NOTE 7 -

EQUITY TRANSACTIONS

Preferred Stock

In June 2010, the Board of Directors voted to amend the Company's Articles of Incorporation in order to and authorize the issuance of 200 million shares of Preferred Stock with a par value of $0.001 per share. Concurrently, the Board designated the preferred stock as Series A Convertible Preferred Stock. Each share of Series A Convertible Preferred stock is convertible into the Company's common stock after two years at a conversion price of $0.01 per share at the holder's option. Each Series A Preferred Holder is also entitled to receive cumulative dividends at the rate of 8% of $1.00 per annum on each outstanding share of Series A Preferred then held by such Series A Preferred Holder, on a pro rata basis.

In May 2011, the Company issued 174,000 shares of Series A Convertible Preferred Stock to one shareholder in exchange for the shareholder's agreement to cancel 17,400,000 shares of the Company's common stock issued and registered to the shareholder.

In November 2010, the Company issued 250,000 shares of Series A Convertible Preferred Stock to one shareholder for $250,000 and in March 2011, the Company issued an additional 400,000 shares of Series A Convertible Preferred Stock to the same shareholder for $400,000.

In June 2010, the Company issued 250,000 shares of Series A Convertible Preferred Stock to one shareholder for $250,000.

Dividends payable on Series A Convertible Preferred Stock of approximately $66,000 are included in Accrued Expenses at September 30, 2011.

Common Stock

On April 21, 2011, the Board of Directors voted to increase the Company's  authorized shares of common stock to 1,250,000,000 shares.

Common Stock issued for cash

During the year ended September 30, 2010 the Company sold 13,736,625 units consisting of two shares of the Company's restricted common stock and a warrant for the purchase of one share of the Company's common stock at a price of $0.0364 per unit for net proceeds of $500,000. The unit sales were completed in five separate installments of 2,747,253 units each. The 13,736,625 warrants have an exercise price of $0.10 and were valued at approximately $10,000 using the Black Scholes Merton Option pricing model with the following range of assumptions for the five issuances - risk-free interest rate of 1.25% to 1.50%; expected dividend yield of 0%; expected life of 2 years; expected volatility of 80% to 90%. The common stock price range upon issuance was between $0.012 and $0.018 per share.

Common Stock issued for services

In April 2011, the Company authorized the issuance of 8,581,446 shares of the Company's common stock to two consultants in exchange for services valued at approximately $54,000.

In September 2011, two officers and directors of the Company converted accrued consulting fees of $50,800 into 8,795,556  shares of common stock. The Company accounted for these transactions pursuant to ASC 718-10 (formerly FASB 123(R)) and Staff Accounting Bulletin No. 107 under which costs or values are measured at the estimated fair market value of the consideration received or equities issued which ever is more readily determinable.

During the year ended September 30, 2010 the Company also issued 15,356,263 shares to consultants, officers and directors for services rendered during the year of approximately $182,000. Between December 2009 to February 2010, four individuals and two officers and directors of the Company converted accrued consulting fees of approximately $216,000 into 12,264,828 shares of common stock and the Company converted accounts payable of approximately $51,000 into 2,927,851 shares of common stock. The Company accounted for these transactions pursuant to ASC 718-10 (formerly FASB 123(R)) and Staff Accounting Bulletin No. 107 under which costs or values are measured at the estimated fair market value of the consideration received or equities issued which ever is more readily determinable.

Common Stock issued in lieu of cash dividends

In April 2011, the Company issued 2,372,409 shares of the Company's common stock to preferred shareholders in lieu of a cash dividend of $23,724.

Common Stock issued for conversion of notes and in connection with debt issuance

In January 2010, a shareholder converted a note payable and accrued interest of approximately $33,000 into 1,818,832 shares of common stock.

In December 2010, the Company issued 750,000 shares of common stock to two shareholders as discounts on notes payable in the amount of $15,000. The discounts are amortized to interest over the life of the respective notes.

Consultant Stock Plans

During the year ended September 30, 2011 the Company adopted the Cleartronic, Inc. 2011 Consultant Stock Plan to assist the Company in obtaining and retaining the services of persons providing consulting services to the Company. In April 2011, the Company filed a registration statement with the Securities and Exchange Commission registering 20,000,000 shares of the Company's common stock for issuance under the plan.

