What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-02-14 compared with 2022-08-15 · 123 added, 170 removed, 56 unchanged (84% of the section changed)

23 unchanged sentences

was incorporated in 1998, in the state of Delaware and has evolved through strategic acquisitions and internal growth into a leading

multi-industry technology company.

The Company has expanded in a wide range of sectors, including smart technologies, virtual and augmented

realities, industrial solutions, and intelligent security systems.

Unless the context requires otherwise, all references to “we”,

“our”, “us”, “Company”, “registrant”, “Cemtrex” or “management”

refer to Cemtrex, Inc.

multi-industry company.

The currently operates in two areas:

industrial services, and intelligent security systems.

Unless the context

requires otherwise, all references to “we”, “our”, “us”, “Company”, “registrant”,

“Cemtrex” or “management” refer to Cemtrex, Inc.

and its subsidiaries.

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

Technologies (AT)

Advanced Technologies segment operates several brands that deliver cutting-edge software and hardware technologies:

Industries – Vicon Industries, a majority owned subsidiary, provides end-to-end video security solutions to meet the toughest

corporate, industrial and governmental security challenges.

Vicon’s products include browser-based video monitoring systems

and analytics-based recognition systems, cameras, servers, and access control systems for every aspect of security and surveillance

in industrial and commercial facilities, federal prisons, hospitals, universities, schools, and federal and state government offices.

Vicon provides cutting edge, mission critical security and video surveillance solutions utilizing Artificial Intelligence (AI) based

data algorithms.

– SmartDesk is focused on reinventing the workspace through developing state-of-the-art, modern, fully integrated, workplace

XR (“CXR”) – CXR is focused on realizing the potential of the metaverse.

CXR delivers Virtual Reality (VR)

and Augmented Reality (AR) solutions that provide higher productivity, progressive design and impactful experiences for consumer

products, and various commercial and industrial applications.

The Company is in the process of developing virtual reality applications

for commercialization in the metaverse over the next couple years.

CXR also invests in emerging startups focused on building best

in class solutions for the metaverse.

Driver Interactive (“VDI”) – VDI provides innovative driver training simulation solutions for effective and

engaging learning for all ages and skills.

Strong – Bravo Strong is a gaming and content studio working to building games and experiences for the metaverse.

tech (formerly Cemtrex Labs) – good tech provides mobile, web, and enterprise software application development services

for startups to large enterprises.

Services (IS)

IS segment operates through a brand, Advanced Industrial Services (“AIS”), that offers single-source expertise and services

for rigging, millwrighting, in plant maintenance, equipment erection, relocation, and disassembly to diversified customers.

high precision equipment in a wide variety of industrial markets like automotive, printing & graphics, industrial automation, packaging,

and chemicals among others.

We are a leading provider of reliability-driven maintenance and contracting solutions for the machinery,

the first quarter of fiscal year 2023, The Company reorganized its reporting segments to be in line with its current structure.

has three business segments, consisting of (i) Security (ii) Industrial Services and (iii) Cemtrex Corporate.

Security segment operates under the Vicon Industries brand.

Vicon Industries, a majority owned subsidiary, provides end-to-end security

solutions to meet the toughest corporate, industrial and governmental security challenges.

Vicon’s products include browser-based

video monitoring systems and analytics-based recognition systems, cameras, servers, and access control systems for every aspect of security

and surveillance in industrial and commercial facilities, federal prisons, hospitals, universities, schools, and federal and state government

Vicon provides innovative, mission critical security and video surveillance solutions utilizing Artificial Intelligence (AI)

based data algorithms.

Industrial Services segment operates under the brand, Advanced Industrial Services (“AIS”), that offers single-source expertise

and services for rigging, millwrighting, in plant maintenance, equipment erection, relocation, and disassembly to diversified customers.

We install high precision equipment in a wide variety of industrial markets like automotive, printing & graphics, industrial automation,

packaging, and chemicals among others.

We are a leading provider of reliability-driven maintenance and contracting solutions for machinery,

packaging, printing, chemical, and other manufacturing markets.

2 unchanged sentences

maintenance, specialty welding services, and high-quality scaffolding.

Corporate segment is the holding company of our other two segments.

