What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-12-29 compared with 2024-12-30 · 153 added, 117 removed, 175 unchanged (61% of the section changed)

15 unchanged sentences

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

Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the

Company’s management to make assumptions, estimates, and judgments that affect the amounts reported, including the notes thereto,

and related disclosures of commitments and contingencies, if any.

Company management has identified certain accounting policies that are

significant to the preparation of its financial statements.

These accounting policies are important for an understanding of the Company’s

financial condition and results of operations.

Critical accounting policies are those that are most important to the portrayal of its

financial condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result

of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.

accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that

future events affecting the estimate may differ significantly from management’s current judgments.

Company management believes the

following critical accounting policies involve the most significant estimates and judgments used in the preparation of its financial statements.

Company management has reviewed the critical accounting policies and estimates with the Audit Committee of our Board of Directors.

Accounting Estimates

preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the Company’s

management to make assumptions, estimates, and judgments that affect the amounts reported, including the notes thereto, and related disclosures

of commitments and contingencies, if any.

Company management has identified certain accounting policies that are significant to the preparation

of its financial statements.

These accounting policies are important for an understanding of the Company’s financial condition

and results of operations.

Critical accounting policies are those that are most important to the portrayal of its financial condition

and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to

make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.

Certain accounting estimates

are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting

the estimate may differ significantly from management’s current judgments.

Company management believes the following critical accounting

policies involve the most significant estimates and judgments used in the preparation of its financial statements.

Company management

has reviewed the critical accounting policies and estimates with the Audit Committee of our Board of Directors.

and Cost of Goods Sold

9 unchanged sentences

could vary significantly from actual requirements if future economic conditions, customer demand, or competition differ from expectations.

was $1,044,530 and $618,021 in inventory obsolescence reserve at September 30, 2024, and 2023, respectively.

October 1, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606), using the modified retrospective

transition method.

Under the guidance of the standard, revenue represents the amount received or receivable for goods and services supplied

by the Company to its customers.

was $1,034,798 and $1,044,530 in inventory obsolescence reserves at September 30, 2025, and 2024, respectively.

Company accounts for revenue in accordance with ASC 606, Revenue from Contracts with Customers (Topic “ASC 606”) .

Under the guidance of the standard, revenue represents the amount received or receivable for goods and services supplied by the

Company to its customers.

Company recognizes revenue at the time a good or service is transferred to a customer and the customer

1 unchanged sentence

Most of the Company’s sales arrangements with customers in the

Security segment are short-term in nature involving single performance obligations related to the delivery of goods or repair of equipment

and generally provide for transfer of control at the time of shipment to the customer.

The Company generally permits returns of product

or repaired equipment due to defects;

Security segment are short-term in nature involving single performance obligations related to the delivery of goods and generally

provide for transfer of control at the time of shipment to the customer.

Additionally, the Company issues additional licenses for

its proprietary software.

These licenses have terms of 1, 3, and 5 years.

The Company records deferred revenue and recognizes the

revenue over the period of the license.

The transaction price is a negotiated price with each customer and is allocated to its

performance obligations based on stand-alone selling price.

The Company generally permits returns of product or repaired equipment

due to defects;

however, returns are historically insignificant.

Billing terms vary by customer and product but

generally do not exceed 90 days.

Billing terms vary by customer and product but generally do not

exceed 90 days.

accordance with the authoritative guidance issued by the FASB on revenue recognition, the Company recognizes revenue from cost reimbursable

13 unchanged sentences

Company records deferred revenue when receiving cash in advance of delivering services to the customer.

The deferred revenue is

reversed, and revenue is recognized when those services are delivered.

The amounts were $1,955,635, $2,311,334, and $1,788,507 as of

September 30, 2024, 2023, and 2022 respectively, recorded as Deferred revenue.

Short-term deferred revenue of $1,297,616 is expected

to be recognized over the next 12 months

The Company records a liability when receiving cash in advance of delivering goods to the customer.

