What changed in this filing

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Item 1. Financial Statements

2023-02-14 compared with 2022-08-15 · 454 added, 550 removed, 322 unchanged (76% of the section changed)

11 unchanged sentences

Prepaid expenses and other assets

Assets of discontinued operations

Total current assets

1 unchanged sentence

Right-of-use assets

Royalties receivable - related party

Note receivable - related party

Liabilities & Stockholders’ Equity (Deficit)

1 unchanged sentence

Accounts payable

Accounts payable - related party

Short-term liabilities

4 unchanged sentences

Accrued income taxes

Liabilities of discontinued operations

Total current liabilities

2 unchanged sentences

Long-term lease liabilities

Notes payable

Mortgage payable

6 unchanged sentences

Shareholders’ equity

Preferred stock , $ 0.001

par value, 10,000,000

shares authorized, Series 1, 3,000,000

shares authorized, 2,079,122

shares issued and 2,015,022 shares outstanding as of June 30, 2022 and 1,885,151

shares issued and 1,821,051 shares outstanding as of September 30, 2021 (liquidation value of $ 10

Series C, 100,000 shares authorized, 50,000 shares issued and outstanding at June 30, 2022 and September 30, 2021

Common stock, $ 0.001 par value, 50,000,000 shares authorized, 26,263,296 shares issued and outstanding at June 30, 2022 and 20,782,194 shares issued and outstanding at September 30, 2021

Preferred stock , $ 0.001 par value, 10,000,000 shares authorized, Series 1, 3,000,000 shares authorized, 2,183,463 shares issued

and 2,119,363 shares outstanding as of December 31, 2022 and 2,079,122 shares issued and 2,015,022 shares outstanding as of

September 30, 2022 (liquidation value of $ 10 per share)

Series C, 100,000 shares authorized, 50,000 shares issued and outstanding at December 31, 2022 and September 30, 2022

Preferred stock, value

Common stock, $ 0.001 par value, 50,000,000 shares authorized, 793,727 shares issued and outstanding at

December 31, 2022 and 754,711 shares issued and outstanding at September 30, 2022

Additional paid-in capital

2 unchanged sentences

( 54,929,020 )

Treasury stock at cost

Treasury stock, 64,100 shares of Series 1 Preferred Stock at December 31, 2022 and September 30, 2022

Accumulated other comprehensive income (loss)

4 unchanged sentences

and Subsidiaries

Consolidated Statements of Operations and Comprehensive Income/(Loss)

Consolidated Statements of Operations

December 31, 2022

December 31, 2021

For the three months ended

For the nine months ended

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

December 31, 2022

December 31, 2021

Cost of revenues

3 unchanged sentences

Total operating expenses

Operating income/(loss)

( 2,120,849 )

( 2,300,269 )

Operating loss

( 1,951,436 )

1 unchanged sentence

Other income/(expense)

Settlement Agreement - Related Party

Interest Expense

2 unchanged sentences

Total other income/(expense), net

( 1,145,317 )

Net loss before income taxes

( 3,096,753 )

( 3,770,865 )

Income tax benefit/(expense)

Net income/(loss)

Loss from Continuing operations

( 3,096,753 )

( 3,770,865 )

Loss from discontinued operations, net of tax

( 3,239,621 )

( 6,336,374 )

( 4,529,823 )

Less loss in noncontrolling interest

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

Net loss attributable to Cemtrex, Inc.

$ ( 6,277,211 )

$ ( 4,477,951 )

Loss Per Share-Basic & Diluted

Continuing Operations

Discontinued Operations

Weighted Average Number of Shares-Basic & Diluted

accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Consolidated Statements Comprehensive Income/(Loss)

December 31, 2022

December 31, 2021

For the three months ended

December 31, 2022

December 31, 2021

Other comprehensive income/(loss)

Net income/(loss)

$ ( 6,336,374 )

$ ( 4,529,823 )

Foreign currency translation loss

Defined benefit plan actuarial gain

Comprehensive income/(loss)

Foreign currency translation (loss)/income

Comprehensive loss

( 6,112,805 )

( 4,470,331 )

Less comprehensive loss attributable to noncontrolling interest

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

Comprehensive loss attributable to Cemtrex, Inc.

$ ( 6,053,642 )

$ ( 4,418,459 )

Income/(loss) Per Share-Basic

Income/(loss) Per Share-Diluted

Weighted Average Number of Shares-Basic

Weighted Average Number of Shares-Diluted

accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1 unchanged sentence

Consolidated Statement of Stockholders’ Equity

Stock Series 1

Preferred Stock Series C

Preferred Stock Series

Common Stock Par

64,100 shares of

Par Value $0.001

15 unchanged sentences

$ ( 148,291 )

Foreign currency translation gain/(loss)

$ ( 199,623 )

Share-based compensation

Shares issued with note payable

Income/(loss) attributable to noncontrolling interest

$ ( 4,721,247 )

( 4,721,247 )

Balance at March 31, 2022

( 51,107,260 )

Foreign currency translation gain/(loss)

Share-based compensation

Shares issued to pay notes payable

Dividends paid in Series 1 preferred shares

Income/(loss) attributable to noncontrolling interest

Balance at June 30, 2022

( 51,788,053 )

accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

Preferred Stock Series

Preferred Stock Series A

Preferred Stock Series C

Preferred Stock Series

Common Stock Par

64,100 shares of

Par Value $0.001

Comprehensive

1 unchanged sentence

Balance at September 30, 2021

30, 2020, as restated

$ ( 41,908,062 )

$ ( 148,291 )

balance, value

$ ( 41,908,062 )

$ ( 148,291 )

Foreign currency translation gain/(loss)

7 unchanged sentences

$ ( 46,386,013 )

Foreign currency translation gain/(loss)

Defined benefit plan actuarial gain/(loss)

Share-based compensation

Shares issued to pay notes payable

Income in noncontrolling interest

Shares and options surrendered in settelment agreement

$ ( 148,291 )

( 3,672,645 )

( 3,674,165 )

Balance at March 31, 2021

balance, value

$ ( 46,386,013 )

Foreign currency translation gain/(loss)

Dividends paid in Series 1 preferred shares

Share-based compensation

Shares granted to pay notes payable

Income in noncontrolling interest

Net income/ (loss)

Balance at June 30, 2021

$ ( 148,291 )

2 unchanged sentences

Consolidated Statements of Cash Flows

For the nine months ended

For the three months ended

Cash Flows from Operating Activities

Net income/(loss)

$ ( 6,336,374 )

$ ( 4,529,823 )

Adjustments to reconcile net income/(loss) to net cash used by operating activities

Depreciation and amortization

Loss on disposal of property and equipment

(Gain)/loss on disposal of property and equipment

Noncash lease expense

1 unchanged sentence

Share-based compensation

Income tax expense/ (benefit)

Interest expense paid in equity shares

2 unchanged sentences

Gain on marketable securities

( 2,234,478 )

( 2,407,841 )

Discharge of Paycheck Protection Program Loans

( 3,349,700 )

Settlement Agreement - Related Party

( 3,674,165 )

Changes in operating assets and liabilities net of effects from acquisition of subsidiaries:

Accounts receivable

Accounts receivable - related party

Trade receivables

( 1,541,371 )

