What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-08-14 compared with 2024-05-14 · 97 added, 103 removed, 117 unchanged (63% of the section changed)

64 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 ended March 31, 2024, and 2023

Security segment revenues for the three months ended March 31, 2024, decreased by $1,828,966 or 18% to $8,084,932 from $9,913,898

for the three months ended March 31, 2023.

This decrease is due to the delay of multiple projects for the Security segment’s

products and services.

Industrial Services segment revenues for the three months ended March 31, 2024, increased by $2,915,164 or 47%, to $9,074,663 from $6,159,499,

for the three months ended March 31, 2023.

of Operations – For the three months ended June 30, 2024, and 2023

Security segment revenues for the three months ended June 30, 2024, decreased by $2,821,792 or 31% to $6,193,487 from $9,015,279 for

the three months ended June 30, 2023.

This decrease is due to the delay of multiple projects for the Security segment’s products

and services and overall worsening economic conditions in the industry.

Industrial Services segment revenues for the three months ended June 30, 2024, increased by $2,778,050 or 49%, to $8,492,911 from $5,714,861,

for the three months ended June 30, 2023.

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

business from the Heisey acquisition completed during the fourth quarter of fiscal year 2023.

Profit for the three months ended March 31, 2024, was $6,939,416 or 40% of revenues as compared to gross profit of $7,338,481 or 46%

of revenues for the three months ended March 31, 2023.

profit in our Security segment was $4,112,969 or 51% of the segment’s revenues for the three months ended March 31, 2024, as compared

to gross profit of $5,120,081 or 52% of the segment’s revenues for the period ended March 31, 2023.

Gross profit was down due to

decreased revenues in the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

profit in our Industrial Services segment was $2,826,447 or 31% of the segment’s revenues for the three months ended March 31,

2024, as compared to gross profit of $2,216,191 or 36% of the segment’s revenues for the period ended March 31, 2023.

profit as a percentage of revenues decreased due to lower margins related to Heisey acquisition related projects in the three months

ended March 31, 2024, compared to the three months ended March 31, 2023.

Profit for the three months ended June 30, 2024, was $5,877,147 or 40% of revenues as compared to gross profit of $6,480,643 or 44% of

revenues for the three months ended June 30, 2023.

profit in our Security segment was $3,223,091 or 52% of the segment’s revenues for the three months ended June 30, 2024, as

compared to gross profit of $4,404,836 or 49% of the segment’s revenues for the period ended June 30, 2023.

percentage was down due to the mix of product sold in the three months ended June 30, 2024, compared to the three months ended June 30,

profit in our Industrial Services segment was $2,654,056 or 31% of the segment’s revenues for the three months ended June 30, 2024,

as compared to gross profit of $2,075,807 or 36% of the segment’s revenues for the period ended June 30, 2023.

Gross profit as

a percentage of revenues decreased due to lower margins related to Heisey acquisition related projects in the three months ended June

30, 2024, compared to the three months ended June 30, 2023.

and Administrative Expenses

and administrative expenses for the three months ended March 31, 2024, increased $1,701,890 or 32% to $7,020,157 from $5,318,267 for

the three months ended March 31, 2023.

and administrative expenses for the three months ended June 30, 2024, increased $2,815,220 or 52% to $8,192,180 from $5,376,960 for the

three months ended June 30, 2023.

The increase in general and administrative expenses is mainly related to increased sales and marketing

1 unchanged sentence

maintenance expenses.

Legal expenses for the three months ended March 31, 2024, include non-recurring expenses of $360,000.

Expenses related to the $1,397,388 write-off of related party note

receivable are included here.

and Development Expenses

and Development expenses for the three months ended March 31, 2024, were $951,400 compared to $1,615,341 for the three months ended March

and Development expenses for the three months ended June 30, 2024, were $864,483 compared to $1,049,909 for the three months ended June

30, 2023, a decrease of $185,426 or 18%.

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

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

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

next generation solutions associated with security and surveillance systems software.

