10-Q: Cleartronic Swings to Profit on Strong Revenue Growth

Cleartronic, Inc. reported a significant turnaround, achieving net income of $184,463 for Q1 2026, driven by a 29.48% revenue increase.

Summary

• Cleartronic, Inc. reported a net income attributable to common stockholders of $184,463 for the three months ended December 31, 2025, a substantial improvement from a net loss of $59,468 in the prior year period.
• Total revenue increased by 29.48% to $1,252,539 for the quarter, up from $967,324 in the same period last year.
• The growth was primarily fueled by a rise in ReadyOp and Alastar platform licensing revenue, which increased from $851,301 to $1,004,282.
• Hardware sales and consulting fees also saw significant increases, with consulting income rising from $94,628 to $218,757.
• Gross profit improved to $1,077,576 from $752,386 year-over-year.
• Operating expenses increased by 10.70% to $894,787, mainly due to a 15.21% rise in administrative expenses, partially offset by lower selling expenses.
• Net cash provided by operating activities was $147,634, a positive reversal from net cash used in operations of $164,714 in the prior year.
• The company's stockholders' deficit decreased from $(356,650) at September 30, 2025, to $(161,844) at December 31, 2025.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a very positive report, marked by a strong return to profitability, robust revenue growth, and improved cash flow from operations. The reduction in stockholders' deficit further reinforces a positive financial trajectory, despite some increases in administrative costs and a noted chip shortage risk.

Positives

• Achieved a net income of $184,463 for the quarter, a significant turnaround from a net loss of $59,468 in the prior year.
• Revenue increased by 29.48% to $1,252,539, indicating strong demand for its software and hardware offerings.
• Gross profit rose substantially to $1,077,576 from $752,386, demonstrating improved profitability on sales.
• Net cash provided by operating activities was $147,634, a positive shift from cash used in operations in the previous year, indicating improved operational efficiency and cash generation.
• Stockholders' deficit significantly reduced from $(356,650) to $(161,844), improving the company's equity position.
• Interest income on treasury bill investments increased by $9,084, contributing to other income.

Negatives

• Administrative expenses increased by 15.21% to $861,467, primarily due to increased general business expenses, headcount, and personnel-related costs associated with new employees.
• The company continues to have a cumulative arrearage of undeclared dividends for Series A Preferred stock, totaling $298,711 as of December 31, 2025.
• The worldwide shortage of computer chips limits the ability to supply proprietary radio gateways, posing a potential constraint on hardware sales.

Risks

• Worldwide shortage of computer chips limits the ability to supply proprietary radio gateways to clients and other buyers.
• Concentration of cash balances at one FDIC-insured banking institution, although the amount exceeding insured limits was $0 as of December 31, 2025.
• The inevitability of legal action in today's business environment, despite no current litigation.
• The University of South Florida Research Foundation, Inc. (USFRF) has the right to purchase 5% of any equity securities issued in future offerings, which could dilute other investors' stakes or affect terms of future capital raises.

Future Outlook

The company plans to continue transitioning Alastar functionality into the ReadyOp platform and enhancing capabilities for existing and new clients for at least the next two years. Management believes its expectations regarding forward-looking statements are based on reasonable assumptions, but cautions that actual results may differ materially due to inherent risks and uncertainties.

Management Comments

• "Our expectations with respect to the forward-looking statements are based upon reasonable assumptions within the bounds of our knowledge of our business and operations."
• "In light of the risks and uncertainties inherent in all future projections, the inclusion of forward-looking statements in this prospectus should not be regarded as a representation that our objectives or plans will be achieved."
• "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 of this prospectus or to reflect the occurrence of unanticipated events."
• "Management will seek to minimize disputes with the Company’s customers but recognizes the inevitability of legal action in today’s business environment as an unfortunate price of conducting business."

Industry Context

StockSavvy.ai notes that Cleartronic's strong revenue growth in software licensing and consulting aligns with broader industry trends favoring SaaS models and specialized communication platforms, particularly for government and healthcare sectors. The increase in multi-year agreements for ReadyOp suggests a stable and growing customer base, a positive indicator in the competitive software market. The reported chip shortage risk for hardware sales is a common challenge across many tech-dependent industries, highlighting supply chain vulnerabilities.

Comparison to Industry Standards

• Cleartronic's 29.48% revenue growth significantly outperforms the average growth rate for many mature software and hardware companies, suggesting strong market penetration or expansion in its niche.
• The shift from a net loss to a net income of $184,463 is a strong indicator of improved operational efficiency and market traction, potentially placing it favorably against smaller, emerging competitors in the emergency communications and healthcare software space.
• The positive net cash from operating activities ($147,634) contrasts sharply with many early-stage or rapidly expanding tech companies that often burn cash, indicating a healthier financial position than some peers.
• The reduction in stockholders' deficit suggests a move towards financial stability, which is a positive sign compared to companies with persistent or increasing deficits.

Legal Proceedings

• Cleartronic is not engaged in any litigation at the present time and management is unaware of any claims or complaints that could result in future litigation.

Related Party Transactions

• Paid $9,000 to a related party consultant during the three months ended December 31, 2025.
• $807 was owed to the Principal Executive Officer for expenses as of December 31, 2025, which was paid in full in January 2026.

Stakeholder Impact

• Shareholders: Positive impact due to significant improvement in net income and cash flow, and reduction in stockholders' deficit. Series A preferred stockholders continue to have cumulative undeclared dividends.
• Customers: Continued support and enhancement of Alastar platform functionality integrated into ReadyOp, potentially improving service offerings. Potential impact from chip shortages on hardware availability.
• Employees: Increase in headcount and personnel-related costs suggests growth and job stability, particularly with new employees associated with the Alastar integration.
• Creditors: Improved financial health with positive net income and cash from operations, and reduced deficit, may enhance creditworthiness.

Next Steps

• Continue transitioning Alastar functionality into the ReadyOp platform and enhancing capabilities for existing and new clients for at least the next two years.
• Monitor and manage the worldwide shortage of computer chips to mitigate impact on proprietary radio gateway supply.
• Adopt ASU 2025-05 for its fiscal year beginning July 1, 2026.

Key Dates

Recommendation

The company's dramatic swing from a net loss to a substantial net income, coupled with nearly 30% revenue growth and positive operating cash flow, indicates a strong operational turnaround and robust business momentum. The reduction in stockholders' deficit further strengthens the balance sheet. While administrative costs increased and a chip shortage poses a risk, the overall financial performance and strategic integration of acquired assets suggest significant upside potential for investors. The company is demonstrating effective execution and improved financial health, making it an attractive investment.

Keywords

Cleartronic, ReadyOp, ReadyMed, Alastar, AudioMate, Software as a Service, SAAS, IP Gateways, Emergency Response, Communications Platform, Quarterly Report, Financial Results, SEC Filing, Technology, Software Licensing, Hardware Sales