CLRI 10-K & 10-Q changes, risk factors and insider trading

Revenues increased 46.63%31.26% to $4,103,388 for the year ended September 30, 2025 as compared to $3,126,148 for the year ended September 30, 2024 as compared to $2,131,955 for the year ended September 30, 2023.2024. The primary reason for the increase was an increase in revenue from the ReadyOp platform from $2,022,550 in 2023 to $2,414,949 in 2024.2024 Thereto was$3,691,273 alsoin an2025. increaseThese were offset by a decrease in sales of ReadyOp hardware products from $49,674 in 2023 to $671,999 in 2024.2024 to $85,195 in 2025. Consulting fees and related income decreasedincreased from $59,731 in 2023 to $39,200 in 2024 2024to $326,920 in 2025 due to a decreasean increase in trainingcontract activity.development activities.

Cost of revenues increased to $893,466 for the year ended September 30, 2025 as compared to $866,402 for the year ended September 30, 20242024. asGross comparedprofits were $3,209,922 and $2,259,746 for the years ended September 30, 2025 and September 30, 2024, respectively. Gross profit margins increased to $435,52978.23% for the year ended September 30, 2023. Gross profits were $2,259,746 and $1,696,426 for the years ended2025 September 30, 2024 and September 30, 2023, respectively. Gross profit margins decreased tofrom 72.29% for the year ended September 30, 2024 from 79.57% for the year ended September 30, 2023.2024.

Operating expenses increased 55.88%32.72% to $2,560,333$3,397,977 for the year ended September 30, 20242025 compared to $1,642,477$2,560,333 for the year ended September 30, 2023.2024. The increase was primarily due to administrativean expenses,increase in payroll research and developmentbenefits expenses,costs andassociated sellingwith expenses.the new employees gained associated with the acquisition of the Alastar platform. General and administrative expenses increased by $770,159$952,765 or 59.06%45.94% as a result primarily of the increase in general businesspayroll expenses, impairment loss, an increase in headcount and personnel related costs associated with the addition of new employees.costs. There were also charitable contributions and employee holiday bonuses paid during the year.

For the year ended September 30, 2024,2025, selling expenses were $287,676$341,226 compared compared to $306,132$287,676 for the year ended September 30, 2023.2024. This decreaseincrease was primarily due to bad debt expense, and slighta offsetdecrease by an increasein in advertising and travel expenses as the Company increased its sales and marketing efforts..

Research and development expenses were $189,022$8,000 for the year ended September September 30, 2024,2025, as compared to $27,314$189,022 for the year ended September 30, 2023.2024. This increasedecrease was primarily due to research and development expenses expenses and Company’sCompany's fees paid to outside consulting services that are assisting us in obtaining FedRAMP certification. For the year ended September 30, 2024, $166,419 was paid in connection with FedRamp certification.

The Company’sCompany's other income increased by $25,855$5,374 from other income of $33,836 $28,462 during the year ended September 30, 20242025 as compared to $2,607$28,462 in other income for the year ended September 30, 2023.2024. This increase was was andue to a increase in interest income on treasury bill investments for the year ended September 30, 2025 and a decrease due to related party interest - receivable of $44,412 and extinguishment of liabilities of $42,941 and offset by a write off of note and interest receivable - related party of $58,891$58,891for the year ended September 30, 2024.

IncomeLoss before Income Taxes

The Company’s loss before income taxes was $272,125,$154,219, during the year ended September 30, 2024,2025, as compared to incomeloss of $56,556 income$272,125 before income taxes for the year ended September 30, 2023.2024. The increased increased costs were partially offset by an increase in subscriptions of ReadyOp licenses.licenses and an increase in contract development revenue.

Net (Loss) Income Attributable to Common Stockholders

Net loss attributable to common stockholders was $313,273$195,255 for the year year ended September 30, 20242025 as compared to a net incomeloss of $15,518$313,273 for the year ended September 30, 2023.2024. The decrease was primarily due to an increase in administrativepayroll-related expensesexpenses, anda decrease in research and development expenses and offset by an increase in sales of ReadyOp licenses licenses and a prior period adjustment, see Note 2. The increased costs were partially due to addition of new employees associated and costs associated FedRAMP certification . The preferred stock dividends remained consistent.

Net cash used in investing activities was $50,807$9,793 for the year ended September September 30, 20232025 which was for the purchase of fixed assets of $6,434, and intangible assets of $44,373.$9,793.

-55-- In 2024, the Company conducted an impairment assessment in accordance with ASC 350-30-35 and determined that all previously capitalized amounts related to costs that are no longer deemed recoverable. As a a result, the Company recognized an impairment loss of $44,373.