The revenue is recognized, and the deposit is applied to the invoice for those goods when those goods are delivered.

The company recorded Deposits from customers of $408,415, $57,434, and $73,144 as of September

30, 2024, 2023, and 2022 respectively.

These amounts are short-term and are expected to be recognized over the next 12 months.

The deferred revenue is reversed,

and revenue is recognized when those services are delivered.

The amounts were $1,866,014, $1,955,635, and $2,311,334, as of September

30, 2025, 2024, and 2023 respectively, recorded as Deferred revenue.

Short-term deferred revenue of $1,383,036 is expected to be recognized

over the next 12 months.

Company records a liability when receiving cash in advance of delivering goods to the customer.

The revenue is recognized, and the deposit

is applied to the invoice for those goods when those goods are delivered.

The company recorded Deposits from customers of $158,344, $408,415,

and $57,434, as of September 30, 2025, 2024, and 2023, respectively.

These amounts are short-term and are expected to be recognized over

the next 12 months.

Company’s industrial services segment’s revenue is derived from contracts with customers.

53 unchanged sentences

Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s

specific terms and applicable authoritative guidance in ASC 480 (Topic 480, Distinguishing Liabilities from Equity) and ASC

815 (Topic 815, Derivatives and Hedging).

The assessment considers whether the warrants are freestanding financial instruments pursuant

to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for

equity classification under ASC 815, including whether the warrants are indexed to our own common shares and whether the warrant

holders could potentially require “net cash settlement” in a circumstance outside of our control, among other conditions

for equity classification.

This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance

and as of each subsequent quarterly period end date while the warrants are outstanding.

specific terms and applicable authoritative guidance in ASC 480 (Topic 480, Distinguishing Liabilities from Equity) and ASC 815 (Topic

815, Derivatives and Hedging).

The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480,

meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification

under ASC 815, including whether the warrants are indexed to our own common shares and whether the warrant holders could potentially

require “net cash settlement” in a circumstance outside of our control, among other conditions for equity classification.

This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent

quarterly period end date while the warrants are outstanding.

issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component

13 unchanged sentences

September 30, 2025, the Company had $3,708,347 of goodwill.

As discussed in Note 2 to the consolidated financial

statements, goodwill is tested annually for impairment at the reporting unit level, or more frequently if impairment indicators arise.

In accordance with the FASB revised guidance on “Testing of Goodwill for Impairment,” a company first has the option to assess

qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying

If the company decides, as a result of its qualitative assessment, that it is more-likely-than- not that the fair value of a

reporting unit is less than its carrying amount, the quantitative impairment test is mandatory.

As discussed in Note 2 to the consolidated financial statements, goodwill

is tested annually for impairment at the reporting unit level, or more frequently if impairment indicators arise.

In accordance with

the FASB revised guidance on “Testing of Goodwill for Impairment,” a company first has the option to assess qualitative factors

to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

If the company

decides, as a result of its qualitative assessment, that it is more-likely-than- not that the fair value of a reporting unit is less

than its carrying amount, the quantitative impairment test is mandatory.

Otherwise, no further testing is required.

The quantitative impairment test consists of a two-step goodwill impairment test.

The first step compares the fair value of each reporting

unit to its carrying amount.

If the fair value of each reporting unit exceeds its carrying amount, goodwill is not considered to be impaired

and the second step will not be required.

If the carrying amount of a reporting unit exceeds its fair value, the second step compares

the implied fair value of goodwill to the carrying value of a reporting unit’s goodwill.

The implied fair value of goodwill is

determined in a manner similar to accounting for a business combination with the allocation of the assessed fair value determined in

the first step to the assets and liabilities of the reporting unit.

The excess of the fair value of the reporting unit over the amounts

assigned to the assets and liabilities is the implied fair value of goodwill.

This allocation process is only performed for purposes

of evaluating goodwill impairment and does not result in an entry to adjust the value of any assets or liabilities.