Trade receivables - related party

( 1,458,595 )

2 unchanged sentences

Accounts payable

Accounts payable - related party

Operating lease liabilities

3 unchanged sentences

Income taxes payable

Net cash used by operating activities - continuing operations

( 5,872,310 )

( 3,633,465 )

Net cash provided/(used) by operating activities - discontinued operations

Net cash used by operating activities

3 unchanged sentences

Purchase of property and equipment

( 1,003,121 )

( 1,113,658 )

Proceeds from sale of property and equipment

Investment in MasterpieceVR

Investment in related party

( 1,075,428 )

Proceeds from sale of marketable securities

Purchase of marketable securities

( 10,214,044 )

( 6,290,747 )

Net cash used by investing activities

Net cash used by investing activities - continuing operations

Net cash provided by investing activities - discontinued operations

Net cash provided/(used) by investing activities

Cash Flows from Financing Activities

Proceeds from notes payable

Payments on notes payable

( 1,176,763 )

( 2,145,257 )

Payments on capital lease liabilities

Payments on bank loans

Proceeds from Paycheck Protection Program Loans

Net cash provided/(used) by financing activities

Net cash used by financing activities

Effect of currency translation

Defined benefit plan actuarial gain/(loss)

Net decrease in cash, cash equivalents, and restricted cash

14 unchanged sentences

Supplemental Schedule of Non-Cash Investing and Financing Activities

Investment in Virtual Driver Interactive

Stock issued to pay notes payable

Shares issued in connection with note payable

Financing of right of use assets

Shares issued to pay notes payable

Investment in right of use asset

accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3 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 Company currently operates in two areas:

industrial services, and intelligent security systems.

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.

now 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, Inc.

(“Vicon”), a majority owned subsidiary,

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

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”), 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.

of Virtual Driver Interactive

October 26, 2020, the company acquired Virtual Driver Interactive (“VDI”), a California based provider of innovative driver

training simulation solutions for a purchase price of $ 1,339,774 plus contingent consideration of $ 175,428 .

over 10 years, VDI has been known for its effective and engaging driver training systems, designed for users of all ages and skill levels.

The Company offers comprehensive training for new teen and novice drivers, along with advanced training for corporate fleets and truck

VDI’s wide range of training courses and system options provide customers with highly portable, affordable and effective

solutions, all while focusing on the dangers of distracted driving.

Results for VDI will be reported under the AT segment.

Company paid $ 900,000 in cash and issued a note payable in the amount of $ 439,774 .

This note carries interest of 5 % and is payable in

two installments of $ 239,774 plus accumulated interest on October 26, 2021, and $ 200,000 plus accumulated interest on October 26, 2022.

Additionally, the Company paid contingent consideration of $ 175,428 in May 2021.

There is no further contingent consideration specified

in the purchase agreement.

The Company has accounted for this acquisition as a business combination and has allocated the purchase price

as follows, $ 876,820 to proprietary software, $ 39,992 to inventory, and $ 598,391 to goodwill.

November 13, 2020, Cemtrex made a $ 500,000 investment and on January 19, 2022, made an additional $ 500,000 investment via a simple agreement

for future equity (“SAFE”) in MasterpieceVR.

The SAFE provides that the Company will automatically receive shares of the

entity based on the conversion rate of future equity rounds up to a valuation cap, as defined.

MasterpieceVR is a software company that

is developing software for content creation using virtual reality.

The investment is included in other assets in the accompanying balance

sheet and the Company accounts for this investment and recorded at cost.

No impairment has been recorded for the period ended June 30,

Impacts of COVID-19 on our Business

COVID-19 pandemic impacted our business operations and the results of our operations during fiscal years 2020 and 2021, primarily with

delays in orders by many customers and new product development, including newer versions of surveillance software since our technical

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

Overall bookings level in the IS segment of our business were

down by more than 20%, compared to fiscal 2019 levels, however our AT segment had experienced relatively less slow down.

revenue are recovering in this fiscal year compared to last year.

However, due to ongoing delays in certain supply chain areas, the expected

launch times of our new products and new versions has resulted in delays of several months.

These supply chain issues have also affected

the Company’s ability to obtain inventory for our current bookings, and the Company has implemented a buildup of inventory levels

to remain competitive and keep backlog orders at a minimum.

Additionally, increased costs and the need to increase wages to retain talent

may cause our gross margin percentages to shrink and our operational costs to rise.

In response to these increased costs, the Company

has implemented an ongoing review of our pricing to cover these additional costs while remaining competitive.

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

The COVID-19 pandemic and the resulting

supply chain issues and inflation has the potential to cause adverse effects to our customers, suppliers or business partners in locations

that have or will experience more pronounced disruptions, which could result in a reduction to future revenue and manufacturing output

as well as delays in our new product development activities.

However, opportunities in the video surveillance field have been growing

for Vicon products.

extent of the pandemics effect on our operational and financial performance will depend in large part on future developments, which cannot

be reasonably estimated at this time.

Future developments include the emergence of new virus variants that are more contagious or harmful

than prior variants, the actions taken to contain or mitigate its impact both within and outside the jurisdictions where we operate,

the impact on governmental programs and budgets, the development of treatments or vaccines, and the resumption of widespread economic

Due to the inherent uncertainty of the unprecedented and rapidly evolving situation, we are unable to predict with any confidence

the likely impact of the COVID-19 pandemic on our future operations.

Going Concern

For the nine months

ended June 30, 2022, the Company has incurred net losses of $ 10,063,448 with working capital of $ 5,757,185 as of June 30, 2022.

in working capital over the past nine months is mainly due to the increase in the short-term portion of the Company’s liabilities,

$ 17,146,234 at June 30, 2022.

While 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.

Based on this, the Company believes that our cash on hand and cash generated by operations

is sufficient to meet the capital demands of our current operations for at least the next twelve months.

Any major increases in sales,

particularly in new products, may require substantial capital investment.

Failure to obtain sufficient capital could materially adversely

impact our growth potential.

Overall, 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

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

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

of former Cemtrex Brands

November 22, 2022, the Company entered into two Asset Purchase Agreements and one Simple Agreement for Future Equity (“SAFE”)

with the Company’s CEO, Saagar Govil, to secure the sale of the subsidiaries Cemtrex Advanced Technologies, Inc, which include

the brand SmartDesk, and Cemtrex XR, Inc., which include the brands Cemtrex XR, Virtual Driver Interactive, Bravo Strong, and good tech

(formerly Cemtrex Labs), to Mr.

November 22, 2022, the Company completed the above disposition for the following consideration.

comprised of:

in cash payable at Closing;

royalty of all revenues on the Business to be paid 90 days after the end of each calendar

year for the next three years;

and should the total sum of royalties due be less than $ 820,000

at the end of the three-year period, Purchaser shall be obligated to pay the difference between

$ 820,000 and the royalties paid.

Advanced Technologies, Inc.

in cash payable at Closing;

royalty of all revenues on the Business to be paid 90 days after the end of each calendar

year for the next 5 years ;

○ $ 1,600,000

in SAFE (common equity) at any subsequent fundraising or exit above $5M with a $10M cap.

Company’s Board of Directors, excluding Saagar Govil who abstained from all voting on these agreements, approved these actions

and agreements.

January 25, 2023, the company completed a 35:1 reverse stock split on its common stock.

