30, 2020
NET INCOME		$	361,098			$	165,269
Cash Flows From Operating Activities
Adjustments to reconcile net income to net cash provided by (used in) Operating activities:
Amortization of ReadyOp software platform			-				10,878
Depreciation expense			2,129				602
Gain on forgiveness of PPP loan			(106,727)				-
Gain on the settlement and reversal of accounts payable			(29,965)				-
Provision (Recovery) for bad debt			10,000				(13,335)
(Increase) decrease in assets:
Accounts receivable			(111,630)				10,676
Inventory			(2,182)				7,367
Prepaid expenses and other current assets			(9,541)				(15,760)
Due from related party			(31,380)				(13,420)
Assets from discontinued operations			-				9,929
Increase (decrease) in liabilities:
Accounts payable			(63,458)				(11,483)
Accrued expenses			(43,457)				(79,843)
Deferred revenue			403,671				(48,412)
Customer deposit			-				(26,756)
Liabilities from discontinued operations			-				2,486
Net Cash Provided By (Used In) Operating Activities			378,558				(1,802)
Cash Flows From Investing Activities
Purchase of fixed assets			(5,093)				(9,029)
Issuance of note receivable			-				(25,000)
Net Cash Used in Investing Activities			(5,093)				(34,029)
Cash Flows From Financing Activities
Proceeds from issuance of installment loan-discontinued operations			-				43,600
Repayment of installment loan - discontinued operations			-				(33,151)
Proceeds from notes payable			-				106,727
Proceeds from notes payable stockholders			-				50,000
Repayment of notes payable stockholders			(48,447)				(94,422)
Proceeds from loan payable - related party - discontinued operations			-				11,362
Net Cash (Used in) Provided by Financing Activities			(48,447)				84,116
Net increase in cash			325,018				48,285
Cash at beginning of year			75,983				27,698
Cash at end of year		$	401,001			$	75,983
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest		$	2,754			$	13,930
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
Deconsolidation of Voiceinterop, Inc.		$	-			$	225,316
Return of 875,000 shares of common stock in exchange for notes and interest receivable		$	26,576			$	-

The accompanying notes are an integral part of these consolidated financial statements

F-4

CLEARTRONIC, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

FOR THE YEARS ENDED SEPTEMBER 30, 2021 AND 2020

		Series A Preferred								Series B Preferred								Series C Preferred								Series D Preferred								Series E Preferred																Additional
		Stock								Stock								Stock								Stock								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 stock			-				-				-				-				-				-				-				-				-				-				12,000,000				120				(120)				-				-
Deconsolidation of Voiceintrop, Inc.			-				-				-				-				-				-				-				-				-				-				-				-				225,316				-				225,316
Net income for the year ended September 30, 2020			-				-				-				-				-				-				-				-				-				-				-				-				-				165,269				165,269
Balance at September 30, 2020			512,996			$	5				-			$	-				4,433,375			$	45				670,904			$	7				3,000,000			$	30				223,994,635			$	2,240			$	15,266,718			$	(16,055,841)			$	(786,796)
Returned of common stock in exchange for notes receivable and interest			-				-				-				-				-				-				-				-				-				-				(875,000)				(9)				(26,567)				-				(26,576)
Series C Convertible Preferred shares exchanged for common stock			-				-				-				-				(1,091,872)				(11)				-				-				-				-				5,459,360				55				(44)				-				-
Net income for the year ended September 30, 2021			-				-				-				-				-				-				-				-				-				-				-				-				-				361,098				361,098
Balance at September 30, 2021			512,996			$	5				-			$	-				3,341,503			$	34				670,904			$	7				3,000,000			$	30				228,578,995			$	2,286			$	15,240,107			$	(15,694,743)			$	(452,274)

The accompanying notes are an integral part of these consolidated financial statements

F-5

CLEARTRONIC, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2021 and 2020

NOTE 1 - ORGANIZATION

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.

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).

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 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 platforms.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements contain the consolidated accounts of Cleartronic, Inc. and its subsidiary, ReadyOp Communications, 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 (See Note 10).

USE OF ESTIMATES

In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and operations for the reporting period.

Although these estimates are based on management's knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results.

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 on September 30, 2021 and September 30, 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 $10,000 and $6,000 allowances for doubtful accounts as of September 30, 2021 and September 30, 2020, respectively.

