CEMTREX INC 10-K

ITEM 9A. CONTROLS AND PROCEDURES Disclosure Controls and Procedures We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable assurance of achieving the desired control objectives, and we necessarily are required to apply our judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. Based on an evaluation under the supervision and with the participation of our management, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of September 30, 2024. 34 Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with GAAP. Because of inherent limitations, a system of internal control over financial reporting may not prevent or detect misstatements. Additionally, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to change in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Our management, including our principal executive officer and principal accounting officer, conducted an evaluation of the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control—Integrated Framework (2013). Based on its evaluation, our management concluded that as of September 30, 2024, that our internal control over financial reporting were effective and there are no material weaknesses in our internal control over financial reporting. This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to Commission rules that permit the Company to provide only management’s report in this annual report. This report shall not be deemed to be filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. Changes in Internal Control Over Financial Reporting During the years ended September 30, 2024, and 2023, the Company engaged a third-party accounting firm to assist with entity level controls around the review of period-end reporting processes, accounting policies and public disclosures that is reasonably likely to materially affect our internal control over financial reporting. ITEM 9B. OTHER INFORMATION None . ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS None. 35 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Directors and Executive Officers of the Registrant As of the date of this Annual Report, the members of our Board of Directors and Executive Officers are: Name and Address Age Positions and Offices Saagar Govil 38 Chairman of the Board of Directors,President, 135 Fell Ct. Chief Executive Officer, & Director Hauppauge, NY 11788 Paul J. Wyckoff 55 Interim Chief Financial Officer 135 Fell Ct. Hauppauge, NY 11788 Brian Kwon 38 Director 135 Fell Ct. Hauppauge, NY 11788 Manpreet Singh 41 Director 135 Fell Ct. Hauppauge, NY 11788 Metodi Filipov 61 Director 135 Fell Ct. Hauppauge, NY 11788 Principal Occupations and Business Experience of Directors and Executive Officers The following is a brief account of the business experience of the Company’s directors and officers: Saagar Govil is the Company’s Chairman since June 2014, and the Chief Executive Officer and President since December 2011. He has been working at Cemtrex since 2008, initially as a field engineer, subsequently moving into sales, and management roles as Vice President of Operations. Saagar was recently recognized as a Forbes’ 30 Under 30 in 2016, Business Insiders #17 on Top 100 of Silicon Alley in 2015, and Top 40 Under 40 by Stony Brook University in 2014. Saagar Govil has a B.E. in Materials Engineering from Stony Brook University and completed the PLD program at Harvard Business School. Paul J. Wyckoff was appointed Cemtrex’s Interim Chief Financial Officer on January 28, 2022, where he is responsible for the Company’s financial planning, accounting, tax, and business process functions. Mr. Wyckoff has been with Cemtrex since March of 2014 when he joined as the Manager of Financial Reporting and since January of 2019 has served as the Company’s Corporate Controller. Prior to joining Cemtrex, Mr. Wyckoff was the Controller at Vaso Corporation (formerly Vasomedical, Inc.) a medical device distribution company based in Plainview, NY. Mr. Wyckoff has over 20 years of private accounting experience and holds a B.S. in Accounting from SUNY College at Old Westbury. Brian Kwon was appointed to the as a director on September 28, 2021 and is presently the President and Chief Procurement Officer of H Mart. Brian has extensive operations experience in purchasing, distribution, logistics, IT, HR, and e-commerce from his time at H-Mart. Brian has completed the Harvard Business School General Management Program. 36 Manpreet Singh was appointed as a director on November 1, 2021 and is currently the founder and Chief Investment Officer of Singh Capital Partners (SCP), a multifamily office that directs investments into venture capital, real estate, and growth equity. SCP invests capital on behalf of Fortune 500 CXOs, Unicorn founders and operators and has executed investments in North America, Europe and Asia. He serves on the numerous non-profit and private company boards including AcquCo, US Inspect, Embrace Software, Snowball Industries, Shukr Investments, Suburban Hospital (John Hopkins Medicine) and Dingman Center at the Smith School of Business. He is a CFA charterholder and Manpreet received his MBA from the Wharton School of Business in Entrepreneurship, Finance, and Real Estate. He also holds a B.S. in Finance with a citation in Entrepreneurship from the University of Maryland, College Park. Mr. Singh’s extensive knowledge of finance allow him to make valuable contributions to the Board. Metodi Filipov was appointed to the Board on February 9, 2018 and is an entrepreneur and technology executive with over 25 years of experience creating, operating and driving growth for technology companies. He has a proven track record of identifying business opportunities and building compelling products. Metodi was formerly VP of Operations at Cemtrex from 2008 to 2010. After Cemtrex, Mr. Filipov served as Managing Director of Bianor, a mobile consulting company providing solutions for enterprise clients. There, he led the development and implementation of innovative mobile products in industries including aviation, pharmaceutical and entertainment. Metodi co-founded Flipps Media, an OTT video distribution platform positioned to be an alternative to traditional cable pay-per-view systems. Before Bianor, he served as product lead for Raritan, a data center technology organization, where he was an integral part of the transition team that led the company to becoming a global IT service management solutions provider. Prior to joining Raritan, Mr. Filipov served as VP of Operations at ISS, a security products company. There, he successfully managed product development and contract manufacturing across continents. Mr. Filipov has extensive experience delivering superior solutions with a focus on optimized efficiency and productivity. Each director of the Company serves for a term of one year or until the successor is elected at the Company’s annual shareholders’ meeting and is qualified, subject to removal by the Company’s shareholders. Each officer serves, at the pleasure of the board of directors, for a term of one year and until the successor is elected at the annual meeting of the board of directors and is qualified. Meetings of the Board of Directors During the fiscal year ended September 30, 2024, the Board of Directors held four meetings. Involvement in Certain Legal Proceedings During the past 10 years, other than as set forth below, none of our current directors, nominees for directors or current executive officers has been involved in any legal proceeding identified in Item 401(f) of Regulation S-K, including: 1. Any petition under the Federal bankruptcy laws or any state insolvency law filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he or she was a general partner at or within two years before the time of such filing, or any corporation or business association of which he or she was an executive officer at or within two years before the time of such filing; 2. Any conviction in a criminal proceeding or being named a subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); 3. Being subject to any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or her from, or otherwise limiting, the following activities: i. Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; ii. Engaging in any type of business practice; or 37 iii. Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws; 4. Being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any type of business regulated by the Commodity Futures Trading Commission, securities, investment, insurance or banking activities, or to be associated with persons engaged in any such activity; 5. Being found by a court of competent jurisdiction in a civil action or by the SEC to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated; 6. Being found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated; 7. Being subject to, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: i. Any Federal or State securities or commodities law or regulation; or ii. Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or iii. Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or 8. Being subject to, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. See subsection titled “Settlement with the Securities and Exchange Commission” under Item 1. Business of this Annual Report on Form 10-K, which is incorporated herein by reference. Committees of the Board Our Board of Directors currently has one standing committee: The Audit Committee. Compensation Committee As a “Controlled Company” as such term is defined under NASDAQ Listing Rule 5615, the Company is not required to have a Compensation Committee. Audit Committee The Audit Committee, which has been established in accordance with requirements of Section 3(a)(58)(A) of the Exchange Act, is comprised of the following independent directors: Metodi Filipov (Chair), Brian Kwon, and Manpreet Singh. The Board of Directors has determined that each member of the Audit Committee: (i) is independent, (ii) meets the financial literacy requirements of the Nasdaq Rules, and (iii) meets the enhanced independence standards established by the SEC. In addition, the Board has determined that Mr. Filipov qualifies as an “audit committee financial expert” as that term is defined in Item 407(d)(5)(ii) of Regulation S-K promulgated under the Exchange Act by the SEC. The Audit Committee is primarily concerned with the integrity of our financial statements, the independence, qualifications and performance of our independent registered public accounting firm, and our compliance with legal requirements. The Audit Committee operates under a written charter approved by the Board of Directors and the Audit Committee that reflects standards and requirements adopted by the SEC and NASDAQ. 38 As indicated in its charter, the Audit Committee’s duties include selecting and engaging our independent registered public accounting firm; reviewing the scope of the audit to be conducted by our independent registered public accounting firm; overseeing our independent registered public accounting firm and reviewing the results of its audit; reviewing our financial reporting processes, including the accounting principles and practices followed and the financial information provided to shareholders and others; overseeing our internal control over financial reporting and disclosure controls and procedures; and serving as our legal compliance committee. Nomination of Directors The Company does not currently have a standing nominating committee or a formal nominating committee charter. As a “Controlled Company” as such term is defined by NASDAQ Listing Rule 5615 the Company is not required to have a Nominating Committee. Currently, the independent members of the Board (Messrs. Kwon, Singh, Wagner, and Filipov), rather than a nominating committee, approve or recommend to the full Board those persons to be nominated. The Board believes that the current method of nominating directors is appropriate because it allows each independent board member input into the nomination process and does not unnecessarily restrict the input that might be provided from an independent director who could be excluded from a committee. Currently, three of the five Directors are independent. Furthermore, the Board has adopted by resolution a director nomination policy. The purpose of the policy is to describe the process by which candidates for inclusion in the Company’s recommended slate of director nominees are selected. The director nomination policy is administered by the Board. Many of the benefits that would otherwise come from a written committee charter are provided by this policy. In the ordinary course, absent special circumstances or a change in the criteria for Board membership, the incumbent directors who continue to be qualified for Board service and are willing to continue as directors are re-nominated. If the Board thinks it is in the best interest of the Company to nominate a new individual for director in connection with an annual meeting of shareholders, or if a vacancy occurs between annual shareholder meetings, the Board will seek potential candidates for Board appointments who meet the criteria for selection as a nominee and have the specific qualities or skills being sought. Director candidates will be selected based on input from members of the Board, senior management of the Company and, if deemed appropriate, a third-party search firm. Candidates for Board membership must possess the background, skills and expertise to make significant contributions to the Board, to the Company and its shareholders. Desired qualities to be considered include substantial experience in business or administrative activities; breadth of knowledge about issues affecting the Company; and ability and willingness to contribute special competencies to Board activities. The Board of Directors intends to review the director nomination policy from time to time to consider whether modifications to the policy may be advisable as the Company’s needs and circumstances evolve, and as applicable legal or listing standards change. The Board may amend the director nomination policy at any time. The Board will consider director candidates recommended by shareholders and will evaluate such director candidates in the same manner in which it evaluates candidates recommended by other sources, as described above. Recommendations must be in writing and mailed to Cemtrex, Inc., 135 Fell Ct. Hauppauge, NY 11788, Attention: Corporate Secretary, and include all information regarding the candidate as would be required to be included in a proxy statement filed pursuant to the proxy rules promulgated by the SEC if the candidate were nominated by the Board of Directors (including such candidate’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected). The shareholder giving notice must provide (i) his or her name and address, as they appear on the Company’s books, and (ii) the number of shares of the Company which are beneficially owned by such shareholder. The Company may require any proposed nominee to furnish such other information it may require to be set forth in a shareholder’s notice of nomination which pertains to the nominee. Director Compensation The members of the Board receive quarterly compensation of $5,000 and stock options. Additionally, we reimburse our directors for expenses incurred in connection with attending board meetings. Insider Trading Policy We recognize that the Company’s executive officers and directors may sell shares from time to time in the open market to realize value to meet financial needs and diversify their holdings, particularly in connection with exercises of stock options. All such transactions are required to comply with the Company’s insider trading policy. 39 Section 16 (a) Beneficial Ownership Reporting Compliance of the Securities Exchange Act Section 16(a) of the Exchange Act requires directors, executive officers and persons who beneficially own more than 10% of our common stock (collectively, “Reporting Persons”) to file initial reports of ownership and reports of changes in ownership of our common stock with the SEC. Reporting Persons are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file. To our knowledge, based solely on our review of the copies of such reports received or written representations from certain Reporting Persons that no other reports were required, we believe that during the year ended September 30, 2024, all Reporting Persons timely complied with all applicable filing requirements. Communications with Directors Shareholders, associates of the Company and other interested parties may communicate directly with the Board of Directors, with the non-management Directors or with a specific Board member, by writing to the Board (or the non-management Directors or a specific Board member) and delivering the communication in person or mailing it to: Board of Directors, Privileged and Confidential, c/o Saagar Govil, CEO, Cemtrex, Inc., 135 Fell Ct. Hauppauge, NY 11788. Correspondence will be discussed at the next scheduled meeting of the Board of Directors, or as indicated by the urgency of the matter. From time to time, the Board of Directors may change the process by which shareholders may communicate with the Board of Directors or its members. Any changes in this process will be posted on the Company’s website or otherwise publicly disclosed. Corporate Governance The Company has an ongoing commitment to good governance and business practices. In furtherance of this commitment, we regularly monitor, and are briefed by outside counsel on, developments in the area of corporate governance and securities law and review our policies and procedures in light of such developments. We comply with the rules and regulations promulgated by the SEC and implement other corporate governance practices we believe are in the best interests of the Company and the shareholders. Code of Ethics We have adopted a code of ethics as of June 28, 2016, that applies to our principal executive officer, principal financial officer, as well as our employees. Our standards are in writing and are posted on our website. The following is a summation of the key points of the Code of Ethics we adopted: Honest and ethical conduct, including ethical handling of actual or apparent conflicts of interest between personal and professional relationships; Full, fair, accurate, timely, and understandable disclosure reports and documents that a small business issuer files with, or submits to, the Commission and in other public communications made by our Company; Full compliance with applicable government laws, rules and regulations; The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and Accountability for adherence to the code. Board Leadership and Structure Saagar Govil, our Chief Executive Officer, also serves as Chairman of the Board of Directors. The Board believes that the Company and its shareholders are best served by having the Chief Executive Officer also serve as Chairman of the Board. The Board also believes that this structure is appropriate in light of the size of our Company and corresponding size of our Board and the complexity of our business. We believe that Mr. Govil is best positioned to develop agendas that ensure that our Board’s time and attention are focused on the matters that are most critical to us. 40 ITEM 11. EXECUTIVE COMPENSATION The compensation discussion addresses all compensation awarded to, earned by, or paid to the Company’s named executive officers (“NEO”), which currently consists of Saagar Govil, the Chairman, Chief Executive Officer, President and Secretary, and Paul J. Wyckoff, Interim CFO. As of the date of this Annual Report, Saagar Govil and Paul J. Wyckoff are currently earning compensation from the Company. Paul J. Wyckoff was named Interim CFO on January 28, 2022. Set forth below is the aggregate compensation for services rendered in all capacities to us during our fiscal years ended September 30, 2024, and 2023 by our executive officers. OPTION PRINCIPAL AND POSITION YEAR SALARY BONUS AWARDS OTHER TOTAL ($) ($) ($) ($) ($) Saagar Govil 2024 744,231 300,000 - 45,220 1,089,451 Chairman od the Board 2023 600,000 - - 45,803 645,803 Chief Executive Officer, and President Paul J. Wyckoff 2024 150,000 - - 15,853 165,853 Interim Chief Financial Officer 2023 150,000 - - 12,291 162,291 (1) The Option Awards Column in the table above reflects the aggregate grant date fair value of the award granted in the year noted. Please see Options/SAR Grants in the Last Fiscal Year below for more information relating to this option grant. (2) Other compensation are amounts paid by the company for medical, dental, vision, and life insurance benefits. NARRATIVE TO SUMMARY COMPENSATION TABLE At this time, we do not have an employment agreement with Saagar Govil or Paul J. Wyckoff, though the Company may enter into such an agreement with them on terms and conditions usual and customary for the industry. All amounts paid to our officers in fiscal year end 2024 were approved by the Company’s board of directors. The Company does not currently have “key man” life insurance on Mr. Govil or Mr. Wyckoff. PAY VERSUS PERFORMANCE Year Summary Compensation Table Total for PEO Compensation Actually Paid to PEO Average Summary Compensation Table Total for Non-PEO NEOs Average Compensation Actually Paid to Non-PEO NEOs Value of Initial Fixed $100 Investment Based On Total Shareholder Return Net Loss (a) (b) (1) (c) (2) (d) (e) (4) (f) (5) (g) (6) 2024 $ 1,089,451 $ 702,443 $ 165,853 $ 165,853 $ 2.53 $ (7,635,505 ) 2023 $ 645,803 $ 562,675 $ 162,291 $ 162,291 $ 65.03 $ (9,233,438 ) 2022 $ 637,534 $ 554,406 $ 96,635 $ 96,635 $ 18.10 $ (13,292,242 ) 1. The dollar amounts reported in column (b) are the amounts reported for Saagar Govil, Chairman of the Board, CEO, President and Secretary, for each of the corresponding years in the “Total” column of the in our Summary Compensation Table. Refer to the Summary Compensation Table above. 