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Analyst: Victor Sula, Ph.D.

Initial Report
January 27th, 2009

1/26/09
CLRI daily
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Cleartronic Inc.
8000 N. Federal Hwy., Ste. 100
Boca Raton, FL 33487 0.00

volume © BigCharts.com
Phone: 206-310-2400 1.5

Thousand
Fax: 561-443-0445 Ext 143 1
E-mail: investorrelations@voiceinterop.com 0.5
Website: www.voiceinterop.com 0

Nov Dec 09

MARKET DATA Company Introduction


Cleartronic Inc. (CLRI) designs, manufactures, sells and installs
electronic hardware and software products that enable communi-
Symbol CLRI cations interoperability among radios, telephones, cellular, satellite
Exchanges OTC BB
and standards-based open protocol phones, regardless of make,
Current Price $0.08
Rating Speculative Buy model and frequency. The Company’s integrated communications
Outstanding Shares 46.32 Million capability allows enterprises to connect disparate communications
Market Cap. $3.71 Million devices by converting analog voice to digital packets and transport-
Average 3-m Volume 3,768 ing the packets via Internet Protocol (IP) over geographic distances.

Source: Yahoo Finance, Analyst Estimates CLRI also offers a monthly, subscription-based interoperability
service – X-Stream Access™, which is designed for public-safety
applications, as well as mission-critical communications. This sub-
scription service facilitates interoperability across unicast or mul-
ticast networks, regardless of software, hardware or proprietary
protocols. The X-Stream Access solution may be integrated into an
agency’s existing communications infrastructure to link with other
agency’s radio channels or non-shared systems. Through this ser-
vice, agencies can avoid substantial start-up costs associated with
developing, managing and deploying their own proprietary sys-
tem.

CLRI’s interoperability devices have applications in virtually ev-


ery market where communications interconnectivity is essential,
including Homeland Security, fire, safety and emergency services,
and mission- critical military and commercial applications. Since
launching its integrated software and hardware solutions in April
2008, the Company has sold and installed systems at three major
international airports and currently has proposals out with nine ad-
ditional airports in the U.S. and Canada. CLRI also is completing
a project with a large international transportation company which,
Cleartronic Inc. (OTCBB: CLRI) 1
Analyst: Victor Sula, Ph.D.
Initial Report
January 27th, 2009

when completed, will consolidate over 175 dispatch centers into one central dispatch center. Additionally, the
Company has pilot projects in the United States, Canada, Latin America, the Caribbean and Europe.

The Company, formerly known as GlobalTel IP Inc., was founded in 1999 and is based in Boca Raton, Florida.
CLRI operates through its wholly owned subsidiary, VoiceInterop Inc.

Investment Highlights
Innovative solutions for interconnectivity

CLRI provides enterprise and hosted unified communications technologies with applications in the Homeland
Security, public safety, first responder and critical infrastructure markets. Its technologies allow shared commu-
nications among incompatible communication devices. The Company’s unified group communications capabil-
ity enables disparate devices to interconnect by converting analog voice to digital packets and transporting the
packets via IP over distances.

Business model combines internal growth and synergetic acquisitions

The Company’s proprietary AudioMate software and hardware solutions deliver both enterprise sales, which
generate one-time revenues, as well as hosted and managed services, which generate recurring revenues.
Through the hosted and managed services model, customers are able to acquire a communications interoper-
ability capability without CAPEX outlays. In addition to internal growth, CLRI is pursuing acquisitions that will
provide operating synergies, broaden the Company’s customer base, and be accretive on a consolidated financial
basis.

Significant market opportunity

A strong market outlook supports the Company’s growth prospects. The worldwide market for unified com-
munications solutions is expected to grow from $25.5 billion in 2008 to $48.7 billion in 2012. CLRI anticipates
capturing at least a small percentage of this market through one-time installations and subscriptions. Even a
modest share would produce sizable revenues. For example, a 1% share of a $25 billion market implies sales of
$250 million.