F-6

PROPERTY AND EQUIPMENT

Property and equipment are 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 includes hospitals, clinics, doctor’s offices and health insurance companies and many other segments of the health care industry. It provides hospitals with patient tracking capability within the hospital. It allows physicians to track patient progress after release from the hospital and allows for secure communication with the patient to track the healing process, record their recovery and monitor their medications. As of the acquisition date, the Company has recorded an estimated historical cost of the ReadyMed software platform based on a preliminary purchase price allocation prepared by management. As a result, during the preliminary purchase price allocation period, which may be up to one year from the acquisition 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 September 30, 2021 and September 30, 2020, the ReadyMed software platform is valued at historical costs of $0 (See Notes 6 and 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. The amortization expense for the years ended September 30, 2021 and 2020 was $0 and $10,878, respectively. As of September 30, 2021 and September 30, 2020, ReadyOp software platform has been fully amortized.

CONCENTRATION OF CREDIT RISK

The Company currently maintains cash balances at one FDIC-insured banking institution. Deposits held in non interest-bearing transaction accounts are insured up to a maximum of $250,000 at all FDIC-insured institutions. As of September 30, 2021 and September 30, 2020, the Company had $139,577 and $0, respectively, in excess of FDIC insurance limits.

RESEARCH AND DEVELOPMENT COSTS

The Company expenses research and development costs as incurred. For the years ended September 30, 2021 and 2020, the Company had $167,661 and $152,602, respectively, in research and development costs .

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.

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 expensed as incurred on the date the revenue associated with the cost is recognized. As of September 30, 2021 and September 30, 2020, respectively, the Company recorded $41,283 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'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.

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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 September 30, 2021 and 2020, we had no options and warrants outstanding.

As of September 30, 2021 and 2020, we had 512,996 shares of Series A Convertible Preferred stock outstanding, which are convertible into 51,299,600 shares of common stock.

As of September 30, 2021 and 2020, we had 3,341,503 and 4,433,375 shares of Series C Convertible Preferred stock outstanding, respectively, which are convertible into 16,707,515 and 22,166,875 shares of common stock, respectively.

As of September 30, 2021 and 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 September 30, 2021 and 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.

The table below details the computation of basic and diluted earnings per share ("EPS") for the years ended September 30, 2021 and 2020:

		For the year ended September 30, 2021			For the year ended September 30, 2020
Net income attributable to common stockholders for the year		$	320,171		$	124,119
Add: Preferred stock dividends			40,927			41,150
Adjusted net income		$	361,098		$	165,269
Weighted average number of shares outstanding			226,520,440			220,978,242
Add: Shares issued upon conversion of preferred stock			371,361,635			376,820,995
Weighted average number of common and common equivalent shares			597,882,075			597,799,237
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 Value Measurements and Disclosures". ASC 820 defines "fair value" as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There was no impact relating to the adoption of ASC 820 to the Company's consolidated financial statements.

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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's opinion that the Company is not exposed to any significant currency or credit risks arising from these financial instruments.

INVENTORY

Inventory consists of components held for assembly and finished goods held for resale or to be utilized for installation in projects. Inventory is valued at lower of cost or net realizable value on a first-in, first-out basis. The Company's policy is to record a reserve for technological obsolescence or slow-moving inventory items. The Company only carries finished goods to be shipped along with completed circuit boards and parts necessary for final assembly of finished product. All existing inventory is considered current and usable. The Company recorded no reserve for obsolete inventory as of September 30, 2021 and September 30, 2020, respectively.

ADVERTISING COSTS

Advertising costs are expensed as incurred. The Company had advertising costs of $20,280 and $41,444 during the years ended September 30, 2021 and 2020, respectively.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2019, the FASB issued ASU 2019-12, 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 be effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years and early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2019-12.

All other newly issued accounting pronouncements but not yet effective have been deemed either immaterial or not applicable.

NOTE 3 - PROPERTY AND EQUIPMENT

At September 30, 2021 and September 30, 2020, property and equipment, net, is as follows:

		September 30, 2021			September 30, 2020
Office Equipment		$	14,122		$	9,029
Less: Accumulated Depreciation			(2,731)			(602)
Total Property and Equipment, net		$	11,391		$	8,427

Depreciation expense for the years ended September 30, 2021 and 2020, was $2,129 and $602, 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, 2020. The maturity of the note receivable in the amount of $10,000 was extended to August 31, 2021 (See Note 7).