2. The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. Govil, as computed in accordance with Item 402(v) of Regulation S-K and do not reflect the total compensation actually realized or received by Mr. Govil. In accordance with these rules, these amounts reflect “Total Compensation” as set forth in the Summary Compensation Table for each year, adjusted as shown below. Equity values are calculated in accordance with FASB ASC Topic 718, and the valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. 3. The dollar amounts reported in column (d) represent the average of the amounts reported for our NEOs as a group (excluding Mr. Govil) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the NEOs included for these purposes in each applicable year are as follows: Paul J. Wyckoff, Interim Chief Financial Officer. 41 4. The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the NEOs as a group (excluding Mr. Govil), as computed in accordance with Item 402(v) of Regulation S-K. In accordance with these rules, these amounts reflect “Total Compensation” as set forth in the Summary Compensation Table for each year, adjusted as shown below. 5. Total Shareholder Return (TSR) is calculated by dividing (a) the difference between our share price at the end of each fiscal year shown and the beginning of the measurement period, and the beginning of the measurement period by (b) our share price at the beginning of the measurement period. The beginning of the measurement period for each year in the table is September 30, 2021. 6. The dollar amounts reported represent the amount of net income reflected in our audited financial statements for the applicable year. Adjustments to Determine Compensation “Actually Paid” for [PEO][Non-PEO NEOs] 2024 2023 2022 Deduction for Change in the Actuarial Present v alues reported under the “ Change in Pension Value and Nonaualified Deferred Comoensation Earnimrn ”‘ Column of the SCT $ - $ - $ - Increase for “Service Cost” for Pension Plans $ - $ - $ - Increase for “Prior Service Cost” for Pension Plans $ - $ - $ - Deduction for Amounts Reported under the “ Stock Awards ,, Column in the SCT $ - $ - $ - Deduction for Amounts Reported under t he “ Option Awards ,, Column in t he SCT $ - $ - $ - Increase for Fair Value of Awards Gran ted during year that Remain Unves ted as of Year end $ - $ - $ - Increase for Fair Value of Awards Gran ted during year that vest during vear $ - $ - $ - Increas e/deduction for Change in Fair value from prior Year-end to current Year-end of Awards Granted Prior to year that were Outstanding and Unvested as of Year-end $ (84,879 ) $ (1,948 ) $ (53,747.00 ) Increas e/deduction for Change in Fair Value from Prior Year-end to Vesting Date of Awards Granted Prior to year tha t Vested during year $ (2,129 ) $ (2,207 ) $ (29,381.00 ) Deduction of Fair v alue of Awards Gran ted Prior to year that were Forfeited during year $ - $ - $ - Increase based upon Incremental Fair Value of Awards Modified during ye ar $ - $ - $ - Increase based on Di vi dends or Other Earnings Paid durilling year prior to Vesting Date of Award $ - $ - $ - Total Adjustments $ (87,008 ) $ (4,155 ) $ (83,128 ) OPTIONS/SAR GRANTS IN THE LAST FISCAL YEAR None. AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION/SAR VALUES None. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END The following table presents information regarding our NEOs’ unexercised options to purchase Common Stock as of September 30, 2024: Option Awards Name Number of Securities Underlying Unexercised Options Exercisable Option Exercise Price Option Expiration Date Saagar Govil 6 $ 117,281.88 2/25/2026 Saagar Govil 2 $ 140,042.00 2/25/2026 Saagar Govil 2 $ 168,050.40 2/25/2026 Saagar Govil 2 $ 201,660.48 2/25/2026 42 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table sets forth certain information known to us with respect to the beneficial ownership of our common stock as of December 23, 2024, by: all persons who are beneficial owners of five percent (5%) or more of our common stock; each of our directors; each of our executive officers; and all current directors and executive officers as a group. Except as otherwise indicated, and subject to applicable community property laws, the persons named in the table below have sole voting and investment power with respect to all shares of common stock held by them. As of December 23, 2024, 1,724,162 shares of Common Stock were issued and outstanding. In addition, there were 50,000 shares of Series C Preferred Stock outstanding which are entitled to vote 17,258,862 shares in the aggregate, all of which is held by Saagar Govil and 2,515,894 shares of Series 1 Preferred Stock outstanding which are entitled to vote 5,031,788 shares in the aggregate. Accordingly, there are a total of 24,014,812 shares outstanding. Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options held by that person that are currently exercisable or exercisable within 60 days of December 23, 2024, are deemed outstanding. Such shares, however, are not deemed as of December 23, 2024, outstanding for the purpose of computing the percentage ownership of any other person. 43 Percentage of Name and Address Issued Common Percentage of Title of Class of Beneficial Owner Title Amount Owned Stock (1) voting stock (2) Common Stock Saagar Govil Chairman of the Board, 30 0 % * 276 Greenpoint Avenue, Suite 208 Chief Executive Officer, Brooklyn, NY 11222 and President Preferred Stock Saagar Govil Chairman of the Board, 153,153 -- 1.3 % (Series 1) 276 Greenpoint Avenue, Suite 208 Chief Executive Officer, Brooklyn, NY 11222 and President Preferred Stock Saagar Govil Chairman of the Board, 50,000 (3) -- 71.9 % (Series C) 276 Greenpoint Avenue, Suite 208 Chief Executive Officer, Brooklyn, NY 11222 and President Paul J. Wyckoff Interim Chief Financial -- -- * 276 Greenpoint Avenue, Suite 208 Officer Brooklyn, NY 11222 Brian Kwon Director 2 * * 276 Greenpoint Avenue, Suite 208 Brooklyn, NY 11222 Manpreet Singh Director 2 * * 276 Greenpoint Avenue, Suite 208 Brooklyn, NY 11222 Metodi Filipov Director 2 * * 276 Greenpoint Avenue, Suite 208 Brooklyn, NY 11222 All directors and executive officers as a group (3 persons) 203,189 (4) * 73.1 % * Less than one percent of outstanding shares. (1) Except as otherwise noted herein, the percentage is determined on the basis of 1,724,162 shares of our Common Stock outstanding plus securities deemed outstanding pursuant to Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Under Rule 13d-3, a person is deemed to be a beneficial owner of any security owned by certain family members and any security of which that person has the right to acquire beneficial ownership within 60 days, including, without limitation, shares of our common stock subject to currently exercisable options. (2) This percentage is based on the 1,724,162 shares of our Common Stock outstanding, the 17,258,862 votes that the Series C Preferred Stock is entitled to vote, and the 5,031,788 votes that the Series 1 Preferred Stock is entitled to vote based on 2 votes per share. (3) Pursuant to the Certificate of Designation of the Series C Preferred Stock, each issued and outstanding share of Series C Preferred Stock are entitled to the number of votes per share 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. (4) Consists of actual amount of Common Stock, Series C, and Series 1 Preferred Stock owned. As described above each share of Series C is entitled to 345.17724 votes. Series 1 Preferred Stock is entitled to 2 votes per share. 44 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE Aside from the following, there have been no transactions since October 1, 2022 to which we have been a party, including transactions in which the amount involved in the transaction exceeds the lesser of $120,000 or 1% of the average of our total assets at year-end for the last two completed fiscal years, and in which any of our directors, executive officers or, to our knowledge, beneficial owners of more than 5% of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest, other than equity and other compensation, termination, change in control and other arrangements, which are described elsewhere in this Annual Report on Form 10-K. As of September 30, 2024, and September 30, 2023, there was $0 and $3,806, respectively, payable due to Ducon Technologies, Inc., which is controlled by Aron Govil, the Company’s Founder and Former Director and CFO. As of September 30, 2023, there were $637,208 of receivables due from Ducon Technologies, Inc. The Company has negotiated a payment agreement regarding past receivables 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 matured on July 31, 2024. The Company did not receive payment on this note at the maturity date and placed a full allowance on the note during fiscal year 2024 and appears on the Company’s Consolidated Statements of Operations and Comprehensive Loss under general and administrative expenses. On February 26, 2021, the Company entered into a Settlement Agreement and Release with Aron Govil regarding a dispute over an alleged misappropriation of funds. As 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. Mr. Govil also executed a secured promissory note (the “Note”) in the amount of $1,533,280. The Note matured and was due in full in two years and boar interest at 9% per annum and was secured by all of Mr. Govil’s assets. Mr. Govil also agreed to sign an affidavit confessing judgment in the event of a default on the Note. 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 Consolidated Balance Sheets and Consolidated Statements of Operations and Comprehensive Loss. The Company has not received payment on this note to date. On 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. Govil. The successor Company conducts business under the name CXR, Inc. Due 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. All receivables due from SmartDesk, Inc, have a full allowance placed on them. Based on sales projections for Cemtrex XR, Inc., the Company does not believe that it will exceed the sales levels required to exceed the $820,000 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 to $660,621 and during the years ended September 30, 2024, and 2023 the Company recognized $53,126 and $44,272 of royalties due, respectively, and will amortize the remaining amount over the period the royalties are due. Additionally, the Company received $76,000 in royalty payments. As of September 30, 2024, there was $685,788 in trade receivables due from CXR, Inc. Of these receivables $60,628 are related to costs paid by Cemtrex related to payroll during the transition of employees to the new company and some subscription services that are set up on auto pay with a credit card. $215,408 is related to the current amount of royalties due and the remaining $409,752 is related to services provided by Cemtrex Technologies Pvt. Ltd. in the normal course of business. These balances are presented on the Consolidated Balance Sheets under the caption “Trade receivables - related party”. The long-term balance of royalties of $456,611 is presented on the Company’s Consolidated Balance Sheets under the caption “Note receivable, net - related party”. During Fiscal year 2024, the Company recognized $665,520 of revenue from CXR, Inc. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The following table sets forth the aggregate fees billed to the Company for the years ended September 30, 2024, and 2023 by Grassi & Co. Certified Public Accountants the Company’s independent auditor: 2024 2023 Audit Fees $ 380,175 $ 342,283 Audit-Related Fees 41,100 84,255 Tax Fees 36,276 61,715 Totals $ 457,551 $ 488,253 Audit fees principally include fees for the audit of our consolidated financial statements included in our annual report on Form 10-K and the review of financial statements included in our quarterly reports on Form 10-Q. Audit-related fees consist of fees for other attestation and related services that are reasonably related to the performance of the audit or review of our financial statements. For fiscal year 2024, these fees primarily related to the review and consent for the S-1 filing related to the May 2024 Equity Financing. For fiscal year 2023, these fees primarily related to the audit of the historical financials of Heisey Mechanical, Ltd. Tax fees consist of tax compliance services. 45 PART IV ITEM 15 EXHIBITS AND FINANCIAL STATEMENTS (a) Financial Statements and Notes to the Consolidated Financial Statements See Index to Consolidated Financial Statements on page F-1 at beginning of attached financial statements. (b) Exhibits Exhibit Incorporated by Reference Filed or Furnished Number Exhibit Description Form Filing Date Herewith 2.1 Stock Purchase Agreement, dated December 15, 2015 Form 8-K/A 9/26/2016 3.1 Certificate of Incorporation filed with the State of Delaware. Form 10-12G 5/22/2008 3.2 Bylaws Form 10-12G 5/22/2008 3.3 Amendment to Certificate of Incorporation Form 10-12G 5/22/2008 3.4 Amendment to Certificate of Incorporation Form 10-12G 5/22/2008 3.5 Amendment to Certificate of Incorporation Form 10-12G 5/22/2008 3.6 Amendment to Certificate of Incorporation Form 10-12G 5/22/2008 3.7 Amendment to Certificate of Incorporation Form 8-K 8/22/2016 3.8 Certificate of Designation of the Series A Preferred Shares Form 8-K 9/10/2009 3.9 Certificate of Designation of the Series 1 Preferred Shares Form 8-K 1/24/2017 3.10 Amendment to Certificate of Incorporation Form 8-K 9/8/2017 3.11 Certificate of Correction to the Certificate of Amendment Form 8-K 6/12/2019 3.12 Amended Certificate of Designation of the Series 1 Preferred Shares Form 8-K 4/1/2020 3.13 Amendment to Certificate of Incorporation Form 10-K 1/5/2021 3.14 Certificate of Correction to the Certificate of Amendment Form 10-Q 5/28/2021 3.15 Amendment to Certificate of Incorporation Form 8-K 1/20/2023 3.16 Amendment to Certificate of Incorporation Form 8-K 8/2/2024 4.1 Form of Subscription Rights Certificate Form S-1 8/29/2016 4.2 Form of Series 1 Preferred Stock Certificate Form S-1/A 11/23/2016 4.3 Form of Series 1 Warrant Form S-1/A 12/7/2016 4.4 Form of Common Stock Purchase Warrant Form 8-K 3/22/2019 4.5 Form of Prefunded Warrant Form 8-K 5/3/2024 4.6 Form of Series A Common Stock Purchase Warrant Form 8-K 5/3/2024 4.7 Form of Series B Common Stock Purchase Warrant Form 8-K 5/3/2024 5.1 Opinion of the Doney Law Firm Form S-1/A 4/30/2024 10.1 Amendment of the Term Loan Agreement between Vicon and NIL Funding, dated March 3, 2023 Form 10-Q 5/11/2023 10.2 Amendment to Loan Documents Between Advanced Industrial Services, Inc. and Fulton Bank, N.A. Form 10-Q 5/11/2023 10.3 Amendment to Promissory Note Between Cemtrex, Inc. and Streeterville Capital, LL Form 10-Q 5/11/2023 10.4 Securities Purchase Agreement dated June 1, 2020 Form 8-K 6/4/2020 10.5 Securities Purchase Agreement dated June 9, 2020 Form 8-K 6/12/2020 10.6 Settlement Agreement and Release between Cemtrex, Inc. and Aron Govil dated February 26, 2021 Form 8-K 2/26/2021 10.7 Securities Purchase Agreement dated February 22, 2022 Form 10-Q 5/16/2022 10.8 Amendment of the Term Loan Agreement between Vicon and NIL Funding, dated March 30, 2022 Form 10-Q 5/16/2022 10.9 Asset Purchase agreement between Cemtrex, Inc. and Saagar Govil, dated November 22, 2022 Form 8-K 11/29/2022 10.10 Asset Purchase agreement between Cemtrex, Inc. and Saagar Govil, dated November 22, 2022 Form 8-K 11/29/2022 10.11 Simple Agreement for Future Equity (SAFE) between Cemtrex, Inc. and Saagar Govil, dated November 18, 2022 Form 8-K 11/29/2022 10.12 2020 Equity Compensation Plan Form S-8 8/17/2020 10.13 Asset Purchase Agreement, dated as of June 7, 2023 Form 8-K 12/6/2023 10.14 Form of Lock-Up Agreement Form S-1/A 4/30/2024 10.15 Note Purchase Agreement between Cemtrex Inc. and Streeterville Capital, LLC, dated September 30, 2021 Form S-1/A 4/30/2024 10.16 Amendment to Promissory Note between Cemtrex Inc. and Streeterville Capital, LLC, dated September 14, 2022 Form S-1/A 4/30/2024 10.17 Amendment to Promissory Note between Cemtrex Inc. and Streeterville Capital, LLC, dated August 30, 2023 Form S-1/A 4/30/2024 10.18 Form of Underwriting Agreement Form 8-K 5/3/2024 10.19 Standstill Agreement, dated April 30, 2024 Form 8-K 5/1/2024 21.1 Subsidiaries of the Registrant X 23.1 Consent of Grassi & Co, CPAs, P.C., Independent Registered Public Accounting Firm X 31.1 Certification of Chief Executive Officer as required by Rule 13a-14 or 15d-14 of the Exchange Act, as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X 31.2 Certification of Interim Chief Financial Officer and Principal Financial Officer as required by Rule 13a-14 or 15d-14 of the Exchange Act, as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X 32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act 0f of 2002. X 32.2 Certification