Accounting Policies and Estimates

15 unchanged sentences

and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended September 30,

of Operations – For the three months ending June 30, 2022, and 2021

Total revenue for the three months

ended June 30, 2022, and 2021 was $13,630,846 and $10,326,431, respectively, an increase of $3,304,415, or 32%.

Loss from operations for

the three months ended June 30, 2022, was $2,120,849 compared to $2,300,269 for the three months ended June 30, 2021, a decrease on the

loss of $179,420, or 8%.

Total revenue for the quarter increased, as compared to total revenue in the same period last year, due to increased

demand for the Company’s products and services.

Loss from operations decreased due to increased revenues as compared to the same

period in the prior year.

Our Advanced Technologies segment revenues for the

three months ended June 30, 2022, increased by $2,316,897 or 40% to $8,162,855 from $5,845,958 for the three months ended June 30, 2021.

This increase is due to an increased demand for security technology products under our Vicon brand.

Our Industrial Services segment

revenues for the three months ended June 30, 2022, increased by $987,518 or 22%, to $5,467,991 from $4,480,473 for the three months ended

June 30, 2021.

This increase is mainly due to an increased demand for the segment’s products and services.

Profit for the three months ended June 30, 2022, was $5,876,356 or 43% of revenues as compared to gross profit of $4,127,716 or 40% of

revenues for the three months ended June 30, 2021.

Gross profit as a percentage of revenues increased in the three months ended June

30, 2022, compared to the three months ended June 30, 2021, due to price increases implemented throughout the company in response to

rising costs of our goods and transportation costs.

The Company’s gross profit margins vary from product to product and from customer

and Administrative Expenses

and administrative expenses for the three months ended June 30, 2022, increased $1,278,940 or 23% to $6,948,959 from $5,670,019 for the

three months ended June 30, 2021.

General and administrative expenses as a percentage of revenues was 51% and 55% of revenues for the

three-month periods ended June 30, 2022, and 2021, respectively.

The increase in general and administrative expenses is the result of

increased personnel, travel, depreciation and amortization, and insurance expenses.

and Development Expenses

and Development expenses for the three months ended June 30, 2022, was $1,048,246 compared to $757,966 for the three months ended June

Research and Development expenses are primarily related to the Advanced Technologies Segment’s development of proprietary

technology and further developments of the SmartDesk and Artificial Intelligence (AI) and next generation solutions associated with security

and surveillance systems software.

Income/(Expense)

income/(expense) for the third quarter of fiscal 2022, was $1,141,206 as compared to $3,468,649 for the third quarter of fiscal 2021.

Other income/(expense) for the three months ended June 30, 2022, included realized and unrealized gain on marketable securities of $2,075,125.

for Income Taxes

the third quarter of fiscal 2022, the Company had an income tax benefit of $247,941 compared to an expense of $40,759 for the third quarter

of fiscal 2021.

The provision for income tax is based upon the projected income tax from the Company’s various U.S.

and international

subsidiaries that are subject to their respective income tax jurisdictions and the Company’s projected ability to utilize net loss

carryforwards.

income/(loss) attributable to Cemtrex, Inc.

Company had a net loss attributable to Cemtrex, Inc.

shareholders of $680,739, or 5% of revenues, for the three-month period ended June

30, 2022, as compared to net income attributable to Cemtrex, Inc.

shareholders of $1,098,013 or 11% of revenues, for the three months

ended June 30, 2021.

Net income/(loss) attributable to Cemtrex, Inc.

shareholders decreased in the third quarter as compared to the same

period last year was primarily due to operating, and other expenses mentioned above.

of Operations – For the nine months ending June 30, 2022, and 2021

Total revenue for the nine months

ended June 30, 2022, and 2021 was $37,031,550 and $28,422,892 respectively, an increase of $8,608,658, or 30%.

Loss from operations for

the nine months ended June 30, 2022, was $9,994,709 compared to $6,308,818 for the nine months ended June 30, 2021, an increase on the

loss of $3,685,891, or 58%.

Total revenue for the period increased, as compared to total revenue in the same period last year, due to

increased demand for the Company’s products and services.

Loss from operations increased due to increased expenses related to personnel

costs, depreciation and amortization, insurance, travel, and research and development costs.