In 2007, the worldwide telecommunications market grew to $1.8 trillion. Experts estimate 7.6% growth and a $2
trillion market in 2008. Technologies such as Voice over Internet Protocol (VoIP) and broadband video, as well
as new mobile data services, are key drivers of telecommunications industry growth. In the past, the structure
of the telecommunication industry relied on tight integration of critical communication functionality. Services
were provided by a very limited set of players. Today, packet-based Internet is creating space for new market
participants through its open design, service and delivery functionality.

AudioMate 360 competitive advantages

CLRI has developed a line of AudioMate 360 Internet Protocol gateways specifically for users of unified group
communications. AudioMate360 IP gateways link analog, land mobile radio and iDEN device communications.
CLRI’s product line is priced well below similar competitors’ devices. In addition, the Company’s IP gateways
are standards-based, software programmable, and virtually plug and play.
A full service customer solution from design to maintenance

Cleartronic Inc. (OTCBB: CLRI) 22


Analyst: Victor Sula, Ph.D.
Initial Report
January 27th, 2009

The Company provides a full suite of services to its clients, from designing custom unified communications solu-
tions to maintaining a managed unified communications in X-Stream Access, to providing 24/7/365 maintenance
and support. X-Stream Access utilizes WAVE software and allows customers to communicate anytime, anywhere,
on any type of existing communication device.

Growing list of customers and partners

Since launching its integrated software and hardware solutions in April 2008, the Company has sold and installed
systems at three major international airports. Proposals are out to nine additional airports in the U.S. and Canada.
The Company is completing a project with a large international transportation company which will consolidate
over 175 dispatch centers into one central dispatch center and has pilot projects in the United States, Canada, Lat-
in America, the Caribbean and Europe. Other sales and installations have been completed with several Microsoft
Gold partners, Lockheed Martin, Westwood One, Nomad Solutions, CenGen and others. In addition the Com-
pany has partnered with Twisted Pair Solutions, Cisco, Sprint/Nextel, Motorola (NAMD), NEC, KITS and IS-MS.

CLRI is already generating revenues

The Company generated revenues totaling $254,555 in the first nine months of FY 2008. CLRI plans to leverage
organic growth through parallel and complementary acquisitions of technologies and businesses.

We expect CLRI’s revenues to rise to a $6.6 million range in FY 2009, increase to approximately $13.2 million in FY
2010 and reach $26 million in FY 2011.

CLRI is implementing a three-pronged marketing approach. The first part entails building a sales force to handle
both direct sales and recruiting channel partners. The second piece involves indirect marketing through channel
partners and systems integrators. The third part leverages professional service, legal and lobbyists partners to as-
sist in securing grant-funded public sector opportunities.

Cleartronic Inc. (OTCBB: CLRI) 3


Analyst: Victor Sula, Ph.D.
Initial Report
January 27th, 2009

Business Model
The Company designs, builds and installs unified communications solutions for both enterprise and managed
environments. Its communication software and hardware devices have the ability to connect various incompat-
ible communications devices such as two-way radios, phones, cellular phones, PDAs, smart phones and public
address systems to Internet Protocol (IP) telephony systems, as well as other pre-existing group communica-
tions networks, regardless of geographic location, make, model and frequency. CLRI has three versions of Au-
dioMate360 IP gateway devices, each supporting a different function – analog, iDEN (Nextel push-to-talk) and
land mobile radio. The Company has also developed unique firmware solutions that integrate its hardware with
partner software to create unified group communications between public and private sector organizations.

In December 2008, the Company introduced X-Stream AccessTM, a managed subscription-based service solu-
tion for emergency communications interoperability. The new service is powered by Twisted Pair Solution’s
WAVETM software, a widely deployed group communications software solution. CLRI acts as the host of the
service. Customers subscribe based on their needs and avoid the huge upfront expenses, which would be re-
quired to replace existing communications infrastructure. X-Stream Access allows customers to choose groups
that can communicate and specify which devices are allowed in the network. The customer pays monthly per
group and per device fees. In addition, WAVE software is integrated with CLRI’s AM360 IP gateway devices to
enhance product and service offerings and eliminate the costs and complexities of proprietary solutions.

