What changed in this filing

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Item 1A. Risk Factors

2022-12-28 compared with 2022-01-21 · 81 added, 87 removed, 632 unchanged (21% of the section changed)

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technical facility in Pune, India has been under lock down on multiple occasions.

Overall bookings level in the IS segment of our business

were down by more than 20%, however our AT segment has experienced relatively less slow down.

In addition, due to delays in certain supply

chain areas, the expected launch times of our new products and new versions has resulted in delays of several months.

Bookings and revenue have largely recovered in this

calendar year compared to last year.

In addition, due to delays in certain supply chain areas, the expected launch times of our new products

and new versions has resulted in delays of several months.

broader implications of COVID-19 on our results from operations going forward remains uncertain.

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However, on the other hand, opportunities in the video surveillance field have been growing for Vicon products.

extent of the pandemic’s effect on our operational and financial performance will depend in large part on future developments, which

cannot be reasonably estimated at this time.

Future developments include the duration, scope and severity of the pandemic, the emergence

of new virus variants that are more contagious or harmful than prior variants, the actions taken to contain or mitigate its impact both

within and outside the jurisdictions where we operate, the impact on governmental programs and budgets, the development of treatments

or vaccines, and the resumption of widespread economic activity.

Due to the inherent uncertainty of the unprecedented and rapidly evolving

situation, we are unable to predict with any confidence the likely impact of the COVID-19 pandemic on our future operations.

materially impact our results of operations, cash flows, and financial condition.

extent of the pandemic’s effect on our operational and financial performance will depend in large part on future developments,

which cannot be reasonably estimated at this time.

Future developments include the duration, scope and severity of the pandemic, the

emergence of new virus variants that are more contagious or harmful than prior variants, the actions taken to contain or mitigate its

impact both within and outside the jurisdictions where we operate, the impact on governmental programs and budgets, the development of

treatments or vaccines, and the resumption of widespread economic activity.

Due to the inherent uncertainty of the unprecedented and

rapidly evolving situation, we are unable to predict with any confidence the likely impact of the COVID-19 pandemic on our future operations.

This could materially impact our results of operations, cash flows, and financial condition.

Related to our Financial Condition

is no guarantee that cash flow from operations and/or debt and equity financings will provide sufficient capital to meet our expansion

goals working capital needs, or fund our operations.

goals working capital need, or fund our operations.

current strategic plan includes the expansion of our company both organically and through acquisitions if market conditions and competitive

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on our common stock market price.

We have a history of losses and may experience

losses in the future, which could result in the market price of our common stock declining.

We have incurred net losses, including net losses

of $7.8 million in 2021, $10.5 million in 2020 and $21.8 million in 2019.

We expect to continue to incur significant product development,

sales and marketing and administrative expenses.

have a history of losses and may experience losses in the future, which could result in the market price of our common stock declining.

have incurred net losses, including net losses attributable to Cemtrex, Inc.

shareholders of $13.0 million in 2022, $7.8 million in

2021, and $10.5 million in 2020.

We expect to continue to incur significant product development, sales and marketing and

administrative expenses.

As a result, we will need to generate significant revenues to achieve profitability.

We cannot be certain that we will achieve profitability in the future or, if we achieve profitability, to sustain it.

If we do not achieve

and maintain profitability, the market price for our common stock may decline, perhaps substantially.

We cannot be certain

that we will achieve profitability in the future or, if we achieve profitability, to sustain it.

If we do not achieve and maintain

profitability, the market price for our common stock may decline, perhaps substantially.

Company is exposed to credit risk, market risk, and fluctuations in the values of its investment portfolio.

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declines in the market values of such investments could have an adverse effect on our financial condition and operating results.

a result, the value and liquidity of the Company’s cash, cash equivalents, and marketable securities may fluctuate substantially.

result, the value and liquidity of the Company’s cash, cash equivalents, and marketable securities may fluctuate substantially.

Therefore, although the Company has not realized any significant losses on its cash, cash equivalents, and marketable securities, future

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our obligations under outstanding indebtedness.

of September 30, 2021, our total indebtedness was approximately $16.4 million, including notes payable of $11.3 million, mortgage

payable of $2.3 million, and bank loans of $2.7 million, including $1.1 million of PPP loans that the Company expects to be forgiven.

Approximately $9.97 million of such debt is classified as current.