All share and per share data have been retroactively

adjusted for this reverse split.

of cure period

January 26, 2023, the Company received a notification letter from the Listing Qualifications Department of Nasdaq notifying the Company

that, it had been granted an additional 180 days or until July 24, 2023, to regain compliance with the Minimum Bid Price Requirement

on its Series 1 Preferred stock.

Rule Compliance

February 8, 2023, the Company received a notification letter from the Listing Qualifications Department of Nasdaq notifying the Company

that it has regained compliance with Listing Rule 5550(a)(2) and is in compliance with all applicable listing standards.

The Company’s

common stock will continue to be listed and traded on The Nasdaq Stock Market.

The hearing scheduled for March 16, 2023 before the Hearings

Panel has been cancelled.

Concern Considerations

accompanying condensed consolidated financial statements of the Company have been prepared assuming the Company will continue as a going

concern and in accordance with generally accepted accounting principles in the United States of America.

The going concern basis of presentation

assumes that the Company will continue in operation one year after the date these financial statements are issued and will be able to

realize its assets and discharge its liabilities and commitments in the normal course of business.

Pursuant to the requirements of the

ASC 205, management must evaluate whether there are conditions or events, considered in the aggregate, which raise substantial doubt

about the Company’s ability to continue as a going concern for one year from the date these financial statements are issued.

evaluation does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented

or are not within control of the Company as of the date the financial statements are issued.

When substantial doubt exists under this

methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s

ability to continue as a going concern.

The mitigating effect of management’s plans, however, is only considered if both (1) it

is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and

(2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about

the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued.

Company has incurred substantial losses of $ 13,020,958 and $ 7,807,995 for fiscal years 2022 and 2021, respectively, and has losses on

continuing operations for the first quarter of fiscal year 2023 of $ 3,096,753 and has debt obligations over the next year of $ 17,099,485

and working capital deficit of $ 469,270 , that raise substantial doubt with respect to the Company’s ability to continue as a going

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 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 35:1 reverse stock split on our common stock to remain trading on the Nasdaq Capital Markets, and improve

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.

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.

Overall, 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 working capital needs.

We currently do not have adequate

cash to meet our short or long-term needs.

The condensed consolidated financial statements do not include any adjustments relating to

this uncertainty.

2 – INTERIM STATEMENT PRESENTATION

21 unchanged sentences

The Company evaluates its estimates and assumptions on an ongoing basis.

condensed consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, Cemtrex Advanced Technologies

Inc., Cemtrex Technologies Pvt.

Ltd., Cemtrex XR Inc., and Advanced Industrial Services, Inc.

and the Company’s majority owned

subsidiary Vicon Industries, Inc.

and its subsidiary, Vicon Industries Ltd.

All inter-company balances and transactions have been eliminated

in consolidation.

condensed consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, Cemtrex Technologies

Ltd., Advanced Industrial Services, Inc., and the Company’s majority owned subsidiary Vicon Industries, Inc.

and its subsidiary,

Vicon Industries Ltd.

All inter-company balances and transactions have been eliminated in consolidation.

Pronouncements

3 unchanged sentences

Issued Accounting Standards

2016-13 Measurement of Credit Losses on Financial Instrument is effective for fiscal years beginning after December 15, 2022.

not expected to apply to the Company as financial instruments giving rise to credit risk are not utilized by the Company.

May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock

Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40).

The new ASU addresses

issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options.

This amendment

is effective for all entities, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

Early adoption is permitted.

The Company is currently evaluating the impact this new guidance will have on its financial statements.

October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities

from Contracts with Customers (“ASU No.

2021-08 will require companies to apply the definition of a performance

obligation under ASC Topic 606 to recognize and measure contract assets and contract liabilities (i.e., deferred revenue) relating to

contracts with customers that are acquired in a business combination.

Under current U.S.

GAAP, an acquirer generally recognizes assets

acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts

with customers, at fair value on the acquisition date.

2021-08 will result in the acquirer recording acquired contract assets

and liabilities on the same basis that would have been recorded by the acquiree before the acquisition under ASC Topic 606.

is effective for fiscal years beginning after December 15, 2022, with early adoption permitted.

We are currently evaluating the impact

of this ASU on our financial statements.

June 30, 2022, the FASB issued ASU 2022-03 Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to

Contractual Sale Restrictions (“ASU 2022-03”), which (1) clarifies the guidance in ASC 820 on the fair value measurement

of an equity security that is subject to a contractual sale restriction and (2) requires specific disclosures related to such an equity

Under current guidance, stakeholders have observed diversity in practice related to whether contractual sale restrictions should

be considered in the measurement of the fair value of equity securities that are subject to such restrictions.

On the basis of interpretations

of existing guidance and the current illustrative example in ASC 820-10-55-52 of a restriction on the sale of an equity instrument, some

entities use a discount for contractual sale restrictions when measuring fair value, while others view the application of such a discount

to be inconsistent with the principles of ASC 820.

To reduce the diversity in practice and increase the comparability of reported financial

information, ASU 2022-03 clarifies this guidance and amends the illustrative example.

2022-03 is effective for fiscal years beginning

after December 15, 2023, with early adoption permitted.

We are currently evaluating the impact of this ASU on our financial statements.

Company does not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have a material

effect on the accompanying consolidated financial statements.

3 – DISCONTINUED OPERATIONS

to the on-going losses and risk associated with the SmartDesk business the Company has valued the royalty and SAFE agreement associated with

the SmartDesk sale at $ 0 and considers such consideration to be a gain contingency.

on sales projections for Cemtrex XR, Inc., the Company does not believe that it will exceed the sales levels required to exceed the

royalties due and has not accounted for any additional royalties at this time.

In accordance with ASC 310 – Receivables, the

Company has discounted the royalties due and has recognized $ 660,621

of royalties due and will amortize the remaining amount over the period the royalties are due.

following table summarizes the loss on the sale:

SUMMARY OF LOSS ON SALE

Purchase Price

Less cash and cash equivalents transferred

Less Liabilities assumed

Net purchase price

Accounts receivable, net

Inventory, net

Prepaid expenses and other assets

Property and equipment, net

Total Assets Sold

Liabilities Transferred

Accounts payable

Short-term liabilities

Long-term liabilities

Total Liabilities Transferred

Net assets sold

Pretax loss on sale of Cemtrex Advanced Technologies, Inc, and Cemtrex XR, Inc.Companies

$ ( 2,455,341 )

and liabilities included within discontinued operations on the Company’s Condensed Consolidated Balance Sheets at December 31,

2022 and September 30, 2022 are as follows;

OF ASSETS AND LIABILITIES INCLUDED WITHIN DISCONTINUED OPERATIONS

September 30,

Current assets

Cash and equivalents

Trade receivables, net

Inventory –net of allowance for inventory obsolescence

Prepaid expenses and other assets

Total current assets

Property and equipment, net

Current liabilities

Accounts payable

Short-term liabilities

Deposits from customers

Accrued expenses

Total current liabilities

Long-term liabilities

Deferred revenue

Total long-term liabilities

Total liabilities

from discontinued operations, net of tax and the loss on sale of discontinued operations, net of tax, of Cemtrex Advanced Technologies,

and Cemtrex XR, Inc., sold during the first quarter of fiscal year 2023, which are presented in total as discontinued operations,

net of tax in the Company’s Condensed Consolidated Statements of Operations for the three-month periods ended December 31, 2022

and 2021, are as follows:

Three months ended December 31,

Total net sales

Cost of sales

Operating, selling, general and administrative expenses

Other expenses

Income (loss) from discontinued operations

Amortization of discounted royalties

Loss on sale of discontinued operations

( 2,455,341 )

Income tax provision

Discontinued operations, net of tax

( 3,328,706 )

the quarter ended December 31, 2022, Vicon completed the closure of its discontinued operating entity Vicon Systems, Ltd.