An impairment loss

is recognized for any excess in the carrying value of goodwill over the implied fair value of goodwill.

The quantitative

impairment test consists of a two-step goodwill impairment test.

The first step compares the fair value of each reporting unit to its

carrying amount.

If the fair value of each reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and

the second step will not be required.

If the carrying amount of a reporting unit exceeds its fair value, the second step compares the

implied fair value of goodwill to the carrying value of a reporting unit’s goodwill.

The implied fair value of goodwill is determined

in a manner similar to accounting for a business combination with the allocation of the assessed fair value determined in the first step

to the assets and liabilities of the reporting unit.

The excess of the fair value of the reporting unit over the amounts assigned to

the assets and liabilities is the implied fair value of goodwill.

This allocation process is only performed for purposes of evaluating

goodwill impairment and does not result in an entry to adjust the value of any assets or liabilities.

An impairment loss is recognized

for any excess in the carrying value of goodwill over the implied fair value of goodwill.

the Company’s goodwill for impairment analyses is complex and highly judgmental due to the nature of qualitive assessment and,

3 unchanged sentences

These significant assumptions are forward looking and could be materially affected by future market or economic conditions.

the year ended September 30, 2024, the Company recorded $530,475 of impairment for Goodwill in the Security Segment.

For the year September

30, 2023, no impairment of the Company’s goodwill was recorded.

the year September 30, 2025, no impairment of the Company’s goodwill was recorded.

For the year ended September 30, 2024, the Company

recorded $530,475 of impairment for Goodwill in the Security Segment.

fiscal year 2023, the Company sold two of its operating entities to Saagar Govil, Chairman of the Board, CEO, President and Secretary,

16 unchanged sentences

date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

Company accounts for business combinations under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification

(“ASC”) 805 “Business Combinations” using the acquisition method of accounting, and accordingly, the assets

and liabilities of the acquired business are recorded at their fair values at the date of acquisition.

The excess of the purchase price

over the estimated fair value is recorded as goodwill.

All acquisition costs are expensed as incurred.

Upon acquisition, the accounts

and results of operations are consolidated as of and subsequent to the acquisition date.

Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis

of the Company’s assets and liabilities and the expected benefits of net operating loss carryforwards.

The impact of changes in

tax rates and laws on deferred taxes, if any, applied during the period in which temporary differences are expected to be settled, is

reflected in the Company’s financial statements in the period of enactment.

The measurement of deferred tax assets is reduced,

if necessary, if, based on weight of the evidence, it is more likely than not that some, or all, of the deferred tax assets will not

The Company had no material amounts recorded for uncertain tax positions, interest, or penalties in the accompanying financial

of Operations - For the fiscal years ending September 30, 2025, and 202 4

Security segment revenues for the year ended September 30, 2024, decreased by $2,337,571 or 7%, to $32,021,899 from $34,359,470 for the

year ended September 30, 2023.

This decrease is due to decreased demand for security technology products under our Vicon brand.

Security segment revenues for the year ended September 30, 2025, increased by $6,376,893 or 20%, to $38,398,792 from $31,021,899 for

the year ended September 30, 2024.

This increase is due to a large sale valued at $10,375,000 for security technology products under

our Vicon brand.

This sale represents 27% of the revenue for this segment for the year ended September 30, 2025.

Industrial Services segment revenues for the year ended September 30, 2025, increased by $3,237,544 or 9%, to $38,079,529 from $34,841,985

1 unchanged sentence

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

and additional revenue related to the acquisition of Heisey Mechanical completed in the fourth quarter of fiscal year 2023.

was unallocated revenue under the Corporate segment of $9,767 for the year ended September 30, 2025.

