Cleartronic, Inc. (Form: 10-Q, Received: 02/14/2011 17:59:36)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_____________

FORM10-Q


(Mark One)
[ X ]	Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the quarterly period ended December 31, 2010

[ ]	Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the transition period from to

Commission File Number: 333-135585

Cleartronic, Inc.

(Exact name of registrant as specified in it’s charter)

Florida 65-0958798

(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

8000 North Federal Highway, Boca Raton, Florida 33487

(Address of principal executive offices) (Zip Code)

561-939-3300

( Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X _ No __ __

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period than the registrant was required to submit and post such files). Yes ____ No ___

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer ____

Accelerated filer ____

Non-accelerated filer ____

Smaller reporting company _ X_

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ___ No _ X_

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ___ No ___

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 132,307,758 shares as of February 14, 2011

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements


CLEARTRONIC, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets



ASSETS

	December 31,	September 30,
	2010	2010
	(unaudited)
Current assets:
Cash	$ 73,478	$ 22,348
Accounts receivable, net	63,787	5,019
Inventory	69,411	51,076
Prepaid expenses and other current assets	23,656	32,407

Total current assets	230,332	110,850

Property and equipment, net	21,299	25,270

Total assets	$ 251,631	$ 136,120


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)


Current liabilities:
Accounts payable	$ 241,706	$ 243,887
Accrued expenses	113,587	79,950
Deferred revenue, current portion	28,736	8,503
Notes payable - stockholders	120,494	121,180

Total current liabilities	504,523	453,520

Long Term Liabilities
Notes Payable - Stockholders	25,000	25,000
Deferred revenue, net of current portion	10,670	1,063

Total long term liabilities	35,670	26,063

Total liabilities	540,193	479,583

Stockholders' equity (deficit):
Series A preferred stock - $.001 par value; 200,000,000 shares authorized,
500,000 and 250,000 shares issued and outstanding, respectively	500	250
Common stock - $.001 par value; 750,000,000 shares authorized,
132,307,758 and 71,717,454 shares issued and outstanding, respectively	132,308	132,308
Additional paid-in capital	6,257,303	6,007,553
Accumulated Deficit	(6,678,673)	(6,483,574)

Total stockholders' equity (deficit)	(288,562)	(343,463)

Total liabilities and stockholders' equity (deficit)	$ 251,631	$ 136,120

The accompanying notes are an integral part of these condensed consolidated financial statements


CLEARTRONIC, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)



		For three	For three
		months ended	months ended
		December 31,	December 31,
		2010	2009


	Revenue	$ 180,442	$ 67,164

	Cost of Revenue	86,095	32,347

	Gross Profit	94,347	34,817


	Operating Expenses:
	Selling expenses	34,477	15,237
	Administrative expenses	208,513	156,349
	Research and development	26,398	44,876
	Depreciation	3,971	7,852

	Total Operating Expenses	273,359	224,314

	(Loss) from operations	(179,012)	(189,497)

	Interest and other expenses	(16,087)	(13,769)

	Net (loss)	$ (195,099)	$ (203,266)

	(Loss) per share - basic and diluted	$ (0.0015)	$ (0.0026)

	Weighted average of shares outstanding:
	Basic and diluted	132,307,758	77,670,604

The accompanying notes are an integral part of these condensed consolidated financial statements


CLEARTRONIC, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

		For three	For three
		months ended	months ended
		December 31,	December 31,
		2010	2009

	Net (Loss)	$ (195,099)	$ (203,266)

	Adjustments to reconcile net (loss) to net cash
	(used) in operating activities:
	Depreciation	3,971	7,852
	Common stock and warrants issued for services	-	100,000
	Amortization of notes payable discount	937	8,781
	(Increase) decrease in assets:
	Accounts receivable	(58,768)	1,140
	Inventory	(18,335)	8,871
	Prepaid expenses and other current assets	7,778	(17,052)
	Increase (decrease) in liabilities:
	Accounts payable	(2,181)	46,984
	Accrued expenses	32,890	43,061
	Customer deposits	783	-
	Deferred revenue	29,840	(4,812)

