Quarterly report [Sections 13 or 15(d)]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Mar. 31, 2025

PRINCIPLES OF CONSOLIDATION

The accompanying unaudited 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.

BASIS OF PRESENTATION

BASIS OF PRESENTATION

The financial statements are prepared in accordance with Generally Accepted Accounting Principles in the United States of America (“U.S. GAAP”). The unaudited interim financial information furnished herein reflects all adjustments, consisting only of normal recurring items, which in the opinion of management are necessary to fairly state the Company’s financial position, results of operations and cash flows for the dates and periods presented and to make such information not misleading.

These unaudited financial statements should be read in conjunction with the Company’s audited financial statements for the year ended September 30, 2024, contained in our General Form for Registration of Securities of Form 10-K as filed with the Securities and Exchange Commission (the “Commission”) on March 21, 2025. The results of operations for the three and six months ended March 31, 2025, are not necessarily indicative of results to be expected for any other interim period or the fiscal year ending September 30, 2025.

USE OF ESTIMATES

USE OF ESTIMATES

In preparing the consolidated 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 property and equipment, valuation of inventory, intangible assets and allowance for credit losses.

RECLASSIFICATIONS

RECLASSIFICATIONS

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no material effect on the consolidated results of operations, stockholders’ equity, or cash flows.

CASH AND CASH EQUIVALENTS

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 has investments Treasury Bills. The Treasury Bills have remaining terms ranging from four-weeks to thirteen weeks on March 31, 2025. Treasury Bills with an original maturity date of three months or less are included within cash and cash equivalents on the balance sheet at March 31, 2025.

ACCOUNTS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES

ACCOUNTS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES

The Company maintains current receivable amounts with most of its customers. The Company regularly monitors and assesses its risk of not collecting amounts owed by customers. This evaluation is based upon an analysis of current and past due amounts, along with relevant history and facts particular to the customer. The Company records its allowance for credit losses based on the results of this analysis. The analysis requires the Company to make significant estimates and as such, changes in facts and circumstances could result in material changes in the allowance for credit losses. The Company considers as past due any receivable balance not collected within its contractual terms.

The Company provided $60,665 and $60,665 allowances for doubtful accounts as of March 31, 2025, and September 30, 2024, respectively.

INVENTORY

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 March 31, 2025 and September 30, 2024, respectively.

At March 31, 2025 inventory was $34,921 of raw materials and finished goods.

At September 30, 2024, inventory was $41,532 of raw materials and finished goods.

PREPAID EXPENSES AND OTHER CURRENT ASSETS

PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist primarily of deferred subscriber costs and prepaid expenses. Deferred subscriber costs totaled $12,750 and $38,250 at March 31, 2025 and September 30, 2024, respectively. Prepaid expenses totaled $77,213 and $82,196 at March 31, 2025 and September 30, 2024, respectively.

PROPERTY AND EQUIPMENT

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 or when the property and equipment is put into service.

IMPAIREMENT OF LONG-LIVED ASSETS

IMPAIREMENT OF LONG-LIVED ASSETS

Management evaluates the recoverability of the Company’s identifiable intangible assets and other long-lived assets when events or circumstances indicate a potential impairment exists, in accordance with the provisions of ASC 360-10-35-15 “Impairment or Disposal of Long-Lived Assets.”

If impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.

There were no impairments recorded during the three and six months ended March 31, 2025 and 2023, respectively.

INTANGIBLE ASSETS – FedRamp

INTANGIBLE ASSETS – FedRamp

During the year ended September 30, 2024, the Company conducted an impairment assessment in accordance with ASC 350-30-35 and determined that all previously capitalized amounts associated with the Company’s expenses related to its FedRAMP certification are no longer deemed recoverable as described in ASC 350-30-35. As a result, the Company recognized an impairment loss of $44,373 for the year ended September 30, 2024.

At March 31, 2025 and September 30, 2024, intangible assets, net, is as follows:

Schedule of intangible assets
	For the six months ended March 31, 2025		For the year ended September 30, 2024
Intangible Assets	$	-	$	44,373
Less: Impairment Loss		-		(44,373	)
Total Intangible Assets, net	$	-	$	-

ASSET PURCHASE - INTANGIBLE ASSET – CLIENT LIST

ASSET PURCHASE - INTANGIBLE ASSET – CLIENT LIST

Accounting for asset acquisitions falls under the guidance of Topic 805, Business Combinations, specifically Subtopic 805-50. A cost accumulation model is used to determine an asset acquisition’s cost. Assets acquired are based on their cost, generally allocated to them on a relative fair value basis. Direct acquisition-related costs are included in the cost of the acquired assets. No goodwill is calculated in an asset acquisition.