This revenue is related to the Company’s

investment in digital assets during the fourth quarter of the year.

profit for the year ended September 30, 2025, was $32,288,526 or 42% of revenues as compared to gross profit of $27,478,204 or 41% of

3 unchanged sentences

Gross profit as a percentage

of revenues remained consistent in the years ended September 30, 2024, compared to the year ended September 30, 2023.

of revenue remained consistent in the year ended September 30, 2025, compared to the year ended September 30, 2024.

profit in our Industrial Services segment was $13,193,005 or 35% of the segment’s revenues for the year ended September 30, 2025,

as compared to gross profit of $11,310,865 or 32% of the segment’s revenues for the year ended September 30, 2024.

as a percentage of revenues decreased in the year ended September 30, 2024, compared to the year ended September 30, 2023, and was primarily

due to lower margins related to Heisey projects that were in operation at the time of the Heisey acquisition.

as a percentage of revenues increased in the year ended September 30, 2025, compared to the year ended September 30, 2024, and was primarily

due to due to improved margins on projects during the year.

profit on the Corporate revenue for the year ended September 30, 2025, was 9,767, or 100% of those revenues.

and Administrative Expenses

and Administrative Expenses for the year ended September 30, 2024, increased by $4,930,679 or 21% to $28,860,019 from $23,929,340 for

the year ended September 30, 2023.

The increase in general and administrative expenses is mainly due

to increases in salaries and wages, travel, and utilities as a result of the acquisition of Heisey completed in the fourth quarter of

fiscal year 2023.

and Administrative Expenses for the year ended September 30, 2025, increased by $565,541 or 2% to $29,425,560 from $28,860,019 for the

year ended September 30, 2024.

The increase in general and administrative expenses is mainly due to increases in depreciation,

insurance, rent and utilities, with insurance, rent and utilities being the result of the new office established in Springfield NJ, and

fringe benefits due to increased premiums for employee benefit programs.

and Development Expenses

and Development expenses for the years ended September 30, 2024, and 2023 were $3,357,455 and $3,267,994, respectively.

in Research and Development expenses are primarily related to the Security Segment’s development of proprietary technology and

next generation solutions associated with security and surveillance systems software.

the year ended September 30, 2024, the Company recognized a goodwill impairment charge of $530,475 related to its Security Segment.

is tested annually for impairment or if an event occurs or circumstances change that would more likely than not reduce the fair value

of the reporting unit below its carrying amount.

and Development expenses decreased by $1,004,315 or 30% to $2,353,140 from $3,357,455, for the years ended September 30, 2024, and 2024,

respectively.

The decrease in Research and Development expenses are primarily related to the Security Segment’s development of

proprietary technology and next generation solutions associated with security and surveillance systems software which have now come to

the year ended September 30, 2025, the Company recorded no goodwill impairment .

For the year ended September 30, 2024, the Company

recognized a goodwill impairment charge of $530,475 related to its Security Segment.

Goodwill is tested annually for impairment or if

an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying

expense for the year ended September 30, 2025, was $27,823,914 as compared to $2,206,604 for the year ended 2024.

Other expense for the

year ended September 30, 2024, was mainly driven by interest expense on the Company’s debt, issuance costs of $995,333, related

to the May 2024 Equity Financing, and loss on the excess fair value of certain prefunded warrants issued in May 2024, offset by the changes

in the fair value of the Series A and Series B warrants outstanding at September 30, 2024.

Other expense for the year ended September

30, 2023, was mainly driven by interest expense on the Company’s debt and included an employee retention credit of $416,502.

Tax Benefit/(Expense)

year ended September 30, 2025, was mainly driven by interest expense on the Company’s debt, loss on the excess fair value of the

Company’s Series A and Series B Warrants exercised during the year, and by the changes in the fair value of the Series

A and Series B warrants outstanding at September 30, 2025.

Other expense for the year ended September 30, 2024, was mainly driven by

interest expense on the Company’s debt, issuance costs of $995,333, related to the May 2024 Equity Financing, and loss on the excess

fair value of certain prefunded warrants issued in May 2024, offset by the changes in the fair value of the Series A and Series B warrants

outstanding at September 30, 2024.

the fiscal year of 2025 we recorded an income tax expense of $734,880 compared to $202,280 for fiscal year 2024.