	Net Cash Used in Operating Activities	(198,184)	(8,441)

	Cash Flows From Investing Activities:
	Purchase of property and equipment	-	(4,004)

	Net Cash Used In Investing Activities	-	(4,004)

	Cash Flows From Financing Activities:
	Bank overdraft	-	576
	Principal payments on notes payable	(686)
	Proceeds from issuance of preferred stock	250,000	-
	Proceeds from notes payable	-	5,000

	Net Cash Provided by Financing Activities	249,314	5,576

	Net Increase (decrease) in Cash	51,130	(6,869)

	Cash - Beginning of Period	22,348	8,273

	Cash - End of Period	$ 73,478	$ 1,404


	SUPPLEMENTAL CASH FLOW INFORMATION:
	Cash paid for interest	$ 5,149	$ 2,153

The accompanying notes are an integral part of these condensed consolidated financial statements

CLEARTRONIC, INC. AND SUBSIDARY

Notes to Condensed Consolidated Financial Statements

December 31, 2010

NOTE 1 -

ORGANIZATION

Cleartronic, Inc. (the “Company”) was incorporated in Florida on November 15, 1999. The Company was originally formed as a website developer under the name Menu Sites, Inc., which ceased operations in 2002. In 2005, the Company became a provider of Voice Over Internet Protocol (VOIP) services and re-seller of international pre-paid telecommunication services through Interactive Media Technologies, Inc., (“IMT”), a related party, and was renamed GlobalTel IP, Inc. In August 2008, the Company ceased re-selling international pre-paid telecommunication services and sold back to IMT certain VoIP assets and began to transition its remaining VoIP business into managed unified group communication operations and development of VoIP related products and services.

In November 2007, the Company formed, as Florida corporations, two wholly-owned subsidiaries: Gulf Telco, Inc. and VoiceInterop, Inc. VoiceInterop, Inc. is the operating subsidiary of the Company and Gulf Telco, Inc. is currently inactive. In May 2008, the Company changed its name to Cleartronic, Inc. The Company now 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. The Company introduced its (patent pending) line of AudioMate360 IP gateway appliances in 2008 and continues to develop an Application Service Provider solution for voice interoperability to be marketed as a hosted interoperability solution for potential customers.

NOTE 2 -

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The accompanying unaudited interim consolidated financial statements contain the consolidated accounts of Cleartronic, Inc., VoiceInterop, Inc. and Gulf Telco, Inc. All material intercompany transactions and balances have been eliminated.

BASIS OF PRESENTATION

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q of Regulation S-K. They may not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements for the year ended September 30, 2010 included in the Company’s Annual Report on Form 10-K filed with the United States Securities and Exchange Commission. The unaudited interim consolidated financial statements should be read in conjunction with those financial statements included in the Form 10-K. In the opinion of management, all adjustments considered necessary for a fair presentation, consisting solely of normal and recurring adjustments have been made. Operating results for the three months ended December 31, 2010 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2011.

CLEARTRONIC, INC. AND SUBSIDARY

Notes to Condensed Consolidated Financial Statements

December 31, 2010

USE OF ESTIMATES

In preparing the 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.

ACCOUNTS RECEIVABLE

The Company provides an allowance for uncollectible accounts based upon a periodic review and analysis of outstanding accounts receivable balances. Uncollectible receivables are charged to the allowance when deemed uncollectible. Recoveries of accounts previously written off are used to credit the allowance account in the periods in which the recoveries are made.

The Company has an Accounts Receivable Purchase and Security Agreement with Bridgeport Capital Resources of Birmingham, AL. Under the terms of the agreement the Company sells certain acceptable accounts receivable to Bridgeport Capital at a discount to the receivable face value. Discounts can range between 2.25 and 6.25 percent depending on the length of time the receivable remains outstanding.