of Interim Chief Financial Officer and Principal Financial Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act 0f of 2002. X 99.1 Order pursuant to Section 8A of the Securities Act – dated September 30, 2022. Form 8-K 10/4/2022 101.INS Inline XBRL Instance Document X 101.SCH Inline XBRL Taxonomy Extension Schema X 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase X 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase X 101.LAB Inline XBRL Taxonomy Extension Label Linkbase X 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase X 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) X ITEM 16. FORM 10-K SUMMARY None. 46 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CEMTREX, INC. December 30, 2024 By: /s/ Saagar Govil 3 Saagar Govil, Chairman of the Board, CEO, President and Secretary (Principal Executive Officer) December 30, 2024 By: /s/ Paul J. Wyckoff . Paul J. Wyckoff, Interim CFO (Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. December 30, 2024 By: /s/ Saagar Govil . Saagar Govil, Chairman of the Board, CEO, President and Secretary (Principal Executive Officer) December 30, 2024 By: /s/ Paul J. Wyckoff . Paul J. Wyckoff, Interim CFO (Principal Financial and Accounting Officer) December 30, 2024 By: /s/ Brian Kwon > Brian Kwon, Director December 30, 2024 By: /s/ Manpreet Singh > Manpreet Singh, Director December 30, 2024 By: /s/ Metodi Filipov > Metodi Filipov, Director 47 Index to the Consolidated Financial Statements Contents Page(s) Report of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets at September 30, 2024 and 2023 F-4 Consolidated Statements of Operations for the Fiscal Years Ended September 30, 2024 and 2023 F-5 Consolidated Statement of Comprehensive Loss for the Fiscal Years Ended September 30, 2024 and 2023 F-5 Consolidated Statements of Shareholders’ Equity for the Fiscal Years Ended September 30, 2024 and 2023 F-6 Consolidated Statement of Cash Flows for Fiscal Years Ended September 30, 2024 and 2023 F-8 Notes to the Consolidated Financial Statements F-10 F- 1 Cemtrex Inc. and Subsidiaries REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Cemtrex, Inc. and Subsidiaries Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Cemtrex, Inc. and Subsidiaries (the “Company”) as of September 30, 2024 and 2023, and the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the years in the two-year period ended September 30, 2024, and the related notes (collectively referred to as, the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended September 30, 2024, in conformity with accounting principles generally accepted in the United States of America. Substantial Doubt Regarding the Company’s Ability to Continue as a Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 1 to the financial statements, the Company has sustained net losses and has significant short-term debt obligations, which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Valuation of Goodwill Description of the matter At September 30, 2024, the Company had approximately $3.7 million of goodwill. As discussed in Note 2 to the financial statements, goodwill is tested annually for impairment at the reporting unit level, or more frequently if impairment indicators arise. Auditing the Company’s goodwill impairment analyses was complex and highly judgmental due to the nature of qualitive assessment and, where necessary, the significant estimation required to determine the fair value of the reporting units. In particular, the fair value estimate was sensitive to significant assumptions, such as future operating results, cash flows and the weighted average cost of capital. These significant assumptions are forward-looking and could be materially affected by future market or economic conditions. F- 2 How we addressed the matter We obtained an understanding of controls over the Company’s goodwill impairment evaluation process, including controls over management’s review of the significant assumptions described above. Our audit procedures to test the Company’s goodwill impairment analyses included ● Evaluating the reasonableness of the Company’s qualitative assessments and its estimated fair value of the reporting units. ● In evaluating the estimated fair value of reporting units, we, among other items, evaluated management’s significant assumptions described above and used within the fair value method, and tested the completeness and accuracy of the underlying data. ● We involved our valuation specialists to assist in assessing fair valuation methodologies utilized in the Company’s goodwill impairment analyses and to assist in evaluating certain assumptions utilized in the analyses, including discount rates. ● We assessed the historical accuracy of management’s projected cash flows, where applicable, and performed sensitivity analyses of the significant assumptions to evaluate the changes in the fair value of the reporting units that would result from changes in the assumptions. ● We assessed the adequacy of the disclosures in the financial statements. Related Party Receivables Description of the matter At September 30, 2024, the Company had approximately $1.2 million of related party receivables. These receivables are made up of $0.5 million of trade receivables, and $0.7 million of royalty receivable. The related party nature of these receivables and associated disclosures are material to the financial statements and of a highly sensitive nature. How we addressed the matter We obtained an understanding of controls over the Company’s accounting and disclosures for related party transactions. Our audit procedures primarily included the following: ● Obtaining an understanding of certain related party transaction by reading relevant agreements, as applicable; ● In certain instance, obtaining confirmations from the related parties to affirm the existence of the open receivable and personal guarantees, as applicable; ● Performing other audit procedures on certain open balances including, among other things, vouching to invoices from the related parties and source documentation representing subsequent cash collections of such receivables; ● Scanning subledgers and documentation obtained in other audit areas for known related parties; and, ● Finally, we evaluated the Company’s disclosures related to the matters described above. Classification, Presentation, Accounting treatment and Valuation of Warrants Description of matter As described in Note 18 to the consolidated financial statements, the Company entered into an Underwriting Agreement to issue and sell common stock and series A, B, and pre-funded warrants during 2024. We identified the evaluation of the classification, presentation, accounting treatment and fair value of warrants issued as a critical audit matter. The principal consideration for our determination that the evaluation of the classification, presentation, accounting treatment and fair value of the warrants issued was a critical audit matter is the high degree of subjective auditor judgment associated with evaluating management’s determination of the liability classification and fair values of the warrants issued, which is primarily due to the underlying terms of the agreement and complexity of the valuation models used and the sensitivity of the underlying significant assumptions. The key assumptions used within the valuation models included the risk-free rate, stock price, strike price, remaining term, and volatility. The calculated fair values are sensitive to changes in these key assumptions. How the Critical Audit Matter was addressed in the Audit Our audit procedures related to the evaluation of acquisition date fair values of the warrants issued included the following, among others: ● We read and reviewed the relevant agreements to agree to key terms of the warrants issued to determine the accuracy of the warrants issued and proper classification, presentation, and accounting treatment. ● We vouched to source documentation to validate warrants issued. ● We assessed the qualifications and competence of management and the qualifications, competence and objectivity of third-party specialists. ● We evaluated the methodologies used to determine the fair values of the warrants issued. ● We tested the assumptions used within the valuation models to estimate the fair value of the warrants issued. ● We evaluated the design and operating effectiveness of certain controls over the valuation process, including controls over the development of the key assumptions such as the risk-free rate, stock price, strike price, remaining term, and volatility. ● We involved an internal valuation specialist who assisted in the evaluation and testing performed of the reasonableness of significant methods and assumptions to the models. ● We assessed the sufficiency of the Company’s disclosure of its accounting for these warrants issued included in Note 18. /s/ Grassi & Co., CPAs, P.C. We have served as the Company’s auditor since 2021. Jericho, New York December 30, 2024 Auditor PCAOB ID Number 606 F- 3 Cemtrex Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS September 30, September 30, Assets 2024 2023 Current assets Cash and cash equivalents $ 3,897,511 $ 5,329,910 Restricted cash 1,522,881 1,019,652 Trade receivables, net 11,159,676 9,209,695 Trade receivables, net - related party 685,788 1,143,342 Trade receivables, net 685,788 1,143,342 Inventory, net 6,988,529 8,739,219 Contract assets, net 985,207 1,739,201 Prepaid expenses and other current assets 1,456,687 2,112,022 Total current assets 26,696,279 29,293,041 Property and equipment, net 9,133,578 9,218,701 Right-of-use operating lease assets 1,933,378 2,287,623 Royalties receivable, net - related party 456,611 674,893 Note receivable, net - related party - 761,585 Goodwill 3,708,347 4,381,891 Other 2,187,265 1,836,009 Total Assets $ 44,115,458 $ 48,453,743 Liabilities & Stockholders’ Equity Current liabilities Accounts payable $ 4,520,173 $ 6,196,406 Accounts payable - related party - 68,509 Accounts payable - 68,509 Sales tax payable 73,024 35,829 Revolving line of credit 3,125,011 - Current maturities of long-term liabilities 4,732,377 14,507,711 Operating lease liabilities - short-term 832,823 741,487 Deposits from customers 408,415 57,434 Accrued expenses 2,034,352 2,784,390 Contract liabilities 1,254,204 980,319 Deferred revenue 1,297,616 1,583,406 Accrued income taxes 314,827 388,627 Total current liabilities 18,592,822 27,344,118 Long-term liabilities Long-term debt 13,270,178 9,929,348 Long-term operating lease liabilities 1,159,204 1,607,202 Other long-term liabilities 274,957 501,354 Deferred Revenue - long-term 658,019 727,928 Warrant liabilities 5,199,436 - Total long-term liabilities 20,561,794 12,765,832 Total liabilities 39,154,616 40,109,950 Commitments and contingencies - - Stockholders’ equity Preferred stock , $ 0.001 par value, 10,000,000 shares authorized, Series 1, 3,000,000 shares authorized, 2,456,827 shares issued and 2,392,727 shares outstanding as of September 30, 2024 and 2,293,016 shares issued and 2,228,916 shares outstanding as of September 30, 2023 (liquidation value of $ 10 per share) 2,457 2,293 Series C, 100,000 shares authorized, 50,000 shares issued and outstanding at September 30, 2024 and September 30, 2023 50 50 Preferred stock, value 50 50 Common stock, $ 0.001 par value, 70,000,000 shares authorized, 14,176 shares issued and outstanding at September 30, 2024 and 50,000,000 shares authorized, 498 shares issued and outstanding at September 30, 2023 14 1 Additional paid-in capital 73,262,536 68,882,750 Accumulated deficit ( 71,355,386 ) ( 64,125,895 ) Treasury stock, 64,100 shares of Series 1 Preferred Stock at September 30, 2024, and September 30, 2023 ( 148,291 ) ( 148,291 ) Accumulated other comprehensive income 2,949,297 3,076,706 Total Cemtrex stockholders’ equity 4,710,677 7,687,614 Non-controlling interest 250,165 656,179 Total liabilities and stockholders’ equity $ 44,115,458 $ 48,453,743 The accompanying notes are an integral part of these consolidated financial statements. F- 4 Cemtrex Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS September 30, 2024 September 30, 2023 For the year ended September 30, 2024 September 30, 2023 Revenues Security Revenue $ 32,021,899 $ 34,359,470 Industrial Services Revenue 34,841,985 25,009,092 Revenues 66,863,884 59,368,562 Cost of revenues Cost of revenues, Security 15,854,560 17,253,170 Cost of revenues, Industrial Services 23,531,120 16,429,566 Cost of revenues 39,385,680 33,682,736 Gross profit 27,478,204 25,685,826 Operating expenses General and administrative 28,860,019 23,929,340 Research and development 3,357,455 3,267,994 Goodwill impairment 530,475 - Total operating expenses 32,747,949 27,197,334 Operating loss ( 5,269,745 ) ( 1,511,508 ) Other (expense)/income Other(expense)/income, net ( 622,558 ) 476,693 Interest expense ( 2,169,469 ) ( 4,966,298 ) Loss on excess fair value of warrants ( 7,255,528 ) - Changes in fair value of warrant liability 7,840,951 - Total other expense, net ( 2,206,604 ) ( 4,489,605 ) Net loss before income taxes ( 7,476,349 ) ( 6,001,113 ) Income tax expense ( 202,280 ) ( 394,272 ) Loss from Continuing operations ( 7,678,629 ) ( 6,395,385 ) Income/(loss) from discontinued operations, net of tax 43,124 ( 2,838,053 ) Net loss ( 7,635,505 ) ( 9,233,438 ) Less net loss in noncontrolling interest ( 406,014 ) ( 36,563 ) Net loss attributable to Cemtrex, Inc. stockholders $ ( 7,229,491 ) $ ( 9,196,875 ) (Loss)/income per share - Basic & Diluted Continuing Operations $ ( 17.96 ) $ ( 15,760.64 ) Discontinued Operations $ 0.11 $ ( 3.89 ) Weighted Average Number of Shares-Basic & Diluted 408,602 414 Cemtrex Inc. and Subsidiaries CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS September 30, 2024 September 30, 2023 For the year ended September 30, 2024 September 30, 2023 Other comprehensive loss Net loss $ ( 7,635,505 ) $ ( 9,233,438 ) Foreign currency translation (loss)/gain ( 127,409 ) 699,181 Comprehensive loss ( 7,762,914 ) ( 8,534,257 ) Comprehensive loss attributable to noncontrolling interest ( 406,014 ) ( 36,563 ) Comprehensive loss attributable to Cemtrex, Inc. stockholders $ ( 7,356,900 ) $ ( 8,497,694 ) The accompanying notes are an integral part of these consolidated financial statements. F- 5 Cemtrex Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Shares Amount Shares Amount Shares Amount Capital Deficit Stock Income Equity interest Preferred Stock Series 1 Preferred Stock Series C Common Stock Par Par Value $0.001 Par Value $0.001 Value $0.001 Additional Treasury Stock, 64,100 shares of Series 1 Accumulated other Cemtrex Non- Number of Number of Number of Paid-in Accumulated Preferred Comprehensive Stockholders’ controlling Shares Amount Shares Amount Shares Amount Capital Deficit Stock Income Equity interest Balance at September 30, 2023 2,293,016 $ 2,293 50,000 $ 50 498 $ 1 $ 68,882,750 $ ( 64,125,895 ) $ ( 148,291 ) $ 3,076,706 $ 7,687,614 $ 656,179 Foreign currency translation loss ( 127,409 ) ( 127,409 ) Share-based compensation 30,235 30,235 Dividends paid in Series 1 preferred shares 235,762 236 ( 236 ) - Purchase of treasury stock ( 69,705 ) ( 69,705 ) Cancellation of treasury stock ( 71,951 ) ( 72 ) ( 69,633 ) 69,705 - Shares issued to pay for services 105 - 169,000 169,000 Exercise of prefunded warrants 5,603 5 3,190,315 3,190,320 Exercise of Series A warrants 2,100 2 1,060,111 1,060,113 Issuance of roundup shares 5,870 6 ( 6 ) - Loss attributable to noncontrolling interest - ( 406,014 ) Net loss - - - - ( 7,229,491 ) - ( 7,229,491 ) Balance at September 30, 2024 2,456,827 $ 2,457 50,000 $ 50 14,176 $ 14 $ 73,262,536 $ ( 71,355,386 ) $ ( 148,291 ) $ 2,949,297 $ 4,710,677 $ 250,165 The accompanying notes are an integral part of these consolidated financial statements. F- 6 Cemtrex Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Preferred Stock Series 1 Preferred Stock Series C Common Stock Par Par Value $0.001 Par Value $0.001 Value $0.001 Additional Treasury Stock, 64,100 shares of Series 1 Accumulated other Cemtrex Non- Number of Number of Number of Paid-in Accumulated Preferred Comprehensive Stockholders’ controlling Shares Amount Shares Amount Shares Amount Capital Deficit Stock Income Equity interest Balance at September 30, 2022 2,079,122 $ 2,079 50,000 $ 50 360 $ 1 $ 66,642,452 $ ( 54,929,020 ) $ ( 148,291 ) $ 2,377,525 $ 13,944,796 $ 692,742 Balance 2,079,122 $ 2,079 50,000 $ 50 360 $ 1 $ 66,642,452 $ ( 54,929,020 ) $ ( 148,291 ) $ 2,377,525 $ 13,944,796 $ 692,742 Foreign currency translation gain - - - - - - 699,181 699,181 Foreign currency translation (loss)/gain - - - - - - 699,181 699,181 Share-based compensation 106,839 106,839 Shares issued to pay notes payable 115 - 1,917,873 1,917,873 Dividends paid in Series 1 preferred shares 213,894 214 ( 214 ) - Income/(loss) attributable to noncontrolling interest - ( 36,563 ) Shares issued to pay for services 14 - 215,800 215,800 Additional rounding shares issued for reverse stock split 9 - - - Net loss - - - - ( 9,196,875 ) - ( 9,196,875 ) Balance at September 30, 2023 2,293,016 $ 2,293 50,000 $ 50 498 $ 1 $ 68,882,750 $ ( 64,125,895 ) $ ( 148,291 ) $ 3,076,706 $ 7,687,614 $ 656,179 Balance 2,293,016 $ 2,293 50,000 $ 50 498 $ 1 $ 68,882,750 $ ( 64,125,895 ) $ ( 148,291 ) $ 3,076,706 $ 7,687,614 $ 656,179 The accompanying notes are an integral part of these consolidated financial statements. F- 7 Cemtrex Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS Cash Flows from Operating Activities 2024 2023 For the year ended September 30, Cash Flows from Operating Activities 2024 2023 Net loss $ ( 7,635,505 ) $ ( 9,233,438 ) Adjustments to reconcile net loss to net cash used by operating activities Depreciation and amortization 1,328,741 1,026,075 (Gain)/loss on disposal of property and equipment ( 19,133 ) 69,601 Noncash lease expense 829,119 702,747 Goodwill impairment 530,475 - Bad debt expense (recovery) ( 79,006 ) ( 14,515 ) Loss on write-off of related party receivables 1,409,500 - Share-based compensation 30,235 106,839 Shares issued to pay for services 169,000 215,800 Interest expense paid in equity shares - 409,541 Accrued interest on notes payable 1,189,629 2,707,262 Non-cash royalty income ( 53,126 ) ( 44,272 ) Amortization of original issue discounts on notes payable - 1,264,111 Amortization of loan origination costs 72,533 - Loss on excess fair value of warrants 7,255,528 - Changes in fair value of warrant liability ( 7,840,951 ) - Changes in operating assets and liabilities net of effects from acquisition of subsidiaries: Trade receivables ( 1,870,975 ) ( 3,795,964 ) Trade receivables - related party ( 63,462 ) ( 1,099,070 ) Inventory 1,893,759 48,598 Contract assets 753,994 ( 290,123 ) Prepaid expenses and other current assets 733,168 ( 458,476 ) Other assets ( 251,256 ) ( 336,264 ) Accounts payable ( 818,733 ) 3,145,469 Accounts payable - related party - 49,376 Sales tax payable 37,195 15,734 Operating lease liabilities ( 831,536 ) ( 577,446 ) Deposits from customers 350,981 ( 15,710 ) Accrued expenses ( 690,038 ) 475,798 Contract liabilities 273,885 393,960 Deferred revenue ( 355,699 ) 522,827 Income taxes payable ( 71,285 ) 293,779 Other liabilities ( 226,397 ) ( 306,544 ) Net cash used by operating activities - continuing operations ( 3,949,360 ) ( 4,724,305 ) Net cash provided by operating activities - discontinued operations - 2,491,581 Net cash used by