What changed in this filing

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Item 1. Financial Statements

2025-02-14 compared with 2024-08-14 · 603 added, 901 removed, 440 unchanged (77% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

September 30,

Current assets

Cash and cash

Cash and cash equivalents

Restricted cash

Trade receivables, net

- related party

Trade receivables, net - related party

Trade receivables, net

1 unchanged sentence

Contract assets, net

expenses and other current assets

Prepaid expenses and other current assets

Total current assets

2 unchanged sentences

Royalties receivable, net - related party

Note receivable, net - related party

& Stockholders’ Equity

Liabilities & Stockholders’ Equity

Current liabilities

Accounts payable

Accounts payable - related

Accounts payable

Sales tax payable

Revolving line of credit

Current maturities of long-term

Operating lease liabilities

Current maturities of long-term liabilities

Operating lease liabilities - short-term

Deposits from customers

Accrued expenses

Accrued payable on inventory in transit

Contract liabilities

Deferred revenue

Accrued income taxes

Total current liabilities

1 unchanged sentence

Long-term debt

Long-term operating lease

Long-term operating lease liabilities

Other long-term liabilities

Deferred Revenue - long-term

long-term liabilities

Warrant liabilities

Total long-term liabilities

Total liabilities

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 June 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)

Series C, 100,000 shares authorized, 50,000

shares issued and outstanding at June 30, 2024 and September 30, 2023

Preferred stock , $ 0.001 par value, 10,000,000 shares authorized,

Series 1, 3,000,000 shares authorized, 2,579,994 shares issued and

2,515,894 shares outstanding as of December 31, 2024 and 2,456,827 shares issued and

2,392,727 shares outstanding as of September 30, 2024 (liquidation value of $ 10 per share)

Series C, 100,000 shares authorized, 50,000 shares issued and outstanding at

December 31, 2024 and September 30, 2024

Preferred stock value

Common stock, $ 0.001 par value, 50,000,000

shares authorized, 16,352,270 shares issued and outstanding at June 30, 2024 and 1,045,783 shares issued and outstanding at September

Common stock, $ 0.001 par value, 70,000,000 shares authorized,

1,784,575 shares issued and outstanding at December 31, 2024 and

14,176 shares issued and outstanding at September 30, 2024

Common stock, $0.001 par value, 70,000,000 shares authorized, 1,784,585 shares issued and outstanding

at December 31, 2024 and 14,176 shares issued and outstanding at September 30, 2024

Additional paid-in capital

2 unchanged sentences

( 71,355,386 )

Treasury stock, 64,100 shares of Series 1

Preferred Stock at June 30, 2024, and September 30, 2023

other comprehensive income

Cemtrex stockholders’ equity

Non-controlling

liabilities and stockholders’ equity

Treasury stock, 64,100 shares of Series 1 Preferred Stock at December 31, 2024,

and September 30, 2024

Treasury stock, 64,100 shares of Series 1 Preferred Stock at December 31, 2024, and September 30,

Accumulated other comprehensive income

Total Cemtrex stockholders’ equity

( 1,559,534 )

Non-controlling interest

Total liabilities and stockholders’ equity

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

1 unchanged sentence

Consolidated Statements of Operations

the three months ended

the nine months ended

December 31, 2024

December 31, 2023

For the three months ended

December 31, 2024

December 31, 2023

Cost of revenues

1 unchanged sentence

General and administrative

and development

operating expenses

(loss)/income

( 3,179,516 )

( 4,950,029 )

Research and development

Total operating expenses

Operating loss

( 2,281,436 )

Other (expense)/income

Other (expense)/income,

Other income, net

Interest expense

( 1,254,185 )

( 1,697,803 )

( 3,717,557 )

Loss on excess fair value

Loss on exercise of warrant liabilities

( 15,796,105 )

Changes in fair value of warrant liability

( 10,020,212 )

in fair value of warrant liability

Total other expense, net

( 26,265,257 )

( 1,219,533 )

( 6,855,804 )

( 3,323,484 )

Net loss before income

( 9,082,009 )

( 1,165,759 )

( 11,805,833 )

( 4,816,273 )

Loss from Continuing

( 9,149,303 )

( 1,185,400 )

( 12,043,882 )

( 4,835,914 )

(Loss)/income from discontinued

operations, net of tax

( 3,212,108 )

Net loss before income taxes

( 28,546,693 )

( 1,243,644 )

Income tax expense

Loss from Continuing operations

( 28,667,231 )

( 1,314,395 )

noncontrolling interest

loss attributable to Cemtrex, Inc.

(Loss)/income from discontinued operations, net of tax

( 28,934,519 )

( 1,303,903 )

Less net loss in noncontrolling interest

Net loss attributable to Cemtrex, Inc.

$ ( 28,754,367 )

1 unchanged sentence

(Loss)/income per share - Basic & Diluted

Weighted Average Number of Shares-Basic

Consolidated Statements of Comprehensive Loss

the three months ended

the nine months ended

comprehensive loss

$ ( 9,139,319 )

$ ( 1,172,119 )

$ ( 12,012,943 )

$ ( 8,048,022 )

currency translation gain/(loss)

Comprehensive

( 8,950,828 )

Continuing Operations

$ ( 2,440.85 )

Discontinued Operations

Weighted Average Number of Shares-Basic & Diluted

Consolidated Statements of Comprehensive Loss

December 31, 2024

December 31, 2023

For the three months ended

December 31, 2024

December 31, 2023

Other comprehensive loss

$ ( 28,934,519 )

$ ( 1,303,903 )

Comprehensive

loss attributable to noncontrolling interest

Comprehensive

loss attributable to Cemtrex, Inc.

Foreign currency translation (loss)/gain

Comprehensive loss

( 29,065,958 )

( 1,076,139 )

Comprehensive loss attributable to noncontrolling interest

Comprehensive loss attributable to Cemtrex, Inc.

