Source: https://ir.stockpr.com/cleartronic/all-sec-filings/content/0001091818-19-000007/clri01152019form10k.htm?TB_iframe=true&height=auto&width=auto&preload=false
Timestamp: 2019-04-20 14:53:33+00:00

Document:
The aggregate market value of the registrants common stock held by non-affiliates of the registrant on March 30, 2018 (based on the closing sale price of $0.06 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 $7,020,000. 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, 2018 the registrant had outstanding 203,899,190 shares of common stock, par value $0.00001 per share.
Management and Related Stockholder Matters.
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.
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.
We were initially incorporated on November 4, 1999, as Menu Sites, Inc., a Florida corporation. On March 9, 2001, we changed our name to CNE Communications, Inc. On October 1, 2004, we changed our name to CNE Industries, Inc. On March 29, 2005, we changed our name to GlobalTel IP, Inc. On May 9, 2008, we changed our name to Cleartronic, Inc.
All of our operations are conducted through our wholly owned subsidiaries, VoiceInterop, Inc., a Florida corporation, incorporated on November 13, 2007, and ReadyOp Communications, Inc., a Florida corporation, incorporated on September 15, 2014, which facilitate the marketing and sales of ReadyOp™ software and AudioMate IP gateways, discussed below.
We do not currently have sufficient capital to conduct the present or proposed business activities described below. The costs to operate our business are approximately $115,000 per month. In order for us to cover our monthly operating expenses, we must generate revenues of approximately $175,000 per month. Accordingly, in the absence of revenues, we must secure $115,000 in equity or debt capital each month to cover our overhead expenses. In order to remain in business for one year without any revenues, we must secure $1,380,000 in equity or debt capital. If we are unsuccessful in securing sufficient capital or revenues, we will be unable to continue any business activities. We have not obtained any commitments for additional capital, and we may not be able to obtain any additional capital on terms not unfavorable to us, if at all.
From March 2005 to October 2007, we were primarily engaged in providing telecommunications services to our customers employing Voice over Internet Protocol (VoIP) technology. In October 2007, we sold substantially all of our assets utilized in that business. Prior to 2005, we were a website development company.
We are now a provider of Internet Protocol, or IP, unified group communication solutions. The products used in our solutions include our own proprietary products as well as products from other software and hardware vendors.
We have designed and customized standards based audio and voice collaboration solutions for prospective customers as part of a unified group communication system. We consider all aspects of a potential customers information technology resources and existing telecommunications network in creating a design best suited for that customer. In 2013, we developed our own proprietary group communication solution and have built and installed four of these solutions as of the filing date of this report. Prior to developing our own solution we used WAVE software as the core component. We have designed, built and installed 20 unified group communication solutions as of the filing date of this report, 14 of which utilize WAVE software. In November 2013, we discontinued using WAVE software as a component in our unified communication solution installations.
Revenues have been generated from the design, construction and installation of the group communication systems. We have also generated revenues from maintenance and support contracts, once a unified group communication solution has been installed and tested. While we no longer sell WAVE based systems we will continue to support the installations that we have previously installed. We also sell our proprietary line of Internet Protocol Gateways which we have branded the AudioMate 360 IP Gateway, discussed below. These units are currently being sold directly to end-users and by Value Added Resellers (VARs). As of the date of this filing, we have approximately 10 active VARs, and we have sold our gateways to more than 1,000 end-users in the United States and 18 foreign countries.
We have developed an Internet Protocol Gateway which we call the AudioMate 360 IP Gateway. The AudioMate 360 IP Gateway has been designed to provide an Internet Protocol Gateway to users of unified group communications. The AudioMate 360 IP Gateway is available in different configurations which enable it to be used with various types of communications equipment.
Although other devices are available that perform the same or similar functions, we believe that our price for the AudioMate 360 IP Gateway is substantially lower than the prices others are presently charging for similar devices. If we are unable to provide the AudioMate 360 IP Gateway to our prospective customers at substantially lower prices than others are charging for similar gateways, our business will be materially adversely affected.
We do not have any other products at this time.
In March 2015, the Company amended its Licensing Agreement with Collabria LLC of Tampa, Florida (Collabria). The Agreement grants the Company master distribution rights to market, sell and support Collabrias command and control software, trade-named ReadyOp. ReadyOp software is designed for fast, efficient access to information and for communication with multiple persons, groups and agencies. This agreement will remain in effect for an initial term of five years unless either the Company or Collabria sooner terminates the agreement. Upon expiration of the agreement, the Companys only obligation to Collabria shall be the payment of all outstanding obligations to Collabria. In September 2014, the Company formed ReadyOp Communications, Inc. (a Florida corporation), as a wholly owned subsidiary to facilitate the marketing of ReadyOp software. According to the terms of the agreement ReadyOp Communications will pay Collabria a royalty for all ReadyOp software sold.
In November 2016, the Company cancelled its Licensing Agreement with Collabria LLC of Tampa, Florida (Collabria) and acquired all of the intellectual property related to Collabrias command and control software, trade-named ReadyOp. In addition the Company acquired Collabrias client list. In exchange for these assets the Company issued Collabria 3,000,000 shares of the Companys restricted Series E Convertible Preferred stock with a fair value of $292,240. The Company assumed none of Collabrias liabilities.
Unified group communications and coordination within and between agencies for response actions to incidents and emergencies has been a challenge for many years. The result has been inefficiencies and in some cases the loss of lives, time and money during response activities. Governmental agencies, hospitals and other organizations experience these same interoperability failures.
We believe that ReadyOp™ software is a new approach to communication, coordination and interoperability that is simple, flexible, low-cost and is already in use by many agencies and enterprises in the governmental and private sectors.
ReadyOp is a simple, innovative web-based planning and communications platform for efficiently and effectively planning, managing, communicating, and directing activities within a single organization or in a unified command structure. ReadyOp is a comprehensive solution with multiple means of communications in a single program, including interoperable communications for radios and other devices. ReadyOps flexibility supports daily operations, exercises and response activities including multi-agency and multi-location operations. ReadyOp is a single platform that provides communications, coordination, collaboration and critical response capabilities for first responders and other organizations.