CLRI has established strong relationships with contract manufacturers and key suppliers. The Company has
partnered with several technology and solution providers for testing, field trials, proof of concept and evalua-
tions. The Company has partnered with Twisted Pair Solutions, Cisco, Sprint/Nextel, Motorola (NAMD), NEC,
KITS and IS-MS. CLRI also lets system integrators add its products and services to their offerings. To-date, the
Company has integrated its services with those of Nortel and Avaya IP PBX resellers, Cisco network suppliers,
Motorola two-way and iDEN radio dealers, and wide-area campus alerting suppliers.

The Company’s business model can be summarized as follows:

CLRI generates enterprise sales from IP gateway installations and recurring revenues from subscriptions to its
hosted and managed services.

Marketing strategy

CLRI has developed a three-pronged marketing strategy that encompasses a sales force for both direct sales and
recruiting channel partners; indirect marketing through channel partners and systems integrators; and relation-
ships with professional service, legal and lobbyists partners to assist in securing PSIC grant-funded public sector
opportunities.

The Company has identified the following target markets:

Cleartronic Inc. (OTCBB: CLRI) 4


Analyst: Victor Sula, Ph.D.
Initial Report
January 27th, 2009

Energy and petrochemical companies


Education and healthcare campus environments
Business campus environments
Private and commercial FCC-licensed wide area radio operators
Gas and electric utilities
Transportation companies
Telecom service providers
State and local public safety and first responder organizations
DHS PSIC and UASI grant recipients
Federal civilian agencies
DOT and hazmat agencies
Public mass transit
Air and maritime ports

Source: Company presentation

Cleartronic Inc. (OTCBB: CLRI) 5


Analyst: Victor Sula, Ph.D.
Initial Report
January 27th, 2009

Products

The AudioMate 360 line of IP gateways bridges analog, land mobile radio and iDEN devices through the IP
world. AM 360 IP gateways are priced 3 to 4 times less than competitors’ devices, and are standards- based, with
programmable software and plug-and-play functionality.

AudioMate 360a (for audio devices)

This version handles baseband audio from iPods, AM/FM radios, analog tape players, CD players, scanner ra-
dios or microphones. It also sends audio from two-way radios, cellular phones and dispatch consoles to external
recording devices and/or public address systems.

AudioMate 360i (for iDEN networks)

The AudioMate 360i links iDEN networks with IP-based unified communications networks. iDEN subscribers
can initiate a direct connect or group call to the AudioMate360i and converse with an individual dispatcher or
all units of a talk group. An iDEN modem permits backhaul of data such as GPS coordinates.

AudioMate 360r (for land mobile radio)

External connectors allows for simple, inexpensive interfaces to popular two-way radios including Motorola,
Kenwood and Ritron. The AudioMate 360r extends basic local control functions to the console operating over
an IP network.

AutoMatic 360 IP gateways

Source: Company presentation

AudioMate Unified Communications™ Software

AudioMate Unified Communications™ Software takes unified communications to another level by allowing au-
thorized personnel to securely communicate using any radio, telephone or PC device, regardless of equipment

Cleartronic Inc. (OTCBB: CLRI) 6


Analyst: Victor Sula, Ph.D.
Initial Report
January 27th, 2009

manufacturer, system protocols or frequencies. Telephones, two-way radio systems and PCs can communicate
with each other over one secure IP Network.

AudioMate Configuration Console

All AudioMate 360 series devices can be operated, configured and updated individually. The AudioMate Configu-
ration Console (an HTTP-based management console) enables centralized access to all AudioMate 360 products
connected to the customer’s network. The AudioMate Configuration Console allows locating, configuring, renam-
ing and updating of all the devices from one location.

Communicator Pro

Source: Company presentation

Services
The Company provides a full suite of related services, from designing custom unified communications solutions
to maintaining a managed unified communication service in X-Stream Access, to providing 24/7/365 maintenance
and support of X-Stream Access.