$ ( 28,885,806 )

3 unchanged sentences

Consolidated Statement of Stockholders’ Equity

1 Preferred Stock

Stock Series 1

Stock Series C

Preferred Stock Series 1

Preferred Stock Series C

Common Stock Par

Treasury Stock, 64,100 shares of

Par Value $0.001

Comprehensive

Stockholders’

1 Preferred Stock

at September 30, 2023

$ ( 64,125,895 )

$ ( 148,291 )

currency translation gain

paid in Series 1 preferred shares

attributable to noncontrolling interest

issued to pay for services

( 1,207,494 )

at December 31, 2023

$ ( 65,333,389 )

$ ( 148,291 )

currency translation loss

of treasury stock

attributable to noncontrolling interest

( 1,473,211 )

at March 31, 2024

$ ( 66,806,600 )

$ ( 217,996 )

currency translation loss

paid in Series 1 preferred shares

Issuance of common stock

Exercise of prefunded

Exercise of Series

of treasury stock

attributable to noncontrolling interest

issued to pay for services

( 8,981,026 )

at June 30, 2024

$ ( 75,787,626 )

Balance at September 30, 2024

Foreign currency translation loss

Share-based compensation

Dividends paid in Series 1 preferred shares

Exercise of Series A warrants

Exercise of Series B warrants

Income/(loss) attributable to noncontrolling interest

Balance at December 31, 2024

( 100,109,753

2 unchanged sentences

Consolidated Statement of Stockholders’ Equity (Continued)

Stock Series 1

Stock Series C

Preferred Stock Series 1

Preferred Stock Series C

Common Stock Par

Par Value $0.001

64,100 shares of

Series 1 Preferred Stock

Comprehensive

Stockholders’

1 Preferred Stock

at September 30, 2022

$ ( 54,929,020 )

$ ( 148,291 )

currency translation gain

issued to pay notes payable

paid in Series 1 preferred shares

attributable to noncontrolling interest

( 6,277,211 )

at December 31, 2022

$ ( 61,206,231 )

$ ( 148,291 )

currency translation loss

$ ( 317,218 )

rounding shares issued for reverse stock split

attributable to noncontrolling interest

issued to pay for services

at March 31, 2023

$ ( 61,801,025 )

$ ( 148,291 )

$ ( 61,801,025 )

$ ( 148,291 )

currency translation gain/(loss)

paid in Series 1 preferred shares

issued to pay notes payable

Income/(loss)

attributable to noncontrolling interest

issued to pay for services

( 1,146,524 )

at June 30, 2023

$ ( 62,947,549 )

$ ( 148,291 )

$ ( 62,947,549 )

$ ( 148,291 )

Balance at September 30, 2023

Foreign currency translation gain

Share-based compensation

Shares issued to pay notes payable

Dividends paid in Series 1 preferred shares

Income/(loss) attributable to noncontrolling interest

Balance at December 31, 2023

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

1 unchanged sentence

Consolidated Statements of Cash Flows

Flows from Operating Activities

the nine months ended

Flows from Operating Activities

For the three months

ended December 31,

Cash Flows from Operating Activities

$ ( 28,934,519 )

$ ( 1,303,903 )

Adjustments to reconcile net loss to net cash

used by operating activities

Adjustments to reconcile net loss to net cash used by operating activities

Depreciation and amortization

(Gain)/loss on disposal of property

and equipment

Loss on disposal of property and equipment

Noncash lease expense

Bad debt expense

Bad debt (recovery)/expense

Contract modification - related party

Share-based compensation

Interest expense paid in

equity shares

Accounts payable paid in

equity shares

Accrued interest on notes

Shares issued to pay for services

Accrued interest on notes payable

Non-cash royalty income

Amortization of original

issue discounts on notes payable

Amortization of loan origination

Loss on excess fair value

Changes in fair value of

warrant liability

( 2,807,890 )

Amortization of original issue discounts on notes payable

Loan origination costs

Loss on exercise of warrant liabilities

Changes in fair value of warrant liability

Changes in operating assets and liabilities net of effects from acquisition

1 unchanged sentence

Trade receivables

Trade receivables - related party

( 4,126,906 )

Trade receivables - related

Contract assets

Prepaid expenses and other

current assets

Prepaid expenses and other current assets

Accounts payable

( 1,051,056 )

Accounts payable - related

( 2,072,392 )

Accounts payable - related party

Sales tax payable

5 unchanged sentences

Income taxes payable

Net cash used by operating

activities - continuing operations

( 2,076,477 )

( 5,394,048 )

cash provided by operating activities - discontinued operations

cash used by operating activities

Other liabilities

Net cash used by operating activities

( 1,201,817 )

( 3,139,073 )

Cash Flows from Investing

Cash Flows from Investing Activities

Purchase of property and equipment

1 unchanged sentence

Royalties on related party revenues

Proceeds from sale of marketable securities

Investment in MasterpieceVR

cash used by investing activities

Cash Flows from Financing

Net cash used by investing activities

( 1,008,899 )

Cash Flows from Financing Activities

Proceeds on revolving line of credit

1 unchanged sentence

( 6,053,954 )

Payments on debt

( 8,371,144 )

Payments on debt

( 2,304,903 )

1 unchanged sentence

Proceeds on bank loans

Purchases of treasury stock

Proceeds from offerings

Expenses on offerings

cash provided by/(used by) financing activities

( 1,280,991 )

Proceeds from notes payable

Proceeds from warrant exercises

Net cash provided by financing activities

Effect of currency translation

Net increase/(decrease) in cash, cash equivalents,

and restricted cash

Net decrease in cash, cash equivalents, and restricted cash

( 2,531,284 )

Cash, cash equivalents,

and restricted cash at beginning of period

cash equivalents, and restricted cash at end of period

Cash, cash equivalents, and restricted cash at beginning of period

Cash, cash equivalents, and restricted cash at end of period

Balance Sheet Accounts Included in Cash, Cash Equivalents, and Restricted Cash

Cash and cash equivalents

Restricted cash

Total cash, cash equivalents, and restricted cash

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

1 unchanged sentence

Consolidated Statements of Cash Flows (Continued)

Sheet Accounts Included in Cash, Cash Equivalents, and Restricted Cash

Cash and cash equivalents

cash, cash equivalents, and restricted cash

Supplemental Disclosure of Cash Flow Information:

2 unchanged sentences

Supplemental Schedule of Non-Cash Investing and Financing Activities

Shares issued to pay notes payable

Shares issued to pay for services

Financing of fixed asset purchase

Purchase of property and equipment through vendor financing

Investment in right of use asset

Series A Warrant Exercises

Noncash recognition of new leases

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

9 unchanged sentences

also reports unallocated corporate expenses.

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

(“Vicon”), which provides

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

Vicon’s products

include browser-based video monitoring systems and analytics-based recognition systems, cameras, servers, and access control systems

for every aspect of security and surveillance in industrial and commercial facilities, federal prisons, hospitals, universities, schools,

and federal and state government offices.

Vicon provides innovative, mission critical security and video surveillance solutions utilizing

Artificial Intelligence (AI) based data algorithms.

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

(“Vicon”), which provides end-to-end

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

Vicon’s products include browser-based

video monitoring systems and analytics-based recognition systems, cameras, servers, and access control systems for every aspect of security

and surveillance in industrial and commercial facilities, federal prisons, hospitals, universities, schools, and federal and state government

Vicon provides innovative, mission critical security and video surveillance solutions utilizing Artificial Intelligence (AI)

based data algorithms.