-66-- We have elected not to present short-term leases on the balance sheet as as these leases have a lease term of 12 months or less at lease inception and do not contain purchase options or renewal terms that we are are reasonably certain to exercise. All other lease assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because our lease does not provide an implicit rate of return, we used our incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease payments.

-2222-- ReadyOp requires no new or on-site hardware or programming by clients and and provides multiple options for communications including radio interoperability using the Company's AudioMate gateways. Plans and operations can be built and stored securely in ReadyOp on a by-location, region and systemwide basis. Assets can be listed along with their location, person to contact and other information that may be needed. Diagrams, charts, maps, pictures, report forms and other documentation can be securely stored yet immediately available securely from any location. ReadyOp also provides efficient planning and response for responding to disasters and for continuity of operations (COOP) and recovery. ReadyOp is the COOP platform for multiple organizations including many federal agencies.

FOR THE THREE MONTHS ENDED MARCHJUNE 31,30, 2026 COMPARED TO THE THREE MONTHS MONTHS ENDED MARCHJUNE 31,30, 2025

Revenues increased 18.60%14.53% to $1,133,502 for the three months ended March 31, 2026 as compared to $955,703$1,235,269 for the three months ended MarchJune 30, 31,2026 as compared to $1,078,530 for the three months ended June 30, 2025. The primary reason for the increase was an increase in revenue from the ReadyOp and Alastar platforms from $880,274$948,892 in 2025 to $997,213$1,060,941 in 2026. There was also an increase in sales of ReadyOp hardware hardware products from $11,300$17,550 in 2025 to $100,500$47,250 in 2026. Consulting fees and related income decreasedincreased from $64,129$112,088 in 2025 to $35,789 $127,078 in 2026 due to aan decreaseincrease in consulting activity.

Cost of revenues increased 26.13%19.02% to $227,861$313,629 for the three months ended endedJune March 31,30, 2026 as compared to $180,651$263,509 for the three months ended MarchJune 31,30, 2025. The primary reason for the increase was due to an increase in ReadyOp and Alastar platform sales and expenses associated with trade show attendance and other marketing expenses. Gross profits were $905,641 $921,640 and $775,052$815,021 for the three months ended MarchJune 31,30, 2026 and 2025, respectively.

Operating expenses increaseddecreased 5.29%1.97% to $853,407$857,638 for the three months ended June March 31,30, 2026 compared to $810,525$874,887 for the three months ended MarchJune 31,30, 2025. The increasedecrease was primarily due to administrative expenses, with a slight offset in selling and research and development expenses. General and administrative expenses increased by $49,053$4,188 or 6.67% 0.54% as a result of the increase in general business expenses, an increase in headcount and personnel related costs associated with the addition of new employees. There were also charitable contributions paid during the three months.

For the three months ended MarchJune 31,30, 2026, selling expenses were $60,782$66,025 compared to $64,901$85,840 for the three months ended MarchJune 31,30, 2025, a decrease of 6.35%.23.08%. This decrease was primarily due to a decrease in advertising expense, travel expenses and offset by a recovery of credit losses.

Research and development expenses were $2,000 for the three months ended March 31, 2026, as compared to $4,000$0 for the three months ended MarchJune 30, 31,2026, as compared to $2,000 for the three months ended June 30, 2025, a decrease of 50%.100%. This decrease was primarily due to timing of research and development expenses.

The Company's other income increased by $4,156$2,231 from other income of $9,004 $7,381 during the three months ended MarchJune 31,30, 2025 as compared to $11,537$11,235 in other income for the three months ended MarchJune 31,30, 2026, an increase of 56.31%.24.78%. This increase was due to an increase in interest income on treasury bill investments of $4,123$6,735 for the three months ended March 31,June 30, 2026.

The Company’s income before income taxes was $63,771,$75,237, during the the three months ended MarchJune 31,30, 2026, as compared to loss of $28,092 income$50,862 before income taxes for the three months ended March,June 30, 2025 due to the increase in revenue that was partially offset by the increase in the Company’s operating expenses.

Net income attributable to common stockholders was $53,652$65,006 for the three three months ended MarchJune 31,30, 2026 as compared to a net loss of $38,210$61,093 for the three months ended MarchJune 31,30, 2025. The increase was primarily due due to an increase in revenue which was partially offset by an increase in operating expenses. The increased costs were partially due to addition of new employees associated with Alastar .Alastar. The preferred stock dividends remained consistent.