Communication challenges and coordination failures within and between organizations have been well documented and remain a part of the final report for most every exercise and major incident. This is especially evident when multiple agencies are involved in a response effort. In 2003, Homeland Security Presidential Directive-5 (HSPD-5) created the National Incident Management System (NIMS). NIMS is intended to provide a consistent template for government, private sector, and nongovernment organizations to work together during incidents and emergencies.
NIMS was used to create the Incident Command System (ICS) for first responders. ICS is essentially an organizational chart with assigned roles for responsibilities during incident response. Each role has assigned tasks to be accomplished, the goal being that all persons assuming the various roles complete their assigned tasks. Use of ICS is mandated for all law enforcement, fire and other government agencies at all levels plus seaports, airports, universities and hospitals. ReadyOp was initially designed based on the structure of ICS, but has evolved into a full response and communications platform.
If we are able to continue our business activities, our business will be dependent on our intellectual property, some of which we have developed for our software and hardware applications. We do not have any trade secret confidentiality agreements. 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 and licensing arrangements, to establish and protect our rights to our technology and other intellectual property. We cannot foretell if these procedures and arrangements will be adequate in protecting our intellectual property.
We have filed a patent application with the United States Patent and Trademark Office in connection with various configurations of our AudioMate 360 IP Gateway. 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. On March 13, 2012, the United States Patent Office notified us 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. It may be that one or more of our 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.
We have obtained trademarks on ReadyOp and VoiceInterop.
Because of our limited resources, we 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 in our industry have substantially greater resources than we do 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 we may obtain. Even if we prevail, the cost and management distraction of litigation could have a material adverse effect on us.
Because 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 us 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 we rely may not adequately protect us, our 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 us.
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.
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.
Our 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. Our future success will depend upon our ability to continue to develop and introduce a variety of new products and product enhancements to address the increasingly sophisticated needs of our customers. We may experience delays in releasing new products and product enhancements in the future. Material delays in introducing new products or product enhancements may cause customers to forego purchases of our products and purchase those of our competitors.
We do not anticipate that our business will be affected by seasonal factors.
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 a rise in cost.
Leverage the scale, expertise and purchasing power of specialized contract manufacturers.
Currently, we have arrangements for the production of our gateways with a contract manufacturer in Florida. Our reliance on contract manufacturers 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. Our contract manufacturers can provide us with a range of operational and manufacturing services, including component procurement and performing final testing and assembly of our products. We intend to depend on our contract manufacturers to procure components and to maintain adequate manufacturing capacity.
We have also relied on a small number of suppliers for several key components utilized in the assembly of our AudioMate 360 IP Gateway. For example, our contract manufacturer has purchased a key component that is essential to the production of our gateways from a single source supplier. We have not identified any alternative suppliers for that component. Our contract manufacturer has maintained relatively low inventories and acquired components only as needed. As a result, our ability to efficiently respond to customer orders, if any, may be constrained by, among other things, the then-current availability or terms and pricing of necessary components. We may be unable to obtain a sufficient quantity of these components in a timely manner to meet the demands of our customers. In addition, we have no control over the prices of these components. Any delays or any disruption of the supply of these components could also materially and adversely affect our operating results.
The unified group communications industry is extremely competitive. Over the past year, the number of companies entering our industry has increased dramatically. Competitive pricing pressures can negatively impact profit margins, if any. Competitors include Cisco Systems, Inc., Tyco Electronics Ltd., Catalyst Communications Technologies, Inc., Telex, Inc., Federal Signal Corporation and Mutual-Link, Inc. as well as Motorola and its authorized dealers. These and other potential competitors are generally large and well capitalized and have substantially more experience than we do in our industry. Consequently, in order for Cleartronic to be successful in its intended operations, it must be able to compete effectively against its competitors. If Cleartronic cannot effectively compete for whatever reason, we will not be successful.
We have marketed our unified group communication solutions and AudioMate 360 IP Gateway through a commissioned sales person. The majority of our sales leads have come through sales persons, VARs and our website. If we are able to continue our business activities, we intend to expand the use of commissioned sales representatives to market and sell the ReadyOp™ software solution along with our AudioMate 360 IP Gateway line of Internet Protocol Gateways. We will continue to use our network of VARs to market our AudioMate 360 IP Gateway.
Our future financial success depends to a large degree upon the personal efforts of our key personnel. Richard J. Martin, our Chairman and Director, Michael. M. Moore, our Chief Executive Officer and Director, and Larry M. Reid, our President, Chief Financial Officer, Principal Accounting Officer, and Secretary and Director, and their intended designees will play the major roles in securing the services of those persons deemed capable to develop and execute upon our business strategy. While we intend to employ additional executive, development, and technical personnel in order to minimize the critical dependency upon any one person, we may not be successful in attracting and retaining the persons needed.
At present, Cleartronic has two executive officers, Larry M. Reid and Michael M. Moore. In March 2015, the Company entered into a new employment agreement with the Companys CEO, 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.
Unless Cleartronic shall have given Mr. Reid and 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, 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.
Mr. Moore will be paid a base salary of $16,667 per months. 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. is attached as an exhibit to this 10-K report.
We estimate that we will need at least $1.38 million to continue operations over the next 12 months. We will apply great efforts to raise through equity or debt offerings what we feel is sufficient working capital for our intended business plan by various means. If we are not able to raise additional capital, we will not be able to continue operations and our business may fail.
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 revenues in relation to our planned expenditures would 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.
As of the date of this report, we have eight employees, Michael M. Moore, our Chief Executive Officer and Director, Larry M. Reid, our President, Chief Financial Officer, Principal Accounting Officer, Secretary, and Director. James Concannon, Sales Director VoiceInterop, Inc., John Ohl, Engineering Director ReadyOp communications, Inc., Gene Hubbard, Technical Assistant ReadyOp Communications, Inc, Jennifer Ohl, Customer Service Manager, ReadyOp Communications, Inc. and Gabriel Saffold, Director Research and Development.
Our transfer agent is ClearTrust, LLC, whose address is 16540 Pointe Village Drive, Suite 206, Lutz, Florida 33558, and telephone number is (813) 235-4490.
Our principal executive offices are located at 8000 North Federal Highway, Suite 100, Boca Raton, Florida 33487, telephone (561) 939-3300. Our email address is info@cleartronic.com. The Cleartronic Internet website is located at www.cleartronic.com. The information contained in our website shall not constitute part of this report.