Unified communications

Unified communications is achieved over geographically diverse areas by converting analog voice to digital pack-
ets and transporting the packets via Internet Protocol (IP). At an enterprise level, these packets allow for voice
collaboration via a client’s private LAN, WAN or public VPN Internet connections. Once AudioMate software is
implemented, clients can link and/or patch in one-to-one, one-to-many, many-to-one or many-to-many devices,
according to their needs and desired speed of deployment.

Managed services

CLRI’s X-Stream Access is a subscription-based communications service. It provides unified group communica-
tions for interoperability consistent with SAFECOM BSI guidelines, utilizing an agency’s existing communica-
tions infrastructure, and linking in other groups using disparate radio channels or non-shared systems. It’s as

Cleartronic Inc. (OTCBB: CLRI) 7


Analyst: Victor Sula, Ph.D.
Initial Report
January 27th, 2009

easy as subscribing to cellular, DSL or cable service. Implementing X-Stream Access services entails minimal, if
any, downtime for the client and updates are provisioned remotely so customers automatically benefit from the
latest software enhancements.

Maintenance and support

The Company provides high levels of support for both enterprise and managed services clients. By provid-
ing 24/7/365 maintenance and support, CLRI implements customer solutions and makes updates to the system
quickly and efficiently.

Connecting the Islands

Source: Company presentation

Cleartronic Inc. (OTCBB: CLRI) 8


Analyst: Victor Sula, Ph.D.
Initial Report
January 27th, 2009

Industry Outlook
The communications industry is the backbone of today’s economy. Industry sales were estimated at $1.2 trillion in
2006. In the past, the industry’s structure depended on rigid integration of critical communication functionality.
Services were provided by a very limited number of players, with the core of the network supplying this tightly
integrated set of features, and the edge (i.e., users) consuming them. Today, packet-based Internet is decoupling
this structure and creating space for new competitors through its open design, service and delivery functional-
ity. The pace of industry innovation is accelerating because of changes in communications technology, business
models and regulations.

In 2007, the worldwide telecommunications market grew to $1.8 trillion. This market is estimated to grow 7.6% in
2008 to $2 trillion. From a regional perspective, North America remains the largest telecommunications market,
with revenues estimated to exceed $511.6 billion in 2008, a 4.5% increase from 2007. Technologies such as Voice
over Internet Protocol (VoIP) and broadband video, as well as new mobile data services, are key growth drivers
in the telecommunications industry. According to Insight Research, the telecommunications industry has fully
recovered from the malaise of recent years and is ramping up to build broadband networks that will support new
types of services.

Communications interoperability market

A 2006 study conducted by Forrester research revealed that businesses and government agencies utilize a variety
of communication devices, including wired and wireless telephones, PCs, PDA, RIM devices, pagers and several
types of messaging systems. Each mode of communication requires a separate contact address and separate man-
agement, administration and directories. Disparate systems and devices increase the complexity of managing
business communications. Despite the proliferation of voice and data communication devices, businesses and
government agencies still lack the ability to effectively communicate with each other.

The Communications Interoperability Markets and Technology Forecast - 2008-2012 report released by the Home-
land Security Research Corporation estimates the overall value of the 2008-2012 cumulative interoperable commu-
nications market in the U.S. and E.U., including systems, maintenance and upgrades, National Guard and cellular
user fees (in the U.S.), at $73 billion. Communications is one of the fastest growing segments of the Homeland
Security market, with combined growth of the U.S. and E.U. markets forecast at 18.6% annually from 2008-20121.
This growth is attributable to a better understanding of the advantages of unified communications, the need to
replace outdated infrastructure, an increasing sense of urgency, and funding allocated by government and private
industry.

The problems resulting from lack of communications interoperability became readily apparent during the 9/11
terrorist attacks and Hurricane Katrina. These catastrophes confirmed what first responders have known for years
- lack of communication interoperability costs lives. After 9/11 the Department of Homeland Security recognized
that some 90% of the public safety communications infrastructure in the U.S. is owned and operated at the local
and state level; in response, the Department of Homeland Security established its SAFECOM program to help lo-
cal and state authorities address communication interoperability problems2.