CONCENTRATION OF CREDIT RISK

The Company currently maintains cash balances at one banking institution. FDIC deposit insurance has temporarily increased from $100,000 to $250,000 per depositor through December 31, 2013. The Company did not have cash balances in excess the FDIC limits at December 31, 2010 and September 30, 2010.

RESEARCH AND DEVELOPMENT COSTS

The Company expenses research and development costs as incurred. For the three months ending December 31, 2010 and 2009, the Company had $26,398 and $44,876, respectively, in research and development costs from continuing operations.

CLEARTRONIC, INC. AND SUBSIDARY

Notes to Condensed Consolidated Financial Statements

December 31, 2010

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 three 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.

EARNINGS 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. Accordingly, for purposes of dilutive earnings per share, the Company excluded the effect of warrants and options. As of December 31, 2010 and 2009, the Company had outstanding options and warrants exercisable for an aggregate 22,336,265 and 10,850,000 shares of common stock, respectively.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s financial instruments consist primarily of cash, accounts receivable, accounts payable, accrued expenses and notes payable. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments.

CLEARTRONIC, INC. AND SUBSIDARY

Notes to Condensed Consolidated Financial Statements

December 31, 2010

INVENTORY

Inventory consists of components held for assembly and finished goods held for resale or to be utilized for installation in projects. Inventory is valued at lower of cost or market on a first-in, first-out basis. The Company’s policy is to record a reserve for technological obsolescence or slow-moving inventory items. No reserve was made for inventory balances as of December 31, 2010.

PROPERTY AND EQUIPMENT

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.

STOCK-BASED COMPENSATION

Effective January 1, 2006, the Company adopted the fair value recognition provisions of Accounting Standards Codification 718-10 “Compensation” (ASC 718-10) using the modified retrospective transition method. SFAS 123R requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense ratably over the requisite service periods. The Company has estimated the fair value of each award as of the date of grant or assumption using the Black-Scholes option pricing model, which was developed for use in estimating the value of traded options that have no vesting restrictions and that are freely transferable. The Black-Scholes option pricing model considers, among other factors, the expected life of the award and the expected volatility of the Company's stock price. In March 2005, the SEC issued SAB No. 107, Share-Based Payment ("SAB 107") which provides guidance regarding the interaction of ASC 718-10 and certain SEC rules and regulations. The Company has applied the provisions of SAB 107 in its adoption of ASC 718-10.

ADVERTISING COSTS

Advertising costs are expensed as incurred. The Company had advertising costs of $4,533 during the three months ended December 31, 2010, and $2,117 during the three months ended December 31, 2009.

CLEARTRONIC, INC. AND SUBSIDARY

Notes to Condensed Consolidated Financial Statements

December 31, 2010

NOTE 3 -

GOING CONCERN

The Company's financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

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 ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 4 -

EQUITY TRANSACTIONS

Preferred Stock

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

NOTE 5 -

RELATED PARTY TRANSACTIONS

The Company leases its office space from another entity that is also a stockholder. Rent expense paid to the related party was $23,820 and $25,935 for the three months ended December 31, 2010 and 2009, respectively.

NOTE 6 -

SUBSEQUENT EVENTS

In May 2009, the FASB issued accounting guidance now codified as FASB ASC Topic 855, “ Subsequent Events,” which establishes general standards of accounting for, and disclosures of, events that occur after the balance sheet date but before financial statements are issued or are available to be issued. FASB ASC Topic 855 is effective for interim or fiscal periods ending after June 15, 2009. Accordingly, the Company adopted the provisions of FASB ASC Topic 855 on June 30, 2009. Management has evaluated subsequent events for the period from December 31, 2010, the date of these financial statements, through the date of the filing, and there have been no material subsequent events during that period.

Item 2. Management’s Discussion and Analysis or Plan of Operation.