The Company executed a new lease with its current landlord on December 1, 2018. The Company leases approximately 1,700 square feet for its principal offices in Boca Raton, Florida at a monthly rental of approximately $3,630. The lease, which provides for annual increases of base rent of 4%, expires on November 30, 2021.
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 our customers but recognizes the inevitability of legal action in todays business environment as an unfortunate price of conducting business.
Our common stock has been traded on the OTCPINK since May 1, 2015, under the symbol CLRI. Previously, the shares of our common stock were traded on the OTCQB from May 16, 2013 until May 1, 2015.
The following table sets forth the high and low bid prices for our common stock on the OTCQB and OTCPINK as reported by various market makers. The quotations do not reflect adjustments for retail mark-ups, mark-downs, or commissions and may not necessarily reflect actual transactions.
As of December 31, 2018, we were authorized to issue 5,000,000,000 shares of our common stock, of which 203,899,190 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 8,617,275 shares are issued or outstanding. There is no trading market for the shares of our preferred stock.
We have not paid or declared any dividends on our common stock, nor do we anticipate paying any cash dividends or other distributions on our common stock in the foreseeable future. Any future dividends will be declared at the discretion of our board of directors and will depend, among other things, on our earnings, if any, our financial requirements for future operations and growth, and other facts as our 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 our 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, 2018 and 2017, the cumulative arrearage of undeclared dividends totaled $88,683 and $44,949, respectively.
(1) Includes shares available for future issuance under the Cleartronic 2011 Equity Incentive Plan.
(2) Includes shares remaining for issuance under the 2009 Consultant Stock Plan.
There were no purchases of our equity securities by Cleartronic or any affiliated purchasers during any month within the fiscal year covered by this report.
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.
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.
for the fiscal year end that there is a substantial doubt about our ability to continue as a going concern. In the absence of significant revenue and profits, we will be completely dependent on additional debt and equity financing. If we are unable to raise needed funds on acceptable terms, we will not be able to execute our business plan, develop or enhance existing services, take advantage of future opportunities, if any, or respond to competitive pressures or unanticipated requirements. If we do not obtain sufficient capital, we will not be able to continue operations.
As of September 30, 2018, Cleartronic had an accumulated deficit of $16,044,512, which included a net loss of $532,809 reported for the year ended September 30, 2018. Also, during the year ended September 30, 2018, we used net cash of $21,365 for operating activities. These factors raise substantial doubt about our ability to continue as a going concern.
While we are attempting to generate revenues, our cash position may not be significant enough to support our daily operations. Management intends to raise additional funds by way of an offering of our debt or equity securities. Management believes that the actions presently being taken to further implement our business plan and generate revenues provide the opportunity for Cleartronic to continue as a going concern. While we believe in the viability of our strategy to generate revenues and in our ability to raise additional funds, we may not be successful. Our ability to continue as a going concern is dependent upon our capability to further implement our business plan and generate revenues.
Year Ended September 30, 2018, Compared to Year Ended September 30, 2017.
Revenues. Revenues increased 125% to $782,232 in 2018, from $346,942 during 2017. This increase of approximately $435,290 was primarily due to increased sales of the ReadyOp software platform. Revenue from our other subsidiary, VoiceInterop, Inc., increased approximately 7% to $191,635 in 2018 to $179,377 in 2017, which is included in income from discontinued operations.
Cost of Revenues and Gross Margins. Cost of revenues increased from $83,543 in 2017, to $123,644 in 2018. Gross margins increased approximately to 84% or $685,588 in 2018 from $263,399 in 2017. The primary reason was due to the increased sales of ReadyOp software subscriptions which generate higher margins.
Operating Expenses. Operating expenses remained fairly consistent in 2018 which is $1,104,229 as compared to $1,107,967 during 2017. Operating expenses include selling expenses, administrative expenses, research and development costs and amortization and depreciation expense.
Selling Expenses. Selling expenses increased approximately 42% from $295,138 in 2017, to $420,123 in 2018, primarily due to increased travel expenses and salaries associated with additional sales staff.
Administrative Expenses. Administrative expenses decreased approximately 6% from $372,129 in 2017, to $348,330 in 2018, primarily due to a decrease in general office expense.
Research and Development Expenses. Research and development expenses increased approximately 110% to $222,256 in 2018, from $105,768 in 2017, due to additional development expense related to improvements and upgrades in the ReadyOP software platform.
Amortization and Depreciation Expenses. Amortization expense was $113,520 in 2018 and $334,932 in 2017 a decrease of 66%. The decrease was primarily due to the write off in the amount of $240,332 on a licensing agreement with Collabria LLC in the year ended September 30, 2017.
Other Income and Other Expense. Interest and other expense increased from $9,042 in 2017 to $13,324 in 2018. The increase was primarily due to an increase in interest expense associated with notes payable.
Net Loss. Net losses were $532,809 and $859,183 for 2018 and 2017, respectively.
Cash and cash equivalents decreased by $7,147 during the fiscal year ended September 30, 2018, to $413. Net cash used in operating activities for the fiscal year ended September 30, 2018, was $21,365 as compared to $258,951 for the fiscal year ended September 30, 2017, due primarily to the decrease was primarily due to the write off of the licensing agreement with Collabria in fiscal 2017. We funded our operating activities during the most recent fiscal year through financing activities that generated net proceeds of approximately $14,218.
At September 30, 2018, our total liabilities were $1,405,697, which included $502,178 in accounts payable, $169,673 in accrued expenses, $147,589 in notes payable stockholders, and $466,695 in deferred revenue.
We believe that in order to fund our business plan, we will need approximately $1,380,000 in new equity or debt capital. In the past, in addition to revenues and deferred revenues, we have obtained funds from the private sale of our debt and equity securities. We have also had discussions with several securities broker-dealers with respect to a private or public offering of our securities. Although none of such discussions has resulted in any funding, we intend to continue to have such discussions in the future. We also intend to continue to seek private financing from certain of our existing stockholders and others.