This substantial debt could have important consequences, including

the following:

(i) a substantial portion of our cash flow from operations may be dedicated to the payment of principal and interest on

indebtedness, thereby reducing the funds available for operations, future business opportunities and capital expenditures;

(ii) our ability

to obtain additional financing for working capital, debt service requirements and general corporate purposes in the future may be limited;

(iii) we may face a competitive disadvantage to lesser leveraged competitors;

(iv) our debt service requirements could make it more difficult

to satisfy other financial obligations;

and (v) we may be vulnerable in a downturn in general economic conditions or in our business

and we may be unable to carry out activities that are important to our growth.

As of September 30, 2022, our total indebtedness was approximately

$20.6 million, including notes payable of $17.7 million, mortgage payable of $2.3 million, and bank loans of $0.6 million, including $0.1

million of PPP loans that the Company expects to be forgiven.

By comparison, as of September 30, 2021, our total indebtedness was approximately

$17.3 million, including notes payable of $12.3 million, mortgage payable of $2.3 million, and bank loans of $2.7 million, including $1.1

million of PPP loans that the Company expects to be forgiven.

For 2022 and 2021 approximately $18.2 million and $10.6 million, respectively,

of such debt is classified as current.

This substantial debt could have important consequences, including the following:

(i) a substantial

portion of our cash flow from operations may be dedicated to the payment of principal and interest on indebtedness, thereby reducing the

funds available for operations, future business opportunities and capital expenditures;

(ii) our ability to obtain additional financing

for working capital, debt service requirements and general corporate purposes in the future may be limited;

(iii) we may face a competitive

disadvantage to lesser leveraged competitors;

(iv) our debt service requirements could make it more difficult to satisfy other financial

and (v) we may be vulnerable in a downturn in general economic conditions or in our business and we may be unable to carry

out activities that are important to our growth.

ability to make scheduled payments of the principal of, or to pay interest on, or to refinance our indebtedness depends on and is subject

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Related to our Business

are substantially dependent upon the success and continued market acceptance of our technology;

the absence of which may significantly

are substantially dependent upon the success and continued market acceptance of our technology, the absence of which may significantly

reduce our sales, profits and cash flow and adversely impact our financial condition.

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financial condition.

have taken a multi-operational approach, and some of our business segments have historically failed to benefit our company, and there

remains a risk that our remaining segments may not prove to be successful.

have taken a multi-operational approach, and some of our business segments have historically failed to benefit our company to date, and

there remains a risk that our remaining segments may not prove to be successful.

We may divest or expand into new areas that are outside

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fail, some of the businesses in our portfolio may not be successful in generating sufficient revenue to be a viable option for our company.

fiscal 2018, for instance, we made a strategic decision to exit the Electronics Manufacturing group by selling all companies in that

business segment on August 15, 2019.

Similarly, during fiscal 2019, we also reached a strategic decision to exit the environmental products

business, which was part of the Industrial Services Segment.

the Company has two business segments, consisting of (i) Advanced Technologies (AT) and (ii) Industrial Services (IS).

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future operating results depend in part on continued successful research, development and marketing of new and improved products and

services through our Advanced Technologies segment, and there can be no assurance that we will successfully introduce

new products and services into the market.

services through our Advanced Technologies segment, and there can be no assurance that we will successfully introduce new products and

services into the market.

success of new and improved products and services through our Advanced Technologies segment depends on our research and development efforts

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In some instances, lead times have extended beyond normal due to logistic delays and labor shortages occurring globally.

Some of our products,

however, require the use of raw materials that are available from only a limited number of regions around the world, are available from

only a limited number of suppliers, or may be subject to significant fluctuations in market prices.

Our results of operations may be

adversely affected if we have difficulty obtaining these raw materials, our key suppliers experience financial difficulties, the quality

products, however, require the use of raw materials that are available from only a limited number of regions around the world, are available

from only a limited number of suppliers, or may be subject to significant fluctuations in market prices.

Our results of operations may

be adversely affected if we have difficulty obtaining these raw materials, our key suppliers experience financial difficulties, the quality

of available raw materials deteriorates, or there are significant price increases for these raw materials.

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rates may adversely impact our results of operations and cash flows.

business and results of operations may be materially adversely effected by compliance with import and export laws.

business and results of operations may be materially adversely affected by compliance with import and export laws.

must comply with various laws and regulations relating to the import and export of products, services and technology from the U.S.

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Related to Legal Uncertainty

are involved in an ongoing SEC investigation, which could divert management’s focus, result in substantial expenses, and have an

adverse impact on our reputation, financial condition, results of operations and cash flows.

Company has received subpoenas from the Securities and Exchange Commission (“SEC”).

The subpoenas request documents and

information concerning, among other things, a company known as Telidyne Inc., a company controlled by our prior officer and director,

Aron Govil, securities offerings related to Telidyne, and the Company’s own product and services, business operations, securities’

offerings and use of proceeds.