Income/Expense

expense for the three months ended March 31, 2024, was $448,039, as compared to $958,634 for the three months ended March 31, 2023.

expense for the three months ended March 31, 2024, and 2023, was mainly driven by interest on the Company’s debt.

interest expense relate to $451,422 in deferral charges and $441,733 of amortization of original issue discounts in the three months

ended March 31, 2023, that did not occur in the current period.

expense for the three months ended June 30, 2024, was $5,902,493, as compared to $1,219,533 for the three months ended June 30,

Other expense for the three months ended June 30, 2024, was mainly driven by the May 2024 Equity Financing expenses of

$995,333, the loss on the excess fair value of the warrants issued in the May 2024 Equity Financing of $7,255,528, offset by the

change in the fair value of the warrants of $2,807,890.

for Income Taxes

the three months ended March 31, 2024 and 2023, the Company had income tax expense from continuing operations of $ 100,004

and $0, respectively.

the three months ended June 30, 2024 and 2023, the Company had income tax expense from continuing operations of $67,294 and $19,461,

respectively.

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

2 unchanged sentences

carryforwards.

Income/(loss)

from Discontinued Operations

the three months ended March 31, 2024 and 2023, the Company had income on discontinued operations, net of tax of $10,463, and $14,232,

respectively.

This income is mainly related to the recognition of the royalties due from CXR, Inc.

of Operations – For the six months ended March 31, 2024, and 2023

Security segment revenues for the six months ended March 31, 2024, increased by $334,091 or 2% to $17,252,733 from $16,918,642 for the

six months ended March 31, 2023.

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, 2024, increased by $5,660,031 or 51%, to $16,785,028 from $11,124,997

for the six months ended March 31, 2023.

of Operations – For the nine months ended June 30, 2024, and 2023

Security segment revenues for the nine months ended June 30, 2024, decreased by $2,487,701 or 10% to $23,446,220 from $25,933,921 for

the nine months ended June 30, 2023.

This decrease is due to the delay of multiple projects for the Security segment’s products

and services and weakening economic conditions in the industry.

Industrial Services segment revenues for the nine months ended June 30, 2024, increased by $8,438,081 or 50%, to $25,277,939 from $16,839,858

for the nine months ended June 30, 2023.

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

business from the Heisey acquisition completed during the fourth quarter of fiscal year 2023.

Profit for the six months ended March 31, 2024, was $14,021,815 or 41% of revenues as compared to gross profit of $12,831,096 or 44%

of revenues for the six months ended March 31, 2023.

profit in our Security segment was $8,629,916 or 50% of the segment’s revenues for the six months ended March 31, 2024, as compared

to gross profit of $8,523,771 or 50% of the segment’s revenues for the six-month period ended March 31, 2023.

Gross profit as a

percentage of revenues remained constant in the six months ended March 31, 2024, compared to the six months ended March 31, 2023.

profit in our Industrial Services segment was $5,391,899 or 32% of the segment’s revenues for the six months ended March 31,

2024, as compared to gross profit of $3,855,116 or 35% of the segment’s revenues for the six-month period ended March 31,

Gross profit as a percentage of revenues decreased due to lower margins related to Heisey acquisition related projects in the

six months ended March 31, 2024, compared to the six months ended March 31, 2023.

Profit for the nine months ended June 30, 2024, was $19,898,962 or 41% of revenues as compared to gross profit of $18,859,530 or 44%

of revenues for the nine months ended June 30, 2023.

profit in our Security segment was $11,853,007 or 51% of the segment’s revenues for the nine months ended June 30, 2024, as

compared to gross profit of $12,928,607 or 50% of the segment’s revenues for the nine-month period ended June 30, 2023.

profit was percentage down due to the mix of products sold in the nine months ended June 30, 2024, compared to the nine months ended June

profit in our Industrial Services segment was $8,045,955 or 32% of the segment’s revenues for the nine months ended June 30, 2024,

as compared to gross profit of $5,930,923 or 35% of the segment’s revenues for the nine-month period ended June 30, 2023.

profit as a percentage of revenues decreased due to lower margins related to Heisey acquisition related projects in the nine months ended

June 30, 2024, compared to the nine months ended June 30, 2023.

and Administrative Expenses

and administrative expenses for the six months ended March 31, 2024, increased $3,509,518 or 33% to $13,992,123 from $10,482,605 for

the six months ended March 31, 2023.

and administrative expenses for the nine months ended June 30, 2024, increased $5,727,701 or 35% to $22,184,303 from $16,456,602 for

the nine months ended June 30, 2023.