Industrial Services segment operates under the brand, Advanced Industrial Services (“AIS”), which offers single-source expertise

7 unchanged sentences

maintenance, specialty welding services, and high-quality scaffolding.

of Heisey Mechanical

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, for $ 2,400,000

plus adjustments for the outstanding contract assets and liabilities of $ 393,291 .

The real estate of the business was purchased at fair

market value on August 30, 2023, for $ 1,500,000 in a separate transaction.

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.

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

consideration transferred allocation of Heisey’s tangible and intangible assets and liabilities, are as follows:

SCHEDULE OF BUSINESS ACQUISITION OF TANGIBLE AND INTANGIBLE ASSETS AND LIABILITIES

Consideration

consideration transferred

Price Allocation:

and equipment

consideration transferred

pro forma summary below presents the results of operations as if the Heisey acquisition occurred on October 1, 2022.

Proforma adjustments

for the three months ended June 30, 2023, includes $ 63,900 of depreciation expense from acquired fixed assets, $ 31,500 of interest expense

on the debt used in the acquisition, and $ 20,739 of income tax benefit.

Proforma adjustments for the nine months ended June 30, 2023,

includes $ 191,700 of depreciation expense from acquired fixed assets, $ 97,359 of interest expense on the debt used in the acquisition,

and $ 13,694 of income tax expense.

The pro forma summary uses estimates and assumptions based on information available at the time.

believes the estimates and assumptions to be reasonable; however, actual results may have differed significantly from this pro forma

financial information.

The pro forma information does not reflect any cost savings, operating synergies or revenue enhancements that

might have been achieved from combining the operations.

The unaudited pro forma summary is provided for illustrative purposes only and

does not purport to represent the Company’s actual consolidated results of operations had the acquisition been completed as of

the date presented, nor should it be considered indicative of the Company’s future consolidated results of operations.

SCHEDULE OF PRO FORMA FINANCIAL INFORMATION

for the three months ended

for the six months ended

( 1,463,553 )

( 7,855,584 )

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 .

Stock Reverse Stock Split

October 2, 2024, the Company completed a 60:1 reverse stock split on its common stock, and on November 26, 2024, the Company completed

a 35:1 reverse stock split on its common stock.

All share and per share data have been retroactively adjusted for the reverse splits.

Notices for Listing Deficiencies

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.

has announced a special meeting of Series 1 Preferred Stock shareholders was scheduled for December 26, 2023, to approve the reverse

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.

January 5, 2024, and January 12, 2024, the Company bought back an aggregate of 71,951 shares 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

The Company’s Series 1 Preferred Stock was delisted from the NASDAQ Capital Market on January 22, 2024.

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.

June 14, 2024, the Company received a notification letter from the Listing Qualifications Department of Nasdaq notifying the Company

3 unchanged sentences

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.

2024 Equity Financing

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.

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

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

approximately $ 10,035,293 , before deducting underwriting discounts and other issuance expenses of $ 995,333 recorded under the caption “ Other(expense)/income, net ” on the Company’s Condensed Consolidated Statements of Operations.

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.

2024 Warrants

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.

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 cashless 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.

As such, upon issuance, the total fair value of the Series A Warrants was $ 11,242,940 , which was based on 40,588,230 common shares issuable

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 $ 3,093,960 .

The total fair value of the Warrants upon issuance

was $ 17,279,611 .

Given that the gross proceeds received of $ 10,024,083 was less than the total fair value of the liability classified

Warrants, the Company recorded a loss on excess fair value of $ 7,255,527 at issuance.

does not regain compliance with the Minimum Bid Price Requirement by December 11, 2024.

On December 11, 2024, we received a notification

letter from the Nasdaq notifying us that we have regained compliance with the Minimum Bid Requirement.

Reverse Stock Split would potentially increase our bid price such that we maintain the Minimum Bid Requirement required for maintaining

the listing requirements for the Nasdaq Capital Market.

Although we currently meet the Nasdaq Minimum Bid Requirement, out of abundance

of caution, we believe that a future reverse split may be necessary in the future if we were to fall short of the Minimum Bid Price Requirement.

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”).

October 23, 2024, the Company received a letter from Nasdaq that it had been granted an extension to February 17, 2025, to regain compliance

with the Minimum Stockholder’s Equity Requirement.

January 2, 2025, the Company received a letter from Nasdaq notifying the Company that based on the Company’s Form 10-K filed on

December 30, 2024, evidencing stockholders’ equity of $ 4,710,677 , Nasdaq has determined that the Company complies with the Minimum

Stockholder’s Equity Requirement and this matter is now closed.

Concern Considerations

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

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

The going concern basis of presentation

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

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

Pursuant to the requirements of the

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

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

accompanying unaudited condensed consolidated financial statements of the Company have been prepared assuming the Company will continue

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

The going concern

basis of presentation assumes that the Company will continue in operation one year after the date these financial statements are issued

and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

Pursuant to the

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

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

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

7 unchanged sentences

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

Company has incurred substantial losses of $ 9,196,875

and $ 13,020,958 for fiscal

years 2023 and 2022, respectively, and has losses on continuing operations for the nine months ending June 30, 2024, of $ 12,043,882

and has current liabilities of $ 14,004,886

and working capital of $ 12,400,461 along

with negative operating cash flows of $ 2,076,477 that raise substantial doubt with respect to the Company’s ability to

continue as a going concern.

Company’s working capital may not be sufficient to cover operating costs which indicates a substantial doubt regarding the Company’s

ability to continue as a going concern, the Company has historically, from time to time, satisfied and may continue to satisfy certain

short-term liabilities through the issuance of common stock, thus reducing our cash requirement to meet our operating needs.

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

Additionally, the Company has (i) secured a line

of credit for its Vicon brand to fund operations, which as of June 30, 2024, has available capacity of $2,269,675, (ii) continually reevaluated

its pricing model on our Vicon brand to improve margins on those products, (iii) entered into a Standstill Agreement with Streeterville

Capital, LLC (“Streeterville”) in which Streeterville agreed not to seek to redeem any portion of its two outstanding notes

with the Company for a period of one year expiring on April 30, 2025 in exchange, the Company agreed to pay to Streeterville the greater

of $4,000,000 or fifty percent (50%) of the net proceeds the Company receives from the sale of any of its common stock or preferred stock

during the Standstill Period.

To date, the Company has paid Streeterville $4,588,897 under this agreement.

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

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.

As of June 30, 2024, the Company may not have adequate cash or available liquidity/available capacity on our lines

of credit to meet our operational needs.

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

Company has incurred substantial operational losses of $ 5,269,745

and $ 1,511,508

for fiscal years 2024 and 2023, respectively, and an operational loss of $ 2,281,438

for the three months ended December 31, 2024.

Additionally, the Company has debt obligations over the next fiscal year of $ 10,842,321

and working capital of $ 4,130,393 ,

that raise substantial doubt with respect to the Company’s ability to continue as a going concern.

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 $ 4,224,130 in cash as of December 31,

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

has available capacity of $ 903,102 , (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 up to $ 10 million when the Series B warrants are exercised, and (iv) on October 2, 2024, and November 26,2024 has effected

a 60:1 and a 35:1 reverse stock split, respectively, on our common stock to remain trading on the Nasdaq Capital Markets, and improve

our ability to potentially raise capital through equity offerings that we may use to satisfy debt.

In the event additional capital is

raised through equity offerings and/or debt is satisfied with equity, it may have a dilutive effect on our existing stockholders.

the Company believes these plans 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.

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.

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

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

Reclassifications

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 “Accrued expenses” a portion of which

has been reclassified to “Accrued payable on inventory in transit” on the condensed consolidated balance sheet The following

table illustrates the reclassifications made.

OF CONDENSED CONSOLIDATED BALANCE SHEETS RECLASSIFICATIONS

CONSOLIDATED BALANCE SHEETS

previously reported

Reclassification

September 30, 2024

CONSOLIDATED BALANCE SHEETS

previously reported

Reclassification

$ ( 640,450 )

payable on inventory in transit

2 – INTERIM STATEMENT PRESENTATION

21 unchanged sentences

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

Reclassifications

prior year amounts have been reclassified for consistency with the current year presentation.

These reclassifications had no effect on

the reported results of operations.

An adjustment has been made to the Condensed Consolidated Balance Sheet for September 30, 2023 and

the Condensed Consolidated Statements of Cash Flows for the nine months ended June 30, 2023.

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 Condensed

Consolidated Statements of Cash Flows.

of an Immaterial Error in Previously Issued Financial Statements

to the issuance of our financial statements for the quarter ended June 30, 2023, an immaterial error was identified and has been corrected

in our historical information related to the calculation of earnings per share.

The original calculation did not take into account the

fair value of the Series 1 Preferred Stock dividends declared during the period.

effects of the correction to the individual effected line items in our Consolidated Statement of Operations are as follows:

SCHEDULE OF ERROR CORRECTIONS AND PRIOR PERIOD ADJUSTMENTS

the three months ended June 30, 2023

previously reported

per share - Basic & Diluted

the six months ended June 30, 2023

previously reported

per share - Basic & Diluted

Accounting Policies

2 of the Notes to Consolidated Financial Statements, included in the annual report on Form 10-K for the year ended September 30, 2024,

includes a summary of the significant accounting policies used in the preparation of the condensed consolidated financial statements.

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.

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

Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss in the Company’s condensed

consolidated statements of operations.

includes a summary of the significant accounting policies used in the preparation of the unaudited condensed consolidated financial statements.

Adopted Accounting Pronouncements

June 2016, the FASB issued Accounting Standards Update No.

2016-13, Financial Instruments – Credit Losses (Topic 326):

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.

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 condensed consolidated financial statements.

following table illustrates the effect of implementation of Update 2016-13 on the current expected credit losses

for the following line items on the condensed consolidated balance sheet:

OF EFFECT IMPLEMENTATION ON CONDENSED CONSOLIDATED BALANCE SHEET

1, 2023 As reported under ASC 326

30, 2023 Pre-ASC 326 Adoption

of ASC 326 Adoption

Trade receivables,

Contract assets, net

Royalties receivable, net

- related party

Note receivable, net -

related party

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.

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 June 30, 2024.

following table illustrates the current expected credit losses activity for the nine months ended June 30, 2024:

OF EXPECTED CREDIT LOSSES ACTIVITY

For the nine months ended

Trade receivables,

Trade receivables, net

- related party

Trade receivables, net

Contract assets, net

Royalties receivable, net

- related party

Note receivable, net -

related party

Issued Accounting Pronouncements Not Yet Effective

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.

On October 1, 2024, the Company implemented

this standard and there has been no material change to the unaudited condensed consolidated financial statements.

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

12 unchanged sentences

after December 15, 2023, with early adoption permitted.

The Company is currently evaluating the impact of this ASU on the condensed consolidated

financial statements.

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 condensed consolidated financial statements.

On October 1, 2024, the Company implemented this standard and there has been

no material change to the unaudited condensed consolidated financial statements.

Issued Accounting Pronouncements Not Yet Effective

December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

7 unchanged sentences

The Company is currently

in the process of evaluating the impact of adoption on the condensed consolidated financial statements.

in the process of evaluating the impact of adoption on the unaudited condensed consolidated financial statements.

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 unaudited

condensed consolidated financial statements.

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.

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 unaudited condensed consolidated

financial statements.

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

effect on the accompanying condensed consolidated financial statements.

3 – DISCONTINUED OPERATIONS

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

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

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

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

on sales projections for Cemtrex XR, Inc., the Company does not believe that it will exceed the sales levels required to exceed the $ 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 and has recognized $ 13,282 , and $ 14,724 during the three-month periods ended June 30, 2024,

and 2023, respectively, and $ 39,845 , and $ 33,875 , during the nine-month periods ended June 30, 2024, and 2023, respectively, and will

amortize the remaining amount over the period the royalties are due.

following table summarizes the loss on the sale recorded during the three months ended December 31, 2022, included in Income/(loss) from

discontinued operations, net of tax in the accompanying condensed consolidated statement of operations:

OF LOSS ON SALE INCLUDED IN INCOME/(LOSS) FROM DISCONTINUED OPERATIONS

Purchase Price

Less cash and cash equivalents transferred

Less liabilities assumed

Net purchase price

Accounts receivable, net

Inventory, net

Prepaid expenses and other

Property and equipment,

Total Assets Sold

Liabilities Transferred

Accounts payable

Short-term liabilities

Total Liabilities Transferred

Net assets sold

Pretax loss on sale

of Cemtrex Advanced Technologies, Inc, and Cemtrex XR, Inc.

$ ( 2,455,341 )

of June 30, 2024, and September 30, 2023, there were no assets or liabilities included within discontinued operations on the Company’s

Condensed Consolidated Balance Sheets.

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

Income/(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 Condensed Consolidated Statements of Operations for the three and nine month periods ended June 30, 2024

and 2023, are as follows:

SCHEDULE OF FINANCIAL STATEMENTS INCLUDED WITHIN DISCONTINUED OPERATIONS

Three months ended

Nine months ended

Total net sales

Cost of sales

Operating, selling, general and administrative

Other (income)/expenses

Income (loss) from discontinued operations

Amortization of discounted royalties

Loss on sale of discontinued operations

( 2,455,341 )

Adjustment of benefit obligation

Income tax provision

Discontinued operations,

$ ( 3,212,108 )

effect on the accompanying unaudited condensed consolidated financial statements.

following table illustrates the approximate disaggregation of the Company’s revenue based off timing of revenue recognition for

the three and nine months ended June 30, 2024 and 2023:

the three months ended December 31, 2024 and 2023:

OF DISAGGREGATION OF REVENUE RECOGNITION

the three months ended

the nine months ended

December 31, 2024

December 31, 2023

For the three months ended

December 31, 2024

December 31, 2023

Point-in-time

1 unchanged sentence

4 – LOSS PER COMMON SHARE

net income (loss) per common share is computed by dividing net income (loss) 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 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.

For the three and nine

months ended June 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:

net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during

Diluted net income per common share is computed by dividing net income 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.

For the three months ended December 31,

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 three months ended

For the six months ended

For the three months ended December 31,

Anti-dilutive shares

the three and nine months ended June 30, 2024 and 2023, loss per share basic and diluted for continuing operations are calculated as

the three months ended December 31, 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

For the three months

For the nine months

For the three months ended December 31,

Loss from Continuing operations

1 unchanged sentence

$ ( 1,314,395 )

$ ( 12,043,882 )

$ ( 4,835,914 )

Less (loss)/gain in noncontrolling interest

Less loss in noncontrolling interest

Preferred stock dividends

Net loss applicable

to common shareholders

( 9,043,525 )

Net loss applicable to common shareholders

( 28,487,079 )

( 1,217,986 )

Weighted Average Number of Shares-Basic & Diluted

Loss per share - Basic & Diluted - Continuing Operations

$ ( 2,440.85 )

Weighted Average Number of Shares-Basic

Loss per share - Basic & Diluted - Continuing

accordance with ASC 260-45-13, the common shares underlying the Series A Warrants under the alternative cashless exercise have been included

3 unchanged sentences

the Security segment and the Industrial Services segment.

The Chief Operating Decision Maker (“CODM”) for all segments is Saagar Govil, the CEO of the Company.

following tables summarize the Company’s reportable segment information and unallocated corporate expenses:

OF SEGMENT INFORMATION

months ended June 30, 2024

months ended June 30, 2023

general, and administrative

and amortization

and development

(loss)/income

$ ( 2,101,247 )

$ ( 1,585,878 )

$ ( 3,179,516 )

( 1,032,183 )

income/(expense)

$ ( 119,813 )

$ ( 5,732,430 )

$ ( 5,902,493 )

$ ( 282,857 )

$ ( 929,395 )

$ ( 1,219,533 )

months ended June 30, 2024

months ended June 30, 2023

and administrative

Industrial Services

For the three months ended December 31, 2024

For the three months ended December 31, 2023

Reportable Segments

Industrial Services

External revenues

Cost of revenues

Operating expenses

General, and administrative

and amortization

and development

(loss)/income

$ ( 3,632,172 )

$ ( 3,317,055 )

$ ( 4,950,029 )

$ ( 623,577 )

$ ( 2,878,413 )

$ ( 1,492,789 )

income/(expense)

$ ( 392,707 )

$ ( 236,683 )

$ ( 6,226,414 )

$ ( 6,855,804 )

$ ( 3,196,712 )

$ ( 3,323,484 )

Depreciation and amortization

Research and development

Operating (loss)/income

Other expense

September 30,

Identifiable Assets

Industrial Services

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, and interest expense on notes payable.

to audit and taxes, legal expenses related to corporate matters, interest expense on notes payable, and Series A and B Warrants transaction

6 – RESTRICTED CASH

3 unchanged sentences

with the plan.

These funds, as required by the plan are restricted in nature and amounted to $ 1,052,028 at June 30, 2024, and $ 919,652

These funds, as required by the plan are restricted in nature and amounted to $ 1,055,100 at December 31, 2024, and $ 1,030,606

at September 30, 2024.

The Company has $ 100,000 in restricted cash held in escrow related to projects that are still bonded through Heisey

as of June 30, 2024.

Additionally, there was $ 100,000 of restricted cash in escrow per the purchase agreement with Heisey Mechanical,

Ltd, as of December 31, 2024 and September 30, 2024, an additional $ 22,349 and $ 325,340 in escrow related to bond requirements on certain

public projects as of December 31, 2024, and September 30, 2024, respectively, and $ 62,675 and $ 66,935 in deposit guarantees as of December

31, 2024, and September 30, 2024, respectively.

7 – FAIR VALUE MEASUREMENTS

23 unchanged sentences

to continue as a going concern.

Company’s fair value liabilities at June 30, 2024, are as follows.

Company’s fair value liabilities at December 30, 2024 and September 30, 2024, are as follows.

OF FAIR VALUE OF LIABILITIES

Quoted Prices

December 31,,

Identical Assets

Warrant liabilities

September 30, 2023, the Company had no fair value liabilities.

summary of the warrant liabilities activity for the nine months ended June 30, 2024, is as follows:

SCHEDULE OF THE WARRANT LIABILITIES ACTIVITY

Quoted Prices

September 30,

Identical Assets

Warrant liabilities

summary of the warrant liabilities activity for the three months ended December 31, 2024, is as follows:

SCHEDULE OF WARRANT LIABILITIES ACTIVITY

Series A Warrants

Series B Warrants

Warrant Liabilities at September 30, 2024

4 unchanged sentences

Fair market revaluation

( 2,221,206 )

( 2,807,890 )

Warrant Liabilities at June 30, 2024

Warrant Liabilities at December 31, 2024

For the three months ended December

31, 2024, the company recognized losses on changes in fair value of warrant liability of $ 10,020,212 which represents the change in the

fair value of the of the warrants unexercised at the measurement period.

For the three months ended December 31, 2024, the company recognized losses on exercise of warrant liabilities of

$ 15,796,105 which represents the difference between the fair value of the shares issued and the fair value of the warrants exercised.

8 – TRADE RECEIVABLES, NET

3 unchanged sentences

Trade receivables

Allowance for credit

Accounts receivables,

Allowance for credit losses

receivables, net, total

receivables include amounts due for shipped products and services rendered.

2 unchanged sentences

expenses and other current assets consist of the following:

OF PREPAID EXPENSES AND OTHER CURRENT ASSETS

SUMMARY OF PREPAID EXPENSES AND OTHER CURRENT ASSETS

December 31, 2024

September 30, 2024

Prepaid expenses

2 unchanged sentences

Short-term investments

Loan origination costs

Prepaid income taxes

VAT and GST tax receivable

expenses and other current assets total

Prepaid expenses and other current assets total

10 – INVENTORY, NET

net consisted of the following:

OF INVENTORY, NET

SCHEDULE OF INVENTORY, NET

September 30,

2 unchanged sentences

Finished goods

Company maintained an allowance for obsolete inventories of $ 501,836 and $ 618,021 at June 30, 2024 and September 30, 2023, respectively.

Inventory, net

Company maintained an allowance for obsolete inventories of $ 1,016,347 and $ 1,044,530 at December 31, 2024 and September 30, 2024, respectively.

11 – PROPERTY AND EQUIPMENT

and equipment are summarized as follows:

OF PROPERTY AND EQUIPMENT

SUMMARY OF PROPERTY AND EQUIPMENT

September 30,

7 unchanged sentences

( 11,712,280 )

Property and equipment,

expense for the three and nine months ended June 30, 2024 and 2023, was $ 325,451 and $ 998,641 , and $ 249,881 and $ 698,269 , respectively

and is recorded in cost of revenues and general and administrative expenses on the Company’s condensed consolidated statements

of operations.

Property and equipment, net

expense for the three months ended December 31, 2024 and 2023, was $ 337,259 and $ 368,301 , respectively and is recorded in cost of revenues

and general and administrative expenses on the Company’s unaudited condensed consolidated statements of operations.

12 – GOODWILL

in the carrying amount of goodwill, by segment, are as follows:

OF GOODWILL BY SEGMENT

SCHEDULE OF GOODWILL BY SEGMENT

Industrial Services

Balance at September 30, 2024

Purchase price allocation adjustment

Balance at June 30, 2024

of June 30, 2024, and September 30, 2023, accumulated impairment losses of $ 3,316,000 related to the Security segment have been recorded.

Impairment /adjustments

Balance at December 31, 2024

of December 31, 2024, and September 30, 2024, accumulated impairment losses of $ 3,846,475 , have been recorded related to the Security

13 – OTHER ASSETS

November 13, 2020, Cemtrex made a $ 500,000 investment, on January 19, 2022, made an additional $ 500,000 investment, and on July 18, 2023,

and October 5, 2023, made an additional $ 100,000 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.

MasterpieceVR is a software company that is developing software for content creation

using virtual reality.

The investment is recorded at cost and is included in other assets in the accompanying Condensed consolidated

balance sheets.

No impairment has been recorded for the three and nine months ended June 30, 2024.

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

three months ended December 31, 2024 and 2023.

assets consisted of the following:

OF OTHER ASSETS

SCHEDULE OF OTHER ASSETS

December 31, 2024

September 30, 2024

Rental deposits

1 unchanged sentence

Other deposits

Demonstration equipment

supplied to resellers

Demonstration equipment supplied to resellers

Other assets total

14 – ACCRUED EXPENSES

expenses consisted of the following:

OF ACCRUED EXPENSES

SCHEDULE OF ACCRUED EXPENSES

December 31, 2024

September 30, 2024

Accrued expenses

Accrued payable on inventory in transit

Accrued payroll

Accrued warranty

expenses total

Accrued expenses total

15 – DEFERRED REVENUE

Company’s deferred revenue as of and for the three and nine months ended June 30, 2024, and 2023, were as follows:

OF DEFERRED REVENUE

Company’s deferred revenue as of and for the three months ended December 31, 2024, and 2023, were as follows:

SCHEDULE OF DEFERRED REVENUE

For the three months ended

For the nine months ended

Deferred revenue at beginning of

December 31, 2024

December 31, 2023

Deferred revenue at beginning of period

Net additions:

1 unchanged sentence

Recognized as revenue:

software revenues

( 1,066,753 )

( 2,044,584 )

( 2,184,458 )

Deferred revenue at

end of period

Deferred software revenues

Deferred revenue at end of period

current portion

Long-term deferred revenue

at end of period

the three and nine months ended June 30, 2024 and 2023, the Company recognized revenue of $ 571,660 , and $ 1,364,475 , and $ 4 42,040 and

$ 1 , 040,221 , respectively, that was previously included in the beginning balance of deferred revenues.

Long-term deferred revenue at end of period

the three months ended December 31, 2024 and 2023, the Company recognized revenue of $ 501,666 , and $ 608,843 , respectively, that was previously

included in the beginning balance of deferred revenues.

16 – CONTRACT ASSETS AND LIABILITIES

7 unchanged sentences

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 condensed consolidated 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 condensed consolidated 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

asset in the unaudited condensed consolidated 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 unaudited condensed consolidated 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.

following is a summary of the Company’s uncompleted contracts:

OF CONTRACT ASSETS AND LIABILITIES

December 31, 2024

September 30, 2024

Costs incurred on uncompleted contracts

Estimated gross profit

Applicable billings

Applicable billings to date

( 14,266,356 )

( 16,000,023 )

(billings in excess of costs)/earnings in excess of billings, Ending balance

Net earnings in excess of billings / (billing in excess of costs)

$ ( 268,997 )

the three and nine months ended June 30, 2024 and 2023, the Company recognized revenue of $ 18,625 and $ 0 , and $ 905,319 and $ 369,835 ,

respectively, that was previously included in the beginning balance of contract liabilities.

following table summarizes the net activity of the contract assets and contract liabilities for the three- and six-month periods ended

June 30, 2024 and 2023.

the three months ended December 31, 2024 and 2023, the Company recognized revenue of $ 760,431 and $ 791,161 , respectively, that was previously

included in the beginning balance of contract liabilities.

following table summarizes the net activity of the contract assets and contract liabilities for the three- period ended December 31 2024

OF CONTRACT ASSETS AND CONTACT LIABILITIES

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

For the three months ended

For the nine months ended

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

December 31, 2024

December 31, 2023

For three months ended

December 31, 2024

December 31, 2023

Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts

6 unchanged sentences

$ ( 980,319 )

$ ( 369,890 )

Changes in revenue billed, contract price or cost estimates

2 unchanged sentences

$ ( 988,725 )

$ ( 1,901,606 )

$ ( 738,962 )

Net Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts

2 unchanged sentences

Changes in revenue billed, contract price or cost estimates

$ ( 1,545,428 )

Net billings in excess of costs, ending balance

$ ( 786,546 )

$ ( 172,447 )

$ ( 786,546 )

$ ( 172,447 )

17 – RELATED PARTY TRANSACTIONS

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

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

On July 31, 2022, the Company negotiated

a payment agreement surrounding the sale of Griffin Filters, LLC, and other liabilities due to the Company totaling $ 761,585 .

This agreement

is in the form of a secured promissory note earning interest at a rate of 5 % per annum and matures on July 31, 2024 .

As of June 30, 2024,

the principle amount of $ 761,585 and $ 74,776 of accrued interest has been recorded as an allowance for expected credit loss against this note.

of June 30, 2024, and September 30, 2023, there was $ 3,797 and $ 3,806 in payables due to Ducon Technologies, Pvt Ltd., which is also

owned by Aron Govil, respectively.

of June 30, 2024, and September 30, 2023, there was $ 0

and $ 637,208

in receivables due from Ducon Technologies, Pvt Ltd., respectively.

During the three months ended June 30, 2024, the Company recorded an allowance for

expected credit loss of $ 635,803 on the receivables due from Ducon Technologies, Pvt Ltd.

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

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

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

Cemtrex XR, Inc.

was purchased for $ 890,000 comprised of $ 75,000 in cash 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, Mr.

Govil shall be obligated to pay the difference between $820,000 and the royalties paid.

Cemtrex Advanced Technologies, Inc.

was purchased for $10,000 in cash, 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.

Subsequent to the sale of Cemtrex Advanced Technologies, Inc.

the business has ceased operations.

The Company has recognized no gain in relation to the 5 % royalties.

the three and nine months ended June 30, 2024, the Company wrote off $ 94,027 in trade receivables, related party and $ 59,703 in trade

payables, related party related to the Cemtrex Advanced Technologies, Inc.

successor company, SmartDesk, Inc.

of June 30, 2024, there was $ 755,198 in trade receivables due from the Cemtrex XR successor company, CXR, Inc.

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.

January 6, 2025, the Company and Saagar Govil signed an agreement to revise the purchase price structure and payment terms.

Agreement’s Purchase Price provisions was amended to reflect that the Purchase Price will solely consist of the royalties based on the

actual revenues generated in the three years following closing.

The provision requiring the total sum of royalties to reach a minimum

of $ 820,000 , with any shortfall to be paid by Purchaser, was removed from the Agreement.

Additionally,

it was agreed that the payment terms due under the royalties shall be as follows commencing on January 1, 2025:

Year (January 2025) Monthly Payment:

Year (January 2026) Monthly Payment:

Payment at the end of the Second Year (December 31, 2026):

Total outstanding royalties

transaction was approved by the Board of Directors with Saagar Govil abstaining from the vote.

of December 31, 2024, management had been engaged in negotiations with Mr.

Govil regarding the amendment to the contract, as both parties

sought to modify the agreement as stated above.

Based on the status of negotiations at year-end and the high likelihood that the modification

would be finalized, management determined that it was appropriate to remove the previously recognized royalty receivable of $ 280,545

from the financial statements as of December 31, 2024.

of December 31, 2024, there were royalties receivable from the sale of Cemtrex, XR, Inc.

of $ 404,756 , of which $ 120,000 is considered

short-term and is presented on the Company’s unaudited Condensed Consolidated Balance Sheet under the caption “Trade receivables,

net – related party.

The Company has taken a $ 10,000 allowance for expected credit losses against these royalties.

of December 31, 2024, there was $ 524,838 in trade receivables due from the Cemtrex XR successor company, CXR, Inc.

Of these receivables

are related to costs paid by Cemtrex related to payroll during the transition of employees to the new company and subscription services

that are set up on auto pay with a credit card.

$ 235,408 is the remaining balance on the first-year royalties on CXR, Inc.’s revenues.

$ 60,628 are related to costs paid by Cemtrex related to payroll during the transition of employees to the new company and subscription

services that are set up on auto pay with a credit card.

$ 120,000 is the short-term due on the royalties on CXR, Inc.’s revenues.

The remaining $ 344,210 is related to services provided by Cemtrex Technologies Pvt.

in the normal course of business.

of June 30, 2024, there were royalties receivable from the sale of Cemtrex, XR, Inc.

of $ 688,738 , of which $ 235,408 is considered short-term

and is presented on the Company’s Condensed Consolidated Balance Sheet under the caption “Trade receivables, net –

related party”.

On April 13, 2024, the Company and CXR, Inc.

agreed to structured payments on the first-year royalties with full

payment being made by December 31, 2024.

The Company has taken a $ 10,000 allowance for expected credit losses against these royalties.

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

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The weighted average remaining term of our operating leases was

approximately 3.16 years at June 30, 2024, and 3 years at September 30, 2023.

The weighted average discount rate used to measure lease

liabilities was approximately 6.54 % at June 30, 2024, and 5.66 % at September 30, 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.

approximately 3.30 years at December 31, 2024, and 3.30 years at September 30, 2024.

The weighted average discount rate used to measure

lease liabilities was approximately 6.22 % at December 31, 2024, and 6.54 % at September 30, 2024.

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.

Company has elected not to recognize lease assets and liabilities for leases with a term of 12 months or less.

1 unchanged sentence

rent of $ 600 per month.

Short-term rent expense was $ 5,400 for the nine months ended June 30, 2024, and $ 2,400 for the nine months ended

June 30, 2023.

Company’s security segment leases approximately 1,037 square feet of office space in Clovis, CA on a month-to-month lease at a

rent of $ 5,487 per month.

Short-term rent expense was $ 43,941 for the nine months ended June 30, 2024.

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

30, 2024, is set forth below:

Short-term rent expense was $ 1,800 for the three months ended December 31, 2024, and 2023.

Company’s security segment leases approximately 705 square feet of office space in Clovis, CA on a month-to-month lease at a rent

of $ 4,202 per month.

Short-term rent expense was $ 12,606 for the three months ended December 31, 2024 and $ 5,550 for the three months

ended December 31, 2023.

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

at December 31, 2024, is set forth below:

OF RECONCILIATION OF UNDISCOUNTED CASH FLOWS TO OPERATING LEASE LIABILITIES

Years ending September 30,

Operating Leases

Undiscounted lease payments

representing interest

lease payments

short-term operating lease liabilities

operating lease liabilities

costs for the three and nine months ended June 30, 2024, and 2023 are set forth below:

Amount representing interest

Discounted lease payments

Less short-term operating lease liabilities

Long-term operating lease liabilities

costs for the three months ended December 31, 2024, and 2023 are set forth below:

OF LEASE COSTS

For the three months ended

For the nine months ended

Operating lease costs

Operating lease

Short-term lease costs

Total lease cost

19 – LINES OF CREDIT AND LONG-TERM LIABILITIES

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by the value of the eligible assets.

As of June 30, 2024, the Company had enough eligible assets to access the full credit line.

Company was in compliance with all loan covenants as of June 30, 2024.