The Company received funds of $ 96,095 , which at the time of operational closure were not guaranteed to be retrievable.

paid $ 7,010 in consulting fees for assistance in retrieving these funds.

The net amount of $ 89,085 is recognized on the Company’s

Condensed Consolidated Income Statement as part of the Loss on Discontinued Operations.

4 – LOSS PER COMMON SHARE

4 unchanged sentences

that could occur from common shares issuable through contingent share arrangements, stock options and warrants.

For the three and mine

months ended June 30, 2022, and 2021, the following items were excluded from the computation of diluted net loss per common share as

their effect is anti-dilutive:

For the three months

ended December 31, 2022, and 2021, the following items were excluded from the computation of diluted net loss per common share as their

effect is anti-dilutive:

SCHEDULE OF COMPUTATION OF DILUTED NET LOSS PER COMMON SHARE AS ANTI-DILUTIVE EFFECT

For the three months ended

For the nine months ended

Warrants to purchase shares

Net loss per common share anti-dilutive effect

5 – SEGMENT INFORMATION

Company reports and evaluates financial information for two segments:

Advanced Technologies (AT) segment, and the Industrial Services

(IS) segment.

The AT segment develops smart devices and provides progressive design and development solutions to create impactful experiences

for mobile, web, virtual and augmented reality, wearables and television as well as providing cutting edge, mission critical security

and video surveillance.

The IS segment offers single-source expertise and services for rigging, millwrighting, in plant maintenance,

equipment erection, relocation, and disassembly to diversified customers in USA in industries such as:

manufacturing, steel, printing,

construction, & petrochemical.

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

reports and evaluates financial information for three current segments:

Security segment, Industrial Services segment and the Corporate

following tables summarize the Company’s segment information:

SCHEDULE OF SEGMENT INFORMATION

the three months ended

the nine months ended

Revenues from external customers

Advanced Technologies

Industrial Services

Total revenues

Advanced Technologies

Industrial Services

Total gross profit

Operating income/(loss)

Advanced Technologies

Three months ended December 31, 2022

Cost of revenues

Operating expenses

Sales, general, and administrative

Depreciation and amortization

Research and development

Operating loss

$ ( 1,215,112 )

$ ( 1,018,863 )

Other income/(expense)

$ ( 112,399 )

$ ( 1,001,358 )

Three months ended December 31, 2021

Industrial Services

( 1,122,874 )

Total operating loss

$ ( 2,120,849 )

Cost of revenues

Operating expenses

Sales, general, and administrative

Depreciation and amortization

Research and development

Operating loss

$ ( 2,172,575 )

2 unchanged sentences

Other income/(expense)

Advanced Technologies

$ ( 1,282,918 )

Industrial Services

$ ( 111,620 )

( 1,487,133 )

Total other expense

$ ( 316,680 )

Depreciation and Amortization

Advanced Technologies

Industrial Services

Total depreciation and amortization

September 30,

Identifiable Assets

Advanced Technologies

Industrial Services

Discontinued operations

6 – RESTRICTED CASH

subsidiary of the Company participates in a consortium in order to self-insure group care coverage for its employees.

The plan is administrated

by Benecon Group and the Company makes monthly deposits in a trust account to cover medical claims and any administrative costs associated

with the plan.

These funds, as required by the plan are restricted in nature and amounted to $ 1,601,723 at December 31, 2022 and $ 1,577,915

at September 30, 2022.

7 – FAIR VALUE MEASUREMENTS

23 unchanged sentences

to continue as a going concern.

Company’s fair value assets at June 30, 2022 and September 30, 2021, are as follows.

Company’s fair value assets at December 31, 2022 and September 30, 2022, are as follows.

SCHEDULE OF FAIR VALUE OF ASSETS

10 unchanged sentences

Fair value assets

6 – RESTRICTED CASH

subsidiary of the Company participates in a consortium in order to self-insure group care coverage for its employees.

The plan is administrated

by Benecon Group and the Company makes monthly deposits in a trust account to cover medical claims and any administrative costs associated

with the plan.

These funds, as required by the plan are restricted in nature and amounted to $ 1,518,720 at June 30, 2022 and $ 1,601,932

at September 30, 2021.

Additionally, the Company had a standby letter of credit for deposit on a building lease and payable against a

money market account.

The amount of the standby letter of credit is $ 0 and $ 517,415 as of June 30, 2022 and September 30, 2021, respectively.

8 – TRADE RECEIVABLES, NET

receivables, net consist of the following:

SCHEDULE OF ACCOUNTS RECEIVABLE, NET

OF TRADE RECEIVABLES, NET

September 30,

2 unchanged sentences

Accounts receivables,

receivable include amounts due for shipped products and services rendered.

for doubtful accounts include estimated losses resulting from the inability of our customers to make required payments.

receivables include amounts due for shipped products and services rendered.

for doubtful accounts includes estimated losses resulting from the inability of our customers to make the required

9 – INVENTORY, NET

8 unchanged sentences

( 1,099,336 )

( 1,088,377 )

Inventory –net of allowance for inventory obsolescence

10 – PREPAID AND OTHER CURRENT ASSETS

December 31, 2022, the Company had prepaid and other current assets consisting of prepayments on inventory purchases of $ 1,445,861 , costs

and estimated earnings in excess of billings on uncompleted contracts of $ 521,172 , and other current assets of $ 1,125,585 .

30, 2022, the Company had prepaid and other current assets consisting of prepayments on inventory purchases of $ 414,997 , costs and estimated

earnings in excess of billings on uncompleted contracts of $ 781,819 , accrued income taxes refunds on foreign operations of $ 37,761 , and

prepaid expenses and other current assets of $ 1,187,067 .

11 – PROPERTY AND EQUIPMENT

11 unchanged sentences

Property and equipment, net

expense for the three months ended June 30, 2022, and 2021 were $ 483,700 , and $ 292,182 , respectively, and for the nine months ended June

30, 2022, and 2021 were $ 1,346,383 , and $ 972,186 , respectively.

842, “Leases”, requires that a lessee recognize the assets and liabilities that arise from operating leases.

A lessee should

recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing

its right to use the underlying asset for the lease term.

For leases with a term of 12 months or less, a lessee is permitted to make

an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities.

In transition, lessees

and lessors are required to recognize and measure leases at either the effective date (the “effective date method”) or the

beginning of the earliest period presented (the “comparative method”) using a modified retrospective approach.

effective date method, the Company’s comparative period reporting is unchanged.

In contrast, under the comparative method, the

Company’s date of initial application is the beginning of the earliest comparative period presented, and the Topic 842 transition

guidance is then applied to all comparative periods presented.