Our current operating expenses are approximately $115,000 per month. In order for us to cover our monthly operating expenses, we must generate approximately $175,000 per month in revenue. Accordingly, in the absence of sufficient revenues, we must raise $115,000 in equity or debt capital each month to cover our overhead expenses. In order to remain in business for one year without any revenues, we must secure $1,380,000 in equity or debt capital. If we are unsuccessful in securing sufficient capital or revenues, we will be unable to continue our business activities.
In November 2016, the Company sold 525,746 shares of Series A Convertible Preferred stock to a private investor and director for $262,873 in cash.
In September 2017, we issued an 8% promissory note to a shareholder and director for $35,000. The note matures on June 30, 2019.
In the year ended September 30, 2017, the Company repaid $33,920 of principal of notes payable to shareholders.
In October 2017, the Company issued two promissory note to a shareholder and director for $15,000 each. The notes bear 8% interest and mature June 30, 2019.
In October 2017, the Company repaid the principal amount of $7,891 of a note payable to a shareholder. In February 2018, the Company paid $7,891 of principal and $248 of accrued interest as full payment of a note payable to a shareholder that matured on December 31, 2017.
During the year ended September 30, 2018, Voiceinterop, Inc. committed to sell 600,000 shares of its common stock to private investors for $68,000. The share issuances are contingent upon a spin-off of the company from Cleartronic, Inc. As of September 30, 2018, $68,000 is recorded as due to unrelated parties as the spin-off has not been completed and the shares have not been issued. The amount is included in liabilities from discontinued operations.
Net cash provided by financing activities was $14,218 during fiscal 2018. This included $30,000 from proceeds from the issuance of notes payable stockholders offset by repayment of note payable shareholders. Net cash provided by financing activities was approximately $263,953 during fiscal year 2017. This included proceeds from the issuance of Convertible Preferred shares and note payable offset by repayment of notes payable shareholders.
Our consolidated financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States. Preparing financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by managements application of accounting policies. Critical accounting policies include revenue recognition and impairment of long-lived assets.
Revenue Recognition and Deferred Revenues. Unified group communication solutions consist of three elements to be provided to customers: software licenses and equipment purchased from third-party vendors, proprietary hardware that is manufactured on contract to required specifications and installation and integration of the hardware and software into the cohesive communication source.
The Company's revenue recognition policies are in accordance with Accounting Standards Codification 605-10 Revenue Recognition (ASC 605-10). Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the contract price is fixed or determinable, and collectability is reasonably assured. No right of return privileges are granted to customers after shipment. The Company recognizes revenue for the elements separately as the sales of the equipment and software, installation and integration, and support services represent separate earnings processes that are generally specified under separate agreements.
Revenue from the resale of equipment utilized in unified group communication solutions is recognized when shipped. For software licenses, the Company does not provide any services that are considered essential to the functionality of the software, and therefore revenue is recognized upon delivery of the software, provided (1) there is evidence of an arrangement, (2) collection of the fee is considered probable and (3) the fee is fixed and determinable.
The Company also provides support to customers under separate contracts varying from one to five years. The Companys obligations under its service contracts vary by the length of the contract. In all cases the Company is the primary obligor to provide first level support to the client. If the contract has less than one year of service and support remaining on the contract, it is classified as a current liability; if longer, it is classified as a non-current liability.
Installation and integration services are recognized upon completion.
Inventory. Inventory consists of 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 and no reserve for obsolescence was carried as of September 30, 2018 and 2017.
Recent accounting pronouncements issued by FASB, the AICPA and the SEC, did not, or are not believed by management to have a material impact on the Companys present or future financial statements.
The financial statements and related notes are included as part of this report as indexed in the appendix on page F-1, et seq.
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 the end of the period ended September 30, 2018, 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.
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.
Our management assessed the effectiveness of our internal control over financial reporting as of September 30, 2018. 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 period ended September 30, 2018, 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.
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 threer 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. With Martin at the helm for 15 years, SMARTLogix was positioned as the dominant player in the market and was acquired by a private equity firm in 2015. Graduating with an Engineering degree from The University of Buffalos School of Engineering, Martin was immediately recruited by Exxon to join their Management Development Program where he quickly rose through the ranks. Following a considerable tenure at Exxon, he leaped into entrepreneurship by purchasing a small Exxon distributorship in the Carolinas. As a result of his capable management, Culp Petroleum was transformed into a large southeast regional distribution company. While at Culp, Martin developed and implemented several disruptive 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. A proven leader in building companies and incorporating innovations, as well as a current member of several boards driving technology and growth, Martin will prove instrumental in guiding Cleartronics future.
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 jets. 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.
We do not currently have an Audit, Executive, Finance, Compensation, or Nominating Committee, or any other committee of the Board of Directors.
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.
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.
Our 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.
With respect to transactions involving real or apparent conflicts of interest, we have not adopted any written policies and procedures.
We have not adopted a Code of Ethics for Senior Executive Officers and Senior Financial Officers.
At present, Cleartronic has two one executive officers, Michael M. Moore and Larry M. Reid. We executed an Employment Agreement with Mr. Reid on March 13, 2015. The Employment Agreement replaces our 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.
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.
Mr. Reid is paid a base salary of $8,000 per month. In addition, Mr. Reid agreed to cancel 2,000,000,000 shares of common stock previously issued to him for conversion of Series C Preferred stock. As additional consideration for the cancellation of the common shares the Company agreed to issue Mr. Reid 200,000 shares of Series C Preferred stock.
Michael M. Moore is the Chief Executive Officer of the Company. We executed an Employment Agreement with Mr. Moore on November 28, 2016. Pursuant to the Employment Agreement (the Agreement), Cleartronic and Mr. Reid agreed that for a one year period beginning on November 28, 2016, 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. 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. 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.
(1) Mr. Reid is our President, Chief Financial Officer, Principal Accounting Officer, Secretary, and a director.
(2) Mr. Moore is our CEO and a director.
See Summary of Cash and Certain Other Compensation, above.
All directors and officers as a group.
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.
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 203,899,190 shares were issued and outstanding. 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 8,617,275 shares were issued and outstanding. Mr. Reid owns 1,077,586 shares of our Series C Convertible Preferred Stock. Mr. Martin owns 512,996 shares of our Series A Convertible Preferred stock and 1,070,000 shares of Series C Convertible Preferred stock. See below for a description of our preferred stock and voting rights.
Mr. Reid is our president, chief financial officer, principal accounting officer, secretary, and director.