However, eight large U.S cities representing a total population of 10.8 million are still communications interoper-
ability nightmares in emergency situations, as shown in the table below. A score below 0.6 indicates a very low
level of interoperability.

1. www.prlog.org/10062395-communications-interoperability-markets-technology-forecast-2008-2012.pdf
2. http://hsdailywire.com/single.php?id=6014

Cleartronic Inc. (OTCBB: CLRI) 9


Analyst: Victor Sula, Ph.D.
Initial Report
January 27th, 2009

Communities’ progress in achieving tactical communications interoperability


Average
Area Governance SOP Usage Score Population

San Francisco, CA 0.50 0.50 0.75 0.58 739,426


Louisville, KY 0.75 0.50 0.50 0.58 556,429
Omaha, NE 0.50 0.50 0.75 0.58 414,521
Detroit, MI 0.50 0.50 0.50 0.50 886,671
Dallas/Fort Worth, TX 0.50 0.50 0.50 0.50 1,837,000
Albuquerque, NM 0.25 0.50 0.75 0.50 494,236
Chicago, IL 0.25 0.50 0.50 0.42 2,842,518
Cleveland, OH 0.25 0.50 0.50 0.42 452,208
Total 10,751,041

Source: Department of Homeland Security.

The tragic consequences of Hurricane Katrina made it obvious to all that drastic communications interoperabil-
ity reform was needed. Louisiana, the state most affected by Hurricane Katrina, was the first to address the issue
head-on and allocate the necessary funding. Louisiana increased its budget for communications interoperability
spending by 140% and is spearheading the implementation of sweeping interoperability communications re-
forms across the U.S. From the state’s new budget of $34 million, 61% will be allocated for connectivity in north
Louisiana, 25% for system maintenance, 11% for portable radios for local and state responders and the rest for
new interoperability staff positions. Many other U.S. states are expected to follow Louisiana’s lead, creating im-
mense public sector business opportunities for CLRI and others.

Overall, the Homeland Security communications interoperability market is expected to grow 22% annually over
the next few years as necessary upgrades are made to state and local public safety agencies and organizations.

Homeland Security Communications Interoperability Market: $52 billion

Source: www.homelandsecurityresearch.net/2008/02/27/over-usd-70-billion-interoperability-market/

Cleartronic Inc. (OTCBB: CLRI) 10


Analyst: Victor Sula, Ph.D.
Initial Report
January 27th, 2009

Financial Analysis

The Company recently commenced operation in the unified communications market and has recorded modest
revenues to-date. Revenues rose to $254,555 during the nine months ended June 30, 2008, from $27,334 during
the same period one year earlier.

Cost of revenues was $194,950 for the nine month FY 2008 period versus $21,057 one year earlier and operating
expense increased to $1,484,420 from $546,623. The main reason for the large increase in operating expenses was
the ramp-up of the Company’s business operations in FY 2008.

CLRI’s net loss increased $886,159 year-over-year to $1,463,454 during the first nine months of FY 2008. This in-
creased loss reflects higher administrative expenses and investments in product development and marketing.

Income statement, $

9 months FY 9 months FY
Q3 FY 2007 Q3 FY 2008 % Chg % Chg
2007 2008
Revenue 27,334 11,966 -56.2% 27,334 254,555 831.3%
Cost of revenue 21,057 13,178 -37.4% 21,057 194,950 825.8%
Gross profit 6,277 -1,212 n/m 6,277 59,605 849.6%
Selling expenses 8,232 42,952 421.8% 8,232 179,646 2082.3%
Administrative expenses 109,207 361,388 230.9% 248,812 1,062,379 327.0%
Research and development 100,549 60,363 -40.0% 256,716 200,134 -22.0%
Depreciation 13,637 13,911 2.0% 32,863 42,261 28.6%
Total operating expenses 231,625 478,614 106.6% 546,623 1,484,420 171.6%
Operating profit -225,348 -479,826 n/m -540,346 -1,424,815 n/m
Other expenses -7,327 -5440 n/m -11,796 -13486 n/m
Loss from discontinued operations -200,613 0 n/m -440,394 -25,153 n/m
Net loss -433,288 -485,266 n/m -992,536 -1,463,454 n/m
Diluted EPS -0.017 -0.013 n/m -0.043 -0.042 n/m

Source: SEC Filings, Fiscal year ends September, 30.