Overview

Cleartronic, Inc. (the “Company,” formerly GlobalTel IP, Inc.) was incorporated in Florida on November 15, 1999. Originally formed as a website developer, we ceased operations in 2002. In 2005, we commenced operations as a provider of Voice Over Internet Protocol (VoIP) services. In 2007, we elected to exit the international VoIP business and concentrate on providing unified group communication solutions. The Company, through our wholly owned subsidiary, VoiceInterop, Inc., now designs, sells and installs unified group communication solutions for public and private enterprises and is developing an Application Service Provider solution for voice interoperability.

Results of Operations – Three Months Ended December 31, 2010 and 2009

Revenues

Revenues increased approximately 168% to $180,442 for the three months ended December 31, 2010 as compared to $67,164 for the three months ended December 31, 2009. The increase was primarily due to an increase in sales of equipment and software as a result of increased sales of unified communications solutions.

Cost of Revenues

Cost of revenues was $86,095 for the three months ended December 31, 2010 as compared to $32,347 for the three months ended December 31, 2009, an increase of approximately 166%. The increase was due to increased sales of unified communications solutions.

Operating Expenses

Operating expenses for the three months ended December 31, 2010 were $273,359 compared to $224,314 for the three months ended December 31, 2009, an increase of approximately 22%. This increase was primarily due to an increase in outside consultant expenses for business development, marketing, and financial advisory services.

Loss from Operations

Loss from operations for the three months ended December 31, 2010 was $179,012 compared to a loss of $189,497 for the three months ended December 31, 2009. The decrease in loss from operations in 2010 versus 2009 was primarily due to an increase in our sales. Gross profit margins remained stable at approximately 52% in the three months ended December 31, 2010 and approximately 52% for the three months ended December 31, 2009.

Net Loss Applicable to Common Stock

Net loss applicable to common stock was $195,099 for the three months ended December 31, 2010 compared to a net loss of $203,266 for the three months ended December 31, 2009. Net loss per common share was $0.0015 and $0.0026 for the three months ended December 31, 2010 and 2009, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Net cash used in operating activities was $198,184 for the three months ended December 31, 2010 compared to $8,441 for the three months ended December 31, 2009.

No cash was provided by or used in investing activities during the three months ended December 31, 2010. Net cash used in investing activities during the three months ended December 31, 2009 was $4,004, which was due to the purchase of additional property.

Net cash provided by financing activities was $249,314 for the three months ended December 31, 2010 compared to $5,576 for the three months ended December 31, 2009. The increase was primarily due to the sale of $250,000 of the Company's preferred stock.

Our obligations are being met on a month-to-month basis as cash becomes available. There can be no assurance that our present flow of cash will be sufficient to meet current and future obligations.

We have incurred losses since our inception and continue to require additional capital to fund operations and development. As such, our ability to pay our already incurred obligations is mostly dependent on the Company being able to have substantially increased revenues and raising substantial additional capital through the sale of its equity or debt securities. There can be no assurance that we will be successful in accomplishing any of the foregoing.

We believe that in order to fund our business plan, we will need approximately $1 million 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 intend to continue to seek private financing from existing stockholders and others.

The costs to operate our current business are approximately $80,000 per month. In order for us to cover our monthly operating expenses, we would have to generate revenues of approximately $230,000 per month. Accordingly, in the absence of revenues, we will need to secure $80,000 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 would need to secure $960,000 in equity or debt capital. If we are unsuccessful in securing sufficient capital or revenues, we would have to cease business in approximately 60 days.