operating activities ( 3,949,360 ) ( 2,232,724 ) Cash Flows from Investing Activities Purchase of property and equipment ( 1,297,346 ) ( 2,761,314 ) Proceeds from sale of property and equipment 63,953 26,205 Royalties on related party revenues 76,000 - Acquisitions, Net of Cash Acquired - ( 2,793,291 ) Investment in MasterpieceVR ( 100,000 ) ( 100,000 ) Net cash used by investing activities ( 1,257,393 ) ( 5,628,400 ) Cash Flows from Financing Activities Proceeds on revolving line of credit 33,071,722 - Payments on revolving line of credit ( 30,019,244 ) - Payments on debt ( 7,923,914 ) ( 1,533,059 ) Payments on Paycheck Protection Program Loans ( 40,486 ) ( 30,286 ) Proceeds on bank loans 340,267 3,360,000 Proceeds from notes payable - 240,000 Purchases of treasury stock ( 69,705 ) - Proceeds from offerings 10,035,292 - Expenses on offerings ( 995,333 ) - Net cash provided by financing activities 4,398,599 2,036,655 Effect of currency translation ( 121,016 ) 700,355 Net decrease in cash, cash equivalents, and restricted cash ( 808,154 ) ( 5,824,469 ) Cash, cash equivalents, and restricted cash at beginning of period 6,349,562 11,473,676 Cash, cash equivalents, and restricted cash at end of period $ 5,420,392 $ 6,349,562 The accompanying notes are an integral part of these consolidated financial statements. F- 8 Cemtrex Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS Balance Sheet Accounts Included in Cash, Cash Equivalents, and Restricted Cash Cash and cash equivalents $ 3,897,511 $ 5,329,910 Restricted cash 1,522,881 1,019,652 Total cash, cash equivalents, and restricted cash $ 5,420,392 $ 6,349,562 Supplemental Disclosure of Cash Flow Information: Cash paid during the period for interest $ 907,307 $ 585,384 Cash paid during the period for income taxes, net of refunds $ 196,727 $ 293,779 Supplemental Schedule of Non-Cash Investing and Financing Activities Shares issued to pay notes payable $ - $ 1,917,873 Financing of fixed asset purchase $ 28,331 $ - Financing of building purchase $ - $ 1,200,000 Financing of acquisition - $ 2,400,000 Purchase of property and equipment through vendor financing $ - $ 675,000 Noncash recognition of new leases $ 474,874 $ 349,172 The accompanying notes are an integral part of these consolidated financial statements. F- 9 Cemtrex Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 – ORGANIZATION Cemtrex 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. and its subsidiaries. Common Stock Reverse Stock Split On October 2, 2024, and November 26, 2024, the Company completed a 60:1 and 35:1 , respectively, reverse stock split on its common stock. All share and per share data have been retroactively adjusted for the reverse splits. Nasdaq Notices for Listing Deficiencies On July 29, 2022, the Company received a notification letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, because the closing bid price for the Company’s Series 1 Preferred Stock listed on Nasdaq was below $ 1.00 for 30 consecutive trading days, the Company no longer met the minimum bid price requirement for continued listing on The Nasdaq Capital Market under Nasdaq Marketplace Rule 5550(a)(2), requiring a minimum bid price of $ 1.00 per share (the “Minimum Bid Price Requirement”). On 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 based on the Company meeting the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing on the Capital Market with the exception of the bid price requirement, and the Company’s written notice of its intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary. On September 8, 2023, the Company received a letter from the Nasdaq Hearings Panel (“Panel”) informing the Company that the Panel has granted the Company a temporary exception to regain compliance with The Nasdaq Stock Market LLC’s (“Nasdaq” or the “Exchange”) Listing Rule 5555(a)(1) (the “Bid Price Rule”) by no later than January 19, 2024. The Company has announced a special meeting of Series 1 Preferred Stock shareholders was scheduled for December 26, 2023, to approve the reverse stock split. On December 26, 2023, the meeting was adjourned to December 29, 2023, due to insufficient votes represented by proxy or virtually in person to constitute a quorum for the transaction of business at the Special Meeting. On December 29, 2023, there were still insufficient votes represented by proxy or virtually in person to constitute a quorum thus the resolution did not pass. On January 5, 2024, and January 12, 2024, the Company bought back an aggregate of 71,951 shares of Series 1 Preferred Stock for $ 69,705 under the Share Repurchase Program approved on August 22, 2023, that allows the Company to repurchase shares of the Series 1 Preferred Stock through various means, including through privately negotiated transactions and through an open market program. On April 8, 2024, these shares were cancelled. The Company’s Series 1 Preferred Stock was delisted from the NASDAQ Capital Market on January 22, 2024. The Series 1 Preferred Stock is now quoted on the OTC Markets under the symbol “CETXP”. Nasdaq filed a Form 25 on March 21, 2024, and the deregistration of the Company’s Series 1 Preferred Stock under Section 12(b) of the Exchange Act became effective for 90 days after filing of the Form 25. On June 14, 2024, the Company received a notification letter from the Listing Qualifications Department of Nasdaq notifying the Company that, because the closing bid price for the Company’s common stock listed on Nasdaq was below $ 1.00 for 30 consecutive trading days, the Company no longer meets the minimum bid price requirement for continued listing on The Nasdaq Capital Market under Nasdaq Marketplace Rule 5550(a)(2), requiring a minimum bid price of $ 1.00 per share. The notification letter also disclosed that in the event the Company does not regain compliance with the Minimum Bid Price Requirement by December 11, 2024, the Company may be eligible for additional time. To qualify for additional time, the Company would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement, and would need to provide written notice of its intention to cure the deficiency during the second compliance period, by effecting a reverse stock split, if necessary. F- 10 On August 21, 2024, the Company received a notification letter from the Listing Qualifications Department of Nasdaq notifying the Company that, because the stockholder’s equity for the Company was below $2,500,000 as reported on our Form 10-Q for the period ended June 30, 2024, the Company no longer meets the minimum shareholder’s equity requirement for continued listing on The Nasdaq Capital Market under Nasdaq Marketplace Rule 5550(b)(1), requiring a minimum stockholder’s equity of $2,500,000 (the “Minimum Stockholder’s Equity Requirement”). On October 23, 2024, the Company received a letter from Nasdaq that it had been granted an extension to regain compliance with the Minimum Stockholder’s Equity Requirement. The terms of the extension are as follows: on or before February 17, 2025, the Company must complete the submitted plan and opt for one of the two following alternatives to evidence compliance with the Rule: Alternative 1 : The Company must furnish to the SEC and Nasdaq a publicly available report (e.g., a Form 8-K) including: 5. A disclosure of Staff’s deficiency letter and the specific deficiency(ies) cited; 6. A description of the completed transaction or event that enabled the Company to satisfy the stockholders’ equity requirement for continued listing; 7. An affirmative statement that, as of the date of the report, the Company believes it has regained compliance with the stockholders’ equity requirement based upon the specific transaction or event referenced in Step 2; and 8. A disclosure stating that Nasdaq will continue to monitor the Company’s ongoing compliance with the stockholders’ equity requirement and, if at the time of its next periodic report the Company does not evidence compliance, that it may be subject to delisting. Alternative 2: The Company must furnish to the SEC and Nasdaq a publicly available report including: 4. Steps 1 & 2 set forth above; 5. A balance sheet no older than 60 days with pro forma adjustments for any significant transactions or event occurring on or before the report date. The pro forma balance sheet must evidence compliance with the stockholders’ equity requirement; and 6. A disclosure that the Company believes it also satisfies the stockholders’ equity requirement as of the report date and that Nasdaq will continue to monitor the Company’s ongoing compliance with the stockholders’ equity requirement and, if at the time of its next periodic report the Company does not evidence compliance, that it may be subject to delisting. Regardless of which alternative the Company chooses, if the Company fails to evidence compliance upon filing its periodic report for the March 31, 2025, with the SEC and Nasdaq, the Company may be subject to delisting. May 2024 Equity Financing and Warrants On May 1, 2024, the Company entered into an underwriting agreement with Aegis Capital Corp., in connection with a firm commitment underwritten public offering of warrants convertible into the Company’s common stock. Further details can be found in Note 18 – Stockholders’ Equity. Going Concern Considerations The accompanying 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, that 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. F- 11 This 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. The Company has incurred substantial losses of $ 7,229,491 and $ 9,196,875 for fiscal years 2024 and 2023, respectively, and has debt obligations over the next fiscal year of $ 7,857,388 and working capital of $ 8,103,457 , that raise substantial doubt with respect to the Company’s ability to continue as a going concern. 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. The Company has $ 3,897,511 in cash as of September 30, 2024. Additionally, the Company has (i) secured a line of credit for its Vicon brand to fund operations, which as of September 30, 2024, has available capacity of $ 1,874,989 , (ii) continually reevaluate our pricing model on our Vicon brand to improve margins on those products and introducing new innovative products to grow revenues, (iii) raised $ 9,039,959 in net proceeds through our May 2024 equity financing and anticipate an additional $ 5 to $ 10 million when the Series B warrants are exercised.; and (iv) subsequent to the balance sheet date has effected a 60:1 and 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. While the Company believes these plans if successful, would be sufficient to meet the capital demands of our current operations for at least the next twelve months, there 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. The Company currently does not have adequate cash or available liquidity/available capacity on our lines of credit to meet our long-term needs and our above plans in the short term may prove to be inadequate to continue as a going concern. Thus, despite our cash on hand, our ability to draw on our credit line, or changes to our pricing models, and other safeguards, we may be unable to meet our obligations as they become due over the next twelve months beyond the issuance date. 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. The Company currently do not have adequate cash to meet our short or long-term needs. The consolidated financial statements do not include any adjustments relating to this uncertainty. NOTE 2 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES The management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles. F- 12 Basis of Presentation The accompanying consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Fiscal Year-End The Company elected September 30 as its fiscal year-end date. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Such estimates include, but are not limited to, provisions for credit losses, net realizable value of inventory, warranty obligations, income tax accruals, deferred tax valuation, valuation of warrant liabilities, and assessments of the recoverability of the Company’s long-lived assets. Actual results could differ from those estimates. Principles of Consolidation The consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, Cemtrex Technologies Pvt. Ltd., and Advanced Industrial Services, Inc. and the Company’s majority owned subsidiary Vicon Industries, Inc. and its subsidiary, Vicon Systems, Ltd. All inter-company balances and transactions have been eliminated in consolidation. Carrying Value, Recoverability and Impairment of Long-Lived Assets The Company’s long-lived assets, which include property and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company assesses the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. When long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives. The impairment charges, if any, are included in operating expenses in the accompanying Consolidated Statements of Operations. Cash Equivalents The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. Trade Receivables and Allowance for Current Expected Credit Losses Trade receivables are recorded at the invoiced amount, net of an allowance for current expected credit losses. The Company performs on-going credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness, as determined by the review of their current credit information; and determines the allowance based on the current expected credit loss (“CECL”) model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost. The Company estimates credit losses associated with our accounts receivable portfolio segment using an expected credit loss model, which utilizes an aging schedule methodology based on historical information and adjusted for asset-specific considerations, current economic conditions and reasonable and supportable forecasts. The Company reserved $ 155,918 and $ 234,924 within its allowance for credit losses at September 30, 2024, and 2023, respectively. The Company does no t have any off-balance-sheet credit exposure to its customers at September 30, 2024, or 2023. F- 13 Inventory and Cost of Goods Sold The Company values inventory, consisting of finished goods, at the lower of cost or net realizable value. Cost is determined on the average cost method. The Company reduces inventory for the diminution of value, resulting from product obsolescence, damage or other issues affecting marketability, equal to the difference between the cost of the inventory and its estimated market value. Factors utilized in the determination of estimated market value include (i) current sales data and historical return rates, (ii) estimates of future demand, and (iii) competitive pricing pressures. The Company classifies inventory markdowns in the income statement as a component of cost of goods sold. These markdowns are estimates, which could vary significantly from actual requirements if future economic conditions, customer demand or competition differ from expectations. There was $ 1,044,530 and $ 618,021 in inventory obsolescence reserve at September 30, 2024, and 2023, respectively. Property and Equipment Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation of property and equipment is computed by the straight-line method over the estimated useful lives of the respective assets, shown in the table below. SCHEDULE OF PROPERTY PLANT AND EQUIPMENT Estimated Useful Life (Years) Building 30 Furniture and office equipment 3 - 5 Computer software 7 - 10 Machinery and equipment 7 Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the Consolidated Statements of Operations. Goodwill Goodwill is tested for impairment annually as of September 30. If circumstances change during interim periods between annual tests that would more likely than not reduce the fair value of a reporting unit below its carrying value, the Company will test goodwill for impairment. Factors that would necessitate an interim goodwill impairment assessment include prolonged negative industry or economic trends, or significant under-performance relative to expected, historical or projected future operating results. Management uses judgment to determine whether to use a qualitative analysis or a quantitative fair value measurement for its goodwill impairment testing. The Company’s fair value measurement approach combines the income and market valuation techniques for each of the Company’s reporting units that carry goodwill. These valuation techniques use estimates and assumptions including, but not limited to, the determination of appropriate market comparable, projected future cash flows (including timing and profitability), discount rate reflecting the risk inherent in future cash flows, perpetual growth rate, and projected future economic and market conditions. As permitted, if the reporting unit fails the impairment test, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standard Update (“ASU”) removing step two from the goodwill impairment test. If a reporting unit fails the quantitative impairment test, impairment expense is immediately recorded as the difference between the reporting unit’s fair value and carrying value. For 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. F- 14 Leases The Company accounts for leases in accordance with Accounting Standards Codification 842, Leases (“ASC 842”). ASC 842 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. The Company also made the accounting policy decision not to recognize lease assets and liabilities for leases with a term of 12 months or less. Warrants The 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. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as a liability at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss in the Company’s Consolidated Statements of Operations. Related Parties The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved b. description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. The Company applies the CECL model on its related party assets and applies an allowance when necessary. Commitment and Contingencies The Company follows topic Accounting Standards Codification (“ASC”) Topic 450-20, Contingencies , to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. F- 15 If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows. Revenue Recognition The Company accounts for revenue in accordance with A ccounting Standards Codification 606, Revenue from Contracts with Customers (“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 obtains control of that good or receives the service performed. 