On August 1, 2024, the Company acquired a group of similar assets from Alastar, Inc. (“Alastar”) for $50,000.

This asset group consisted of cash, prepaids and other current assets, as well as intellectual property including trademarks, software platforms, and a client list. The client list was the only asset ascribed value which was deemed to have continuing value to the Company. The Company has classified this client list as an intangible asset, which will be amortized over 5 years.

The table below summarizes the estimated fair value of the assets acquired and the liabilities assumed at the effective acquisition date.

Schedule of estimated fair value of the assets acquired
Consideration
Cash	$	50,000

Fair Value of consideration transferred	$	50,000

Recognized amounts of identifiable assets acquired and liabilities assumed:

Cash	$	260,863
Prepaid expenses and other current assets	$	29,639
Total assets acquired	$	290,502

Deferred Revenue	$	290,502
Total liabilities assumed	$	290,502

Total identifiable net assets	$	-

Intangible Assets - Client List	$	50,000

At March 31, 2025 and September 30, 2024, intangible asset – client list, net, is as follows:

Schedule of intangible assets
	For the six months ended March 31, 2025			For the year ended September 30, 2024
Intangible Assets – Customer Lists	$	50,000		$	50,000
Less: Accumulated Amortization		(6,667	)		(1,667	)
Total Intangible Assets, net	$	43,333		$	48,333

Amortization expense for the six months ended March 31, 2025 and 2023, was $5,000 and $0, respectively.

Estimated future amortization expense for the six months ended March 31,

Schedule of estimated future amortization expense
2025 (6 Months)	$	5,000
2026		10,000
2027		10,000
2028		10,000
2029		8,333
	$	43,333

CONCENTRATION OF CREDIT RISK

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 March 31, 2025 and September 30, 2024, the Company had $0 and $92,982, respectively, in excess of FDIC insured limits.

RESEARCH AND DEVELOPMENT COSTS

RESEARCH AND DEVELOPMENT COSTS

The Company expenses research and development costs as incurred.

For the three months ended March 31, 2025 and 2024, the Company had $4,000 and $3,044 respectively, in research and development costs.

For the six months ended March 31, 2025 and 2024, the Company had $6,000 and $16,603 respectively, in research and development costs.

REVENUE RECOGNITION AND DEFERRED REVENUES

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 has transferred promised goods and services to the customer and in the amount that reflects the consideration to which the company expects to be entitled for the exchange for those goods and services. The Company applies the following five-step model to determine this amount:

i. Establishment of a contract with the 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 software licenses and integrated hardware. 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 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 are expensed as incurred on the date the revenue associated with the cost is recognized.

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 meetings and charge our clients on a per diem basis. These charges are recorded as consulting fees in our income statement.

Customer billings for services not yet rendered and hardware not yet installed 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.

As of March 31, 2025 and September 30, 2024, respectively, the Company recorded $1,336,929 and $1,373,325, respectively, in deferred revenue.

DISAGGREGATED REVENUE

DISAGGREGATED REVENUE

The following table sets forth the approximate net sales by primary category:

Schedule of disaggregated revenue
	For the three months ended
	March 31, 2025		March 31, 2024
Licensing of ReadyOp Software	$	880,274	$	550,418
Hardware Sales and Consulting		75,429		21,595
Total	$	955,703	$	572,013

	For the six months ended
	March 31, 2025		March 31, 2024
Licensing of ReadyOp Software	$	1,731,576	$	1,139,965
Hardware Sales and Consulting		191,451		38,095
Total	$	1,923,027	$	1,178,060

DEFERRED REVENUE

DEFERRED REVENUE

The following table provides a summary of the changes included in deferred revenue during the six months ended March 31, 2025 and year ended September 30, 2024:

Schedule of deferred revenue
	For the three months ended March 31, 2025			For the year ended September 30, 2024
Beginning balance	$	1,373,325		$	1,177,680
Additions to deferred liability (1)		1,923,027			3,321,793
Deductions to deferred liability (2)		(1,959,423	)		(3,126,148	)
Ending balance	$	1,336,929		$	1,373,325

(1)

Customer billings for services not yet rendered and hardware not yet installed

(2)

Revenue recognized in the current year related to the deferred liability

EARNINGS PER SHARE

EARNINGS PER SHARE

Earnings per share (“EPS”) are the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. EPS is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16, basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by adding both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.