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, 2020. The maturity of the note receivable in the amount of $15,000 was extended to August 31, 2021 (See Note 7).

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 Note 7).

Interest income for the years ended September 30, 2021 and 2020 was $1,167 and $409, respectively.

NOTE 5 - NOTES PAYABLE

Notes payable to Stockholders

As of September 30, 2021 and September 30, 2020, the Company had unsecured notes payable to stockholders totaling $0 and $48,447, respectively. One note with a principal balance 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 and was paid in full including $8,002 in accrued interest on March 19, 2021.

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. During the years ended September 30,2021 and 2020, the Company made a repayment of $48,447 and $26,832, respectively. As of September 30, 2021 and 2020, the balance due was $0 and $48,447.

Interest expense on the notes payable to stockholders was $1,754 and $9,136 for the years ended September 30, 2021 and 2020, respectively.

		September 30, 2021			September 30, 2020
Note payable stockholder		$	-		$	48,447
Less: current portion			-			(48,447)
Long-term note payable		$	-		$	-

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 $7,262 included in liabilities from discontinued operations was deconsolidated as of February 14, 2020 (See Notes 7 and 9).

Note Payable - PPP Loan

On June 10, 2020, the Company, was granted a loan (the "Loan") from Bank of America, N.A., in the aggregate amount of $106,727, pursuant to the Paycheck Protection Program (the "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 recorded a gain on forgiveness of PPP loan in the amount of $106,727 in the fourth quarter of 2021.

		September 30, 2021			September 30, 2020
Note payable (PPP Loan)		$	-		$	106,727
Less: current portion			-			(18,944)
Long-term note payable		$	-		$	87,783

Note Payable

On December 2, 2019, the Company issued a promissory note in the amount of $50,000. The loan balance of $50,000 and interest of $732 was paid in full at maturity on February 29, 2020.

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NOTE 6 - EQUITY TRANSACTIONS

Preferred Stock Dividends

As of September 30, 2021 and September 30, 2020, the cumulative arrearage of undeclared dividends for Series A Preferred stock totaled $123,998 and $83,071, respectively.

Common stock issued for Conversion of C Preferred

During the year ended September 30, 2021, the holders of Series C preferred stock, converted 1,091,872 shares of Series C Preferred Stock into 5,459,360 shares of Common Stock.

Common stock issued in Exchange for Notes Receivable

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 Note 4).

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") regarding a pending S-1 filing.

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). The Company recorded $225,316 to additional paid in capital for deconsolidation of VoiceInterop, Inc.

NOTE 7 - RELATED PARTY TRANSACTIONS

The Company leases its office space from VoiceInterop the Company's former wholly owned subsidiary and now 96% owned by our shareholders for approximately $1,400 per month. On February 14, 2020, VoiceInterop was deconsolidated and is no longer our subsidiary. Rent expense incurred during the years ended September 30, 2021 and 2020 was $17,901 and $31,532, respectively (See Note 8).

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 $7,262 included in liabilities from discontinued operations was deconsolidated as of February 14, 2020 (See Notes 5 and 9).

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. During the years ended September 30,2021 and 2020, the Company made a repayment of $48,447 and $26,832, respectively. As of September 30, 2021 and 2020, the balance due was $0 and $48,447 (See Note 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, 2020. 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, 2020. 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 6).

As of September 30, 2021, the Company advanced $44,801 to VoiceInterop, the Company'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 8 - 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 years ended September 30, 2021 and 2020 was $17,901 and $31,532, respectively.

Revenue and Accounts Receivable Concentration

No customer accounted for more than 10% of the Company's revenue for the years ended September 30, 2021.

No customer accounted for more than 10% of the Company's revenue for the years ended September 30, 2020.

As of September 30, 2021, no customer accounted for more than 10% of the Company'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 18% and 11%, respectively.

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.

Exclusive Licensing Agreement

On May 5, 2017, the Company entered into an Exclusive Licensing Agreement with Sublicensing Terms (the "Agreement") with the University of Southern Florida Research Foundation, Inc. ("USFRF") relating to an exclusive license of certain patent rights in connection with one of USFRF's U.S. Patent Applications. Both parties recognize that the research and development work provided by the Company was sufficient for USFRF to enter into the Agreement with the Company.