With respect to the election of directors or other matters.
10,000,000 shares have been designated as Series D Preferred Stock, 670,904 of which are issued and outstanding.
10,000,000 shares have been designated Series E Preferred stock, of which 3,000,000 are issued and outstanding.
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 $0.50 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.
In November 2015, the Company entered into a promissory note for $40,000 with a stockholder, officer and director of the Company. The note bears an 8% interest rate, is unsecured and is due on December 31, 2017. In December 2017, the maturity date was extended to December 31, 2018. In January 2019, the maturity date was further extended to December 31, 2019.
During the year ended September 30, 2017, the Company issued an unsecured 8% promissory note maturing on December 31, 2018 to a shareholder and director for $35,000. In January 2019, the maturity date was further extended to June 30, 2019.
During the year ended September 30, 2017, the Company repaid the principal amount of $33,920 of a note payable to a shareholder.
In October 2017, the Company issued two promissory notes to a shareholder and director in the amount of $15,000 each. The notes bear 8% interest and mature on December 31, 2018. In January 2019, the maturity date was further extended to June 30, 2019.
In April 2018, a shareholder and director exchanged 53,500 shares of Series A Convertible Preferred stock for 1,070,000 shares of Series C Convertible Preferred Stock.
In September 2018 the Companys Chief Financial Officer and director exchanged one share of Series B Preferred stock for 800,000 shares of Series C Convertible Preferred Stock.
The aggregate 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, 2018 and 2017 were $26,000 and $26,000, respectively.
The aggregate audit-related fees billed by Liggett & Webb PA for professional services rendered for the audit of our annual financial statements for the fiscal years ended September 30, 2018 and 2017 was $ 0 and $ 0, respectively.
The aggregate tax fees billed by Liggett & Webb PA professional services rendered for tax services for the fiscal years ended September 30, 2018 and 2017 was $1,200 and $1,200, respectively.
There were no other fees billed by Liggett & Webb PA for professional services rendered during the fiscal years ended September 30, 2018 and 2017, other than as stated under the captions Audit Fees, Audit-Related Fees, and Tax Fees.
All financial statements are included in Item 8 of this report.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Convertible Promissory Note dated November 15, 2011, in the original principal amount of $60,000 issued to Asher Enterprises, Inc., filed as exhibit 10.1 to the registrants Form 10-Q on May 14, 2012, Commission File Number 333-135585.
Convertible Promissory Note dated January 19, 2012, in the original principal amount of $37,500 issued to Asher Enterprises, Inc., filed as exhibit 10.2 to the registrants Form 10-Q on May 14, 2012, Commission File Number 333-135585.
Promissory Note dated June 26, 2012, in the original principal amount of $10,000 issued to Dominic Albi, filed as exhibit 10.3 to the registrants Form 10-Q on August 20, 2012, Commission File Number 333-135585.
Convertible Promissory Note dated August 22, 2012, in the original principal amount of $37,500 issued to Asher Enterprises, Inc., filed as exhibit 4.12 to the registrants Form 10-K on January 14, 2013, Commission File Number 333-135585.
Amendment to Consulting Services Agreement dated October 1, 2008, between Larry M. Reid and the registrant, filed as exhibit 10.7 to the registrants Form 10-K on December 30, 2011, Commission File Number 333-135585.
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.
Software License Agreement dated August 15, 2014, between Collabria LLC and the registrant, filed as exhibit 10.11 to the registrants Form 8-K on August 20, 2014 Commission File Number 333-135585.
Convertible Promissory Note dated December 1, 2014, in the original principal amount of $38,000 issued to KBM Worldwide, Inc. filed as exhibit 10.9 to the registrants Form 10-K on January 13, 2015, Commission File Number 000-55329.
Convertible Promissory Note dated May 7, 2015 in the original amount of $43,000 issued to Vis Vires Group Inc. filed as exhibit 10.16 to the registrant's Form 10-K on January 13, 2016, Commission File 000-55329.
Securities Purchase Agreement dated May 7, 2015 between the registrant and Vis Vires Group Inc. in connection with the Convertible Promissory Note issued on even date filed as exhibit 10.17 to the registrant's Form 10-K on January 13, 2016, Commission File 000-55329.
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. .
Convertible Promissory Note dated December 7, 2015 for an amount up to $150,000 issued to JMJ Financial filed as exhibit 10.19 to the registrant’s Form 10-K on January 13, 2016, Commission File 000-55329.
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.
Employment Agreement dated November 28, 2016 between the registrant and Mr. Moore.
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.
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.
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.
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.
We have audited the accompanying consolidated balance sheets of Cleartronic, Inc. and Subsidiaries (the Company) as of September 30, 2018 and 2017, the related consolidated statements of operations, changes in stockholders deficit and cash flows for each of the two years in the period ended September 30, 2018 and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2018 and 2017, and the results of its operations and its cash flows for the years ended September 30, 2018 and 2017, in conformity with accounting principles generally accepted in the United States of America.
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 financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
Series A preferred stock - $.00001 par value; 1,250,000 shares authorized,512,996 and 566,496 shares issued and outstanding, respectively.
Series D preferred stock - $.00001 par value; 10,000,000 shares authorized,670,904 and 670,904 shares issued and outstanding, respectively.
Series E preferred stock - $.00001 par value, 10,000,000 shares authorized,3,000,000 and 3,000,000 shares issued and outstanding, respectively.
Common stock - $.00001 par value; 5,000,000,000 shares authorized,203,899,190 and 203,899,190 shares issued and outstanding, respectively.
During the year ended September 30, 2018, a shareholder and director exchanged one share of Series B Preferred stock for 800,000 shares of Series C Convertible Preferred stock.
During the year ended September 30, 2018, a shareholder and director exchanged 53,500 shares of series A Convertible Preferred stock for 1,070,000 shares of Series C Convertible Preferred stock.
During the year ended September 30, 2017, the Company acquired the ReadyOp software platform and Collabria's client list from Collabria LLC in exchange for 3,000,000 shares of Series E Convertible Preferred stock valued at $292,240.
Cleartronic, Inc. (the Company) was incorporated in the state of Florida on November 15, 1999.