Further, under either transition method, the standard includes certain

practical expedients intended to ease the burden of adoption.

The Company adopted ASC 842 October 1, 2019, using the effective date method

and elected certain practical expedients allowing the Company not to reassess:

whether expired or existing contracts contain leases under the new definition

lease classification for expired or existing leases;

whether previously capitalized initial direct costs would qualify for capitalization

under Topic 842.

expense for the three months ended December 31, 2022, and 2021 were $ 530,830 , and $ 262,833 , respectively.

12 – OTHER ASSETS

of December 31, 2022, the Company had other assets of $ 1,546,101 which was comprised of rent security of $ 62,041 , a strategic investment

in MasterpieceVR of $ 1,000,000 (see below), and other assets of $ 484,060 .

As of September 30, 2022, the Company had other assets of $ 1,399,745

which was comprised of rent security deposits of $ 204,388 , Investment in Masterpiece VR valued at $ 1,000,000 , and other assets of $ 195,357 .

November 13, 2020, Cemtrex made a $ 500,000 investment and on January 19, 2022, made an additional $ 500,000 investment via a simple agreement

for future equity (“SAFE”) in MasterpieceVR.

The SAFE provides that the Company will automatically receive shares of the

entity based on the conversion rate of future equity rounds up to a valuation cap, as defined.

MasterpieceVR is a software company that

is developing software for content creation using virtual reality.

The investment is included in other assets in the accompanying balance

sheet and the Company accounts for this investment and recorded at cost.

No impairment has been recorded for the quarter ended December

13 – RELATED PARTY TRANSACTIONS

August 31, 2019, the Company entered into an Asset Purchase Agreement for the sale of Griffin Filters, LLC to Ducon Technologies,

Inc., which Aron Govil, the Company’s Founder and former CFO, for total consideration of $ 550,000 .

On July 31, 2022, the Company

negotiated a payment agreement surrounding the sale of Griffin Filters, LLC and other liabilities due to Cemtrex, Inc.

This agreement is in the form of a secured promissory note earning interest at a rate of 5 %

per annum and matures on

July 31, 2024 .

of December 31, 2022, and September 30, 2022, there was $ 19,034 and $ 19,133 payable due to Ducon Technologies, Inc., respectively.

of $ 708,512 that represented the amount due from Ducon to Cemtrex Technologies Pvt.

the Company’s subsidiary based in India

were written off to bad debt in fiscal year 2022.

February 26, 2021, the Company entered into a Settlement Agreement and Release with Aron Govil regarding transactions Cemtrex’s

Board of Directors determined were incorrectly handled and accounted for.

Govil executed a secured promissory note (the “Note”)

in the amount of $ 1,533,280 .

The Note matures and is due in full in two years and bears interest at 9 % per annum and is secured by all

Govil’s assets.

Govil also agreed to sign an affidavit confessing judgment in the event of a default on the Note.

the Company believes the note is fully collectible, in accordance with ASC 450-30, Gain Contingencies, the Company determined the gain

will not be recognized until the note is paid.

Accordingly, the note and associated gain is not presented on the Company’s Condensed

Consolidated Balance Sheets and Condensed Consolidated Statements of Operations.

November 22, 2022, the Company entered into two Asset Purchase Agreements and one Simple Agreement for Future Equity (“SAFE”)

with the Company’s CEO, Saagar Govil, to secure the sale of the subsidiaries Cemtrex Advanced Technologies, Inc, and Cemtrex XR,

Inc., which include the brands SmartDesk, Cemtrex XR, Virtual Driver Interactive, Bravo Strong, and good tech (formerly Cemtrex Labs),

Govil (see NOTE 1).

of December 31, 2022, there was $ 383,710 in trade receivables due from these companies.

$ 107,910 of these receivables are related to

costs paid by Cemtrex related to payroll during the transition of employees to the new company.

The remaining $ 275,800 are related to

services provided by Cemtrex Technologies Pvt.

in the normal course of business.

of December 31, 2022, there were royalties receivable from the sale of Cemtrex, XR, Inc.

of $ 665,048 .

Company is party to contracts where we lease property from others under contracts classified as operating leases.

The Company primarily

leases office and operating facilities, vehicles, and office equipment.

The weighted average remaining term of our operating leases was

approximately 3.6 years at December 31, 2022 and 4.3 years at December 31, 2021.

Lease liabilities were $ 2,520,506 with $ 787,561 classified

as short-term at December 31, 2022, and $ 2,576,963 with $ 754,495 , classified as short-term at September 30, 2022.

The weighted average

discount rate used to measure lease liabilities was approximately 5.6 % at December 31, 2022 and 6.6 % at December 31, 2021.

used the rate implicit in the lease, where known, or its incremental borrowing rate as the rate used to discount the future lease payments.

Company also made the accounting policy decision not to recognize lease assets and liabilities for leases with a term of 12 months or

Company entered into operating leases for its facilities in New York, United Kingdom, and India, as well as for vehicles for use in our

Industrial Services segment.

The operating lease terms range from 1 to 7 years.

The Company excluded the renewal option on its applicable

facility leases from the calculation of its right-of-use assets and lease liabilities.

and operating lease liabilities consist of the following:

SUMMARY OF FINANCE AND OPERATING LEASE LIABILITIES

September 30,

Lease liabilities - current

Finance leases

Operating leases

Lease liabilities - net of current portion

Finance leases

Operating leases

reconciliation of undiscounted cash flows to finance and operating lease liabilities recognized in the condensed consolidated balance

sheet at June 30, 2022, is set forth below:

SCHEDULE OF RECONCILIATION OF UNDISCOUNTED CASH FLOWS TO FINANCE AND OPERATING LEASE LIABILITIES

reconciliation of undiscounted cash flows to operating lease liabilities recognized in the condensed consolidated balance sheet at December

31, 2022, is set forth below:

SCHEDULE OF RECONCILIATION OF UNDISCOUNTED CASH FLOWS TO OPERATING LEASE LIABILITIES

Years ending September 30,

Finance leases

Operating Leases

3 unchanged sentences

Discounted lease payments

disclosures of lease data are set forth below:

costs for the three months ended December 31, 2022 and 2021 are set forth below.:

SCHEDULE OF LEASE COSTS

Nine months ended

June 30, 2022

June 30, 2021

For the three months ended

Finance lease costs

Depreciation of finance lease assets

Interest on lease liabilities

Operating lease costs

Operating lease expense

Other information:

Cash paid for amounts included in the measurement of lease liabilities:

Operating leases

Finance leases

Weighted-average remaining lease term - finance leases (months)

Weighted-average remaining lease term - operating leases (months)

Weighted-average discount rate - finance leases

Weighted-average discount rate - operating leases

Company used the rate implicit in the lease, where known, or its incremental borrowing rate as the rate used to discount the future lease

11 – PREPAID AND OTHER CURRENT ASSETS

June 30, 2022, the Company had prepaid and other current assets consisting of prepayments on inventory purchases of $ 439,143 , costs and

estimated earnings in excess of billings on uncompleted contracts of $ 504,618 , and other current assets of $ 1,463,355 .

On September 30,

2021, the Company had prepaid and other current assets consisting of prepayments on inventory purchases of $ 298,707 , costs and estimated

earnings in excess of billings on uncompleted contracts of $ 1,148,243 , and other current assets of $ 1,138,702 .