7 unchanged sentences

restricted cash of $6,347,041 at September 30, 2025, and $5,420,392 at September 30, 2024, respectively.

The increase in working capital

was primarily due to the decrease in the Company’s current maturities of long-term liabilities of $9,775,334, a result of the standstill

agreement with the holder of $12,440,555 of notes payable and a decrease in the Company’s cash and cash equivalents of $1,432,399

and a decrease inventory of $1,750,690.

activities for continuing operations used $3,949,360 of cash for the year ended September 30, 2024, compared to using $4,724,305 of cash

The decrease in working capital

was primarily due to the increase in the Company’s current maturities of long-term liabilities of $4,193,120, a result of the timing

of the Company notes payable coming due and a decrease in the Company’s trade receivables from related parties of $280,295 and

a decrease in inventory of $403,585.

activities for continuing operations provided $159,315 of cash for the year ended September 30, 2025, compared to using $3,949,360 cash

for the year ended September 30, 2024.

Cash provided by operating activities for discontinued operations for the year ended September

30, 2023, was $2,491,581.

adjustments to net loss for the year ended September 30, 2025, were $29,970,888 as compared to $4,822,544 for the year ended September

For fiscal year 2025, the main drivers to this adjustment were depreciation and amortization, loss on the excess value of warrants,

and the fair value change in warrant liabilities.

For fiscal year 2024, the main drivers for this adjustment were depreciation and amortization,

loss on the excess value of warrants, and related party write-offs.

receivables increased by $1,973,748 or 18% to $13,133,424 at September 30, 2025, from $11,159,676 at September 30, 2024.

in trade receivables is mainly due to increased revenues and receivables related to the business generated by the acquisition of Heisey.

in trade receivables is mainly due to increased revenues.

activities for continuing operations used $2,960,739 of cash during the year ended September 30, 2025, compared to $1,257,393 used in

1 unchanged sentence

Investing activities for fiscal year 2025 were mainly driven by the purchase of property and equipment

Investing activities for fiscal year 2023 were mainly driven by the purchase of property and equipment and the acquisition of Heisey

and investment in digital assets.

Investing activities for fiscal year 2024 were mainly driven by the purchase of property and equipment.

activities provided $4,075,261 of cash for the year ended September 30, 2025, as compared to $4,398,599 provided in the year ended September

In fiscal 2024 our financing activities were mainly comprised of proceeds from the Company’s equity public offering,

payments on debt, and activity on the revolving line of credit.

In fiscal 2023 our financing activities were mainly comprised of financing

of the acquisition of Heisey and the building purchase

In fiscal 2025 our financing activities were mainly comprised of proceeds from the Company’s equity public offering and

notes payable, proceeds from warrant exercises, payments on debt, and activity on the revolving line of credit.

In fiscal 2024 our financing

activities were mainly comprised of proceeds from the Company’s equity public offerings, payments on debt, and activity on the

revolving line of credit.

Company has incurred substantial losses of $28,112,368 and $7,229,491 for fiscal years 2025 and 2024, respectively, and has debt obligations

1 unchanged sentence

ability to continue as a going concern, as discussed in Item 1A of this Form 10-K.

to September 30, 2025, the Company completed several financing and capital transactions that have significantly improved liquidity and

reduced debt:

December 2025, the Company received $5,657,264 million in gross proceeds from Series

B Warrant exercises and issued 2,316,480 shares of common stock upon exercise.

December 8, 2025, the Company issued 2,500,609 shares of common stock to satisfy $6,084,000

of outstanding debt.

December 11, 2025, the Company raised $2,000,000 gross ($1,950,000 net) in a registered direct

December 23, 2025, the Company raised $2,000,000 gross ($1,950,000 net) in a registered direct

transactions provided approximately $9.6 million in gross cash proceeds and reduced debt by $6.084 million, significantly improving

short-term liquidity and supporting ongoing operations and potential acquisitions.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

1 unchanged sentence

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 7. Management’s Discussion and Analysis