The increase in general and administrative expenses is mainly related to increased payroll, fringe

benefits, insurance, professional fees and travel.

Increases in payroll include approximately $680,000 in severance and bonus

Legal expenses for the six months ended March 31, 2024, include non-recurring expenses of $360,000.

Increases in payroll include approximately $680,000 in severance and bonus payments.

Legal expenses for the nine months ended June 30, 2024, include non-recurring expenses of $360,000.

Expenses related to the $1,491,415 write-off of related party notes receivable are included here.

and Development Expenses

and Development expenses for the six months ended March 31, 2024, were $1,800,205 compared to $3,445,054 for the six months ended March

and Development expenses for the nine months ended June 30, 2024, were $2,664,688 compared to $3,895,717 for the nine months ended June

30, 2023, a decrease of $1,231,029 or 32%.

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

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

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

Income/Expense

expense for the six months ended March 31, 2024, was $953,311, as compared to $2,103,951 for the six months ended March 31, 2023.

expense for the six months ended March 31, 2024, and 2023, was mainly driven by interest on the Company’s debt.

Decreases in interest

expense relate to $673,253 in deferral charges and $841,800 of amortization of original issue discounts in the six months ended March

31, 2023, that did not occur in the current period.

Other expense for the nine

months ended June 30, 2024, was $6,855,804, as compared to $3,323,484 for the nine months ended June 30, 2023.

Other expense for the

nine months ended June 30, 2024, and 2023, was mainly driven by interest on the Company’s debt.

Other expense for the nine

months ended June 30, 2024, was mainly driven by the May 2024 Equity Financing expenses of $995,333, the loss on the excess fair

value of the warrants issued in the May 2024 Equity Financing of $7,255,528, offset by the change in the fair value of the warrants

of $2,807,890.

for Income Taxes

the six months ended March 31, 2024 and 2023, the Company had income tax expense from continuing operations of $ 170,755 and $0.

The provision

for income tax is based upon the current 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 current ability to utilize net loss carryforwards.

Income/(loss)

from Discontinued Operations

the six months ended March 31, 2024, the Company had income on discontinued operations, net of tax of $20,955.

This income is mainly

related to the recognition of the royalties due from CXR, Inc.

Losses on discontinued operations for the six months ended March 31, 2023,

were $3,225,389 attributable to the operations and sale of the Cemtrex brands discussed in Note 3 to the financial statements included

the nine months ended June 30, 2024 and 2023, the Company had income tax expense from continuing operations of $238,049 and $19,641.

The provision for income tax is based upon the current 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 current ability to utilize net loss carryforwards.

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

1 unchanged sentence

and Capital Resources

capital was $10,300,384 at March 31, 2024, compared to working capital of $1,948,923 at September 30, 2023.

capital was $12,400,461 at June 30, 2024, compared to working capital of $1,948,923 at September 30, 2023.

This includes cash and equivalents

and restricted cash of $4,088,536 at March 31, 2024, and $6,349,562 at September 30, 2023.

and restricted cash of $7,620,225 at June 30, 2024, and $6,349,562 at September 30, 2023.

The increase in working capital was primarily

due to the Company’s entry into a standstill agreement on two notes extending the maturity date and holding redemptions for a period

used by operating activities for continuing operations for the six months ended March 31, 2024, and 2023 was $2,752,236 and $5,383,060,

due to the Company’s May 2024 Equity Financing and entry into a standstill agreement on two notes extending the maturity date and

holding redemptions for a period of one year.

used by operating activities for continuing operations for the nine months ended June 30, 2024, and 2023 was $2,076,477 and $5,394,048,

respectively.