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; however, returns are historically insignificant. Billing terms vary by customer and product but generally do not exceed 90 days. In accordance with the authoritative guidance issued by the FASB on revenue recognition, the Company recognizes revenue from cost reimbursable contracts based on the services provided, typically represented by man-hours worked, and is measured by reference to agreed charge-out rates or to the estimated total contract revenue. Revenue from long-term fixed price contracts is recognized using the percentage-of-completion method, measured by reference to physical completion or the ratio of costs incurred to total estimated contract costs. If the outcome of a contract cannot be estimated reliably, as may be the case in the initial stages of completion of the contract, revenue is recognized only to the extent of the costs incurred that are expected to be recoverable. If a contract is expected to be loss-making, the expected amount of the loss is recognized immediately in the income statement. Revenue from short-term contracts is recognized when delivery has occurred, and collection of the resulting receivable is deemed probable. Timing of revenue recognition may differ from the timing of invoicing to customers. The 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. Contracts The Company’s industrial services segment’s revenue is derived from contracts with customers. These contracts fall into two categories, “Fixed Price” and “Time and Material Price” contracts. The Company determines the appropriate accounting treatment for each contract at its inception. Generally, contracts have a period from six months to two years. The Company accounts for a contract when: (i) it has approval and commitment from both parties, (ii) the rights of the parties are identified, (iii) payment terms are identified, (iv) the contract has commercial substance, and (v) collectability of consideration is probable. The Company considers the start of a project to be when the above criteria have been met and it has written authorization from the customer to proceed. F- 16 Fixed price contracts The Company’s revenue from fixed price contracts is recognized on the percentage-of-completion method, measured by the percentage of costs incurred to estimated total costs for each contract. When the job is started and in process, all actual costs incurred (labor and materials) are processed and reconciled at month end. The percentage of completion and revenue earned is calculated at month end. Billings are created based on contract criteria agreed upon and reconciled to determine if any costs in excess of billing or billings in excess of costs exist. Changes in job performance, job conditions, estimated contract costs and profitability, and final contract settlements may result in revisions to costs and income. The effects of these revisions are recognized in the period in which the revisions are determined. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. This measurement and comparison process requires updates to the estimate of total costs to complete the contract, and these updates may include subjective assessments and judgments. Time and material price contracts Revenue from time and material price contracts is recognized based on costs incurred and projected markup on costs. Revenue from these contracts will vary based on actual labor, materials and overhead costs charged to the job and the negotiated billing rates. Contracts are initiated by customers or through bids if with a municipality. Any materials used and time spent within the shop on the job is assigned to the appropriate job and reconciliated monthly. Management bills the customer and records the revenue earned from contract. Depending on the contract terms, billings could be based on certain milestones stipulated in the contract. If this is the case, unbilled revenue is recorded at month end based on time and materials incurred and markup. Performance Obligations Generally, the Company’s contracts contain one performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account. The Company’s performance of the contracts with customers typically provides a significant service of integrating a complex set of tasks and components into a single project or capability (even if that single project results in the delivery of multiple units), and as such, the entire contract and/or purchase order is accounted for as one performance obligation. The transaction price is allocated to the performance obligation and recognized as revenue when, or as, the performance obligation is satisfied with the continuous transfer of control to the customer. Less commonly, a contract may be considered to have multiple performance obligations even when they are part of a single contract. For contracts with multiple performance obligations, the Company allocates the transaction price to each performance obligation using the best estimate of the standalone selling price of each distinct good or service in the contract. The Company recognizes revenue over time for the majority of the services it performs as (i) control continuously transfers to the customer as work progresses at a project location controlled by the customer and (ii) the Company has the right to bill the customer as costs are incurred. The following table illustrates the approximate disaggregation of the Company’s revenue based off timing of revenue recognition for years ended September 30, 2024, and 2023. SCHEDULE OF DISAGGREGATION OF THE COMPANY REVENUE RECOGNITION For the years ended September 30, 2024 September 30, 2023 Over time 57 % 48 % Point-in-time 43 % 52 % Warranties The Company provides for the estimated cost of product warranties at the time revenue is recognized. While the Company engages in product quality programs and processes, including monitoring and evaluating the quality of its component suppliers, its warranty obligation is affected by product failure rates, material usage and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage or service delivery costs differ from its estimates, revisions to the estimated warranty liability may be required. F- 17 Income Tax Provision The Company accounts for income taxes under ASC 740-10, (“Income Taxes”) , which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Consolidated Statements of Operations and Comprehensive Loss in the period that includes the enactment date. The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying Consolidated Balance Sheets, as well as tax credit carrybacks and carryforwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its Consolidated Balance Sheets and provides valuation allowances as management deems necessary. Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions including the United States, India, and The United Kingdom, and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary. Uncertain Tax Positions For the years ended September 30, 2024, and 2023, the Company did not take any uncertain tax positions and had no adjustments to its income tax liabilities or benefits. The Company will record any interest and/or penalties arising from uncertain tax provisions when they are likely to occur and reasonably estimable. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty (50) percent likelihood of being realized upon ultimate settlement. The Company will accrue interest and penalties on income taxes when there is a likelihood that they will occur and can be reasonably estimated. Accounting for Share-Based Compensation The Company follows ASC 718 (“Share-Based Payment”), which requires that all share-based payments to employees, including stock options, stock appreciation rights (SARs) and common stock share awards, be recognized as compensation expense in the consolidated financial statements based on their fair values and over the requisite service period. The fair value for options granted was determined at the date of grant using a Black-Scholes valuation model and the straight-line attribution approach using the following weighted average assumptions: The risk-free interest rate used in the Black-Scholes valuation method is based on the implied yield currently available in U.S. Treasury securities at maturity with an equivalent term. Other than a one-time dividend paid in fiscal year 2017, the Company never declared or paid any cash dividends and does not currently expect to do so in the future. Expected volatility is based on the annualized daily historical volatility of the Company’s stock over a representative period. The weighted-average expected life represents the period over which stock-based awards are expected to be outstanding and was determined based on a number of factors, including historical weighted average and projected holding periods for the remaining unexercised shares, the contractual terms of the Company’s stock-based awards, vesting schedules and expectations of future employee behavior. F- 18 Net Loss per Common Share Basic net income (loss) per common share is computed by dividing net income (loss) less the fair market value of dividends declared by the weighted average number of shares of common stock outstanding during the period. Diluted net income per common share is computed by dividing net income less the fair market value of dividends declared by the weighted average number of shares of common stock and potentially dilutive outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent share arrangements, stock options and warrants. As of September 30, 2024, and 2023, 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 years ended September 30, 2024 2023 Options 18 18 Warrants 13,529,410 - For the years ended September 30, 2024, and 2023 loss per share basic and diluted for continuing operations are calculated as follows. SCHEDULE OF LOSS PER SHARE BASIC AND DILUTED FOR CONTINUING OPERATIONS 2024 2023 For the years ended September 30, 2024 2023 Loss from Continuing operations $ ( 7,678,629 ) $ ( 6,395,385 ) Less (loss)/gain in noncontrolling interest ( 406,014 ) ( 36,563 ) Preferred stock dividends 67,788 166,084 Net loss applicable to common shareholders ( 7,340,403 ) ( 6,524,906 ) Weighted Average Number of Shares-Basic & Diluted 408,602 414 Loss per share - Basic & Diluted - Continuing Operations $ ( 17.96 ) $ ( 15,760.64 ) Foreign Currency Translation (Loss)/Gain and Comprehensive Income Loss In countries in which the Company operates, and the functional currency is other than the U.S. dollar, assets and liabilities are translated using published exchange rates in effect at the consolidated balance sheet date. Revenues and expenses and cash flows are translated using an approximate weighted average exchange rate for the period. Resulting translation adjustments are recorded as a component of accumulated other comprehensive loss on the accompanying consolidated balance sheet. For the years ending September 30, 2024, and September 30, 2023, comprehensive loss includes a loss of $ 127,409 and a gain of $ 699,181 , respectively, which were entirely from foreign currency translation. As of and for the year ended September 30, 2024, and 2023, the Company used the following exchange rates. SCHEDULE OF FOREIGN CURRENCY EXCHANGE RATE Approximate weighted Approximate weighted average exchange rate average exchange rate Exchange rate at For the three months ended Exchange rate at For the year ended Currency September 30, 2024 September 30, 2024 September 30, 2023 September 30, 2023 Indian Rupee 0.012 0.012 0.012 0.012 Great Britain Pound 1.339 1.268 1.220 1.226 F- 19 Reclassifications Certain reclassifications have been made to prior period amounts to conform to the current period presentation. This had no effect on the Company’s statement of operations or retained earnings. The reclassification was to the caption “Short-term investments” which has been reclassified to “Prepaid expenses and other current assets” on the Consolidated Balance Sheet and “Gain/(loss) on marketable securities to “Prepaid expenses and other current assets” on the Consolidated Statements of Cash Flows. The following table illustrates the reclassifications made. SCHEDULE OF RECLASSIFICATIONS September 30, 2023 CONSOLIDATED BALANCE SHEETS As previously reported Reclassification As revised Short-term investments $ 13,663 $ ( 13,663 ) $ - Prepaid expenses and other current assets $ 2,098,359 $ 13,663 $ 2,112,022 For the year ended September 30, 2023 CONSOLIDATED STATEMENTS OF CASH FLOWS As previously reported Reclassification As revised Gain/(loss) on marketible securities $ 58 $ ( 58 ) $ - Prepaid expenses and other current assets $ ( 458,534 ) $ 58 $ ( 458,476 ) Payments on bank loans $ ( 488,689 ) $ 488,689 $ - Payments on debt $ ( 1,044,370 ) $ ( 488,689 ) $ ( 1,533,059 ) Correction of an Immaterial Error in Previously Issued Financial Statements Subsequent to the issuance of our financial statements for the year ended September 30, 2023, immaterial errors were identified and has been corrected in our historical information related to the cash flow presentation of non-cash royalty income. The original presentation had non-cash royalty income presented in Trade receivables – related party. Additionally, Shares issued to pay for services was presented in the supplemental disclosure of the cash flow presentation, but not presented on the face of the financial. The effects of the correction to the individual effected line items in our Consolidated Statement of Cash Flows are as follows. SCHEDULE OF ERROR CORRECTIONS AND PRIOR PERIOD ADJUSTMENTS For the year ended September 30, 2023 As previously reported Corrections As corrected Non-cash royalty income $ - $ ( 44,272 ) $ ( 44,272 ) Trade receivables - related party $ ( 1,143,342 ) $ 44,272 $ ( 1,099,070 ) Shares issued to pay for services $ - $ 215,800 $ 215,800 Accounts payable $ 3,361,269 $ ( 215,800 ) $ 3,145,469 Business Combinations The 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. Recently Adopted Accounting Pronouncements In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“Update 2016-13”). Update 2016-13 replaced the incurred loss model with an expected loss model, which is referred to as the current expected credit loss (“CECL”) model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including but not limited to trade receivables. For public business entities, the new standard became effective for annual reporting periods beginning after December 15, 2022, including interim periods within that reporting period. On October 1, 2023, the Company implemented this standard and there has been no material change to the consolidated financial statements. F- 20 The following table illustrates the effect of implementation of Update 2016-13 on the current expected credit losses for the following line items on the consolidated balance sheet. SCHEDULE OF EFFECT IMPLEMENTATION ON CONDENSED CONSOLIDATED BALANCE SHEET Assets: October 1, 2023 As reported under ASC 326 September 30, 2023 Pre-ASC 326 Adoption Impact of ASC 326 Adoption Trade receivables, net $ 234,924 $ 234,924 $ - Contract assets, net $ 8,696 $ - $ 8,696 Royalties receivable, net - related party $ 10,000 $ - $ 10,000 Note receivable, net - related party $ 44,761 $ 44,761 $ - The Company carries its accounts receivables net of an allowance for credit losses. The measurement and recognition of credit losses involves the use of judgment. Management’s assessment of expected credit losses includes consideration of current and expected economic conditions, market and industry factors affecting the Company’s customers (including their financial condition), the aging of account balances, historical credit loss experience, customer concentrations, and customer creditworthiness. Management evaluates its experience with historical losses and then applies this historical loss ratio to financial assets with similar characteristics. The Company’s historical loss ratio or its determination of risk pools may be adjusted for changes in customer, economy, market or other circumstances. The Company may also establish an allowance for credit losses for specific receivables when it is probable that the receivable will not be collected, and the loss can be reasonably estimated. Amounts are written off against the allowance when they are considered to be uncollectible, and reversals of previously reserved amounts are recognized if a specifically reserved item is settled for an amount exceeding the previous estimate. The Company will utilize the Probability-of-default method for financing receivables and loans. Expected credit losses are determined by multiplying the probability of default (i.e., the probability the asset will default within the given time frame) by the loss given default (the percentage of the asset not expected to be collected because of default). The Company considers sources of repayment associated with a financial asset when determining its credit losses, including collection against the collateral and certain embedded credit enhancements, such as guarantees or insurance. The allowance for credit losses was immaterial as of September 30, 2024. The following table illustrates the current expected credit losses activity for the nine months ended September 30, 2024. SCHEDULE OF EXPECTED CREDIT LOSSES ACTIVITY October 1, 2023 September 30, 2024 September 30, 2024 As of For the year ended As of October 1, 2023 September 30, 2024 September 30, 2024 Assets: Trade receivables, net $ 234,924 $ ( 79,006 ) $ 155,918 Trade receivables, net - related party $ - $ - $ - Trade receivables, net $ - $ - $ - Contract assets, net $ 8,696 $ 7,289 $ 15,985 Royalties receivable, net - related party $ 10,000 $ - $ 10,000 Note receivable, net - related party $ 44,761 $ ( 44,761 ) $ - Recently Issued Accounting Pronouncements Not Yet Effective On 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 security. 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. ASU No. 2022-03 is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company is currently evaluating the impact of this ASU on the consolidated financial statements. In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which enhances the disclosures required for operating segments in the Company’s annual and interim consolidated financial statements. ASU 2023-07 is effective for the Company for annual reporting for fiscal 2025 and for interim period reporting beginning in fiscal 2026 on a retrospective basis. Early adoption is permitted. The Company is currently evaluating the impact of our pending adoption of ASU 2023-07 on the consolidated financial statements. F- 21 In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires public entities to disclose consistent categories and greater disaggregation of information in the rate reconciliation and for income taxes paid. It also includes certain other amendments to improve the effectiveness of income tax disclosures. The guidance is effective for financial statements issued for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is required to adopt this standard prospectively in fiscal year 2026 for the annual reporting period ending September 30, 2026. The Company is currently in the process of evaluating the impact of adoption on the consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, “Income Statement (Topic 220): Reporting Comprehensive Income - Expense Disaggregation Disclosures, Disaggregation of Income Statement Expenses”, that requires public companies to disclose, in interim and reporting periods, additional information about certain expenses in the financial statements. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted and is effective on either a prospective basis or retrospective basis. The Company is currently assessing the potential impacts of adoption on the consolidated financial statements. In November 2024, the FASB issued ASU 2024-04, “Debt with Conversion and Other Options (Subtopic 470-20), which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. ASU 2024-04 is effective for annual periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities that have adopted the amendments in Update 2020-06. Adoption can be on a prospective or retrospective basis. The Company is currently in the process of evaluating the impact of adoption on the consolidated financial statements. The 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. NOTE 3 – SEGMENT AND GEOGRAPHIC INFORMATION The Company’s reporting segments consist of Security and Industrial Services. Additionally, the Company’s operational structure also reports unallocated corporate expenses. All intersegment transactions have been eliminated and values are presented net of eliminations. Operating segments The Company determines its reporting units in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 280, Segment Reporting. The Company evaluates a reporting unit by first identifying its operating segments under ASC 280. The Company operates as two operating segments and unallocated corporate expenses which is reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is responsible for the allocation of resources and assessing the performance of the operating segment and has been identified as Saagar Govil, the CEO of the Company. Unallocated corporate expenses mainly relate to payroll and benefits for corporate officers, investor relation expenses, accounting expenses related audit and taxes, legal expenses related to corporate matters, consulting expenses related to accounting and corporate matters, and interest expense on notes payable. Security Cemtrex’s Security segment operates under the Vicon brand that deliver cutting-edge software and hardware technologies: Vicon Industries, a majority owned subsidiary, provides end-to-end security solutions to meet the toughest corporate, industrial and governmental security challenges. Vicon’s products include browser-based video monitoring systems and analytics-based recognition systems, cameras, servers, and access control systems for every aspect of security and surveillance in industrial and commercial facilities, federal prisons, hospitals, universities, schools, and federal and state government offices. Vicon provides cutting edge, mission critical security and video surveillance solutions utilizing Artificial Intelligence (AI) based data algorithms. F- 22 Industrial Services Cemtrex’s Industrial Services segment operates through 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 and graphics, industrial automation, packaging, and chemicals among others. We are a leading provider of reliability-driven maintenance and contracting solutions for the machinery, packaging, printing, chemical, and other manufacturing markets. The focus is on customers seeking to achieve greater asset utilization and reliability to cut costs and increase production from existing assets, including small projects, sustaining capital, turnarounds, maintenance, specialty welding services, and high-quality scaffolding. The following tables summarize the Company’s segment information. SCHEDULE OF SEGMENT INFORMATION Security Industrial Services Corporate Consolidated Security Industrial Services Corporate Consolidated For the year ended September 30, 2024 For the year ended September 30, 2023 Reportable Segments Reportable Segments Security Industrial Services Corporate Consolidated Security Industrial Services Corporate Consolidated Revenues $ 32,021,899 $ 34,841,985 $ - $ 66,863,884 $ 34,359,470 $ 25,009,092 $ - $ 59,368,562 Cost of revenues 15,854,560 23,531,120 - 39,385,680 17,253,170 16,429,566 - 33,682,736 Gross profit $ 16,167,339 $ 11,310,865 $ - $ 27,478,204 $ 17,106,300 $ 8,579,526 $ - $ 25,685,826 Operating expenses General, and administrative 16,073,558 7,074,828 4,436,787 27,585,173 14,422,950 4,755,998 3,724,317 22,903,265 Depreciation and amortization 329,294 945,552 - 1,274,846 254,392 719,404 52,279 1,026,075 Research and development 3,357,455 - - 3,357,455 3,267,994 - - 3,267,994 Goodwill Impairment 530,475 - - 530,475 - - - - Operating (loss)/income $ ( 4,123,443 ) $ 3,290,485 $ ( 4,436,787 ) $ ( 5,269,745 ) $ ( 839,036 ) $ 3,104,124 $ ( 3,776,596 ) $ ( 1,511,508 ) Other (expense)/income $ ( 492,330 ) $ ( 295,157 ) $ ( 1,419,117 ) $ ( 2,206,604 ) $ 113,846 $ ( 166,369 ) $ ( 4,437,082 ) $ ( 4,489,605 ) September 30, September 30, 2024 2023 Identifiable Assets Security $ 17,253,328 $ 21,829,183 Industrial Services 24,576,055 23,781,349 Corporate 2,286,075 2,843,211 Total Assets $ 44,115,458 $ 48,453,743 The Company generates revenue from product sales and services from its subsidiaries located in the United States, the United Kingdom, and India. Revenue and long-lived asset information for the Company is as follows. SCHEDULE OF REVENUE FROM PRODUCT SALES AND SERVICES FROM ITS SUBSIDIARIES For the year ended September 30, September 30, Revenues 2024 2023 United States $ 62,921,388 $ 53,905,149 United Kingdom 3,251,130 3,301,682 India 691,366 2,161,731 $ 66,863,884 $ 59,368,562 September 30, September 30, Long-lived Assets 2023 2023 United States $ 14,253,674 $ 15,420,489 United Kingdom 218,346 328,819 India 303,283 138,907 $ 14,775,303 $ 15,888,215 F- 23 NOTE 4 – FAIR VALUE MEASUREMENTS Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level hierarchy is applied to prioritize the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under the guidance for fair value measurements are described below: Level 1 — Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Our Level 1 assets include cash equivalents, banker’s acceptances, trading securities investments and investment funds. The Company measures trading securities investments and investment funds at quoted market prices as they are traded in an active market with sufficient volume and frequency of transactions. Level 2 — Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified contractual term, a Level 2 input must be observable for substantially the full term of the asset or liability. Level 3 — Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date. Level 3 assets and liabilities include cost method investments, goodwill, intangible assets, and property, plant and equipment, which are measured at fair value using a discounted cash flow approach when they are impaired. Quantitative information for Level 3 assets and liabilities reviewed at each reporting period includes indicators of significant deterioration in the earnings performance, credit rating, asset quality, business prospects of the investee, and financial indicators of the investee’s ability to continue as a going concern. The Company’s fair value assets for the years ended September 30, 2024, are as follows. SCHEDULE OF FAIR VALUE OF LIABILITIES Quoted Prices Significant in Active Other Significant Balance Markets for Observable Unobservable as of Identical Assets Inputs Inputs September 30, (Level 1) (Level 2) (Level 3) 2024 Liabilities Warrant liabilities $ 4,160,658 $ 1,038,778 $ - $ 5,199,436 $ 4,160,658 $ 1,038,778 $ - $ 5,199,436 At September 30, 2023, the Company had no fair value assets or liabilities. A summary of the warrant liabilities activity for the year ended September 30, 2024, is as follows. SCHEDULE OF THE WARRANT LIABILITIES ACTIVITY Series A Warrants Series B Warrants Prefunded Warrants Total Warrant Liabilities at September 30, 2023 $ - $ - $ - $ - Warrants Issued 11,242,940 2,942,711 3,105,170 17,290,821 Warrants Exercised ( 1,060,113 ) - ( 3,190,320 ) ( 4,250,433 ) Fair market revaluation ( 6,022,169 ) ( 1,903,933 ) 85,150 ( 7,840,951 ) Warrant Liabilities at September 30, 2024 $ 4,160,658 $ 1,038,778 $ - $ 5,199,436 F- 24 NOTE 5 – RESTRICTED CASH A 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 $ 1,030,606 and $ 919,652 as of September 30, 2024, and 2023, respectively. Additionally, there was $ 100,000 of restricted cash in escrow per the purchase agreement with Heisey Mechanical, Ltd, an additional $ 325,340 in escrow related to bond requirements on certain public projects, and $ 66,935 in deposit guarantees. NOTE 6 – TRADE RECEIVABLES, NET Trade receivables, net consists of the following. SCHEDULE OF TRADE RECEIVABLES, NET September 30, September 30, 2024 2023 Trade receivables $ 11,315,594 $ 9,444,619 Allowance for credit losses ( 155,918 ) ( 234,924 ) Accounts receivables, net, total $ 11,159,676 $ 9,209,695 Trade receivables, net were $ 5,399,216 at September 30, 2022. Trade receivables include amounts due for shipped products and services rendered. Allowance for credit losses include estimated losses resulting from the application of the CECL method to our trade receivables. NOTE 7 – PREPAID AND OTHER CURRENT ASSETS Prepaid and other current assets consist of the following. SUMMARY OF PREPAID EXPENSES AND OTHER CURRENT ASSETS September 30, 2024 September 30, 2023 Prepaid expenses $ 547,914 $ 521,310 Prepaid inventory 301,605 1,084,051 Deferred costs 71,359 25,941 Short-term investments 13,871 13,663 Prepaid income taxes 462,997 168,555 VAT and GST tax receivable 58,941 298,502 Prepaid expenses and other current assets total $ 1,456,687 $ 2,112,022 NOTE 8 – INVENTORY, NET Inventory, net of reserves, consist of the following. SCHEDULE OF INVENTORY, NET September 30, September 30, 2024 2023 Raw materials $ 421,557 $ 885,398 Work in progress 272,910 109,019 Finished goods 6,294,062 7,744,802 Inventory, net 6,988,529 8,739,219 F- 25 NOTE 9 – PROPERTY AND EQUIPMENT Property and equipment are summarized as follows. SUMMARY OF PROPERTY AND EQUIPMENT September 30, September 30, 2024 2023 Land $ 945,279 $ 945,279 Building and leasehold improvements 4,388,556 4,362,062 Furniture and office equipment 600,186 579,700 Computers and software 1,333,135 1,333,135 Machinery and equipment 13,578,702 12,488,639 Property and equipment, gross 20,845,858 19,708,815 Less: Accumulated depreciation ( 11,712,280 ) ( 10,490,114 ) Property and equipment, net $ 9,133,578 $ 9,218,701 The Company completed the annual impairment test of property and equipment and determined that there was no impairment as the fair value of property and equipment substantially exceeded their carrying values at September 30, 2024. Depreciation and amortization of property and equipment totaled approximately $ 1,328,741 and $ 1,026,075 for fiscal years ended September 30, 2024, and 2023, respectively and are recorded as general and administrative expenses on the Company’s Consolidated Statements of Operations. Additionally, depreciation and amortization of property and equipment of approximately $ 53,895 and $ 33,256 for fiscal years ended September 30, 2024, and 2023, respectively and are recorded as cost of revenues, Security on the Company’s Consolidated Statements of Operations. NOTE 10 – GOODWILL Changes in the carrying amount of goodwill, by segment, are as follows. SCHEDULE OF GOODWILL BY SEGMENT Security Industrial Services Consolidated Balance at September 30, 2023 $ 530,475 $ 3,851,416 $ 4,381,891 Purchase price allocation adjustment - ( 143,069 ) ( 143,069 ) Impairment ( 530,475 ) - ( 530,475 ) Balance at September 30, 2024 $ - $ 3,708,347 $ 3,708,347 For the year ended September 30, 2024, $ 530,475 of impairment of the Company’s goodwill was recorded. As of September 30, 2024, and September 30, 2023, accumulated impairment losses of $ 3,846,475 and $ 3,316,000 related to the Security segment have been recorded. NOTE 11 - OTHER ASSETS On November 13, 2020, and January 19, 2022, Cemtrex made $ 500,000 investments, on July 18, 2023, and October 5, 2023, made additional $ 100,000 investments, and on October 17, 2024, and November 18, 2024, made additional $ 50,000 investments on each respective date, 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 consolidated balance sheet and the Company accounts for this investment and recorded at cost. No impairment has been recorded for the years ended September 30, 2024 and 2023. Other assts consists of the following. SCHEDULE OF OTHER ASSETS September 30, 2024 September 30, 2023 Rental deposits $ 194,796 $ 198,641 Investment in Masterpiece VR 1,200,000 1,100,000 Other deposits 350,845 167,808 Demonstration equipment supplied to resellers 441,624 369,560 Other assets total $ 2,187,265 $ 1,836,009 F- 26 NOTE 12 – ACCRUED EXPENSES Accrued expenses consist of the following. SCHEDULE OF ACCRUED EXPENSES September 30, 2024 September 30, 2023 Accrued expenses $ 352,938 $ 319,211 Accrued payable on inventory in transit 640,450 1,154,254 Accrued payroll 818,262 1,088,223 Accrued warranty 222,702 222,702 Accrued expenses total $ 2,034,352 $ 2,784,390 NOTE 13 – DEFERRED REVENUE The Company’s deferred revenue as of and for the years ended September 30, 2024, and 2023, are as follows. SCHEDULE OF DEFERRED REVENUE For the year ended September 30, 2024 September 30, 2023 Deferred revenue at beginning of period $ 2,311,334 $ 1,788,507 Net additions: Deferred software revenues 2,321,630 2,679,379 Recognized as revenue: Deferred software revenues ( 2,677,329 ) ( 2,156,552 ) Deferred revenue at end of period 1,955,635 2,311,334 Less: current portion 1,297,616 1,583,406 Long-term deferred revenue at end of period $ 658,019 $ 727,928 For the years ended September 30, 2024, and 2023, the Company recognized revenue of $ 1,555,423 , and $ 1,190,479 , respectively, that was previously included in the beginning balance of deferred revenues. NOTE 14 - CONTRACT ASSETS AND LIABILITES Project contracts typically provide for a schedule of billings on percentage of completion of specific tasks inherent in the fulfillment of the Company’s performance obligation(s). The schedules for such billings usually do not precisely match the schedule on which costs are incurred. As a result, contract revenue recognized in the statements of operations can and usually does differ from amounts that can be billed to the customer at any point during the contract. Amounts by which cumulative contract revenue recognized on a contract as of a given date exceeds cumulative billings and unbilled receivables to the customer under the contract are reflected as a current asset in the balance sheets under the caption “Contract assets.” Amounts by which cumulative billings to the customer under a contract as of a given date exceed cumulative contract revenue recognized are reflected as a current liability in the balance sheets under the caption “Contract liabilities.” Conditional retainage represents the portion of the contract price withheld until the work is substantially complete for assurance of the Company’s obligations to complete the job. F- 27 The following is a summary of the Company’s uncompleted contracts. SCHEDULE OF CONTRACT ASSETS AND LIABILITIES September 30, 2024 September 30, 2023 Costs incurred on uncompleted contracts $ 12,724,334 $ 12,523,552 Estimated gross profit 3,006,692 3,085,350 15,731,026 15,608,902 Applicable billings to date ( 16,000,023 ) ( 14,850,020 ) Net (billings in excess of costs)/earnings in excess of billings, Ending balance $ ( 268,997 ) $ 758,882 For the years ended September 30, 2024, and 2023, the Company recognized revenue of $ 905,319 and $ 369,835 , respectively, that was previously included in the beginning balance of contract liabilities. SUMMARY OF CONTRACT ASSETS AND CONTACT LIABILITIES September 30, 2024 September 30, 2023 For the year ended September 30, 2024 September 30, 2023 Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts Contract asset, beginning balance $ 1,739,201 $ 781,819 Changes in revenue billed, contract price or cost estimates ( 753,994 ) 957,382 Contract asset, net, ending balance $ 985,207 $ 1,739,201 Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts Contract liability, beginning balance ( 980,319 ) $ ( 369,890 ) Changes in revenue billed, contract price or cost estimates ( 273,885 ) ( 610,429 ) Contract liability, ending balance $ ( 1,254,204 ) $ ( 980,319 ) Net Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts Net billings in excess of costs, beginning balance $ 758,882 $ 411,929 Changes in revenue billed, contract price or cost estimates $ ( 1,027,879 ) 346,953 Net billings in excess of costs, ending balance $ ( 268,997 ) $ 758,882 NOTE 15 – LEASES The 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 3.3 years at September 30, 2024, and 3 years at September 30, 2023. The weighted average discount rate used to measure lease liabilities was approximately 6.54 % at September 30, 2024, and 2023. The Company used the rate implicit in the lease, where known, or its incremental borrowing rate as the rate used to discount the future lease payments. The Company’s corporate segment leases approximately 100 square feet of office space in Brooklyn, NY on a month-to-month lease at a rent of $ 600 per month with $ 7,200 of expense for the year ended September 30, 2024 and approximately 911 square feet of office space in Clovis, CA on a month-to-month lease at a monthly rent of $ 4,202 with $ 58,996 of expense for the year ended September 30, 2024. The expense is under the caption “General and administrative” on the Company’s Consolidated Statements of Operations. A reconciliation of undiscounted cash flows to operating lease liabilities recognized in the Consolidated Balance Sheet at September 30, 2024, is set forth below. SCHEDULE OF RECONCILIATION OF UNDISCOUNTED CASH FLOWS TO OPERATING LEASE LIABILITIES Years ending September 30, Operating Leases 2025 924,699 2026 734,114 2027 363,196 2028 99,730 2029 10,519 Undiscounted lease payments 2,132,258 Amount representing interest ( 140,231 ) Discounted lease payments 1,992,027 Less short-term operating lease liabilities 832,823 Long-term operating lease liabilities $ 1,159,204 F- 28 Lease costs for the years ended September 30, 2024, and 2023 are set forth below. SCHEDULE OF LEASE COSTS 2024 2023 For the year ended September 30, 2024 2023 Operating lease costs 831,536 828,048 Short-term lease costs 66,196 - Total lease cost $ 897,732 $ 828,048 NOTE 16 – LINES OF CREDIT AND LONG-TERM LIABILITIES Revolving line of credit On October 5, 2023, the Company obtained a revolving line of credit in the amount of $ 5,000,000 from Pathward, N.A. The interest rate will be a rate which is equal to three percentage points ( 3 %) in excess of that rate shown in the Wall Street Journal as the prime rate (the “Effective Rate”) and matures twenty-four months from the closing date. This loan is secured by the Company’s eligible accounts receivable and eligible finished goods inventory. The Company’s ability to borrow against the line of credit is limited by the value of the eligible assets. As of September 30, 2024, the Company had enough eligible assets to access the full credit line. The Company was in compliance with all loan covenants as of September 30, 2024. The funds were used to pay the NIL Funding term loan and will fund operations of the Vicon entity. As of September 30, 2024, this loan had a balance of $ 3,125,011 , with no remaining unamortized loan origination fees. There were $ 1,874,989 in available funds as of September 30, 2024. Standstill Agreement On August 31, 2023, the Company and Streeterville Capital, LLC (“Streeterville”) entered into a standstill agreement for the two notes held by Streeterville Capital, LLC. The terms of this agreement are the earlier of (a) the date that is ninety (90) days from the Effective Date, and (b) the date that the Company completes an equity offering on either Form S-1 or Form S-3 (the “Standstill Period”), Streeterville Capital, LLC will not seek to redeem any portion of the Notes, and (c) the Company agrees to prepay to Lender fifty percent ( 50 %) of the net proceeds received by Borrower in connection with all equity financings until such time as Borrower has raised at least $ 5,000,000 in aggregate net proceeds. On April 30, 2024, the Company entered into a Standstill Agreement with Streeterville Capital, LLC (“Streeterville”) in which Streeterville agreed not to seek to redeem any portion of its two outstanding notes with the Company for a period of one year expiring on April 30, 2025, with $ 239,813 classified as short-term , and in exchange, the Company agreed to pay to Streeterville the greater of $ 4,000,000 or fifty percent ( 50 %) of the net proceeds the Company receives from the sale of any of its common stock or preferred stock during the Standstill Period. To date, the Company has paid Streeterville $ 4,588,897 under this agreement. Loans Payable to Bank On September 5, 2024, the Company acquired a loan from Fulton Bank in the amount of $ 312,000 in order to fund new equipment for Advanced Industrial Services, Inc. This loan carries interest of SOFR plus 2.37 % per annum. This loan carries loan covenants which the Company was in compliance with as of September 30, 2024. This loan is secured by the assets of the Company. F- 29 On December 5, 2023, the Company acquired a loan from HDFC Bank in the amount of ₹ 2,352,700 ($ 28,219 on date of loan acquisition) in order to fund a vehicle for Cemtrex Technologies Pvt, Ltd., Inc. This loan carries interest of 8.7 % per annum. This loan was paid in full prior to the maturity date on June 3, 2024. SCHEDULE OF LINES OF CREDIT AND LONG TERM LIABILITIES September 30, September 30, Interest Rate Maturity 2024 2023 Fulton Bank - $360,000 fund equipment for AIS. The Company was in compliance with loan covenants as of September 30, 2024. This loan is secured by certain assets of the Company. SOFR plus 2.37% (7.33% as of September 30, 2024 and 7.68% as of September 30, 2023). 