Our Advanced Technologies segment revenues for the

nine months ended June 30, 2022, increased by $5,497,438 or 34% to $21,503,679 from $16,006,241 for the nine months ended June 30, 2021.

This increase is due to an increased demand for security technology products under our Vicon brand.

Our Industrial Services segment

revenues for the nine months ended June 30, 2022, increased by $3,111,220 or 25%, to $15,527,871 from $12,416,651 for the nine months

ended June 30, 2021.

This increase is mainly due to an increased demand and increased pricing for the segment’s products and services.

Profit for the nine months ended June 30, 2022, was $13,798,161 or 37% of revenues as compared to gross profit of $12,062,070 or 42%

of revenues for the nine months ended June 30, 2021.

Gross profit as a percentage of revenues decreased in the nine months ended June

30, 2022, compared to the nine months ended June 30, 2021, due to increased cost of revenues as a result of supply chain difficulties

and increased transportation costs for goods.

The Company’s gross profit margins vary from product to product and from customer

of Operations – For the three months ending December 31, 2022, and 2021

revenue for the three months ended December 31, 2022, and 2021 was $11,970,242 and $9,413,395, respectively, an increase of $2,556,847,

Loss from continuing operations for the three months ended December 31, 2022, was $3,096,753 compared to $3,770,865 for the three

months ended December 31, 2021, a decrease on the loss of $674,112, or 18%.

Total revenue for the quarter increased, as compared to total

revenue in the same period last year, due to increased demand for the Company’s products and services.

Loss from operations decreased

due to increased revenues as compared to the same period in the prior year.

Security segment revenues for the three months ended December 31, 2022, increased by $2,646,131 or 40% to $7,004,744 from $4,358,613

for the three months ended December 31, 2021.

This increase is due to an increased demand for Security technology.

Industrial Services segment revenues for the three months ended December 31, 2022, decreased by $88,474 or 2%, to $4,965,498 from $5,053,972

for the three months ended December 31, 2021.

This decrease is mainly due to timing of the recognition of revenue for the segment’s

products and services.

Profit for the three months ended December 31, 2022, was $5,042,615 or 42% of revenues as compared to gross profit of $3,222,250 or 34%

of revenues for the three months ended December 31, 2021.

profit in our Security segment was $3,403,690 or 49% of the segment’s revenues for the three months ended December 31, 2022 as

compared to gross profit of $1,791,255 or 41% of the segment’s revenues for the period ended December 31, 2021.

Gross profit as

a percentage of revenues increased in the three months ended December 31, 2022, compared to the three months ended December 31, 2021,

due to price increases implemented throughout the segment in response to rising costs of our goods and transportation costs.

profit in our Industrial Services segment was $1,638,925 or 33% of the segment’s revenues for the three months ended December 31,

2022 as compared to gross profit of $1,430,185 or 28% of the segment’s revenues for the period ended December 31, 2021.

as a percentage of revenues increased in the three months ended December 31, 2022, compared to the three months ended December 31, 2021,

was primarily due to lower subcontractor costs.

and Administrative Expenses

and administrative expenses for the nine months ended June 30, 2022, increased $3,980,996 or 24% to $20,318,196 from $16,337,200 for

the nine months ended June 30, 2021.

General and administrative expenses as a percentage of revenues was 55% and 57% of revenues for

the nine-month periods ended June 30, 2022, and 2021, respectively.

The increase in general and administrative expenses is the result

of increased personnel, travel, depreciation and amortization, and insurance expenses.

and administrative expenses for the three months ended December 31, 2022, increased $7,882 or 0.14% to $5,455,833 from $5,447,951

for the three months ended December 31, 2021.

General and administrative expenses as a percentage of revenues were 46% and 58% of

revenues for the three-month periods ended December 31, 2022, and 2021, respectively.

and Development Expenses

and Development expenses for the nine months ended June 30, 2022, was $3,474,674 compared to $2,033,688 for the nine months ended June

Research and Development expenses are primarily related to the Advanced Technologies Segment’s development of proprietary

technology and further developments of the SmartDesk and Artificial Intelligence (AI) and next generation solutions associated with security

and surveillance systems software.

and Development expenses for the three months ended December 31, 2022, were $1,538,218 compared to $1,072,898 for the three months ended

December 31, 2021.

Research and Development expenses are primarily related to the Security Segment’s development of next generation

solutions associated with security and surveillance systems software.

Income/(Expense)

income/(expense) for the first three quarters of fiscal 2022, was $(316,680) as compared to $8,315,729 for the first three quarters of

fiscal year 2021.

Other income/(expense) for the nine months ended June 30, 2022, included the gain on the forgiveness of our PPP loans

of $971,500 and the issuance of common stock in connection with a note payable of $700,400 and the realized and unrealized gain on marketable

securities of $2,235,738.

income/(expense) for the first quarter of fiscal 2022, was an expense of $1,145,317 as compared to an expense of $472,266 for the first

quarter of fiscal 2021.

Other income/(expense) for the three months ended December 31, 2022, was mainly driven by interest on the Company’s

Other income/(expense) for the three months ended December 31, 2021, included the gain on the forgiveness of our PPP loans of $971,500.

for Income Taxes

the first three quarters of fiscal year 2022, the Company had an income tax benefit of $247,941 compared to an expense of $168,190 for

the first three quarters of fiscal year 2021.

The provision for income tax is based upon the projected income tax from the Company’s

and international subsidiaries that are subject to their respective income tax jurisdictions and the Company’s projected

ability to utilize net loss carryforwards.

the first quarters of fiscal 2022, and 2021, the Company took no provision on income taxes.

The provision for income tax is based upon

the projected income tax from the Company’s various U.S.

and international subsidiaries that are subject to their respective income

tax jurisdictions and the Company’s projected ability to utilize net loss carryforwards.

from Discontinued Operations

discussed in Note 3, the Company had losses on discontinued operations of $3,239,621.

The losses are comprised of the $2,455,701 loss

on the sale of Cemtrex Advanced Technologies, and Cemtrex XR, Inc..

The net loss of $877,792 for the three months ended December 31,

2022, and the net gain on the recovery of cash from Vicon Industries Ltd.

Losses on discontinued operations for the three

months ended December 31, 2021 were $758,241 attributable to the operations of the Cemtrex brands discussed in Note 3.

income/(loss) attributable to Cemtrex, Inc.

Company had a net loss attributable to Cemtrex, Inc.

shareholders of $9,879,991, or 27% of revenues, for the nine-month period ended

June 30, 2022, as compared to net income attributable to Cemtrex, Inc.

shareholders of $1,859,534 or 7% of revenues, for the nine months

ended June 30, 2021.

Net loss attributable to Cemtrex, Inc.

shareholders increased in the first three quarters of fiscal year 2022 as

compared to the same period last year was primarily due to costs of revenues and operating expenses mentioned above.

shareholders of $6,277,711, or 52% of revenues, for the three-month period

ended December 31, 2022, as compared to net loss attributable to Cemtrex, Inc.

shareholders of $4,477,951 or 42% of revenues, for

the three months ended December 31, 2021.

The net loss attributable to Cemtrex, Inc.

shareholders increased in the first quarter as

compared to the same period last year was primarily due to the loss on discontinued operations.

Company’s business and operations have not been materially affected by inflation during the periods for which financial information

1 unchanged sentence

and Capital Resources

capital was $5,751,185 at June 30, 2022, compared to $15,088,892 at September 30, 2021.

This includes cash and equivalents and restricted

cash of $12,961,207 at June 30, 2022, and $17,186,323 at September 30, 2021.

The decrease in working capital was primarily due to the

Company’s use of cash to build inventory and a shift of liabilities to short-term during the first three quarters of fiscal year

receivables decreased $246,514 or 3% to $7,564,382 at June 30, 2022, from $7,810,896 at September 30, 2021.

The decrease in trade receivables

is attributable to increased collection efforts to keep our trade receivables from going past due.

increased $2,801,243 or 50% to $8,458,530 at June 30, 2022, from $5,657,287 at September 30, 2021.

The increase in inventories is attributable

to the purchase of inventories for new products the Company plans to ship in the future and to build up stock inventory to account for

supply chain issues.

used by operating activities for the nine months ended June 30, 2022 and 2021 was $10,246,799 and $6,198,611 respectively.

in operating cash flows was primarily due to purchases on inventory and payment of accounts payable and accrued expenses.

provided by investment activities for the nine months ended June 30, 2022 was $517,029 compared to $154,326 for the nine-month period

ending June 30, 2021.

Investing activities for the first three quarters of fiscal year 2022 were driven mainly by the Company’s

net gain on the purchase and sale of marketable securities and the sale of property and equipment.

provided by financing activities for the nine months ended June 30, 2022 and 2021 $5,902,298 compared to using cash of $160,158 for the

nine-month period ending June 30, 2021.

Financing activities were primarily driven by proceeds from the note payable issued in February

believe that our cash on hand and cash generated by operations is

sufficient to meet the capital demands of our current operations for the next year (ending June 30, 2023).

While our working capital and

current debt indicate a going concern issue, the Company has historically, from time to time, satisfied and may continue to satisfy certain

short-term liabilities through the issuance of common stock, thus reducing our cash requirement to meet our operating needs.

increases in sales, particularly in new products, may require substantial capital investment.

Failure to obtain sufficient capital could

materially adversely impact our growth potential.

capital deficit was $469,270 at December 31, 2022, compared to working capital of $4,754,493 at September 30, 2022.

This includes cash

and equivalents and restricted cash of $7,370,333 at December 31, 2022, and $12,188,096 at September 30, 2022.

The decrease in working

capital was primarily due to the Company’s transfer of cash to in the sale of Cemtrex Advanced Technologies and Cemtrex XR, Inc.

and accrual of interest on short-term liabilities during the first quarter of fiscal year 2023.

used by operating activities for continuing operations for the three months ended December 31, 2022 and 2021 was $5,872,310 and $3,633,702

respectively.

Cash provided by operating activities for discontinued operations for the three months ended December 31, 2022 was $2,501,426,

compared to using cash of $719,237.

The increase in operating cash usage for continuing operations was primarily due to increases of

trade receivables, prepaid expenses, and other assets and payment of accounts payable and other liabilities.

receivables increased $1,536,861 or 28% to $6,936,077 at December 31, 2022, from $5,399,216 at September 30, 2022.

The increase in trade

receivables is attributable to increased sales in the Security segment.

Inventories increased $116,492 or 1% to $8,604,759 at December 31,

2022, from $8,487,817 at September 30, 2022.

The increase in inventories is attributable to inventories in transit yet to be sold.

used by investment activities for continuing operations for the three months ended December 31, 2022 was $568,111 compared to $291,666

for the three-month period ending December 31, 2021.

Cash provided by investing activities for discontinued operations for the three

months ended December 31, 2022 was $207,329.

Investing activities for the first quarter of fiscal year 2023 were driven mainly by the

Company’s purchase of property and equipment.

used by financing activities for the three months ended December 31, 2022, was $600,920 compared to $632,753 for the three-month

period ending December 31, 2021.

Financing activities were primarily driven by payments on the Company’s debt and the

royalties receivable for discontinued operations.

our working capital deficit and current debt indicate a substantial doubt regarding the Company’s ability to continue as a going

concern, the Company has historically, from time to time, satisfied and may continue to satisfy certain short-term liabilities through

the issuance of common stock, thus reducing our cash requirement to meet our operating needs.

Additionally, the Company has recently

sold unprofitable brands, reducing the cash required to maintain those brands, reevaluated our pricing model on our Vicon brand to improve

margins on those products, and has effected a reverse stock split on our common stock to remain trading on the Nasdaq Capital Markets,

and improved our ability to potentially raise capital through equity offerings that we may use to satisfy debt.

In the event additional

capital is raised through equity offerings and/or debt is satisfied with equity, it may have a dilutive effect on our existing stockholders.

While the Company believes these plans are sufficient to meet the capital demands of our current operations for at least the next twelve

months, the is no guarantee that we will succeed.

there is no guarantee that cash flow from our existing or future operations and any external capital that we may be able to raise will

be sufficient to meet our expansion goals and working capital needs.

be sufficient to meet our working capital needs.

We currently do not have adequate cash to meet our short or long-term needs.

The consolidated

financial statements do not include any adjustments relating to this uncertainty.

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-Q

Item 2. Management’s Discussion and Analysis