Pursuant to ASC Paragraphs 260-10-45-45-21 through 260-10-45-45-23 Diluted EPS shall be based on the most advantageous conversion rate or exercise price from the standpoint of the security holder. The dilutive effect of outstanding call options and warrants (and their equivalents) issued by the reporting entity shall be reflected in diluted EPS by application of the treasury stock method unless the provisions of paragraphs 260-10-45-35 through 45-36 and 260-10-55-8 through 55-11 require that another method be applied. Equivalents of options and warrants include non-vested stock granted to employees, stock purchase contracts, and partially paid stock subscriptions (see paragraph 260–10–55–23). Anti-dilutive contracts, such as purchased put options and purchased call options, shall be excluded from diluted EPS. Under the treasury stock method: a. Exercise of options and warrants shall be assumed at the beginning of the period (or at time of issuance, if later) and common shares shall be assumed to be issued. b. The proceeds from exercise shall be assumed to be used to purchase common stock at the average market price during the period. (See paragraphs 260-10-45-29 and 260-10-55-4 through 55-5.) c. The incremental shares (the difference between the number of shares assumed issued and the number of shares assumed purchased) shall be included in the denominator of the diluted EPS computation.

As of March 31, 2025 and 2024, we had no options and warrants outstanding.

As of March 31, 2025 and 2024, 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 March 31, 2025 and 2024, we had 3,133,503 shares of Series C Convertible Preferred stock outstanding which are convertible into 15,667,515 and shares of common stock.

As of March 31, 2025 and 2024, we had 670,904 shares of Series D Preferred stock outstanding which are convertible into 3,354,520 shares of common stock.

As of March 31, 2025 and 2024, 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 three and six months ended March 31, 2025 and 2024:

Schedule of diluted earnings per share
	For the three months ended March 31, 2025			For the three months ended March 31, 2024
Net (loss) income attributable to common stockholders for the period	$	(38,210	)	$	9,985

Weighted average number of shares outstanding		229,160,695			229,160,695

Basic earnings per share	$	(0.00	)	$	0.00

The following table sets for the computation of diluted earnings per share:

Schedule of computation of diluted earnings per share
	For the three months ended March 31, 2025			For the three months ended March 31, 2024
Net (loss) income attributable to common stockholders for the period	$	(38,210	)	$	9,985
Add: Preferred stock dividends		10,118			10,231

Adjusted net (loss) income	$	(28,092	)	$	20,216

Weighted average number of shares outstanding		229,160,695			229,160,695
Add: Shares issued upon conversion of preferred stock		-			370,321,635
Weighted average number of common and common equivalent shares		229,160,695			599,482,330

Diluted earnings per share	$	(0.00	)	$	0.00


	For the six months ended March 31, 2025			For the six months ended March 31, 2024
Net (loss) income attributable to common stockholders for the period	$	(97,678	)	$	17,309

Weighted average number of shares outstanding		229,160,695			229,160,695

Basic earnings per share	$	(0.00	)	$	0.00

The following table sets for the computation of diluted earnings per share:


	For the six months ended March 31, 2025			For the six months ended March 31, 2024
Net (loss) income attributable to common stockholders for the period	$	(97,678	)	$	17,309
Add: Preferred stock dividends		20,461			20,574

Adjusted net (loss) income	$	(77,217	)	$	37,883

Weighted average number of shares outstanding		229,160,695			229,160,695
Add: Shares issued upon conversion of preferred stock		-			370,321,635
Weighted average number of common and common equivalent shares		229,160,695			599,482,330

Diluted earnings per share	$	(0.00	)	$	0.00

FAIR VALUE OF FINANCIAL INSTRUMENTS

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. 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 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.

As of March 31, 2025 and September 30, 2024, we held no assets that were required to be measured at fair value on a recurring basis. There were no transfers between levels in the fair value hierarchy during the six months ended March 31, 2025 and year ended September 30, 2024, respectively.

ADVERTISING COSTS

ADVERTISING COSTS

Advertising costs are expensed as incurred. The Company had advertising costs of $3,784 and $38,108 during the three months ended March 31, 2025 and 2024, respectively.

Advertising costs are expensed as incurred. The Company had advertising costs of $12,237 and $60,692 during the six months ended March 31, 2025 and 2024, respectively.