The Company, through one of its wholly owned subsidiaries VoiceInterop, Inc., designs, builds and installs unified group communication solutions, including unique hardware and customized software, for public and private enterprises and markets those services and products under the VoiceInterop brand name.
In November 2016, the Company cancelled its Licensing Agreement with Collabria LLC of Tampa, Florida (Collabria) and acquired all of the intellectual property related to Collabrias command and control software, trade-named ReadyOp. along with Collabrias client list. In exchange for these assets the Company issued Collabria 3,000,000 share of the Companys Series E Convertible Preferred stock. The Company assumed none of Collabrias liabilities. In September 2014, the Company formed ReadyOp Communications, Inc. (a Florida corporation), as a wholly owned subsidiary to facilitate the marketing of ReadyOp software. The Companys two operating subsidiaries are VoiceInterop, Inc. and ReadyOp Communications, Inc.
The Companys two operating subsidiaries are Voiceinterop, Inc. and ReadyOp Communications, Inc.
The consolidated financial statements and accompanying notes have been prepared in conformity with accounting principles generally accepted in the United States of America. The consolidated financial statements include the accounts of Cleartronic, Inc. and its subsidiaries, VoiceInterop, Inc. and ReadyOp Communications, Inc. All intercompany transactions and balances have been eliminated.
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, equity transactions, valuation of deferred tax assets, estimated useful life of intangible assets, valuation of inventory and allowance for doubtful account.
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 at September 30, 2018 and 2017.
The Company provided $16,000 as allowance for doubtful accounts for the year ended September 30, 2018 and $2,000 for the year ended September 30, 2017.
In November 2016, the Company cancelled its Licensing Agreement with Collabria LLC. As a result of this cancellation, the remaining balance of the licensing agreement in the amount of $240,332 was expensed in the year ended September 30, 2017.
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, amortization expense recognized for the years ended September 30, 2018 and 2017 was $65,196 and $54,333, respectively. The Collabria customer base was valued at $96,640 to be amortized over two years, amortization expense recognized for the years ended September 30, 2018 and 2017 was0 $48,324 and $40,267, respectively.
The Company currently maintains cash balances at one FDIC-insured banking institution. Deposits held in noninterest-bearing transaction accounts are insured up to a maximum of $250,000 at all FDIC-insured institutions. At September 30, 2018 and 2017, the Company had no cash balances above the FDIC-insured limit, respectively.
The Company expenses research and development costs as incurred. For the years ended September 30, 2018 and 2017, the Company had $222,256 and $105,768, respectively, in research and development costs.
Unified group communication solutions consist of three elements to be provided to customers: software licenses and equipment purchased from third-party vendors, proprietary hardware that is manufactured on contract to required specifications and installation and integration of the hardware and software into the cohesive communication source.
Revenue from the resale of equipment utilized in unified group communication solutions is recognized when shipped. For software licenses, the Company does not provide any services that are considered essential to the functionality of the software, and therefore revenue is recognized upon delivery of the software, provided (1) there is evidence of an arrangement, (2) collection of the fee is considered probable and (3) the fee is fixed and determinable. Upon acquisition of the ReadyOp software platform, the Company changed its revenue recognition for ReadyOp software. For ReadyOp software the Company currently defers the license fee on issuance of the license and recognizes the revenue over the term of the agreement. This is due to the fact that the software license comes with customer support for the license period. The Company now provides support to customers which was previously provided by Collabria LLC. Royalties paid to software vendors are categorized as Cost of Goods Sold.
In accordance with accounting guidance now codified as FASB ASC 260 Earning 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.
As of September 30, 2018 and 2017, we had no options and warrants outstanding. As of September 30, 2018 and 2017, we had 512,996 and 566,496 shares of Series A Convertible Preferred stock outstanding, respectively. As of September 30, 2018 and 2017, Series A Convertible Preferred stock are convertible into 51,299,600 and 56,649,600 shares of common stock after a two-year period from the issuance date, respectively. As of September 30, 2018 and 2017 we have 4,433,375 and 2,563,375 shares of Series C Convertible Preferred stock outstanding, respectively. As of September 30, 2018 and 2017, the Series C shares are convertible into 22,166,875 shares and 12,816,875 shares of common stock, respectively. As of September 30, 2018 and 2017, we had 670,904 shares of Series D Convertible Preferred stock outstanding which are convertible into 3,354,520 shares of common stock. As of September 30, 2018 and 2017 we had 3,000,000 shares of Series E Convertible Preferred stock outstanding which are convertible after a two-year period from date of issuance.
The Company adopted ASC topic 820, Fair Value Measurements and Disclosures (ASC 820), Fair Value Measurements, effective January 1, 2009. 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.
Level 3: Inputs that are generally unobservable. 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 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 market on a first-in, first-out basis. The Company purchases completed circuit boards at a price that includes component parts and assembly charges. 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 and the Company recorded no reserve for obsolete inventory for the years ended September 30, 2018 and 2017.
Property and equipment are recorded at cost. For financial statement purposes depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the asset.
Expenditures for replacements, maintenance and repairs that do not extend the lives of the respective assets are charged to expense as incurred. When assets are retired, sold or otherwise disposed of, their costs and related accumulated depreciation are removed from the accounts and resulting gains or losses are recognized.
As of September 30, 2018 and 2017 all property and equipment had been fully depreciated.
The Company accounts for income taxes in accordance with accounting guidance now codified as FASB ASC Topic 740, Income Taxes, which requires that the Company recognizes income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recorded for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a tax rate change on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company records valuation allowance to reduce net deferred tax assets to the amount considered more likely than not to be realized. Changes in estimates of future taxable income can materially change the amount of such valuation allowances.
The Company is required to recognize measure, classify, and disclose in the financial statements uncertain tax positions taken or expected to be taken in the Companys tax returns. Management has determined that the Company does not have any uncertain tax positions and associated unrecognized benefits that materially impact the financial statements or related disclosures. Since tax matters are subject to some degree of uncertainty, there can be no assurance that the Companys tax returns will not be challenged by the taxing authorities and that the Company will not be subject to additional tax penalties, and interest as a result of such challenge. The federal and state income tax returns of the Company for the years ended September 30, 2018, 2017 and 2016 are subject to examination by the IRS and state taxing authorities generally for three years after they were filed. There are no tax examinations currently in process.