The Agreement is effective April 25, 2017 and continues until the later of the date that no Licensed Patent remains a pending application or an enforceable patent or the date on which the Licensee's obligation to pay royalties expires.

The Company paid USFRF a License Issue Fee of $6,000 and $953 as reimbursement of expenses associated with the filing of the Licensed Patent. The company agreed to pay USFRF a royalty of 3% for sales of all Licensed Products and Licensed Processes and agreed to pay USFRF minimum royalty payments as follows:

Payment	Year
$1,000	2019
$4,000	2020
$8,000	2021

-and every year thereafter on the same date, for the life of the agreement.

In the event the Company proposes to sell any Equity Securities, then USFRF will have the right to purchase 5% of the securities issued in such offering on the same terms and conditions are offered to other purchasers in such financing. As of September 30, 2021 and 2020, the Company has recorded $6,000 and $3,000 for the minimum royalty for the fiscal year ended 2021 and 2020.

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NOTE 9 - DEFERRED INCOME TAXES

The Company calculates its deferred tax assets based upon its consolidated net operating loss (NOL) carryovers available to offset future taxable income, net of other tax credit(s) or tax deferred liabilities, if any. No deferred tax assets for the years ended September 30, 2021 and 2020 have been recorded since any available deferred tax assets are fully offset by increases in its valuation allowances. The Company increased its valuation allowance based on its history of consolidated net losses. At September 30, 2021, the Company has an adjusted net operating loss carryforward of approximately $14,210,000 that expire through 2038. Should a cumulative change in the ownership of more than 50% occur within a three-year period, there could be an annual limitation on the use of the net operating loss carryforwards.

Deferred income taxes reflect the tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes plus any available consolidated, net deferred tax credits. Significant components of the Company's net deferred income tax assets at September 30, 2021 and 2020, respectively are as follows:

		2021			2020
Depreciation		$	2,746		$	-
Allowance for doubtful account			12,332			9,797
Net operating loss carryforward			3,601,402			3,693,736
Net deferred income tax asset			3,616,480			3,703,533
Less: valuation allowance			(3,616,480)			(3,703,533)
Total deferred income tax assets		$	-		$	-

A reconciliation of the Federal and respective State income tax rate as a percentage of income before taxes is as follows:

		2021			2020
Federal statutory taxes		$	71,660		$	32,798
State income taxes, net of federal benefit			19,860			9,090
Change in tax estimates			(5,901)			427,325
Less: Valuation allowance, non-deductible items			1,434			445
Change in valuation allowance			(87,053)			(469,658)
		$	-0-		$	-0-

		2021			2020
Federal statutory Income tax rate			21.00%			21.00%
State taxes, net of federal benefit			4.35%			4.35%
Effective rate of deferred tax asset			25.35%			25.35%
Less: Valuation allowance			(25.35%)			(25.35%)
Effective income tax rate			0.00%			0.00%

Management has determined that it is more likely than not that the Company will not use the NOL carryforward and has a 100% valuation allowance against the deferred asset. The reserve is based on historical experience of the Company's operations as it has not recognized net income in its current incarnation and there is no indication of any events or conditions that would show that trend will not continue due to the Company's current expectation of expense requirements.

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NOTE 10 - 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 distributed 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. Each common shareholder received .075 shares of VoiceInterop common stock for each one (1) share of Cleartronic stock held by the shareholder, and each shareholder of Series C and D Preferred stock received 0.375 shares of VoiceInterop common stock for each one (1) share of Series C or Series D Preferred stock held by the shareholder.

On November 14, 2019, VoiceInterop, Inc.'s, S-1 Registration Statement was declared effective by Securities and Exchange Commission. On February 14, 2020, the distribution of shares was approved by FINRA and completed and deconsolidation was completed. 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.

		For the period
		From October 1, 2019 to
		February 14, 2020 (Deconsolidation Date)
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 Expense			(2,231)
Loss Before Income Taxes			(64,936)
Provision for Income Taxes			-
Loss from discontinued operations		$	(64,936)

F-14

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, 2020
		(Deconsolidation Date)
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
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 $7,262 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 $17,901 and $31,532 for the years ended September 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.

NOTE 11 - SUBSEQUENT EVENTS

On December 1, 2021, the Company signed a one year lease approximately 2,000 square feet for our principal offices in Boca Raton, Florida. The monthly rent is $2,200. The lease expires on November 30, 2022.

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