During the year ended September 30, 2005 the Company adopted the GlobalTel IP, Inc. 2005 Incentive Equity Plan (the "Plan") allocating up to five million shares of the Company's common stock to offer incentives to key employees, contractors, directors and officers. On July 18, 2007, the Board of Directors, pursuant to the Plan, granted 3,050,000 options to 4 employees (including 2 officers and directors), and 2 consultants at an exercise price of $0.275. The 2,000,000 options issued to the 2 officers and directors vested upon issuance and expire on July 31, 2012. In May 2008, the Board authorized an expansion of the number of shares allocated to the Plan to a total of 15,000,000 shares (10,000,000 additional shares of common stock). Pursuant to the Plan, in September 2008 the Board authorized a grant of 2,300,000 options to six employees (including 2 officers and directors) at an exercise price of $0.12 and expire December 31, 2013. In September 2009, pursuant to the Plan, the Board authorized a grant of 4,000,000 options to six consultants (including 2 officers and directors) at an exercise price of $0.03 per share that expire December 31, 2014. In September 2009, two officers and directors cancelled 1,250,000 options each. Each of the option cancellations were for 250,000 shares at an exercise price of $0.20 expiring March 1, 2010 and 1,000,000 shares at an exercise price of $0.275 per share expiring on July 31, 2012.

The following table summarizes information about stock options outstanding at September 30, 2011:

		Stock Options
		Shares		Wtd. Avg.      Exercise Price
Outstanding at September 30, 2009		8,450,000		$0.105
Granted/Issued		--		--
Exercised		--		--
Expired/Canceled		1,350,000		$0.200
Outstanding at September 30, 2010 Granted/Issued Exercised Expired/Canceled		7,100,000 -- -- --		$0.087 -- -- --
Outstanding at September 30, 2011		7,100,000		$0.087

The following table summarizes the number of outstanding options with their corresponding contractual life, as well as the exercisable weighted average (WA) outstanding exercise price, and number of vested options with the corresponding exercise price by price range.

	Outstanding					Exercisable
Range	Outstanding Options	WA Remaining Contractual Life		WA Outstanding Exercise Price	Vested Options		WA Vested Exercise Price
$0.00 to $0.030	4,000,000	4.25 yrs	$0.030			4,000,000		$0.030
$0.04 to $0.120 $0.20 to $0.275	2,300,000     800,000 7,100,000	2.25 yrs   0.84 yrs 2.45 yrs	$0.120      $0.275      $0.105			2,300,000    800,000 7,100,000		$0.120 $0.275 $0.087

In October 2010 the 2005 Incentive Equity Plan expired. During the year ended September 30, 2011, the Company granted no options and no options expired or were cancelled.

Outstanding options held by related parties as of September 30, 2011 and 2010 amounted 4,600,000.

Warrants

During the year ended September 30, 2011, 12,202,222 warrants were issued to three consultants for services rendered (including one officer and director). The Company recorded an expensed of $71,000 as a result of the issuance.

The Company applied fair value accounting for all share based payment awards. The fair value of each warrant granted is estimated on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes assumptions used are as follows:

Exercise price	$0.01 - $0.001
Expected dividends	0%
Expected volatility	199%
Risk free interest rate	0.96%
Expected life of warrant	5 years
Expected forfeitures	0%

During the year ended September 30, 2010, 13,736,625 warrants were issued to one shareholder as part of 5 unit purchase agreements, no warrants expired and no warrants were cancelled.

The following is a summary of the Company's warrant activity:

	Warrants		Weighted average exercise price
Outstanding at September 30, 2009	1,635,000		$               0.275
Granted	13,736,265		$               0.100
Exercised	-		$                    -
Outstanding at September 30, 2010	15,371,265
Granted	12,202,222		$               0.001
Exercised	-
Forfeited/Cancelled	(135,000)		$               0.200
Outstanding at September 30, 2011	27,438,487		$               0.070
Warrants exercisable at September 30, 2011	27,438,487		$               0.070
Warrants outstanding at September 30, 2011	27,438,487		$               0.070

The following table summarizes the number of outstanding warrants with their corresponding contractual life, as well as the exercisable weighted average (WA) outstanding exercise price, and number of vested warrants with the corresponding exercise price by price range.

	Outstanding					Exercisable
Range	Outstanding Warrants	WA Remaining Contractual Life		WA Outstanding Exercise Price	Vested Warrants				WA Vested Exercise Price
$0.001 to $0.275	27,438,487	1.92 yrs		$ 0.07	27,438,487		$ 0.07