FORWARD-LOOKING STATEMENTS

The information set forth in this Management’s Discussion and Analysis contains certain “forward-looking statements,” including, among others (i) expected changes in our revenues and profitability, (ii) prospective business opportunities, and (iii) our strategy for financing our business. Forward-looking statements are statements other than historical information or statements of current condition. Some forward-looking statements may be identified by use of terms such as “believes,” “anticipates,” “intends,” or “expects.” These forward-looking statements relate to our plans, objectives, and expectations for future operations. Although we believe that 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. In light of the risks and uncertainties, there can be no assurance that actual results, performance, or achievements will not differ materially from any future results, performance, or achievements expressed or implied by such forward-looking statements. The foregoing review of important factors should not be construed as 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 of this prospectus or to reflect the occurrence of unanticipated events.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

An evaluation was conducted by our chief executive officer (“CEO”) and principal financial officer (“PFO”) of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of December 31, 2010. Based on that evaluation, the CEO and PFO concluded that our controls and procedures were effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 (i) is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (ii) is accumulated and communicated to our management, including our CEO and PFO, as appropriate to allow timely decisions regarding required disclosures.

Management is aware that there is a lack of segregation of duties due to the small number of employees dealing with general administrative and financial matters. However, at this time management has decided that considering the abilities of the employees now involved and the control procedures in place, the risk associated with such lack of segregation is low and the potential benefits of adding employees to clearly segregate duties do not justify the substantial expenses associated with such increases. Management may reevaluate this situation as circumstances dictate.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

There have been no material developments during the quarter ended December 31, 2010 in any material pending legal proceedings to which we are a party or of which any of our property is the subject.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On November 1, 2010, an investor purchased 250,000 shares of Series A Convertible Preferred Stock for $250,000. Each Series A Preferred Share is convertible into the Company's common stock after two years at a conversion price of $0.01 per share at the holder's option. Each Series a Preferred Holder is also entitled to receive cumulative dividends at the rate of 8% of $1.00 per annum on each outstanding share of Series A Preferred then held by such Series A Preferred Holder, on a pro rata basis. The proceeds from the sales were used to fund operating expenses.

The registrant claimed exemption from the registration provisions of the Securities Act of 1933 with respect to the securities pursuant to Section 4(2) thereof inasmuch as no public offering was involved. The shares were not offered or sold by means of: (i) any advertisement, article, notice or other communication published in any newspaper, magazine or similar medium, or broadcast over television or radio, (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising, or (iii) any other form of general solicitation or advertising and the purchases were made for investment and not with a view to distribution. Each of the purchasers was, at the time of the purchaser’s respective purchase, an accredited investor, as that term is defined in Regulation D under the Securities Act of 1933, and had access to sufficient information concerning the registrant and the offering.

Item 3. Defaults upon Senior Securities.

None.

Item 5. Other Information.

(a)

None.

(b)

There were no changes to the procedures by which security holders may recommend nominees to our board of directors.

Item 6. Exhibits.


Exhibit Number			Description

3.1			Articles of Incorporation (1)
3.2			Articles of Amendment to Articles of Incorporation, filed March 12, 2001 (1)
3.3			Articles of Amendment to Articles of Incorporation, filed October 4, 2004 (1)
3.4			Articles of Amendment to Articles of Incorporation, filed March 31, 2005 (1)
3.5			Articles of Amendment to Articles of Incorporation, filed May 9, 2008 (2)
3.6			Bylaws (1)
3.7			Articles of Amendment to the Articles of Incorporation, filed June 28, 2010 *
31.1			Section 302 Certification by the Corporation’s Principal Executive Officer *
31.2			Section 302 Certification by the Corporation’s Principal Financial and Accounting Officer *
32.1			Section 906 Certification by the Corporation’s Principal Executive Officer *
32.2			Section 906 Certification by the Corporation’s Principal Financial and Accounting Officer *


*	Filed herewith.
(1)	Filed on July 3, 2006 as an exhibit to our Registration Statement on Form SB-2, and incorporated herein by reference.
(2)	Filed on May 28, 2008 as an exhibit to Amendment No. 6 to our Registration Statement on Form S-1, and incorporated herein by reference.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	CLEARTRONIC, INC.