12 – OTHER ASSETS

of June 30, 2022, the Company had other assets of $ 1,356,766 which was comprised of rent security of $ 90,791 , a strategic investment

in MasterpieceVR of $ 1,000,000 , and other assets of $ 265,975 .

As of September 30, 2021, the Company had other assets of $ 697,240 which

was comprised of rent security deposits of $ 84,362 , Investment in Masterpiece VR valued at $ 500,000 , and other assets of $ 112,878 .

13 – RELATED PARTY TRANSACTIONS

August 31, 2019, the Company entered into an Asset Purchase Agreement for the sale of Griffin Filters, LLC to Ducon Technologies, Inc.,

which Aron Govil, the Company’s Founder and former CFO, its President, for total consideration of $ 550,000 .

As of June 30, 2022,

and September 30, 2021, there was $ 1,472,514 and $ 1,487,155 in receivables due from Ducon Technologies, Inc., respectively.

2022, $500,000 of the balance due is for the sale of Griffin, which was due in February 2021, and the remaining balance are various receivables

with various due dates within the next fiscal year.

The Company has negotiated a payment agreement surrounding the sale of Griffin Filters,

LLC and other liabilities due to Cemtrex, Inc.

totaling 761,585.

This agreement is in the form of a secured promissory note earning interest

at a rate of 5 % per annum and matures on July 31, 2024.

The remaining $ 710,929 represents the amount due from Ducon to Cemtrex Technologies

the Company’s subsidiary based in India and is still in negotiation.

February 23, 2021, Cemtrex’s Board of Directors determined that certain transactions between Cemtrex Inc.

and First Commercial,

a company owned by former Executive Director, former Controlling Shareholder and former CFO, Aron Govil, were incorrectly handled and

accounted for.

total amount of disputed transfers was approximately $ 7,100,000 and occurred in fiscal year 2017 in the amount of $ 5,600,000 and in fiscal

year 2018 in the amount of $ 1,500,000 .

Cemtrex did not find any other such transfers during this period or thereafter, upon further review

of the Company’s records.

the Company’s investigation into this matter, the Company has determined that there were inaccuracies in the Company’s financial

The financials for the periods 2017 and 2018 were incorrect corresponding to the amounts that were incorrectly accounted

for, and subsequent years were affected by the roll forward effects of these entries.

The Company found unsupported advertising expenses

in the amount of approximately $ 400,000 on Cemtrex Inc’s income statement for fiscal year 2018 and found that approximately $ 5,700,000

of intangible assets and $ 975,000 of research and development expenses, as translated from Indian Rupee at the time, were recorded on

Cemtrex India’s financial statements in fiscal year 2018 and could not be substantiated.

The total amount of unsubstantiated transfers

recorded by Cemtrex India, and the unsupported advertising expense recorded by Cemtrex, Inc.

sums to $ 7,100,000 , corresponding with the

total amount in question regarding First Commercial transfers during fiscal years 2017 and 2018

February 26, 2021, the Company entered into a Settlement Agreement and Release with Aron Govil regarding these transactions.

part of the Settlement Agreement, Mr.

Govil was required to pay the Company consideration with a total value of $ 7,100,000 (the “Settlement

Amount”) by entering into the Agreement.

The Settlement Amount was satisfied in a combination of Mr.

Govil forfeiting certain Preferred

Stock and outstanding options and executing a secured note in the amount of $ 1,533,280 .

The Independent Board of Directors in coordination

with Management concluded the settlement represented fair value.

March 2021, Mr.

Govil returned to the Company 1,000,000 shares of Series A Preferred Stock, 50,000 Shares of Series C Preferred Stock,

469,949 shares of Series 1 Preferred Stock, and forfeited all outstanding options to purchase shares of commons stock (collectively,

the “Securities”).

For the purposes of accounting recognition, the Company determined the fair value of the Series A, Series

C, and Series 1 Preferred stock based on the closing trading value of the Series 1 Preferred Stock on the date of the agreement.

options surrendered were valued using the Black-Scholes option pricing model.

Company recognized the gain with respect to the surrendered Securities during the second quarter of fiscal year 2021.

The gain of $ 3,674,165

is reported as Settlement Agreement – Related Party on the Company’s Condensed Consolidated Statements of Operations and

Comprehensive Income/(Loss).

discussed above, Mr.

Govil also executed a secured promissory note (the “Note”) in the amount of $ 1,533,280 .

The Note matures

and is due in full in two years and bears interest at 9 % per annum and is secured by all of Mr.

Govil’s assets.

agreed to sign an affidavit confessing judgment in the event of a default on the Note.

While the Company believes the note is fully collectible,

in accordance with ASC 450-30, Gain Contingencies, the Company determined the gain will not be recognized until the note is paid.

the note and associated gain is not presented on the Company’s Condensed Consolidated Balance Sheets and Condensed Consolidated

Statements of Operations and Comprehensive Income/(Loss).

Total lease cost

15 – LINES OF CREDIT AND LONG-TERM LIABILITIES

Company currently has a line of credit with Fulton Bank for $ 3,500,000 .

The line carried interest of LIBOR plus 2.00 % per annum ( 2.075 %

as of September 30, 2021).

On June 10, 2022, The Company and Fulton Bank agreed to an amendment of the line of credit to carry interest

at the Secured Overnight Financing Rate (“SOFR”) plus 2.37 % per annum ( 3.87 % as of June 30, 2022).

At June 30, 2022 and September

30, 2021, there was no outstanding balance on this line of credit.

The terms of this line of credit are subject to the bank’s review

annually on February 1.

payable to bank

December 15, 2015, the Company acquired a loan from Fulton Bank in the amount of $ 5,250,000 in order to fund the purchase of Advanced

Industrial Services, Inc.

$ 5,000,000 of the proceeds went to direct purchase of AIS.

This loan carried interest of LIBOR plus 2.25 % per

annum ( 2.325 % as of September 30, 2021).

On June 10, 2022, The Company and Fulton Bank agreed to an amendment of the loan to carry interest

at SOFR plus 2.37 % per annum ( 3.87 % as of June 30, 2022).

This loan is payable on December 15, 2022.

This loan carries loan covenants

which the Company was in compliance with as of June 30, 2022.

The outstanding balance on this loan was $ 492,031 and $ 1,218,680 , on June

30, 2022, and September 30, 2021, respectively.

This loan is secured by the assets of the Company.

May 1, 2018, the Company acquired a loan from Fulton Bank in the amount of $ 400,000 in order to fund new equipment for Advanced Industrial

Services, Inc.

This loan carried interest of LIBOR plus 2.00 % per annum ( 2.075 % as of September 30, 2021).

On June 10, 2022, The Company

and Fulton Bank agreed to an amendment of the loan to carry interest at SOFR plus 2.37 % per annum ( 3.87 % as of June 30, 2022).

is payable on May 1, 2023.

This loan carries loan covenants which the Company was in compliance with as of June 30, 2022.

The outstanding

balance on this loan was $ 84,581 and $ 149,914 , on June 30, 2022, and September 30, 2021, respectively.

This loan is secured by the assets

of the Company

January 28, 2020, the Company acquired a loan from Fulton Bank in the amount of $ 360,000 in order to fund new equipment for Advanced

Industrial Services, Inc.