1/31/2025 28,302 108,700 Fulton Bank - $ 360,000 fund equipment for AIS. The Company was in compliance with loan covenants as of September 30, 2024. This loan is secured by certain assets of the Company. SOFR plus 2.37 % ( 7.33 % as of September 30, 2024 and 7.68 % as of September 30, 2023). 1/31/2025 28,302 108,700 Fulton Bank - $ 312,000 fund equipment for AIS. The Company was in compliance with loan covenants as of September 30, 2024. This loan is secured by certain assets of the Company. SOFR plus 2.37 % ( 7.33 % as of September 30, 2024 and 7.68 % as of September 30, 2023). 9/30/2029 312,000 - Fulton Bank mortgage $ 2,476,000 . The Company was in compliance with loan covenants as of September 30, 2024. This loan is secured by the underlying asset. SOFR plus 2.62 % ( 7.58 % on September 30, 2024 and ( 7.93 % on September 30, 2023). 1/28/2040 2,113,337 2,180,115 Fulton Bank (HEISEY) - $ 1,200,000 mortgage loan; requires monthly principal and interest payments through August 1, 2043 with a final payment of remaining principal on September 1, 2043 ; The loan is collateralized by 615 Florence Street and 740 Barber Street and guaranteed by AIS and Cemtrex. SOFR plus 2.80 % per annum ( 7.76 % as of September 30, 2024 and 8.11 % as of September 30, 2023). 9/30/2043 1,176,112 1,200,000 Fulton Bank (HEISEY) - $ 2,160,000 . promissory note related to purchase of Heisey; requires 84 monthly principal and interest payments ; The note is collateralized by the Heisey assets and guaranteed by the Parent; matures in 2030. SOFR plus 2.80 % per annum ( 7.76 % as of September 30, 2024 and 8.11 % as of September 30, 2023). 7/1/2030 1,881,621 2,122,565 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 $ 0 , as of September 30, 2024 and September 30, 2023. 8 % 6/30/2025 244,766 4,596,589 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 $ 0 as of September 30, 2024 and September 30, 2023. 8 % 2/22/2026 12,195,789 11,243,233 Note Payable - $ 240,000 For the purchase of Heisey Mechanical, Ltd. 6 % 7/1/2024 - 240,000 Term Loan Agreement with NIL Funding Corporation (“NIL”) - $ 5,600,000 The Company was in compliance with loan covenants as of September 30, 2023. 11.50 % 12/31/2024 - 1,979,743 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. 1 % 5/5/2025 50,628 91,114 Software License Agreement - $ 1,125,000 , for the purchase of software source code for use in our Security segment products N/A 6/3/2024 - 675,000 Total debt $ 18,002,555 $ 24,437,059 Less: Current maturities ( 4,732,377 ) ( 14,507,711 ) Long-term debt $ 13,270,178 $ 9,929,348 Estimated maturities of the Company’s long-term debt over the next 5 years are as follows. SCHEDULE OF ESTIMATED MATURITIES OF LONG TERM DEBT 2025 2026 2027 2028 2029 Thereafter Total Fulton Bank - $360,000 28,302 - - - - - $ 28,302 Fulton Bank - $ 360,000 28,302 - - - - - $ 28,302 Fulton Bank - $ 312,000 53,671 57,643 62,210 67,114 71,362 - $ 312,000 Fulton Bank - $ 2.16 Mil 264,301 262,135 284,544 308,869 335,063 426,709 $ 1,881,621 Fulton Bank - Mortgage #1 72,410 73,009 85,701 92,430 100,563 1,689,224 $ 2,113,337 Fulton Bank - Mortgage #2 28,417 26,792 29,087 31,578 34,030 1,026,208 $ 1,176,112 PPP Loans 40,511 10,117 - - - - $ 50,628 Notes Payable 4,244,765 8,195,790 - - - - $ 12,440,555 TOTAL $ 4,732,377 $ 8,625,486 $ 461,542 $ 499,991 $ 541,018 $ 3,142,141 $ 18,002,555 F- 30 NOTE 17 – RELATED PARTY TRANSACTIONS As of September 30, 2024, and September 30, 2023, there was $ 0 and $ 3,806 , respectively, payable due to Ducon Technologies, Inc., which is controlled by Aron Govil, the Company’s Founder and Former Director and CFO. As of September 30, 2023, there were $ 637,208 of receivables due from Ducon Technologies, Inc. The Company negotiated a payment agreement regarding past receivables and other liabilities due to Cemtrex, Inc. totaling $ 761,585 . This agreement was in the form of a secured promissory note earning interest at a rate of 5 % per annum and matured on July 31, 2024 . The Company did not receive payment on this note at the maturity date and placed a full allowance on the note during fiscal year 2024 and appears on the Company’s Consolidated Statements of Operations and Comprehensive Loss under general and administrative expenses. On February 26, 2021, the Company entered into a Settlement Agreement and Release with Aron Govil regarding a dispute over an alleged misappropriation of funds. As 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. Mr. Govil also executed a secured promissory note (the “Note”) in the amount of $ 1,533,280 . The Note matured and was due in full in two years and boar interest at 9 % per annum and was secured by all of Mr. Govil’s assets. Mr. Govil also agreed to sign an affidavit confessing judgment in the event of a default on the Note. 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 consolidated balance sheets and consolidated statements of operations and comprehensive loss. The Company has not received payment on this note to date. On 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. Govil. The successor Company conducts business under the name CXR, Inc. On November 22, 2022, the Company completed the above disposition for the following consideration. ● Cemtrex XR, Inc. ○ $ 895,000 comprised of: ■ $ 75,000 in cash payable at Closing; and ■ 5 % 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. ● Cemtrex Advanced Technologies, Inc. ○ $ 10,000 in cash payable at Closing; and ○ 5 % royalty of all revenues on the Business to be paid 90 days after the end of each calendar year for the next 5 years ; and ○ $1,600,000 in SAFE (common equity) at any subsequent fundraising or exit above $5,000,000 with a $10,000,000 cap. The Company’s Board of Directors, excluding Saagar Govil who abstained from all voting on these agreements, approved these actions and agreements. F- 31 Due 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. All receivables due from SmartDesk, Inc, have a full allowance placed on them, no payments have been received. Based on sales projections for Cemtrex XR, Inc., the Company does not believe that it will exceed the sales levels required to exceed the $ 820,000 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 to $ 660,621 and during the years ended September 30, 2024, and 2023 the Company recognized $ 53,126 and $ 44,272 of royalties due, respectively, and will amortize the remaining amount over the period the royalties are due. Additionally, the Company received $ 76,000 in royalty payments. As of September 30, 2024, there was $ 685,788 in trade receivables due from CXR, Inc. Of these receivables $ 60,628 are related to costs paid by Cemtrex related to payroll during the transition of employees to the new company and some subscription services that are set up on auto pay with a credit card. $ 215,408 is related to the current amount of royalties due and the remaining $ 409,752 is related to services provided by Cemtrex Technologies Pvt. Ltd. in the normal course of business. These balances are presented on the Consolidated Balance Sheets under the caption “Trade receivables - related party”. The long-term balance of royalties of $ 456,611 is presented on the Company’s Consolidated Balance Sheets under the caption “Note receivable, net - related party”. During Fiscal year 2024, the Company recognized $ 665,520 of revenue from CXR, Inc. NOTE 18 – STOCKHOLDERS’ EQUITY Preferred Stock The Company is authorized to issue 10,000,000 shares of Preferred Stock, $ 0.001 par value. As of September 30, 2024, and September 30, 2023, there were 2,506,827 and 2,343,016 shares issued and 2,442,727 and 2,278,916 shares outstanding, respectively. Series A Preferred Stock Each issued and outstanding Series A Preferred Share shall be entitled to the number of votes per share equal to the result of: (i) the number of shares of common stock of the Company issued and outstanding at the time of such vote multiplied by 1.01; divided by (ii) the total number of Series A Preferred Shares issued and outstanding at the time of such vote, at each meeting of shareholders of the Company with respect to any and all matters presented to the shareholders of the Company for their action or consideration, including the election of directors. Holders of Series A Preferred Shares shall vote together with the holders of Common Shares as a single class. The Series A Preferred Stock has no liquidation value or preference. The Series A Preferred Stock has no redemption rights. As of September 30, 2024, and September 30, 2023, there were no shares of Series A Preferred Stock issued and outstanding. Series C Preferred Stock On 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 per share 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. The Series C Preferred Stock has no liquidation value or preference. The Series C Preferred Stock has no redemption rights. F- 32 As of September 30, 2024, and September 30, 2023, there were 50,000 shares of Series C Preferred Stock issued and outstanding. Series 1 Preferred Stock Dividends Holders of the Series 1 Preferred will be entitled to receive cumulative cash dividends at the rate of 10 % of the purchase price per year, payable semiannually on the last day of March and September in each year. Dividends may also be paid, at our option, in additional shares of Series 1 Preferred, valued at their liquidation preference. The Series 1 Preferred rank senior to the common stock with respect to dividends. Dividends will be entitled to be paid prior to any dividend to the holders of our common stock. Liquidation Preference The Series 1 Preferred has a liquidation preference of $ 10 per share, equal to its purchase price. In the event of any liquidation, dissolution or winding up of our company, any amounts remaining available for distribution to stockholders after payment of all liabilities of our company will be distributed first to the holders of Series 1 Preferred, and then pari passu to the holders of the Series A preferred stock and our common stock. The holders of Series 1 Preferred have preference over the holders of our common stock on any liquidation, dissolution or winding up of our company. The holders of Series 1 Preferred also have preference over the holders of our Series A preferred stock. Voting Rights Except as otherwise provided in the certificate of designation, preferences and rights or as required by law, the Series 1 Preferred will vote together with the shares of our common stock (and not as a separate class) at any annual or special meetings of stockholders. Except as required by law, each holder of shares of Series 1 Preferred will be entitled to two votes for each share of Series 1 Preferred held on the record date as though each share of Series 1 Preferred were 2 shares of our common stock. Holders of the Series 1 Preferred will vote as a class on any amendment altering or changing the powers, preferences or special rights of the Series 1 Preferred so as to affect them adversely. No Conversion The Series 1 Preferred will not be convertible into or exchangeable for shares of our common stock or any other security. Rank The Series 1 Preferred will rank with respect to distribution rights upon our liquidation, winding-up or dissolution and dividend rights, as applicable: ● senior to our Series A preferred stock, common stock and any other class of capital stock we issue in the future unless the terms of that stock provide that it ranks senior to any or all of the Series 1 Preferred; ● on a parity with any class of capital stock we issue in the future the terms of which provide that it will rank on a parity with any or all of the Series 1 Preferred; ● junior to each class of capital stock issued in the future the terms of which expressly provide that such capital stock will rank senior to the Series 1 Preferred and the common stock; and ● junior to all of our existing and future indebtedness. F- 33 Redemption Shares of Series 1 Preferred may be redeemed, in whole or in part, at the option of the Corporation, by the Corporation by giving notice of such redemption at any time. Notice of redemption may be given either by mailing notice to the holders of record or by public announcement, by press release or otherwise. If notice is given by public announcement, by press release or otherwise, such notice shall be effective as of the date of such announcement, regardless of whether notice is also mailed or otherwise given to holders of record. The redemption price for any shares of Series 1 Preferred to be redeemed (the “Redemption Price”) shall be payable in cash, out of funds legally available therefor, and shall be equal to the Preference Amount, plus any accrued but unpaid dividends. If fewer than all of the outstanding shares of Series 1 Preferred are to be redeemed at any time, the Corporation may choose to redeem shares proportionally from all holders or may choose the shares to be redeemed by lot or by any other equitable method. The Company’s Series 1 Preferred Stock was suspended from the Nasdaq Capital Market on January 22, 2024. The Series 1 Preferred Stock is now quoted on the OTC Markets under the symbol “CETXP.” Nasdaq filed a Form 25 on March 21, 2024. The deregistration of the Company’s Series 1 Preferred Stock under Section 12(b) of the Exchange Act became effective 90 days after filing of the Form 25. During the year ended September 30, 2024, and 2023, 235,762 and 213,894 shares of Series 1 Preferred Stock were issued to pay dividends to holders of Series 1 Preferred Stock. respectively. As of September 30, 2024, and September 30, 2023, there were 2,456,827 and 2,293,016 shares of Series 1 Preferred Stock issued and 2,392,727 and 2,228,916 shares outstanding, respectively. The Company currently holds 64,100 shares of Series 1 Stock in Treasury stock. On August 22, 2023, the Board of Directors (the “Board”) of Cemtrex, Inc. authorized and approved a share repurchase program for up to 2,200,000 shares of the currently outstanding shares of the Company’s Series 1 Preferred Stock over a period of 3 years, starting on September 1, 2023, and ending on August 31, 2026. Under the stock repurchase program, the Company intends to repurchase shares through open market purchases, privately negotiated transactions, block purchases or otherwise in accordance with applicable federal securities laws, including Rule 10b-18 of the Exchange Act. During the year ended September 30, 2024, the Company has bought back and later cancelled 71,951 shares into treasury for $ 69,705 under the Share Repurchase Program approved on August 22, 2023, that allows the Company to repurchase shares of the Series 1 Preferred Stock through various means, including through privately negotiated transactions and through an open market program. The Board also authorized the Company to enter into written trading plans under Rule 10b5-1 of the Exchange Act. Adopting a trading plan that satisfies the conditions of Rule 10b5-1 allows a company to repurchase its shares at times when it might otherwise be prevented from doing so due to self-imposed trading blackout periods or pursuant to insider trading laws. Under any Rule 10b5-1 trading plan, the Company’s third-party broker, subject to Securities and Exchange Commission regulations regarding certain price, market, volume and timing constraints, would have authority to purchase the Company’s Series 1 Preferred Stock in accordance with the terms of the plan. The Company may from time to time enter into Rule 10b5-1 trading plans to facilitate the repurchase of its Series 1 Preferred Stock pursuant to its share repurchase program. The Company cannot predict when or if it will repurchase any shares of Series 1 Preferred Stock as such stock repurchase program will depend on a number of factors, including constraints specified in any Rule 10b5-1 trading plans, price, general business and market conditions, and alternative investment opportunities. F- 34 Common Stock On October 2, 2024, and November 26, 2024, the Company completed a 60:1 and 35:1 , respectively, reverse stock split on its common stock. All share and per share data have been retroactively adjusted for the reverse splits. On August 2, 2024, the Company increased the number of authorized shares of common stock from 50,000,000 to 70,000,000 shares, $ 0.001 par value. As of September 30, 2024, there were 14,176 shares issued and outstanding and at September 30, 2023, there were 498 shares issued and outstanding. May 2024 Equity Financing On May 1, 2024, the Company entered into an underwriting agreement with Aegis Capital Corp., in connection with a firm commitment underwritten public offering (the “Offering”), providing for the issuance of (i) 554,705 units (the “Common Units”), each consisting of one share of common stock of the Company (“Common Stock”), a warrant to purchase one share of common stock at an exercise price of $0.85 per share, which warrant will expire on the two-and-a-half year anniversary of the original issuance date (the “Series A Warrants”), and a warrant to purchase one share of common stock at an exercise price of $0.85 per share, which warrant will expire on the five-year anniversary of the original issuance date (the “Series B Warrants”); and (ii) 11,210,000 pre-funded units (the “Pre-funded Units”), each consisting of one pre-funded warrant to purchase one share of common stock (the “Pre-funded Warrants”), a Series A Warrant and a Series B Warrant. The purchase price of each Unit was $0.85, and the purchase price of each Pre-Funded Unit was $0.849. The Pre-Funded Warrants are immediately exercisable and may be exercised at any time until all of the Pre-Funded Warrants are exercised in full. In addition, the Company granted the Underwriter a 45-day option to purchase additional 1,764,705 shares of common stock and/or Pre-Funded Warrants, representing up to 15 % of the number of common stock and Pre-Funded Warrants sold in the Offering, and/or additional 1,764,705 Series A Warrants representing up to 15 % of the Series A Warrants sold in the Offering, and/or additional 1,764,705 Series B Warrants representing up to 15 % of the Series B Warrants sold in the Offering to cover over-allotments, if any. The Offering closed on May 3, 2024. An aggregate of 11,764,705 Units (which includes 554,705 shares of common stock), 11,210,000 Pre-Funded Units (which includes 11,210,000 Pre-Funded Warrants), and a Series A Warrant and a Series B Warrant were sold in the Offering. On May 3, 2024, the Underwriter partially exercised its over-allotment option with respect to 1,764,705 Series A Warrants and 1,764,705 Series B Warrants. The aggregate gross proceeds to the Company were $ 10,035,293 , before deducting underwriting discounts and other issuance expenses of $ 995,333 . The underwriting discounts and other issuance expenses were expensed since the Series A, Series B, and Pre-Funded Warrants were each determined to be liabilities and recorded at their fair value. May 2024 Warrants The Company evaluated the Series A, Series B, and Prefunded Warrants (collectively, the “Warrants”) in accordance with the guidance at ASC 480, Distinguishing Liabilities from Equity and ASC 815-40, Derivatives and Hedging, and determined that the Warrants are precluded from being considered indexed to the entity’s own stock, resulting in the Warrants being classified as a liability. The fair value of the Series A Warrants was determined based on the stock price on issuance of $ 0.277 multiplied by the total number of shares of common stock issuable upon exercise of the Series A alternative cashless exercise. Under the alternative cashless exercise, the Holder is entitled to receive three times the normal number of shares issued in a cash exercise. The Series A Holder may only execute the alternative cashless exercise after Stockholder Approval (and received June 17, 2024); at the time of issuance, Stockholder Approval was deemed perfunctory and almost certain to occur, and the most likely settlement option would be through the alternative cashless exercise. In addition, beginning on the date of the Warrant Stockholder Approval, the Warrants will contain a reset of the exercise price to a price equal to the lesser of (i) the then-current exercise price and (ii) lowest volume weighted average price for the five trading days immediately preceding and immediately following the date we effect a reverse stock split in the future with a proportionate adjustment to the number of shares underlying the Warrants. As such, upon issuance, the total fair value of the Series A Warrants was $ 11,242,940 , which was based on 40,588,230 units issued under the alternative cashless exercise. The measurement of fair value of the Series B Warrants were determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance (i.e., share price of $ 0.277 , exercise price of $ 0.85 , term of five years , volatility of 132 %, risk-free rate of 4.5 %, and expected dividend rate of 0 %). The grant date fair value of these Series B Warrants was estimated to be $ 2,942,711 on May 3, 2024, and such warrants were classified as liabilities. Due to the nominal exercise price, the fair value of the Prefunded Warrants was based on the intrinsic value of each Warrant on the grant date. The intrinsic value was calculated based on the May 3, 2024, stock price of $ 0.277 and the strike price of $ 0.001 , resulting in a total fair value of $ 3,105,170 . The total fair value of the Warrants upon issuance was $ 17,290,821 . Given that the gross proceeds received of $ 10,035,292 was less than the total fair value of the liability classified Warrants, the Company recorded a loss on excess fair value of $ 7,255,528 at issuance. F- 35 During the year ended September 30, 2024, the Company issued 5,603 shares of common stock to satisfy the Prefunded Warrants described above and 2,100 shares of common stock to satisfy 1,469,531 Series A Warrants. SCHEDULE SHARES ISSUABLE UNDER WARRANTS OUTSTANDING Warrant Shares Outstanding Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Outstanding at September 30, 2023 - - Warrants granted 65,327,640 $ 0.85 Warrants exercised ( 15,618,593 ) $ 0.61 Warrants forfeited - Warrants cancelled - Outstanding at September 30, 2024 49,709,047 $ 0.23 2.77 Exercisable at September 30, 2024 49,709,047 $ 0.23 2.77 NOTE 19 – SHARE-BASED COMPENSATION On September 25, 2019, the Company cancelled all outstanding options granted to Saagar Govil, the Company’s Chairman and CEO and granted a stock option for 6 shares. These options have an exercise price of $ 117,281.88 per share, which vested upon grant, and they expire after seven years. Additionally, Mr. Govil was granted additional future options; (i) 2 shares of the Corporation’s common stock, CETX at an exercise price of $ 140,042.00 per share vesting on September 25, 2021; (ii) 2 shares of the Corporation’s common stock, CETX at an exercise price of $ 168,050.40 per share vesting on September 25, 2023; and (iii) 2 shares of the Corporation’s common stock, CETX at an exercise price of $ 201,660.48 per share vesting on September 25, 2025. During the years ended September 30, 2024, and 2023 the Company recognized $ 30,325 and $ 106,839 of share-based compensation expense on its outstanding options, respectively. The share-based compensation is listed under the caption “General and administrative” expenses on the Company’s Consolidated Statements of Operations. As of September 30, 2024, there was $ 33,071 of total unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over a weighted-average period of 1.5 years. SCHEDULE OF STOCK OPTIONS ACTIVITY Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value Outstanding at September 30, 2022 22 $ 94,038.64 3.25 $ - Options granted - - - $ - Options exercised - - - Options forfeited - - - Options cancelled ( 4 ) $ 43,547.40 $ - Outstanding at September 30, 2023 18 $ 105,258.92 2.25 $ - Options granted - - - Options exercised - - - Options forfeited - - - Options cancelled - - - Outstanding at September 30, 2024 18 $ 105,258.92 1.25 $ - Vested and exercisable at September 30, 2024 18 $ 105,258.92 $ - F- 36 NOTE 20 – COMMITMENTS AND CONTINGENCIES From time to time, the Company and its subsidiaries are involved in legal proceedings that are incidental to the operation of our business. The Company continues to defend vigorously against all claims. Although the ultimate outcome of any legal matter cannot be predicted with certainty, based on present information, including assessment of the merits of the particular claim, as well as current accruals and insurance coverage, the Corporation does not expect that such legal proceedings will have a material adverse impact on its consolidated financial statements. NOTE 21 – INCOME TAXES The Tax Cuts and Jobs Act (the “Tax Act”) was enacted on December 22, 2017. The Tax Act reduces the maximum U.S. federal corporate tax rate from 35% to 21% , allows net operating losses incurred in 2018 and beyond to be carried forward indefinitely, allows alternative minimum tax carryforwards to be partially refunded, beginning in 2018, and fully refunded by 2021, and creates new taxes on certain foreign sourced earnings. At September 30, 2024, the Company had approximately $ 15,052,834 of federal, $ 5,209,518 of state, and $ 1,646,625 of foreign net operating loss carryforwards. The net operating loss carryforwards, if not utilized, will begin to expire in 2030 for federal purposes and in 2026 for state purposes . The company is currently reviewing net operating losses for Section 382 limitation purposes and will make any required adjustments to the net operating losses at the completion of the study. The following is a geographical breakdown of loss before the provision for income taxes. SCHEDULE OF (LOSS) INCOME BEFORE PROVISION FOR TAX 2024 2023 Year ended September 30, 2024 2023 Domestic $ ( 7,090,508 ) $ ( 6,279,077 ) Foreign ( 385,841 ) 277,964 Loss before provision for income taxes $ ( 7,476,349 ) $ ( 6,001,113 ) The provision for income taxes consisted of the following. SCHEDULE OF PROVISION FOR INCOME TAXES September 30, 2024 September 30, 2023 Current (benefit)/provision Federal $ - $ - State 165,093 319,427 Foreign 37,187 74,845 Total current (benefit)/provision 202,280 394,272 Deferred provision Federal - - State - - Foreign - - Total deferred provision $ - $ - Total (benefit)/provision for income taxes $ 202,280 $ 394,272 F- 37 The following is a reconciliation of the effective income tax rate to the federal and state statutory rates. SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION For the Fiscal Year For the Fiscal Year Ended Ended September 30, 2024 September 30, 2023 U.S. statutory rate 21.00 % 21.00 % State taxes, net of federal - 1.74 % - 4.21 % Foreign tax rate differential - 0.23 % - 0.45 % Change in valuation allowance - 13.23 % - 22.51 % Return to provision - 1.44 % 0.98 % State Rate Change - 0.50 % 0.00 % Goodwill impairment - 1.49 % 0.00 % Write-Off of Related Party Note with Majority Owner - 2.35 % 0.00 % Issuance Costs - Equity Financing - 2.80 % 0.00 % Fair Value Adjustments on Warrants 1.64 % 0.00 % Global intangible income 0.00 % - 0.97 % Other permanent differences - 1.56 % - 0.42 % Effective Tax Rate - 2.71 % - 6.57 % The components of our deferred tax assets and liabilities are summarized as follows. SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES September 30, 2024 September 30, 2023 Deferred Tax Assets: Net operating Loss carryforwards $ 21,908,977 $ 20,375,296 Inventory and other reserves 1,363,737 1,221,903 Allowance for bad debt 32,919 32,633 Interest Expense Limitation 4,751,442 4,193,177 Accruals 439,996 293,956 Capitalized R&D 852,417 27,359 Warranty reserve 27,287 476,045 Other 15,270 6,927 Total gross deferred taxes 29,392,045 26,627,296 Valuation allowance ( 28,127,540 ) ( 24,744,527 ) Net deferred tax assets 1,264,505 1,882,769 Deferred Tax Liabilities: Deferred revenue ( 296,090 ) ( 363,423 ) Prepaid expenses ( 132,685 ) ( 127,852 ) Goodwill amortization ( 10,020 ) ( 512,702 ) Depreciation ( 825,710 ) ( 878,792 ) Total deferred tax liabilities ( 1,264,505 ) ( 1,882,769 ) Total deferred tax assets (liabilities) $ - $ - Management has concluded that it is more likely than not that the deferred tax assets will not be realized and has reduced the asset by a valuation allowance. F- 38 NOTE 22 – BUSINESS COMBINATION On July 1, 2023, the Company under AIS, completed the acquisition of a leading service contractor and steel fabricator that specializes in industrial and water treatment markets, Heisey Mechanical, Ltd. (“Heisey”) based in Columbia, Pennsylvania. The real estate of the business was purchased at fair market value on August 30, 2023, for $ 1,500,000 in a separate transaction. Heisey provides the water treatment industry with a variety of fabricated vessels and equipment including ASME pressure vessels, heat exchangers, mix tanks, reactors, and other specialized fabricated equipment. Additionally, the contracting team assists with installation and service of fabricated items. The company has over 33,000 square feet of manufacturing floor space in its facility and an experienced staff of fabricators, welders, and field mechanics. The purchase price allocation presented below compares the preliminary allocation which was developed based on an estimate of fair values of Heisey’s identifiable tangible and intangible assets acquired and liabilities assumed as of July 1, 2023, compared to the final allocation. The consideration transferred and allocation of Heisey’s tangible and intangible assets and liabilities, are as follows. SCHEDULE OF BUSINESS ACQUISITION OF TANGIBLE AND INTANGIBLE ASSETS AND LIABILITIES Preliminary Final Consideration Transferred: Cash $ 393,291 $ 393,291 Seller’s note 240,000 240,000 Financed amount 2,160,000 2,160,000 Total consideration transferred $ 2,793,291 $ 2,793,291 Purchase Price Allocation: Inventory 300,000 443,069 Contract assets 667,259 667,259 Machinery and equipment 1,625,000 1,625,000 Contract liabilities ( 216,469 ) ( 216,469 ) Accrued expenses ( 57,499 ) ( 57,499 ) Goodwill 475,000 331,931 Total consideration transferred $ 2,793,291 $ 2,793,291 The unaudited pro forma summary below presents the results of operations as if the Heisey acquisition occurred on October 1, 2022. Proforma adjustments for the twelve months ended September 30, 2023, includes $ 127,800 of depreciation expense from acquired fixed assets, $ 127,883 of interest expense on the debt used in the acquisition. The pro forma summary uses estimates and assumptions based on information available at the time. Management believes the estimates and assumptions to be reasonable; however, actual results may have differed significantly from this unaudited pro forma financial information. The unaudited pro forma information does not reflect any cost savings, operating synergies or revenue enhancements that might have been achieved from combining the operations. SCHEDULE OF PRO FORMA FINANCIAL INFORMATION Unaudited For the year ended September 30, 2023 Revenues $ 66,274,838 Net loss ( 9,173,748 ) On August 30, 2023, the Company acquired a mortgage in the amount of $ 1,200,000 from Fulton Bank to finance the purchase of the properties formerly owned by Heisey Mechanical Ltd. The mortgage carries interest at the Secured Overnight Financing Rate (SOFR) plus 2.8 % and matures on September 30, 2043. NOTE 23 – DISCONTINUED OPERATIONS On 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. Govil F- 39 Due 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. Based on sales projections for Cemtrex XR, Inc., the Company does not believe that it will exceed the sales levels required to exceed the $ 820,000 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 to $ 660,621 and during the years ended September 30, 2024, and 2023 the Company recognized $ 53,126 and $ 44,272 of royalties due, respectively, and will amortize the remaining amount over the period the royalties are due. Additionally, the Company received $ 76,000 in royalty payments. As of September 30, 2024, there was $ 685,788 in trade receivables due from CXR, Inc. Of these receivables $ 60,628 are related to costs paid by Cemtrex related to payroll during the transition of employees to the new company and some subscription services that are set up on auto pay with a credit card. $ 215,408 is related to the current amount of royalties due and the remaining $ 409,752 is related to services provided by Cemtrex Technologies Pvt. Ltd. in the normal course of business. These balances are presented on the Consolidated Balance Sheets under the caption “Trade receivables - related party”. The long-term balance of royalties of $ 456,611 is presented on the Company’s Consolidated Balance Sheets under the caption “Note receivable, net - related party”. During Fiscal year 2024, the Company recognized $ 665,520 of revenue from CXR, Inc. The following table summarizes the loss on the sale recorded during fiscal year 2023, included in Income/(loss) from discontinued operations, net of tax in the accompanying Consolidated Statement of Operations. SUMMARY OF LOSS ON SALE Purchase Price $ 745,621 Less cash and cash equivalents transferred ( 699,423 ) Less liabilities assumed ( 10,924 ) Net purchase price $ 35,274 Assets Sold Accounts receivable, net $ 625,638 Inventory, net 980,730 Prepaid expenses and other assets 502,577 Property and equipment, net 837,808 Goodwill 598,392 Total Assets Sold 3,545,145 Liabilities Transferred Accounts payable 370,774 Short-term liabilities 364,775 Long-term liabilities 318,981 Total Liabilities Transferred 1,054,530 Net assets sold $ 2,490,615 Pretax loss on sale of Cemtrex Advanced Technologies, Inc, and Cemtrex XR, Inc. $ ( 2,455,341 ) During the first quarter of fiscal 2023, Vicon completed the closure of its discontinued operating entity Vicon Systems, Ltd. located in Israel. The Company received funds related to benefit obligations of $ 96,095 , which at the time of operational closure were not guaranteed to be retrievable. The company paid $ 7,010 in consulting fees for assistance in retrieving these funds. The net amount of $ 89,085 is recognized on the Company’s Consolidated Income Statement as part of the Loss on Discontinued Operations. F- 40 Gain/(loss) from discontinued operations, net of tax and the loss on sale of discontinued operations, net of tax, of Cemtrex Advanced Technologies, Inc. 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 Consolidated Statements of Operations for the years ended September 30, 2024 and 2023, are as follows. SCHEDULE OF FINANCIAL STATEMENTS INCLUDED WITHIN DISCONTINUED OPERATIONS 2024 2023 Year ended September 30, 2024 2023 Total net sales $ - $ 649,061 Cost of sales - 57,429 Operating, selling, general and administrative expenses 681 1,104,506 Other (income)/expenses - 3,195 Income (loss) from discontinued operations ( 681 ) ( 516,069 ) Amortization of discounted royalties 53,126 44,272 Loss on sale of discontinued operations - ( 2,455,341 ) Adjustment of benefit obligation - 89,085 Income tax provision 9,321 - Discontinued operations, net of tax $ 43,124 $ ( 2,838,053 ) NOTE 24 – SUBSEQUENT EVENTS Cemtrex has evaluated subsequent events up to the date the consolidated financial statements were issued. The Company concluded that the following subsequent events have occurred and require recognition or disclosure in the consolidated financial statements. Preferred shares issued for dividend On October 7, 2024, the Company issued 123,167 shares of its Series 1 Preferred Stock to for dividends. The dividend was paid to shareholders of record as of September 30, 2024 . Common shares issued subsequent to financial statements date On various dates subsequent to September 30, 2024, 1,324,503 shares of common stock were issued to satisfy Series A Warrants with an aggregate strike price value of $ 9,998,205 and a fair market value of $ 21,515,777 . On various dates subsequent to September 30, 2024, 333,650 shares of common stock were issued to satisfy Series B Warrants with an aggregate strike price value of $ 1,050,597 and a fair market value of $ 1,095,731 . On various dates during November and December 2024, 51,833 shares of common stock were issued to make up for fractional shares from the November 26, 2024 reverse stock split. Strategic Investment On October 17, 2024, and November 18, 2024, the Company made an additional $ 50,000 investment, on each date 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. Common Stock Reverse Stock Split On October 2, 2024 and November 26, 2024, the Company completed a 60:1 and 35:1 , respectively, reverse stock split of its common stock. All share and per share data have been retroactively adjusted for the reverse splits. Issuance of Note payable On November 21, 2024, the Company issued a note payable to Streeterville Capital, LLC, in the amount of $ 580,000 . This note carries interest of 8 % and matures on May 21, 2026 . After deduction of an original issue discount of $ 75,000 and legal fees of $ 5,000 , the Company received $ 500,000 in cash. F- 41