Advertising costs are expensed as incurred. The Company had advertising costs of $13,263 during the year ended September 30, 2018 and $6,850 during the year ended September 30, 2017.
Recent accounting pronouncements issued by the FASB, the AICPA and the SEC, did not, or are not believed by management to have a material impact on the Companys present or future financial statements.
In April 2016, the FASB issued ASU 201610 Revenue from Contract with Customers (Topic 606): identifying Performance Obligations and Licensing  .The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. Topic 606 includes implementation guidance on (a) contracts with customers to transfer goods and services in exchange for consideration and (b) determining whether an entitys promise to grant a license provides a customer with either a right to use the entitys intellectual property (which is satisfied at a point in time) or a right to access the entitys intellectual property (which is satisfied over time). The amendments in this Update are intended render more detailed implementation guidance with the expectation to reduce the degree of judgement necessary to comply with Topic 606. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.
During the years ended September 30, 2018 and 2017, and since inception, the Company has experienced cash flow problems. From time-to-time, the Company has experienced difficulties meeting its obligations as they became due. As reflected in the accompanying consolidated financial statements, the Company incurred net losses from operations of approximately $532,000 for the year ended September 30, 2018 and had working capital deficit of approximately $1.1 million as of September 30, 2018. The Company also had an accumulated deficit of approximately $16,000,000 and a stockholders deficit of approximately $1,180,000 at September 30, 2018.These matters raise substantial doubt about the Companys ability to continue as a going concern.
The Company believes the acquisition of the ReadyOp software platform along with the Collabria client list, will allow the Company to generate additional income through the sale of ReadyOp software and will result in expanding the distribution of the AudioMate AM360 line of IP gateway devices. In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management is currently seeking funding from significant shareholders and outside funding sources sufficient to meet its minimal operating expenses. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classifications of liabilities that might be necessary if the Company is unable to continue as a going concern.
On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act (the TCJA) that significantly reforms the Internal Revenue Code of 1986, as amended (the Internal Revenue Code). The TCJA, among other things, contains significant changes to corporate taxation, including reduction of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%, effective as of January 1, 2018; limitation of the tax deduction for interest expense; limitation of the deduction for net operating losses to 80% of current year taxable income and elimination of net operating loss carrybacks, in each case, for losses arising in taxable years beginning after September 30, 2018 (though any such tax losses may be carried forward indefinitely); modifying or repealing many business deductions and credits, including reducing the business tax credit for certain clinical testing expenses incurred in the testing of certain drugs for rare diseases or conditions generally referred to as orphan drugs; and repeal of the federal Alternative Minimum Tax (AMT).
The Company is still in the process of analyzing the impact to the Company of the TCJA. Where the Company has been able to make reasonable estimates of the effects related to which its analysis is not yet complete, the Company has recorded provisional amounts. The ultimate impact to the Companys consolidated financial statements of the TCJA may differ from the provisional amounts due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the TCJA. The accounting is expected to be complete when the Companys 2018 U.S. corporate income tax return is filed in 2019.
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, 2018 and 2017 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, 2018, the Company has an adjusted net operating loss carryforward of approximately $12,000,000 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.
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.
As of September 30, 2018 and 2017, the Company has unsecured notes payable to stockholders totaling $147,589 and $134,087, respectively. These notes range in interest from 8% to 15% which are payable quarterly. The notes mature on December 31, 2018. In January 2019, the maturity date on these notes were extended to June 30, 2019 and December 31, 2019.
During the year ended September 30, 2017, the Company issued an unsecured 8% promissory note maturing on December 31, 2018 to a shareholder and director for $35,000. In January 2019, the maturity date of this note was extended to June 30, 2019.
In October 2017, the Company issued two promissory notes to a shareholder and director in the amount of $15,000 each. The notes bear 8% interest and mature on December 31, 2018. In January 2019, the maturity date of this note was extended to June 30, 2019.
Interest expense on notes payable  stockholders was $13,324 and $12,643 for the years ended September 30, 2018 and 2017, respectively.
Stock is entitled to receive cumulative dividends, payable quarterly in either cash or equivalent shares of common stock 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 August 2012, the Board of Directors voted to amend the Companys Articles of Incorporation to designate the Series B Preferred Stock setting forth the rights and preferences of the Series B Preferred Stock. Among other things, the Certificate of Designation (i) authorizes 10 (ten) shares of the Corporations preferred stock to be designated as Series B Preferred Stock; (ii)grants no conversion rights to the holders of the Series B Preferred Stock; (iii) provides the holders of Series B Preferred Stock shall vote with the holders of the Corporations common stock and any class or series of capital stock of the Corporation hereafter created; and (iv) provides that if at least on 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 (2) times the sum of: i) the total number of shares of Common Stock which are issued and outstanding at the time of voting, plus ii)the total number of shares of any Preferred Stocks which are issued and outstanding at the time of voting.
In October 2012, the Board of Directors voted to amend the Companys Articles of Incorporation to designate the Series C and Series D Convertible Preferred Stock setting forth the rights and preferences of the Series C and D Convertible Preferred Stock, par value $.00001 per share. Among other things, the Certificate of Designation for the Series C Preferred (i) authorizes fifty million (50,000,000) shares of the Corporations preferred stock to be designated as Series C Convertible Preferred Stock; (ii) grants conversion rights to the holders of the Series C Preferred Stock; (iii) provides that each share of Series C Preferred Stock shall ten votes for any election or other vote placed before the shareholders of the Corporation; (iv) provides for anti-dilutive rights; (v) provides for liquidation rights; (vi) establishes the initial price at $2.50 per share; (vii) entitles the holder of the Series C Preferred Stock to receive dividends when, as and if declared by the Board of Directors. Among other things, the Certificate of Designation for the Series D Preferred (i) authorizes ten million (10,000,000) shares of the Corporations preferred stock to be designated as Series D Convertible Preferred Stock; (ii) grants conversion rights to the holders of the Series D Preferred Stock; (iii) provides that each share of Series D Preferred Stock shall ten votes for any election or other vote placed before the shareholders of the Corporation; (iv) provides for anti-dilutive rights; (v) provides for liquidation rights; (vi) establishes the initial price at $5.00 per share; (vii) entitles the holder of the Series D Preferred Stock to receive dividends when, as and if declared by the Board of Directors.