This loan carried interest of LIBOR plus 2.25 % per annum ( 2.325 % as of September 30, 2021).

On June 10, 2022,

The Company and Fulton Bank agreed to an amendment of the loan to carry interest at SOFR plus 2.37 % per annum ( 3.87 % as of June 30, 2022).

This loan is payable on May 1, 2023.

This loan carries loan covenants which the Company was in compliance with as of June 30, 2022.

outstanding balance on this loan was $ 201,975 and $ 258,060 , on June 30, 2022, and September 30, 2021, respectively.

This loan is secured

by the assets of the Company

September 30, 2020, the Company, issued a note payable to an independent private lender in the amount of $ 4,605,000 .

This note carried

interest of 8 % and matured on March 30, 2022 .

After deduction of an original issue discount of $ 600,000 and legal fees of $ 5,000 , the

Company received $ 4,000,000 in cash.

As of June 30, 2022, and September 30, 2021, this note had a balance of $ 0 and $ 2,256,448 , respectively.

As of June 30, 2022, and September 31, 2021, this note had unamortized original issue discount balance of $ 0 and $ 200,000 , respectively

September 30, 2021, the Company, issued a note payable to an independent private lender in the amount of $ 5,755,000 .

This note carries

interest of 8 % and matures on March 30, 2023 .

After deduction of an original issue discount of $ 750,000 and legal fees of $ 5,000 , the

Company received $ 5,000,000 in cash.

As of June 30, 2022, and September 30, 2021, this note had a balance of $ 5,306,176 and $ 5,005,000 ,

respectively.

As of June 30, 2022, and September 31, 2021, this note had unamortized original issue discount balance of $ 375,000 and

$ 750,000 , respectively.

February 22, 2022, the Company, issued a note payable to an independent private lender in the amount of $ 9,205,000 .

This note carries

interest of 8 % and matures on August 22, 2023 .

After deduction of an original issue discount of $ 1,200,000 and legal fees of $ 5,000 ,

the Company received $ 8,000,000 in cash.

Additionally, the Company issued 1,000,000 shares of its common stock to the lender.

market value of the stock of $ 700,400 was recognized as interest expense on the Company’s Condensed Consolidated Statement of Operations

and Comprehensive Income/(Loss).

As of June 30, 2022, this note had a balance of $ 9,470,561 .

As of June 30, 2022, this note had unamortized

original issue discount balance of $ 866,667 .

March 30, 2022, Vicon, a subsidiary of the Company, amended the $ 5,600,000 Term Loan Agreement with NIL Funding Corporation (“NIL”).

Upon closing, $ 500,000 of outstanding borrowings were repaid to NIL.

The Agreement requires monthly payments of accrued interest that

began on October 1, 2018.

This note carries interest of 8.85 % and matures on March 30, 2023 .

This note carries loan covenants which the

Company is in compliance with as of June 30, 2022.

As of June 30, 2022, and September 30, 2021, this note had a balance of $ 2,897,743

and $ 3,604,743 , respectively.

January 28, 2020, the Company’s subsidiary, Advanced Industrial Services, Inc., completed the purchase of two buildings for a total

purchase price of $ 3,381,433 .

The Company paid $ 905,433 in cash and acquired a mortgage from Fulton Bank in the amount of $ 2,476,000 .

This mortgage carried interest of LIBOR plus 2.50 % per annum ( 2.575 % as of September 30, 2021).

On June 10, 2022, The Company and Fulton

Bank agreed to an amendment of the mortgage to carry interest at SOFR plus 2.62 % per annum ( 4.12 % as of June 30, 2022 ).

This mortgage

is payable on January 28, 2040 .

This loan carries loan covenants similar to covenants on the Company’s other loans from Fulton

As of June 30, 2022, the Company was in compliance with these covenants.

As of June 30, 2022, and September 30, 2021, this mortgage

had a balance of $ 2,265,733 and $ 2,339,114 , respectively.

Protection Program Loans

April and May of 2020, and January and April of 2021, the Company and its subsidiaries applied for and were granted $ 6,413,385 in Paycheck

Protection Program loans under the CARES Act.

These loans bear interest of 2 % and mature in two years.

The Company has applied for and

received loan forgiveness under the provisions of the CARES Act for $ 6,291,985 .

The remaining loan of $ 121,400 has been modified with

a maturity date of May 5, 2025 and payments starting in June of 2022 and is recorded under Paycheck Protection Program Loans on our Condensed

Consolidated Balance Sheet as of June 30, 2022, net of the short-term portion of $ 24,280 .

The issuing bank determined that this loan

qualifies for loan forgiveness, however the Company is awaiting final approval from the Small Business Administration.

15 – STOCKHOLDERS’ EQUITY

following table outlines the Company’s lines of credit and liabilities.

OF LINES OF CREDIT AND LIABILITIES

September 30,

Interest Rate

Fulton Bank line of credit $ 3,500,000 - The terms of this line of credit are subject to the bank’s review annually on February 1.

Secured Overnight Financing Rate (“SOFR”) plus 2.37 % ( 6.67 % as of December 31, 2022 and 5.35 % as of September 30, 2022)

Fulton Bank loan $ 5,250,000 for the purchase of AIS $ 5,000,000 of the proceeds went to the direct purchase of AIS.

This loan is secured by certain assets of the Company.

SOFR plus 2.37 %( 6.67 % as of December 31, 2022 and 5.35 % as of September 30, 2022)

Fulton Bank loan $ 400,000 fund equipment for AIS.

The Company was in compliance with loan covenants as of December 31, 2022.

This loan is secured by certain assets of the Company.

SOFR plus 2.37 % ( 6.67 % as of December 31, 2022 and 5.35 % as of September 30, 2022)

Fulton Bank - $ 360,000 fund equipment for AIS.

The Company was in compliance with loan covenants as of December 31, 2022.

This loan is secured by certain assets of the Company.

SOFR plus 2.37 % ( 6.67 % as of December 31, 2022 and 5.35 % as of September 30, 2022).

Fulton Bank mortgage $ 2,476,000 .

The Company was in compliance with loan covenants as of December 31, 2022.

SOFR plus 2.62 % ( 6.92 % as of December 31, 2022 and 5.6 % as of September 30, 2022).

Note payable - $ 439,774 .

For the purchase of VDI.

Payable in two installments on October 26, 2021, and October 26, 2022.

Note payable - $ 5,755,000 - Less original issue discount $ 750,000 and legal fees $ 5,000 , net cash received $ 5,000,000 Unamortized original issue discount balance of $ 125,000 and $ 250,000 , as of December 31, 2022 and September 30, 2022respectively.

Note payable - $ 9,205,000 .

Less original issue discount $ 1,200,000 and legal fees $ 5,000 ,net cash received $ 8,000,000 .

28,572 shares of common stock valued at $ 700,400 recognized as additional original issue discount.

Unamortized original issue discount balance of $ 739,044 and$ 1,064,778 as of December 31, 2022 and September 30, 2022 respectivly.

Term Loan Agreement with NIL Funding Corporation (“NIL”) - $ 5,600,000 The Company was in compliance with loan covenants as of December 31, 2022.