Liquidity and capital resources

The Company has little cash and negative operating cash flow. Obligations are being met on a month-to-month
basis as cash becomes available.

CLRI has incurred losses since its inception, and will likely require additional capital to fund its FY 2009 business
activities. Management estimates current operating costs at approximately $167,000 per month. The Company
will likely need to raise at least $2 million through equity or debt financing to fund its FY 2009 business plan.

Cleartronic Inc. (OTCBB: CLRI) 11


Analyst: Victor Sula, Ph.D.
Initial Report
January 27th, 2009

Balance sheet, $ Mn

30-Sep-07 30-Jun-08

Current Assets, including 329,453 915,238


Cash and short-term investment 152,825 357
Property and equipment, net 282,429 168,574
Total Assets 611,882 1,083,812

Liabilities, including 546,482 122.8


Debt 240000 37565
Equity 65,400 (330,854)

Source : SEC Filings

Revenue Outlook

CLRI is a global provider of advanced unified communications solutions that make communications intercon-
nectivity easier and cheaper. The Company plans to grow by:

• Leveraging R&D investments through product innovation and lifecycle management;


• Establishing a geographically diverse backup manufacturing and order fulfillment capability;
• Capturing growth opportunities in international markets;
• Solidifying relationships with leading channel partners and system integrators;
• Investing in marketing campaigns; and
• Exercising capital discipline and preserving financial flexibility.

A strong industry outlook enhances CLRI’s growth prospects. The worldwide market for unified communica-
tions solutions is projected to nearly double in size from $25.5 billion in 2008 to $48.7 billion in 2012. Even cap-
turing a small percentage of the market through installations and hosted network subscriptions would produce
meaningful revenues for the Company - 1% market share is $250 million.

Based on our conversations with management, we are forecasting FY 2009 revenues will rise to a $6.6 million
range, then increase to approximately $13.2 million in FY 2010 and $26 million in FY 2011. We also expect EBIT-
DA growth to follow a similar trajectory, with EBITDA climbing from $1.7 million in FY 2009 to $2.9 million in
FY 2010 and reaching $6.0 million in FY 2011.

Cleartronic Inc. (OTCBB: CLRI) 12


Analyst: Victor Sula, Ph.D.
Initial Report
January 27th, 2009

CLRI Projected Revenue Growth ($ millions)

Comparative analysis

We based our valuation of CLRI on a comparative analysis to other companies that provide unified group com-
munications hardware, software and services.

Company name Ticker Price Market P/E P/S


20-Jan-09 Symbol $ Cap. $ Mn 2008 2009 2008 2009

Cisco Systems Inc. CSCO 15.18 88,880 11.16 10.40 2.37 2.31
Juniper Networks Inc. JNPR 15.61 8,250 13.23 12.90 2.30 2.18
Alcatel-Lucent ALU 1.88 4,250 n/m n/m 0.18 0.20
Tyco Electronics Ltd. TEL 15.19 6,950 9.86 7.79 0.59 0.57
VeriSign Inc. VRSN 17.62 3,420 17.80 12.68 3.64 3.23
Motorola Inc. MOT 4.36 9,860 145.33 218.00 0.33 0.38
Median 13.23 12.68 1.44 1.38

Cleartronic Inc. CLRI 0.08 3.71

Source: Yahoo Finance

The peer group companies currently trade at 1.38 times forward Price/Sales multiples. We believe CLRI should
trade at a premium to the peer group because of its attractively priced products and services and growing list of
Fortune 1000 customers.