In December 2013, the Board of Directors voted to amend the Companys Articles of Incorporation to change the conversion rights of the Series C and Series D Convertible Preferred Stock. Each share of the Series C and Series D Preferred Stock is convertible into five shares of common stock.
In October 2016, the Board of Directors voted to amend the Companys Articles of Incorporation to designate the Series E Convertible Preferred Stock setting forth the rights and preferences of the Series E Convertible Preferred Stock, par value $.00001 per share. Among other things, the Certificate of Designation for the Series E Preferred (i) authorizes ten million (10,000,000) shares of the Corporations preferred stock to be designated as Series E Convertible Preferred Stock; (ii) grants conversion rights to the holders of the Series E Preferred Stock; (iii) provides that each share of Series E Preferred Stock shall be ten votes for any election or other vote placed before the shareholders of the Corporation; (iv) provides for anti-dilutive rights; (v) provides for liquidation rights; (vi) establishes the initial price at $1.00 per share; (vii) entitles the holder of the Series E Preferred Stock to receive dividends when, as and if declared by the Board of Directors.
In April 2018 a shareholder and director exchanged 53,500 shares of Series A Convertible Preferred stock for 1,070,000 shares of Series C Convertible Preferred Stock.
In November, 2016, the Board of Directors approved the Asset Purchase Agreement between the Company and Collabria LLC (Collabria). Under the terms of the Agreement, the Company acquired all of the intellectual property of Collabria, including its ReadyOp command, control and communication platform trade named ReadyOp (the ReadyOp Platform). In addition, the Company acquired Collabrias customer base (Collabria Client List). The Company assumed no liabilities of Collabria under this Agreement. The terms of the Agreement called for the Company to issue 3,000,000 (Three million) shares of restricted Series E Convertible Preferred stock to Collabria with a fair value of $292,240. Shares of the Series E Convertible Preferred have the following conversion rights and provisions: After a period of two (2) years following the date of issuance, each one (1) share of Series E Preferred shall be convertible into one hundred (100) shares of fully paid and non-assessable Common Stock at the sole option of the holder of Series E Preferred.
On September 13, 2012, the Board of Directors voted to increase the Companys authorized shares of common stock to 5,000,000,000 shares and to decrease the par value to $.00001 per share.
During the year ended September 30, 2018, VoiceInterop, Inc. committed to sell 600,000 shares of its common stock to private investors for $68,000. The shares issuance is contingent upon a spin-off of the Company from Cleartronic, Inc. into a separate company. As of September 30, 2018, $68,000 is recorded as due to unrelated parties as the spin-off has not been completed and the shares have not been issued. The amount is included in liabilities from discontinued operations ( see Note 9). The capital raised by Voiceinterop, Inc. was used to fund the due diligence on potential acquisition and legal fees associated with the spin-off.
The Company leases its office space from another entity that is also a stockholder. Rent expense paid to the related party was $57,534 and $60,258 for the years ended September 30, 2018 and 2017, respectively.
In November 2015, the Company entered into a promissory note for $50,000 with a stockholder, officer and director of the Company. The note bears an 8% interest rate, is unsecured and is due on December 31, 2017. In 2016, $10,000 of principal was converted into common stock, leaving the balance outstanding of $40,000. In December 2017, the maturity date was extended to December 31, 2018. In January 2019, the maturity date was further extended to December 31, 2019.
In October 2017, the Company issued two promissory notes to a shareholder and director in the amount of $15,000 each. The notes bear 8% interest and mature on December 31, 2018. In January 2019, the maturity date was exended to June 30, 2019.
The Company leases approximately 1,700 square feet for its principal offices in Boca Raton, Florida at a monthly rental of approximately $3,630. The Company excuted a new lease with it current landlord on December 1, 2018 which provides for annual increases of base rent of 4%, expires on November 30, 2021.
The Company rented office space on a month to month basis for its Tampa operations at a cost of $2,000 per month. The lease was terminated on June 1, 2018.
Rent expense incurred during the years ended September 30, 2018 and 2017 was $57,534 and $60,258, respectively.
No customer accounted for more than 10% of the Companys revenues for the year ended September 30, 2018 and 2017. As of September 30, 2018 two customers accounted for approximately 24% of the Companys total outstanding accounts receivable. As of September 30, 2017 two customers accounted for approximately 24% of the Companys total outstanding accounts receivable.
In March 2018, the Company approved a Letter of intent to be issued by its subsidiary VoiceInterop, Inc. to CanniPlus Global, Inc. The Company also approved that the Company 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 company approved an asset purchase agreement whereby VoiceInterop, Inc. would acquire the assets of CanniPlus Global, Inc. On May 31, 2018, the asset purchase agreement was cancelled due to major discrepancies in the schedule of assets to be acquired.
On April 23, 2018, the board of Directors declared a stock dividend for certain shareholders of the corporation. That each common shareholder would receive .075 shares of VoiceInterop, Inc. 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, Inc. common stock fo 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 SEC regarding a pending S-1 filing. As of January 21, 2019, the pending S-1 filing has not been submitted to the US SEC for approval.
In March 2018, the Company approved a Letter of intent to be issued by its subsidiary VoiceInterop, Inc. to CanniPlus Global, Inc. The Company also approved the spin-off VoiceInterop, Inc. 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 company approved an asset purchase agreement whereby VoiceInterop, Inc. would acquire the assets of CanniPlus Global, Inc. On May 31, 2018, the asset purchase agreement was cancelled due to major discrepancies in the schedule of assets to be acquired. Despite the cancellation of the asset purchase agreement, the Company intends to move forward with the spin-off of Voiceinterop, Inc. Therefore, the Company has discontinued operations of this subsidiary.
The following table illustrates the reporting of the discontinued operations included in the Statements of Operations for the year ended September 30, 2018 and 2017.
Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrants internal control over financial reporting.
The information contained in such Annual Report on Form 10-K, for the fiscal year ending September 30, 2018, fairly presents, in all material respects, the financial condition and results of operations of Cleartronic, Inc.
Michael M. Moore, Chief Executive Officer of Cleartronic, Inc.
Larry M. Reid, Chief Financial Officer andPrincipal Accounting Officer of Cleartronic, Inc.

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