Date: February 14, 2011	By:	/s/ Larry Reid
		Larry Reid Principal Executive Officer and Principal Financial Officer and Chief Accounting Officer

Exhibit 3.7

ARTICLES OF AMENDMENT

TO THE ARTICLES OF INCORPORATION

CLEARTRONIC, INC.

Pursuant to Sections 607.1002 and 607.0602 of the Florida Business Corporation Act of the State of Florida, the undersigned President and Chief Executive Officer of Cleartronic, Inc. (the “Corporation”), a corporation organization and existing under and by virtue of the laws of the State of Florida and bearing Document Number P99000101137, does hereby certify:

FIRST: Whereas, by virtue of the authority contained in the Articles of Incorporation of the Corporation, the Corporation has authority to issue 200,000,000 shares of preferred stock, par value $.001 per share, the designation and amount thereof and series, together with the powers, preferences, rights, qualifications, limitations or restrictions thereof, to be determined by the Board of Directors pursuant to the applicable laws of the State of Florida.

SECOND: The Board of Directors has hereby established a Series A Convertible Preferred Stock, par value $.001 per share, authorized to be issued by the Corporation as above stated, with the designations and amounts thereof, together with the voting powers, preferences, and relative, participating, optional, and other special rights of the shares of each such series, and the qualifications, limitations, or restrictions thereof, to be as follows.

THIRD: ARTICLE SECOND of the Corporation’s Articles of Incorporation shall be amended in its entirety to include the designation of Series A Convertible Preferred Stock as follows:

“The aggregate number of shares which the Corporation shall have authority to issue is 950,000,000 shares of capital, 750,000,000 shares of which shall be common stock, par value $.001 per share (“ Common Stock ”), and 200,000,000 shares of which shall be preferred stock, par value $.001 per share (“ Preferred Stock ”). Before the issuance of any Preferred Stock, the Board of Directors shall determine, in whole or in part, the preferences, limitations, and relative rights of the Preferred Stock or one or more series within the Preferred Stock.

SERIES A CONVERTIBLE PREFERRED STOCK

The Board of Directors of the Corporation desires, pursuant to its authority as aforesaid, to determine and fix the rights, preferences, privileges and restrictions relating to a class of said Preferred Stock to be designated as follows:

Designation: Number of Shares . The designation of said series of Preferred Stock shall be Series A Convertible Preferred Stock, par value $.001 per share (the “ Series A Preferred ”). The number of designated shares of Series A Preferred stock shall be 1,250,000.

Conversion into Common Stock. Shares of Series A Preferred shall have the following conversion rights and obligations:

(a)

Conversion at Holders’ Option . After a period of two (2) years following the date of issuance, each one (1) share of Series A Preferred shall be convertible into 100 shares of fully paid and nonassessable Common Stock at the sole option of the holder of Series A Preferred (“ Series A Preferred Holder ”).

(b)

Mechanics of Conversion . If the Series A Preferred Holder exercises its conversion option and at such time as the conditions described in Section 2(a) shall have occurred, the Series A Preferred Holder shall surrender the certificates therefor, duly endorsed, at the office of the Corporation or of any transfer agent for the Series A Preferred. The Corporation shall, as soon as practicable thereafter, issue and deliver at such office to such Series A Preferred Holder, a certificate or certificates for the number of shares of Common Stock of the Corporation to which such holder shall be entitled as aforesaid. Such conversion shall be deemed to have been made on the date that the surrendered certificates are delivered in accordance with this Section 2(b) and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock as of such date.

(c)

No Impairment . This Corporation will not, by amendment of its Articles of Incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue, or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by this Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Section 2 and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights, as set forth herein, of the holders of the Series A Preferred against impairment.

(d)

No Fractional Shares . No fractional shares shall be issued upon the conversion of any share or shares of the Series A Preferred and the number of shares of Common Stock to be issued shall be rounded to the nearest whole share. Whether or not fractional shares are issuable upon such conversion shall be determined on the basis of the total number of shares of Series A Preferred the Series A Preferred Holder is at the time converting into Common Stock and the number of shares of Common Stock issuable upon such aggregate conversion.