We are initiating coverage of CLRI with a Speculative Buy Rating. However, we strongly advise readers to con-
sider the risk factors mentioned below before investing in these shares. CLRI will need to raise additional capital
to fund its business and faces many other obstacles in achieving sustainable growth and profitability.

Cleartronic Inc. (OTCBB: CLRI) 13


Analyst: Victor Sula, Ph.D.
Initial Report
January 27th, 2009

Investment Risks
Limited operating history

CLRI has operated its current business only since June 2007. As a result, there is a limited operating history to
review, making it difficult to evaluate the Company’s business and prospects. The risks and difficulties facing the
Company include challenges in accurate financial planning and uncertainties resulting from a shorter period for
evaluating the success of business strategies as compared to companies with longer operating histories.

Lack of revenues and negative operating cash flows

Since its inception, the Company has generated net losses and negative operating cash flows. While management
anticipates a rapid rollout of its business plan, there is no assurance that CLRI will achieve its revenue growth
targets.

Availability of funding

The Company will likely require substantial additional capital to pursue its business strategy. Accumulated losses
to-date and limited tangible assets may make it difficult for CLRI to obtain additional funds on acceptable terms.
We think the Company will need to raise at least $2 million through debt or equity financing to implement its FY
2009 business plan.

Reliance on third party software

CLRI doesn’t develop, maintain or improve unified group communications software. Instead, the Company uti-
lizes unified group communications software owned by Twisted Pair Solutions. CLRI’s reseller agreement with
Twisted Pair Solutions may be terminated at any time without cause upon 30 days prior written notice. Another
agreement, which relates to an application service provider service the Company is developing, has an initial
term expiring in 2011. There can be no assurance that Twisted Pair Solutions will not terminate the reseller agree-
ment with CLRI or that the Company will be able to satisfy the terms and conditions of its second agreement with
Twisted Pair Solutions.

Competitive pressure

The unified group communications industry is extremely competitive. Over the past year, the number of compa-
nies entering this market has increased dramatically. Competitive pricing pressures may negatively impact profit
margins. Competitors include Cisco Systems Inc., Tyco Electronics Ltd., Catalyst Communications Technologies
Inc., Telex Inc., Federal Signal Corporation and MutualLink Inc., as well as Twisted Pair Solutions and other resell-
ers and licensees.

Cleartronic Inc. (OTCBB: CLRI) 14


Analyst: Victor Sula, Ph.D.
Initial Report
January 27th, 2009

Management

Larry M. Reid Mr. Reid is a senior executive with more than 25 years experience in executive management, corporate gov-
ernance, operations management and fiscal responsibility. Mr. Reid has been a member of CLRI’s board of
CEO, CFO and Co-founder directors since 1999 and president since September 2006. He was also the Company’s president from 1999
to March, 2005, at which time he became executive vice-president and CFO. From December 2001 until
September 2005, Mr. Reid was CFO and a director of Connectivity Inc., a manufacturer and distributor of
emergency call boxes. Connectivity was acquired by Arrow Resources Development in April 2003, and Mr.
Reid became an executive vice-president and director of that company

Michael J. Gutowski Mr. Gutowski is a seasoned sales and marketing executive with more than 20 years experience in sales
management, strategic business planning, market analysis, operations management and key alliance iden-
VP Product and Business tification. He has held his present position with CLRI since March 2005. From November 1999 to Decem-
Development and Co-founder ber 2002, Mr. Gutowski was CEO and a director of Connectivity Inc. Following its acquisition by Arrow
Resources Development, Mr. Gutowski became president, COO and a director of the new company. Mr.
Gutowski left Arrow Resources Development in September 2004.

Carlos Barreiro Mr. Barreiro has had a 19-year career in communications technology, software development and project
management, ranging from military to commercial applications. He has been the Company’s chief techni-
Chief Technical Officer cal officer since August 2007. From March 2006 to April 2007, Mr. Barreiro was a senior software developer
at Baby Universe Inc., an e-commerce retailer of juvenile products. From 2000 to March 2006, he was senior
software developer and project manager for Voiceware Inc., a VOIP and telephony switch manufacturer.
Mr. Barreiro holds the highest levels of WAVE certification.