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures, to require enhanced disclosures that include reportable segment expenses. The amendments in this update provide that a business entity disclose significant segment expenses, segment profit or loss (after significant segment expenses), and allows reporting of additional measures of a segments profit or loss if used in assessing segment performance. Such disclosures apply to entities with a single reportable segment. These amendments were effective for the Company in 2024 and retrospectively to all prior periods using the significant segment expense categories identified. The impact of the adoption of the amendments in this update was not material to the Company’s consolidated financial position and results of operations, as the requirements impact only segment reporting disclosures in the footnotes to the Company’s consolidated financial statements.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

The Company continues to monitor new accounting pronouncements issued by the FASB and does not believe any accounting pronouncements issued through the date of this report will have a material impact on the Company’s Financial Statements.

In the current year, the Company adjusted its classification of selling and administrative expenses in the Statement of Operations. For comparative purposes, amounts in the prior years have been reclassified to conform to current year presentations. These reclassifications had no effect on previously reported results of operations or retained earnings.

SEGMENT REPORTING

SEGMENT REPORTING

Operating segments are defined as components of an enterprise that have the following characteristics: (i) they engage in business activities from which they may earn revenue and incur expense, (ii) their operating results are regularly reviewed by the chief operating decision maker (“CODM”) for resource allocation decisions and performance assessment, and (iii) their discrete financial information is available. Our CODM is our Chief Executive Officer, who manages and allocates resources to our operations on a consolidated basis. We operate as one segment, and ReadyOp facilitates the marketing and sales of subscriptions to the ReadyOp™ and ReadyMed ™ platforms and the AudioMate IP gateways. Segment information is further described in Note 8.

LEASE ACCOUNTING

LEASE ACCOUNTING

We determine if an arrangement is a lease, or contains a lease, at inception and record the leases in our financial statements upon lease commencement, which is the date when the underlying asset is made available for use by the lessor.

We have a lease agreement with lease and non-lease components and have elected to utilize the practical expedient to account for lease and non-lease components together as a single combined lease component, from both a lessee and lessor perspective with the exception of direct sales-type leases and production equipment classes embedded in supply agreements. From a lessor perspective, the timing and pattern of transfer are the same for the non-lease components and associated lease component and, the lease component, if accounted for separately, would be classified as an operating lease.

We have elected not to present short-term leases on the balance sheet as these leases have a lease term of 12 months or less at lease inception and do not contain purchase options or renewal terms that we are reasonably certain to exercise. All other lease assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because our lease does not provide an implicit rate of return, we used our incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease payments.

In general, leases, where we are the lessee, may include options to extend the lease term. These leases may include options to terminate the lease prior to the end of the agreed upon lease term. For purposes of calculating lease liabilities, lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise such options.

Lease expense for operating leases is recognized on a straight-line basis over the lease term as cost of revenues or operating expenses depending on the nature of the leased asset. Certain operating leases provide for annual increases to lease payments based on an index or rate. We calculate the present value of future lease payments based on the index or rate at the lease commencement date.

Differences between the calculated lease payment and actual payment are expensed as incurred. Amortization of finance lease assets is recognized over the lease term as cost of revenues or operating expenses depending on the nature of the leased asset.

On December 2, 2022, and effective on January 1, 2023, the Company signed a two-year lease of 1,145 square feet for our principal offices in Clearwater, Florida. The monthly rent was $2,134 in year one and increases to $2,198 in year two. The lease expired on December 31, 2024. Our current office space lease is month-to-month.

The tables below present information regarding the Company’s operating lease assets and liabilities at March 31, 2025 and September 30, 2024:

Schedule of operating lease assets and liabilities
	March 31, 2025			September 30, 2024
Assets

Operating lease -right-of-use assets-non-current	$	-		$	5,983

Liabilities

Operating lease liability	$	-		$	6,506

Weighted-average remaining lease term (years)		-			0.25

Weighted-average discount rate		8	%		8	%

The components of lease expense were as follows:

Operating lease cost

Amortization on right-of-use operating lease asset	$	5,983		$	23,932
Lease liability expense in connection with obligation repayment		87			1,604
Total operating lease costs	$	6,070		$	25,536

Supplemental cash outflows information related to operation lease was as follows:

Operating cash outflows from operating lease (obligation payment)	$	6,594		$	26,184
Right-of-use asset obtained in exchange for new operating lease liability	$	-		$	-

At March 31, 2025, the Company has no financing leases as defined in ASC 842, “Leases.”

Future minimum lease payments required under leases that have initial or remaining non-cancelable lease terms in excess of one year at March 31, 2025:

Schedule of future minimum lease payments required under leases
2025	$	-
Total undiscounted cash flows		-
Less: amount representing interest		-
Present value of operating lease liability		-
Less: current portion of operation lease liability		(-)
Long-term operating lease liability	$	-