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

Our negative operating cash flow was mainly the result of our net loss combined with operating changes in trade receivables.

receivables increased by $2,326,185 or 25% to $11,535,880 at March 31, 2024, from $9,209,695 at September 30, 2023.

The increase in trade

receivables is attributable to increased sales in the Industrial Services segment.

used by investing activities for continuing operations for the six months ended March 31, 2024, was $455,308 compared to $252,706 used

for the six months ended March 31, 2023.

Investing activities for the six months ended March 31, 2024, were driven by the Company’s

Cash provided by operating activities for discontinued operations for the nine months ended June 30, 2023, was $2,474,863.

Our negative operating cash flow was mainly the result of our net loss combined with operating changes in trade payables.

receivables decreased by $1,408,812 or 15% to $7,800,883 at June 30, 2024, from $9,209,695 at September 30, 2023.

The decrease in trade

receivables is attributable to decreased sales in the Security segment.

used by investing activities for continuing operations for the nine months ended June 30, 2024, was $406,224 compared to $735,265 used

for the nine months ended June 30, 2023.

Investing activities for the nine months ended June 30, 2024, were driven by the Company’s

purchase of property and equipment and investment in Masterpiece VR.

Investing activities for the six months ended March 31, 2023, were

Investing activities for the nine months ended June 30, 2023, were

driven by the Company’s purchase of property and equipment.

provided by financing activities for the six months ended March 31, 2024, was $1,250,540 compared to using cash of $920,127 for the six

months ended March 31, 2023.

Financing activities were primarily driven by proceeds and payments on the Company’s revolving line

of credit and payments on its secured debt.

Financing activities for the six months ended March 31, 2023, were primarily driven by payments

on the Company’s debt.

current debt indicates 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.

The Company has $2,916,120 in cash and cash equivalents as of March 31, 2024.

Additionally,

the Company has (i) secured a line of credit for its Vicon brand to fund operations, which as of March 31, 2024, has available capacity

of $980,766, (ii) continually reevaluated its pricing model on our Vicon brand to improve margins on those products, (iii) entered into

an underwriting agreement in connection with underwritten public offering, the aggregate gross proceeds to the Company were approximately

$10,035,000, before deducting underwriting discounts and other estimated expenses payable by the Company, and (iv) entered into a Standstill

Agreement with Streeterville Capital, LLC (“Streeterville”) in which Streeterville agreed not to seek to redeem any portion

of its two outstanding notes with the Company for a period of one year expiring on April 30, 2025, in exchange,

provided by financing activities for the nine months ended June 30, 2024, was $3,867,544 compared to using cash of $1,280,991 for the

nine months ended June 30, 2023.

Financing activities for the nine months ended June 30, 2024, were primarily driven by the proceeds

and expenses on the May 2024 Equity Financing, proceeds and payments on the Company’s revolving line of credit and payments on

its secured debt.

Financing activities for the nine months ended June 30, 2023, were primarily driven by payments on the Company’s

The Company’s

working capital may not be sufficient to cover operating costs which indicates 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.

The Company has $7,620,225 in cash and cash equivalents and restricted cash as of June 30, 2024.

Additionally, the Company has (i)

secured a line of credit for its Vicon brand to fund operations, which as of June 30, 2024, has available capacity of $2,269,675,

(ii) continually reevaluated its pricing model on our Vicon brand to improve margins on those products, (iii) entered into a

Standstill Agreement with Streeterville Capital, LLC (“Streeterville”) in which Streeterville agreed not to seek to

redeem any portion of its two outstanding notes with the Company for a period of one year expiring on April 30, 2025 in exchange,

the Company agreed to pay to Streeterville the greater of $4,000,000 or fifty percent (50%) of the net proceeds the Company receives

from the sale of any of its common stock or preferred stock during the Standstill Period.

To date, the company has paid

Streeterville $4,588,897 under this agreement.

the event additional capital is raised through equity offerings and/or debt is satisfied with equity, it may have a dilutive effect on

17 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