Cleartronic Inc. (OTCBB: CLRI) 15


Analyst: Victor Sula, Ph.D.
Initial Report
January 27th, 2009

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party compensation received has been disclosed within each individual profile in accordance with section 17(b) of the Securities Act of 1933. This compensa-
tion constitutes a conflict of interest as to our ability to remain objective in our communication regarding the profiled companies. BlueWave Advisors, LLC,
and/or its affiliated will hold, buy, and sell securities in the companies profiled. When compensated in shares, all readers should be aware that is our policy to
liquidate all shares immediately. We reserve the right to buy or sell the shares of any the companies mentioned in any materials we produce at any time. This
compensation constitutes a conflict of interest as to our ability to remain objective in our communication regarding the profiled companies. BeaconEquity.com
is a Web site wholly-owned by BlueWave Advisors, LLC. BlueWave Advisors, LLC has been compensated six thousand dollars from Downshire Capital, a
shareholder of CLRI, as a marketing budget to manage a comprehensive investor awareness program including the creation and distribution of this report as
well as other investor relations efforts.

Information contained in our report will contain “forward looking statements” as defined under Section 27A of the Securities Act of 1933 and Section 21B of the
Securities Exchange Act of 1934. Subscribers are cautioned not to place undue reliance upon these forward looking statements. These forward looking state-
ments are subject to a number of known and unknown risks and uncertainties outside of our control that could cause actual operations or results to differ ma-
terially from those anticipated. Factors that could affect performance include, but are not limited to, those factors that are discussed in each profiled company’s
most recent reports or registration statements filed with the SEC. You should consider these factors in evaluating the forward looking statements included in
the report and not place undue reliance upon such statements.

We are committed to providing factual information on the companies that are profiled. However, we do not provide any assurance as to the accuracy or com-
pleteness of the information provided, including information regarding a profiled company’s plans or ability to effect any planned or proposed actions. We
have no first-hand knowledge of any profiled company’s operations and therefore cannot comment on their capabilities, intent, resources, nor experience and
we make no attempt to do so. Statistical information, dollar amounts, and market size data was provided by the subject company and related sources which
we believe to be reliable.

To the fullest extent of the law, we will not be liable to any person or entity for the quality, accuracy, completeness, reliability, or timeliness of the information
provided in the report, or for any direct, indirect, consequential, incidental, special or punitive damages that may arise out of the use of information we provide
to any person or entity (including, but not limited to, lost profits, loss of opportunities, trading losses, and damages that may result from any inaccuracy or
incompleteness of this information).

We encourage you to invest carefully and read investment information available at the websites of the SEC at http://www.sec.gov and FINRA at http://www.
finra.org.

All decisions are made solely by the analyst and independent of outside parties or influence.

I, Victor Sula, Ph.D, the author of this report, certify that the material and views presented herein represent my personal opinion regarding the content and
securities included in this report. In no way has my opinion been influenced by outside parties, nor has my compensation been either directly or indirectly
tied to the performance of any security listed. I certify that I do not currently own, nor will own and shares or securities in any of the companies featured in
this report.

Victor Sula, Ph.D. - Senior Analyst

Victor Sula, Ph.D. has held the position of Senior Analyst with several independent investment research firms since 2004. Prior to 2004, Mr. Sula held Senior
Financial Consultant positions within the World Bank sponsored Agency for Restructuring and Enterprise Assistance and TACIS sponsored Center for Produc-
tivity and Competitiveness of Moldova, where he was involved in corporate reorganization and liquidation. He is also employed as Associate Professor at the
Academy of Economic Studies of Moldova. Mr. Sula earned his Ph.D. degree in 2001 and bachelor’s degree in Finance in 1997 from the Academy of Economic
Studies of Moldova. Mr. Sula is currently a level III candidate in the CFA program.

Cleartronic Inc. (OTCBB: CLRI) 16