Paycheck Protection Program loan - $ 121,400 - The issuing bank determined that this loan qualifies for loan forgiveness;

however the Company is awaiting final approval from the Small Business Administration.

Total Notes Payable

Current maturities

( 17,099,485 )

( 16,894,743 )

Notes Payable, Long Term

16 – SHAREHOLDERS’ EQUITY

Company is authorized to issue 10,000,000 shares of Preferred Stock, $ 0.001 par value.

As of June 30, 2022, and September 30, 2021, there

were 2,129,122 and 1,935,151 shares issued and outstanding, respectively.

As of December 31, 2022, and September 30, 2022,

there were 2,233,463 and 2,129,122 shares issued and 2,169,363 and 2,065,022 shares outstanding, respectively.

1 Preferred Stock

the nine months ended June 30, 2022, 193,971 shares of Series 1 Preferred Stock were issued to pay dividends to holders of Series 1 Preferred

of June 30, 2022, and September 30, 2021, there were 2,079,122 and 1,885,151 shares of Series 1 Preferred Stock issued and outstanding,

respectively.

the three months ended December 31, 2022, 104,341 shares of Series 1 Preferred Stock were issued to pay dividends to holders of Series

1 Preferred Stock.

of December 31, 2022, and September 30, 2022, there were 2,183,463 and 2,079,122 shares of Series 1 Preferred Stock issued and 2,119,363

and 2,015,022 shares of Series 1 Preferred Stock outstanding, respectively.

C Preferred Stock

October 3, 2019, pursuant to Article IV of our Articles of Incorporation, our Board of Directors voted to designate a class of preferred

stock entitled Series C Preferred Stock, consisting of up to one hundred thousand ( 100,000 ) shares, par value $ 0.001 .

Under the Certificate

of Designation, holders of Series C Preferred Stock are entitled to the number of votes equal to the result of (i) the total number of

shares of Common Stock outstanding at the time of such vote multiplied by 10.01, and divided by (ii) the total number of shares of Series

C Preferred Stock outstanding at the time of such vote, at each meeting of our shareholders with respect to any and all matters presented

to our shareholders for their action or consideration, including the election of directors.

of June 30, 2022, and September 30, 2021, there were 50,000 shares of Series C Preferred Stock issued and outstanding.

of December 31, 2022, and September 30, 2022, there were 50,000 shares of Series C Preferred Stock issued and outstanding.

January 25, 2023, the Company completed a 35:1 reverse stock split on its common stock.

All share and per share data have been retroactively

adjusted for this reverse split.

Company is authorized to issue 50,000,000 shares of common stock, $ 0.001 par value.

As of June 30, 2022, there were 26,263,296 shares

As of December 31, 2022, there were 793,727 shares

issued and outstanding and at September 30, 2022, there were 754,711 shares issued and outstanding.

the nine months ended June 30, 2022, 4,481,102 shares of the Company’s common stock have been issued to satisfy $ 2,712,500 of notes

the three months ended December 31, 2022, 39,016 shares of the Company’s common stock have been issued to satisfy $ 31,331 of notes

payable, $ 168,669 in accrued interest, and $ 32,145 of excess value of shares issued recorded as interest expense.

An additional 1,000,000

shares were issued in connection with a note payable issued on February 22, 2022.

17 – SHARE-BASED COMPENSATION

the nine months ended June 30, 2022, and 2021, the Company recognized $ 111,402 and $ 110,904 of share-based compensation expense on its

outstanding options, respectively.

As of June 30, 2022, $ 269,142 of unrecognized share-based compensation expense is expected to be recognized

over a period of four years.

the three months ended December 31, 2022, and 2021, the Company recognized $ 39,842 and $ 45,371 of share-based compensation expense on

its outstanding options, respectively.

As of December 31, 2022, $ 152,433 of unrecognized share-based compensation expense is expected

to be recognized over a period of four years.

Future compensation amounts will be adjusted for any change in estimated forfeitures.

the three months ended December 31, 2022, options to purchase 2,931 shares of the Company’s common stock at an exercise price of

$ 13.65 per share were cancelled.

18 – COMMITMENTS AND CONTINGENCIES

Company has its corporate headquarters in New York City with a 12-month lease of 2,500 square feet of office space at a rate of $ 10,000

Company’s IS segment owns approximately 25,000 square feet of warehouse space in Manchester, PA and approximately 43,000 square

feet of office and warehouse space in York, PA.

The IS segment also leases approximately 15,500 square feet of warehouse space in Emigsville,

PA from a third party in a three -year lease at a monthly rent of $ 4,555 expiring on August 31, 2022.

Company’s AT segment leases (i) approximately 6,700 square feet of office and warehouse space in Pune, India from a third party

in an five year lease at a monthly rent of $ 6,453 (INR 456,972 ) expiring on February 28, 2024 , (ii) approximately 30,000 square feet of

office and warehouse space in Hauppauge, New York from a third party in a seven -year lease at a monthly rent of $ 28,719 expiring on March

31, 2027, and (iii) approximately 9,400 square feet of office and warehouse space in Hampshire, England in a fifteen -year lease with

at a monthly rent of $ 7,329 (£ 5,771 ) which expires on March 24, 2031 and contains provisions to terminate in 2026.

per month expiring on February 28, 2023.

Company’s Industrial Services segment owns approximately 25,000 square feet of warehouse space in Manchester, PA and approximately

43,000 square feet of office and warehouse space in York, PA.

The IS segment also leases approximately 15,500 square feet of warehouse

space in Emigsville, PA from a third party in a three-year lease at a monthly rent of $ 4,555 expiring on August 31, 2025 .

Company’s Security segment leases (i) approximately 6,700 square feet of office and warehouse space in Pune, India from a third

party in an five year lease at a monthly rent of $ 6,453 (INR 456,972 ) expiring on February 28, 2024 , (ii) approximately 30,000 square

feet of office and warehouse space in Hauppauge, New York from a third party in a seven-year lease at a monthly rent of $ 28,719 expiring

on March 31, 2027 , and (iii) approximately 9,400 square feet of office and warehouse space in Hampshire, England in a fifteen-year lease

with at a monthly rent of $ 7,329 (£ 5,771 ) which expires on March 24, 2031 and contains provisions to terminate in 2026.

19 – SUBSEQUENT EVENTS

has evaluated subsequent events up to the date the condensed consolidated financial statements were issued.

Cemtrex has concluded that

there were no subsequent events that occurred and require recognition or disclosure in the condensed consolidated financial statements.

January 25, 2023, the company completed a 35:1 reverse stock split on its common stock.

All share and per share data have been retroactively

adjusted for this reverse split.

of cure period

January 26, 2023, the Company received a notification letter from the Listing Qualifications Department of Nasdaq notifying the Company

that, it had been granted an additional 180 days or until July 24, 2023, to regain compliance with the Minimum Bid Price Requirement

on its Series 1 Preferred stock.

Rule Compliance

February 8, 2023, the Company received a notification letter from the Listing Qualifications Department of Nasdaq notifying the Company

that it has regained compliance with Listing Rule 5550(a)(2) and is in compliance with all applicable listing standards.

The Company’s

common stock will continue to be listed and traded on The Nasdaq Stock Market.

The hearing scheduled for March 16, 2023 before the Hearings

Panel has been cancelled.

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 1. Financial Statements