10-K: Cleartronic Reports Strong Revenue Growth, Reduced Net Loss in FY2025

Cleartronic, Inc. announced a 31.26% increase in revenue and a significant reduction in net loss for the fiscal year ended September 30, 2025, driven by strong ReadyOp platform subscriptions.

Summary

• Revenue increased by 31.26% to $4,103,388 for the fiscal year ended September 30, 2025, up from $3,126,148 for the year ended September 30, 2024.
• The primary reason for the revenue increase was a rise in ReadyOp platform subscriptions, which grew from $2,414,949 in 2024 to $3,691,273 in 2025.
• Consulting fees and related income also saw a substantial increase, from $39,200 in 2024 to $326,920 in 2025, due to increased contract development activities.
• Net loss attributable to common stockholders decreased to $195,255 for the year ended September 30, 2025, compared to a net loss of $313,273 for the year ended September 30, 2024.
• Gross profit margins improved to 78.23% for the year ended September 30, 2025, from 72.29% for the year ended September 30, 2024.
• Operating expenses increased by 32.72% to $3,397,977 in 2025, primarily due to higher payroll and benefits costs associated with the acquisition of the Alastar platform.
• Research and development expenses significantly decreased to $8,000 in 2025 from $189,022 in 2024, mainly due to reduced spending on FedRAMP certification assistance.
• Cash and cash equivalents increased to $1,124,052 as of September 30, 2025, from $849,727 in the prior year.
• The company acquired a group of assets from Alastar, Inc. for $50,000 on August 1, 2024, classifying the client list as an intangible asset to be amortized over 5 years.
• A material weakness in internal control over financial reporting identified in the prior year (FY2024) has been fully remediated as of September 30, 2025.

Sentiment

Score: 6

Explanation: The company showed strong revenue growth and a reduced net loss, indicating operational improvements. However, the continued net loss, increased operating expenses, and several corporate governance deficiencies temper the positive financial trends. The FedRAMP delay and reliance on key personnel also add a layer of caution.

Positives

• Revenue increased by 31.26% to $4,103,388 in FY2025, demonstrating strong top-line growth.
• ReadyOp platform subscription revenue significantly increased from $2,414,949 in 2024 to $3,691,273 in 2025.
• Gross profit margins improved to 78.23% in FY2025 from 72.29% in FY2024, indicating better cost management relative to revenue growth.
• Net loss attributable to common stockholders decreased by 37.7% to $195,255 in FY2025 from $313,273 in FY2024, showing progress towards profitability.
• Cash and cash equivalents increased to $1,124,052 at year-end 2025, up from $849,727 in 2024, improving liquidity.
• The material weakness in internal control over financial reporting from the prior year has been fully remediated.
• Deferred revenue increased to $1,791,311 in 2025 from $1,373,325 in 2024, indicating strong future revenue recognition.

Negatives

• Operating expenses increased by 32.72% to $3,397,977 in FY2025, primarily due to higher payroll and benefits costs associated with the Alastar acquisition.
• Sales of ReadyOp hardware products decreased significantly from $671,999 in 2024 to $85,195 in 2025.
• Net cash provided by operating activities decreased to $284,118 in 2025 from $414,901 in 2024.
• The company continues to operate at a net loss, with an accumulated deficit of $15,599,119 as of September 30, 2025.
• Cumulative arrearage of undeclared dividends for Series A Preferred stock totaled $288,365 as of September 30, 2025.
• The allowance for doubtful accounts increased to $150,308 in 2025 from $60,665 in 2024, suggesting higher credit risk or less collectable receivables.
• The company has a month-to-month lease for its principal offices effective January 1, 2025, which could introduce uncertainty regarding office space.

Risks

• Business reliance on third parties to provide technology.
• Ability to integrate and manage acquired technology, assets, companies, and personnel.
• Changes in market conditions, the volatile and intensely competitive environment in the business sectors, and rapid technological change.
• Dependence on key and scarce employees in a competitive market for skilled personnel.
• Sales to government entities are subject to a number of challenges and risks, including the ongoing FedRAMP authorization process.
• Reliance on contract manufacturing for AudioMate gateways involves risks such as the absence of adequate capacity, ownership of certain elements of electronic designs, and reduced control over delivery schedules.
• Inability to adequately protect intellectual property rights, including patents, trademarks, and trade secrets, especially in foreign countries.
• Potential for infringement actions if the company uses technology claimed under patents of others, leading to significant liabilities or requiring cessation of technology use.
• Limited resources to protect or challenge patents, making the company vulnerable to larger competitors in litigation.
• Future operating results may vary from quarter to quarter due to factors outside of control, making revenue and results difficult to forecast.
• Inability to adjust spending rapidly enough to compensate for any unexpected revenue shortfall.
• Concentration of cash balances at one FDIC-insured banking institution, with $23,583 in excess of insured limits as of September 30, 2025.
• Interruption of adequate supply of components, primarily computer chips, to manufacturing sources, limiting the ability to supply proprietary radio gateways.
• The company has not adopted written policies and procedures for conflicts of interest.
• The company has not adopted a Code of Ethics for Senior Executive Officers and Senior Financial Officers.
• Non-compliance with Section 16(a) beneficial ownership reporting requirements by executive officers, directors, and greater than 10 percent beneficial owners.
• As a small company with a limited number of employees, there is an inherent issue of segregation of duties.
• The company has a full valuation allowance against its deferred tax assets due to a history of consolidated net losses and no indication of a trend reversal.
• A cumulative change in ownership of more than 50% within a three-year period could lead to an annual limitation on the use of net operating loss carryforwards.

Future Outlook

The company expects to complete its FedRAMP Authorization process in early 2026, which is anticipated to expand usage by additional federal government agencies. It also plans to continue transitioning and enhancing Alastar functionality into the ReadyOp platform for at least the next two years. The company's future success depends on its ability to develop and introduce new products and services to meet evolving customer needs.