FOR THE SIXNINE MONTHS ENDED MARCHJUNE 31,30, 2026 COMPARED TO THE SIXNINE MONTHS ENDED MARCHJUNE 31,30, 2025

Revenues increased 24.08%20.65% to $2,386,041$3,621,310 for the sixnine months ended MarchJune 31,30, 2026 as compared to $1,923,027$3,001,557 for the sixnine months ended MarchJune 31,30, 2025. The primary reason for the increase was an increase in revenue from the ReadyOp and Alastar platforms from $1,731,576$2,680,468 in 2025 to $2,001,495$3,062,436 in 2026. There was also an increase in sales of ReadyOp hardware products from $32,695$50,245 in 2025 to $130,000$177,250 in 2026. Consulting fees and related income increased from $158,581$270,844 in 2025 to $254,546$381,625 in 2026 due to an increase in consulting activity.

Cost of revenues increased 1.83%8.70% to $402,824$716,453 for the sixnine months ended MarchJune 31,30, 2026 as compared to $395,589$659,098 for the sixnine months ended MarchJune 31,30, 2025. The primary reason for the increase was due to an increase in ReadyOp and Alastar platform sales and expenses associated with trade show attendance and other marketing expenses. Gross profits were were $1,983,217$2,904,857 and $1,527,438$2,342,459 for the sixnine months ended MarchJune 31,30, 2026 and 2025, respectively.

Operating expenses increased 7.99%4.50% to $1,748,194$2,605,832 for the sixnine months ended endedJune March 31,30, 2026 compared to $1,618,831$2,493,718 for the sixnine months ended MarchJune 31,30, 2025. The increase was primarily due to administrative expenses, expenses, with a slight offset in selling and research and development expenses. General and administrative expenses increased by $162,786 $166,974 or 10.97% 7.37% as a result of the increase in general business expenses, an increase in headcount and personnel related costs associated with the addition of new employees. There were also charitable contributions paid during the sixnine months.

For the sixnine months ended MarchJune 31,30, 2026, selling expenses were $86,709$152,734 compared to $117,990$203,830 for the sixnine months ended MarchJune 31,30, 2025, a decrease of 26.51%.25.07%. This decrease was primarily due to a decrease in advertising expense, travel expenses and offset by a recovery of credit losses.

Research and development expenses were $4,000 for the sixnine months ended MarchJune 31,30, 2026, as compared to $6,000$8,000 for the sixnine months ended MarchJune 31,30, 2025, a decrease of 33.33%.50.00%. This increasedecrease was primarily due to timing of research and development expenses.

The Company's other income increased by $9,378$11,609 from other income of $23,180 $14,176 during the sixnine months ended MarchJune 31,30, 2025 as compared to $23,554$34,789 in other income for the sixnine months ended MarchJune 31,30, 2026, an increase increase of 66.15%.50.08%. This increase was due to an increase in interest income on treasury bill investments of $7,279$24,615 for the sixnine months ended March 31,June 30, 2026.

The Company’s income before income taxes was $258,577,$333,814, during the the sixnine months ended MarchJune 31,30, 2026, as compared to loss of $77,217$128,079 income before income taxes for the sixnine months ended March,June 30, 2025 due to the increase in revenue that was partially offset by the increase in the Company’s operating expenses.

Net income attributable to common stockholders was $238,115$303,121 for the nine six months ended MarchJune 31,30, 2026 as compared to a net loss of $97,678$158,771 for the sixnine months ended MarchJune 31,30, 2025. The increase was primarily due due to an increase in revenue which was partially offset by an increase in operating expenses. The increased costs were partially due to addition of new employees associated with Alastar . The preferred stock dividends remained consistent.

For the sixnine months ended MarchJune 31,30, 2026, net cash used in operations of of $55,927$108,277 was the result of a net income of $258,577,$333,814, depreciation and amortization expense of $11,065,$16,856, a recovery of credit losses of $20,952,$23,343, ana increasedecrease of accounts receivable of $11,602,$85,885, aan decreaseincrease in prepaid expenses of $7,059$16,696 and ana increasedecrease in inventory of $26,105.$37,911. These were offset by ana increasedecrease in accounts payable of $21,993$44,732 and a decrease in deferred revenue of $348,172.$497,972.

For the sixnine months ended MarchJune 31,30, 2025, net cash used in operations of of $124,945$68,313 was the result of a net loss of $77,217,$128,079, depreciation and amortization expense of $11,205,$16,619, amortization of operating lease of $5,983, increase in provision of $5,983,credit losses of $20,500, a loss on sale of fixed assets of $483, an increase ofin accountsprepaid receivableexpenses of $102,503, $65,988 and an increase in accounts payable of $68,895.$16,463 and an increase in deferred revenue of $12,975. These were offset by a decrease inof inventoryaccounts receivable of $6,611, decrease in deferred revenue of $36,396,$47,808, a decrease in prepaid expensesinventory of $4,983$11,429, and a decrease in operating lease liability of $6,506.

Net cash used in investing activities was $8,617 and $0$4,768 for the sixnine months ended MarchJune 31,30, 2026 and 2025, respectively, which was for the purchase of fixed assets.