(e)

Notices of Record Date . In the event the Corporation takes record of the holders of any class of securities for the purpose of determining which holders are entitled to receive any dividend (other than a cash dividend) or other distribution, any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities, property, or other right, the Corporation shall mail to each Series A Preferred Holder, at least 20 days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution, or right.

(f)

Reservation of Stock Issuable Upon Conversion . Solely for the purpose of effecting the conversion of the shares of the Series A Preferred, the Corporation shall at all times, subject to the conditions described in Section 2(a), reserve and keep available out of its authorized but unissued shares of Common Stock, such number of shares of its Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Series A Preferred; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series A Preferred, the Corporation will take such corporate action as, in the opinion of counsel to the Corporation, may be necessary and authorized to increase its authorized but unissued shares of Common Stock to such number of shares of Common Stock to such number of shares as shall be sufficient for such purposes.

(g)

Notices . Any notice required by the provisions of this Section 2 to be given to the holders of shares of Series A Preferred shall be deemed given if deposited in the United States mail, postage prepaid, and addressed to each holder of record at his or her address appearing on the books of this Corporation.

(h)

The Corporation shall pay the amount of any and all issue taxes (but not income taxes) that may be imposed in respect of any issue or delivery of stock upon the conversion of any shares of Series A Preferred, but all transfer taxes and income taxes that may be payable in respect of any change of ownership of Series A Preferred or any rights represented thereby or of stock receivable upon conversion thereof shall be paid by the person or persons surrendering such stock for conversion.

Dividends . Each Series A Preferred Holder shall be entitled to receive cumulative dividends at the rate of eight percent (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. Such dividends shall accumulate on the basis of a 365 or 366 day year, as the case may be, with respect to any share of Series A Preferred from the date of issuance of any such share and shall be paid quarterly commencing on September 30, 2010. Dividends payable pursuant to this Section 3 shall be payable, at the sole option of the Corporation, in the form of (i) cash or (ii) shares of Common Stock at the VWAP for the last 10 trading days of the applicable calendar quarter, which VWAP shall not be lower than $0.01. If payable in cash, such dividends shall be due by the 5th business day following the end of the applicable calendar quarter, and, if payable in shares of Common Stock, such dividends in the form of a stock certificate shall be due by the 10th business day following the end of the applicable calendar quarter, unless there are reasonable delays in delivery by the transfer agent of the Common Stock. “ VWAP ” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a trading market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the trading market on which the Common Stock is then listed or quoted for trading as reported by Bloomberg Financial L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)); (b) if the Over-the-Counter Bulletin Board is not a trading market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Over-the-Counter Bulletin Board; (c) if the Common Stock is not then quoted for trading on the Over-the-Counter Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink Sheets, LLC (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Series A Preferred Holders and reasonably acceptable to the Corporation, the fees and expenses of which shall be paid equally by the Series A Preferred Holders and the Corporation.

Status of Converted or Redeemed . In case any shares of Series A Preferred shall be converted, redeemed, or otherwise repurchased or reacquired, the shares so redeemed, converted, or reacquired shall resume the status of authorized but unissued shares of Preferred Stock and shall no longer be designated as Series A Preferred.”

FOURTH: The foregoing amendment was duly adopted by the Corporation’s Board of Directors on June 24, 2010 pursuant to a unanimous written consent of the Board of Directors in accordance with Section 607.0821 of the Florida Business Corporation Act.

IN WITNESS WHEREOF, the undersigned, being the President and Chief Executive Officer of the Corporation, has executed these Articles of Amendment as of June 24, 2010.

CLEARTRONIC, INC.

/s/ Larry M. Reid

By: Larry Reid

Its: President and Chief Executive Officer



Date: February 14, 2011		/s/ Larry Reid
	By	Larry Reid
		Principal Executive Officer and Principal Financial Officer