Management Comments

• Our future financial success depends to a large degree upon the personal efforts of our key personnel, Michael M. Moore, our Chief Executive Officer (CEO) and Director, and Larry M. Reid, our Chief Financial Officer (CFO), Secretary and Director.
• We are not aware of any direct competitors for ReadyOp, ReadyMed or the Alastar platform that offer the same combinations of capabilities and function.
• We continue to develop and enhance the ReadyOp/ReadyMed platforms and to integrate the Alastar platform capabilities into ReadyOp to improve the value and increase the potential market size and growth of our client clientele.
• Management believes that significant progress has been made in enhancing internal controls as of September 30, 2025 and has concluded that the enhanced controls are operating effectively. The material weakness described in Part II, Item 9A, Controls and Procedures in our Annual Report on Form 10-K for the year ended September 30, 2024 has been fully remediated.
• 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.

Industry Context

The company operates in the unified communications and emergency response software industry, characterized by rapid technological changes and evolving customer requirements. While the company claims no direct competitors for its unique combination of ReadyOp, ReadyMed, and Alastar platforms, it acknowledges similar programs like WebEOC and Everbridge. The ongoing FedRAMP authorization process is crucial for expanding its footprint within the federal government sector, aligning with a broader trend of increased cybersecurity and compliance requirements for cloud services in government. The reliance on contract manufacturing is a common industry practice to avoid capital expenditures and leverage specialized expertise, but it also introduces supply chain risks, particularly given the current worldwide shortage of computer chips.

Comparison to Industry Standards

• The company states it is 'not aware of any direct competitors for ReadyOp, ReadyMed or the Alastar platform that offer the same combinations of capabilities and function,' suggesting a unique market position.
• It notes that similar programs like WebEOC and Everbridge exist, but ReadyOp provides different capabilities and is priced lower, with some clients using ReadyOp in addition to these other programs.
• The company's gross profit margin of 78.23% in FY2025 is strong for a software-as-a-service (SaaS) business, often indicating a scalable model with high value, aligning with high-margin SaaS models.
• The ongoing net loss and accumulated deficit, despite revenue growth, suggest the company is still in a growth or investment phase, which is not uncommon for technology companies, but it contrasts with mature, profitable industry leaders.
• The company's pursuit of FedRAMP authorization is a standard and necessary step for cloud service providers aiming to secure significant federal government contracts, indicating an alignment with industry best practices for government-facing solutions.

Corporate Governance

Legal Proceedings

• The company is not engaged in any litigation at the present time.
• Management is unaware of any claims or complaints that could result in future litigation.

Related Party Transactions

• The company paid $36,000 to a related party consultant during the year ended September 30, 2025 (compared to $39,000 in 2024).
• As of September 30, 2024, the company owed $1,024 to its Chief Executive Officer for operating expenses, which was repaid in October 2024.
• Prior to September 30, 2024, the company advanced $53,302 to VoiceInterop, its former wholly-owned subsidiary, and recorded $5,589 in interest receivable. In September 2024, the company took a bad debt expense of $58,891 for the uncollectible note and interest receivable from VoiceInterop.

Stakeholder Impact

• Shareholders: Reduced net loss and revenue growth are positive, but the accumulated deficit, preferred stock dividend arrearage, and corporate governance deficiencies may concern some investors. The stock repurchase program, though not yet utilized, could benefit shareholders if implemented.
• Employees: Increased payroll and benefits costs due to the Alastar acquisition suggest growth in the workforce. The company's dependence on key personnel highlights their importance.
• Customers: Continued development and integration of platforms (ReadyOp, ReadyMed, Alastar) aim to improve value and expand market size, potentially benefiting existing and new customers. The FedRAMP certification will enhance trust for government clients.
• Suppliers/Contract Manufacturers: Reliance on contract manufacturers for AudioMate gateways means their operational stability and component supply (e.g., computer chips) directly impact the company's ability to deliver products.
• Creditors: Improved liquidity with increased cash balances and reduced net loss could be viewed positively, but the accumulated deficit and preferred stock dividend arrearage remain considerations.

Next Steps

• Complete the FedRAMP Authorization process, expected in early 2026, to expand usage by federal government agencies.
• Continue transitioning and enhancing Alastar functionality into the ReadyOp platform for at least the next two years.
• Expand the use of commissioned sales groups and individual sales representatives to market and sell programs and gateways.
• Employ additional executive, development, and technical personnel to minimize dependency on key individuals.
• Monitor new accounting pronouncements issued by the FASB for potential material impact.
• Address the cumulative arrearage of undeclared dividends for Series A Preferred stock.

Key Dates

Recommendation

While Cleartronic demonstrated strong revenue growth and a reduced net loss, indicating operational improvements and market traction for its software platforms, several factors warrant a 'hold' recommendation. The company continues to operate at a net loss with a significant accumulated deficit, and cash flow from operations decreased year-over-year. Corporate governance issues, including the lack of key board committees and a code of ethics, along with non-compliance in Section 16(a) filings, present notable risks. The delay in FedRAMP certification and supply chain risks for hardware also add uncertainty. The positive momentum in software subscriptions is encouraging, but the underlying structural and governance concerns suggest a cautious approach until further improvements in profitability and corporate oversight are demonstrated.

Keywords

Cleartronic, CLRI, ReadyOp, ReadyMed, Alastar, AudioMate, SAAS, Software as a Service, Emergency Response, Communications Platform, Government Contracts, FedRAMP, Financial Results, Annual Report, 10-K, Software Licensing, Hardware Sales, Intellectual Property, Corporate Governance, Net Loss Reduction, Revenue Growth