Although the Company is not currently the subject of any enforcement proceedings, the investigation could

lead to enforcement proceedings and substantial expenses if the SEC contends that the Company has not complied with securities laws.

The Company is fully cooperating with the SEC’s requests.

The Company has incurred legal and accounting expenses and may incur

significant legal and accounting expenditures in connection with the SEC’s investigation.

The Company is unable to predict how

long the SEC’s investigation will continue or its outcome.

could be subject to additional civil penalties or face criminal penalties and sanctions if we violate the terms of settlement with the

September 30, 2022, acting pursuant to an offer of settlement submitted by the Company, the SEC issued an order pursuant to Section 8A

of the Securities Act, directing the Company to cease and desist from committing or causing any violations and any future violations

of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder (the “SEC Order”).

we have already paid the penalties imposed by the order into which we entered pursuant to the SEC Order, it contains ongoing and continuing

requirements that we refrain from violating the Securities Act.

Any future violation of applicable securities laws by us or management

could result in harsher sanctions and fines, which would have a material adverse effect on our ability to implement our business plans.

SEC staff can make reasonable requests from us for further evidence of compliance.

Such requests for further information, record-keeping

requirements and others generally could divert management’s attention from implementing its business plans and could require additional

material expenditures by us to legal counsel or other advisors and service providers.

Further issues could reduce investor and shareholder

confidence in our company and could result in a failure to execute on our business plan, which would negatively impact our business.

A copy of the SEC Order can be found at www.sec.gov.

global operations subject us to many different and complex laws and rules, and we may face difficulty in compliance.

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misstatement of our financial statements would not be prevented or detected on a timely basis.

Our management, including our principal executive officer and principal accounting officer, conducted an evaluation of the effectiveness

management, including our principal executive officer and principal accounting officer, conducted an evaluation of the effectiveness

of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway

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Based on its evaluation, our management concluded

that as of September 30, 2021, there are material weaknesses in our internal control over financial reporting.

The material weaknesses

relates to the Company lacking sufficient, qualified, accounting personnel and the associated sufficient processes and systems.

of qualified accounting personal resulted in the Company lacking entity level controls around the review of period-end reporting processes,

accounting policies and public disclosures.

Additionally, the Company’s current processes and systems do not provide for necessary,

timely reconciliation of certain accounts and sufficient consideration regarding recoverability of certain assets.

These deficiencies

are common in small companies, similar to us, with limited personnel.

that as of September 30, 2022, that our internal control over financial reporting were not effective and there are material weaknesses

in our internal control over financial reporting.

are required to disclose changes made in our internal control and procedures on a quarterly basis.

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A voluntary or involuntary departure by Saagar Govil could have

a materially adverse effect on our business operations if we were not able to attract a qualified replacement for him in a timely manner.

a materially adverse effect on our business operations if we were not able to attract a qualified replacement for them in a timely manner.

we are unable to attract and retain qualified personnel, especially our design and technical personnel, we may not be able to execute

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of substantial amounts of our common stock in the public market could depress the market price of our common stock.

common stock, Series 1 warrants and Series 1 Preferred Stock are listed for trading on the Nasdaq Capital Market.

If our stockholders

sell substantial amounts of our securities in the public market, including the shares of common stock issuable upon the exercise of our

Series 1 warrants and stock options, and shares issued as consideration in future acquisitions, or the market perceives that such sales

may occur, the market price of our securities could fall and we may be unable to sell our securities in the future.

common stock and Series 1 Preferred Stock are listed for trading on the Nasdaq Capital Market.

If our stockholders sell substantial amounts

of our securities in the public market, including the shares of common stock issuable upon the exercise of our Series 1 warrants and

stock options, and shares issued as consideration in future acquisitions, or the market perceives that such sales may occur, the market

price of our securities could fall and we may be unable to sell our securities in the future.

securities may experience extreme price and volume fluctuations, which could lead to costly litigation for us and make an investment

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As of September 30, 2022, we had total consolidated debt of approximately $20.6 million

and 2,156,784 shares of Series 1 preferred stock outstanding.

Any liquidation, winding up or dissolution of our company or of any

of our wholly or partially owned subsidiaries would have a material adverse effect on holders of our common stock.

and 2,079,122 shares issued and 2,015,022 shares of Series 1 preferred stock outstanding.

Any liquidation, winding up or dissolution

of our company or of any of our wholly or partially owned subsidiaries would have a material adverse effect on holders of our common

common stockholders may be adversely affected by the issuance of any subsequent series of preferred stock.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors