What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-11 compared with 2023-02-14 · 150 added, 107 removed, 72 unchanged (78% of the section changed)

22 unchanged sentences

The Company undertakes no obligation to update forward-looking statements as a result of future events or developments.

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

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.

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

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

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

and its subsidiaries.

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

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

of (i) Security, (ii) Industrial Services, and (iii) Cemtrex Corporate.

Security segment operates under the brand of its majority owned subsidiary, Vicon Industries, Inc.

(“Vicon”), which 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 offices.

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”), which 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,

AIS installs 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,

AIS is a leading provider of reliability-driven maintenance and contracting solutions for machinery,

packaging, printing, chemical, and other manufacturing markets.

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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 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%.

of Operations – For the three months ending March 31, 2023, and 2022

revenue for the three months ended March 31, 2023, and 2022 was $16,073,789 and $11,746,017, respectively, an increase of $4,327,380,

Loss from continuing operations for the three months ended March 31, 2023, was $553,761 compared to $4,116,783 for the three

months ended March 31, 2022, a decrease on the loss of $3,563,022, or 87%.

Total revenue for the quarter increased, as compared to total

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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

Security segment revenues for the three months ended March 31, 2023, increased by $3,173,789 or 47% to $9,913,898 from $6,740,109 for

the three months ended March 31, 2022.

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

Industrial Services segment revenues for the three months ended March 31, 2023, increased by $1,153,591 or 23%, to $6,159,499 from $5,005,908

for the three months ended March 31, 2022.

This increase is mainly due to increased demand 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.

Profit for the three months ended March 31, 2023, was $7,338,481 or 46% of revenues as compared to gross profit of $3,769,781 or 32%

of revenues for the three months ended March 31, 2022.

profit in our Security segment was $5,122,290 or 52% of the segment’s revenues for the three months ended March 31, 2023, as compared

to gross profit of $2,303,763 or 34% of the segment’s revenues for the period ended March 31, 2022.

Gross profit as a percentage

of revenues increased in the three months ended March 31, 2023, compared to the three months ended March 31, 2022, 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 $2,216,191 or 36% of the segment’s revenues for the three months ended March 31,

2023, as compared to gross profit of $1,466,018or 29% of the segment’s revenues for the period ended March 31, 2022.

as a percentage of revenues increased in the three months ended March 31, 2023, compared to the three months ended March 31, 2022, was

primarily due to lower subcontractor costs.

and Administrative Expenses

and administrative expenses for the three months ended March 31, 2023, decreased $106,402 or 2% to $5,318,267 from $5,424,669 for the

three months ended March 31, 2022.

General and administrative expenses as a percentage of revenues were 33% and 46% of revenues for the

three-month periods ended March 31, 2023, and 2022, respectively.

The reduction in general and administrative expenses is mainly related

to reduced employee costs and legal expenses.

and Development Expenses

and Development expenses for the three months ended March 31, 2023, were $1,615,341 compared to $1,239,334 for the three months ended

March 31, 2022, an increase of $376,007 or 30%.

Research and Development expenses are primarily related to the Security Segment’s

development of next generation solutions associated with security and surveillance systems software.

expense for the three months ended March 31, 2023, was $958,634, as compared to other expense of $1,222,561 for the three months ended

March 31, 2022.

Other expense for the three months ended March 31, 2023, was mainly driven by interest on the Company’s debt, offset

by a one-time income related to employee retention credits of $416,502.

for Income Taxes

the three months ended March 31, 2023, and 2022, 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.

Income/(loss)

from Discontinued Operations

Company had income on discontinued operations of $14,232.

This income is mainly related to the recognition of the royalties due from

Losses on discontinued operations for the three months ended March 31, 2022 were $685,140 attributable to the operations of

the Cemtrex brands discussed in Note 3.

of Operations – For the six months ending March 31, 2023, and 2022

revenue for the six months ended March 31, 2023, and 2022 was $28,043,639 and $21,159,412, respectively, an increase of $6,884,227, or

Loss from continuing operations for the six months ended March 31, 2023, was $3,650,514 compared to $7,887,648 for the six months

ended March 31, 2022, a decrease on the loss of $4,237,134, or 54%.

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 decreased due

to increased revenues and improved gross profit margins as compared to the same period in the prior year.

Security segment revenues for the six months ended March 31, 2023, increased by $5,819,110 or 52% to $16,918,642 from $11,099,532 for

the six months ended March 31, 2022.

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

Industrial Services segment revenues for the six months ended March 31, 2023, increased by $1,065,117 or 11%, to $11,124,997 from $10,059,880

for the six months ended March 31, 2022.

This increase is mainly due to increased demand for the segment’s

products and services.

Profit for the six months ended March 31, 2023, was $12,381,096 or 44% of revenues as compared to gross profit of $6,992,031 or 33% of

revenues for the six months ended March 31, 2022.

profit in our Security segment was $8,525,980 or 50% of the segment’s revenues for the six months ended March 31, 2023, as compared

to gross profit of $4,095,828 or 37% of the segment’s revenues for the six-month period ended March 31, 2022.

Gross profit as a

percentage of revenues increased in the six months ended March 31, 2023, compared to the six months ended March 31, 2022, 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 $3,855,116 or 35% of the segment’s revenues for the six months ended March 31, 2023,

as compared to gross profit of $2,896,203 or 29% of the segment’s revenues for the period ended March 31, 2022.

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.

a percentage of revenues increased in the six months ended March 31, 2023, compared to the six months ended March 31, 2022, was primarily

due to lower subcontractor costs.

and Administrative 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 administrative expenses for the six months ended March 31, 2023, decreased $231,239 or 2% to $10,482,605 from $10,713,844 for the

six months ended March 31, 2022.

General and administrative expenses as a percentage of revenues were 37% and 51% of revenues for the

six-month periods ended March 31, 2023, and 2022, respectively.

The reduction in general and administrative expenses is mainly related

to reduced employee costs and legal expenses.

and Development Expenses

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 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.

and Development expenses for the six months ended March 31, 2023, were $3,445,054 compared to $2,471,008 for the six months ended March

31, 2022, an increase of $974,046 or 39%.

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

of next generation solutions associated with security and surveillance systems software.

expense for the six months ended March 31, 2023, was $2,103,951 as compared to an expense of $1,694,827 for the six months ended March

Other expense for the six months ended March 31, 2023, was mainly driven by interest on the Company’s debt, offset by

a one-time income related to employee retention credits of $416,502.

Other expense for the six months ended March 31, 2022, included

the gain on the forgiveness of our PPP loans of $971,500.

for Income Taxes

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

the six months ended March 31, 2023, and 2022, the Company took no provision on income taxes.

The provision for income tax is based upon

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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 $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

Company had losses on discontinued operations of $3,225,389.

The losses are comprised of the $2,455,341 loss on the sale of Cemtrex Advanced

Technologies, and Cemtrex XR, Inc.

The net loss of $878,284 for the six months ended March 31, 2023, the recognition of discounted royalties

of $19,151, and the net gain on the recovery of cash from Vicon Industries Ltd.

Losses on discontinued operations for the

six months ended March 31, 2022 were $1,444,098 attributable to the operations of the Cemtrex brands discussed in Note 3.

Company’s business and operations have been affected by inflation during the periods for which financial information

is presented.

In response, the Company has instituted price increases and initiated cost-saving measures to mitigate the effects

of inflation on operations.

and Capital Resources

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

capital was $383,939 at March 31, 2023, compared to working capital of $6,252,972 at September 30, 2022.

This includes cash and equivalents

and restricted cash of $7,279,334 at March 31, 2023, and $11,473,676 at September 30, 2022.

The decrease in working capital was primarily

due to the Company’s sale of assets and liabilities of discontinued operations and an increase in accounts payable, accrued expenses,

and deferred revenue during the six months ended March 31, 2023.

used by operating activities for continuing operations for the six months ended March 31, 2023 and 2022 was $5,383,060 and $6,152,012,

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.

Cash provided by operating activities for discontinued operations for the six months ended March 31, 2023 was $2,488,144,

compared to using cash of $1,310,586 for the six months ended March 31, 2022.

receivables increased by $1,872,272 or 35% to $7,271,488 at March 31, 2023, 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.

used by investment activities for continuing operations for the six months ended March 31, 2023 was $252,706 compared to $5,425,408 for

the six months ended March 31, 2022.

Cash used by investing activities for discontinued operations for the six months ended March 31,

2022 was $2,349.

Investing activities for the six months ended March 31, 2023 were driven by the Company’s purchase of property

and equipment.

used by financing activities for the six months ended March 31, 2023, was $920,127 compared to providing cash of $6,484,337 for the six

months ended March 31, 2022.

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

Financing activities

for the six months ended March 31, 2022 were primarily driven by proceeds from the note payable issued in February of 2022.

our working capital 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.

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

4 unchanged sentences

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