The funds were used to pay the NIL Funding term loan and will

fund operations of the Vicon entity.

As of June 30, 2024, this loan had a balance of $ 2,730,325 , with $ 18,133 of unamortized loan origination

fees, which is included in “Prepaid expenses” on the accompanying Condensed Consolidated Balance Sheet.

There were $ 2,269,675

in available funds as of June 30, 2024.

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.

As of December 31, 2024, the Company had enough eligible assets to access the full credit line.

The Company was in compliance with all loan covenants as of December 31, 2024.

As of December 31, 2024, and September 30, 2024, this

loan had a balance of $ 4,096,898 , and $ 3,125,011 , respectively.

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.

the Company has paid Streeterville $ 4,588,897 under this agreement.

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.

During fiscal year 2024, the Company has paid Streeterville $ 4,588,897 under this agreement.

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.

As of December 31, 2024, this note had unamortized original issue discount balance of $ 70,833 .

following table outlines the Company’s secured liabilities:

OF LINES OF CREDIT AND LIABILITIES

Fulton Bank - $360,000 fund equipment

The Company was in compliance with loan covenants as of June 30, 2024.

OF LINES OF CREDIT AND AND LONG TERM LIABILITIES

September 30,

Interest Rate

Fulton Bank - $ 360,000 fund equipment for AIS.The Company was in compliance with loan covenants as of December 31, 2024.

This loan is secured by certain assets of the Company.

SOFR plus 2.37% (7.7% as of June 30, 2024 and 7.68%

as of September 30, 2023).

Fulton Bank - $ 360,000 fund equipment

The Company was in compliance with loan covenants as of June 30, 2024.

SOFR plus 2.37 % ( 6.86 % as of December 31, 2024 and 7.33 % as of September 30, 2024).

Fulton Bank - $ 312,000 fund equipment for AIS.The Company was in compliance with loan covenants as of December 31, 2024.

This loan is secured by certain assets of the Company.

SOFR plus 2.37 % ( 7.7 % as of June 30, 2024 and 7.68 %

as of September 30, 2023).

SOFR plus 2.37 % ( 6.86 % as of December 31, 2024 and 7.33 % as of September 30, 2024).

Fulton Bank mortgage $ 2,476,000 .

was in compliance with loan covenants as of June 30, 2024.

The Company was in compliance with loan covenants as of December 31, 2024.

This loan is secured by the underlying asset.

SOFR plus 2.62 % ( 7.95 % on June 30, 2024 and

( 7.93 % on September 30, 2023).

Fulton Bank (HEISEY) - $ 1,200,000 mortgage

requires monthly principal and interest payments through August 1, 2043 with a final payment of remaining principal on September

The loan is collateralized by 615 Florence Street and 740 Barber Street and guaranteed by AIS and Cemtrex.

SOFR plus 2.80 % per annum ( 8.13 % as of June 30, 2024 and 8.11 % as of

September 30, 2023).

SOFR plus 2.62 % ( 7.11 % on December 31, 2024 and 7.58 % on September 30, 2024).

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 ( 7.29 % as of December 31, 2024 and 7.76 % as of September 30, 2024).

Fulton Bank (HEISEY) - $ 2,160,000 .

note related to purchase of Heisey;

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;

The note is collateralized by the Heisey assets and guaranteed by the Parent;

matures in 2030.

SOFR plus 2.80 % per annum ( 8.13 % as of June 30, 2024 and 8.11 % as of

September 30, 2023).

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 June

30, 2024 and September 30, 2023.

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 June 30, 2024 and September 30, 2023.

Note Payable - $ 240,000 For the purchase of

Heisey Mechanical, Ltd.

Term Loan Agreement with NIL Funding Corporation

(“NIL”) - $ 5,600,000 The Company was in compliance with loan covenants as of September 30, 2023.

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.

Software License Agreement - $ 1,125,000 , for

the purchase of software source code for use in our Security segment products

HDFC Bank Auto Loan

- $ 28,331 , for the purchase of automobile at India office.

Monthly payments of ₹ 65,179 ($ 781.93 as translated as of June 30,

Automobile is collateral for this loan.

This loan was paid off prior to the maturity date.

SOFR plus 2.80 % per annum ( 7.29 % as of December 31, 2024 and 7.76 % as of September 30, 2024).

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 December 31, 2024 and September 30, 2024.

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 December 31, 2024 and September 30, 2024.

Note payable - $ 580,000 .Less original issue discount$ 75,000 and legal fees$ 5,000 ,net cash received $ 500,000 .Unamortized original issue discount balance of $ 70,833 as of December 31, 2024.

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.

Current maturities

( 6,745,423 )

( 4,732,377 )

Unamortized original issue discount

Long-term debt

20 – STOCKHOLDERS’ EQUITY

6 unchanged sentences

Act became effective 90 days after filing of the Form 25.

the nine months ended June 30, 2024, 235,762 shares of Series 1 Preferred Stock were issued to pay dividends to holders of Series 1 Preferred

the nine months ended June 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.

of June 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

the three months ended December 31, 2024, 123,167 shares of Series 1 Preferred Stock were issued to pay dividends to holders of Series

1 Preferred Stock.

of December 31, 2024, and September 30, 2024, there were 2,579,994 and 2,456,827 shares of Series 1 Preferred Stock issued and 2,515,894

and 2,392,727 shares of Series 1 Preferred Stock outstanding, respectively.

the nine months ended June 30, 2024, 33,189 shares of the Company’s common stock have been issued in exchange for services valued

at $ 129,000 .

the nine months ended June 30, 2023, 11,764,705

shares of common stock were issued for the exercise of 11,210,000 prefunded warrants and 554,705

shares of common stock as part of the May 2024 Equity Financing described below.

the nine months ended June 30, 2024, 3,508,593 shares of common stock were issued for the exercise of 1,169,531 Series A Warrants under

the Alternative Cashless Exercise option.

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.

the three months ended December 31, 2024, 1,436,749 shares of common stock were issued for the exercise of 3,946,790 Series A Warrants

under the Alternative Cashless Exercise option as adjusted for reverse stock splits and exercise price adjustments.

the three months ended December 31, 2024, 330,650 shares of common stock were issued for the exercise of 330,650 Series B Warrants.

2024 Equity Financing

16 unchanged sentences

representing up to 15 % of the Series B Warrants sold in the Offering to cover over-allotments, if any.

The Offering closed on

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 $ 1,133,166 .

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.

The Offering closed on May 3,

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 $ 1,133,166 .

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.

2024 Warrants

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.

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 amount of shares issued in a cashless 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.

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 $ 3,093,960 .

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 amount of shares issued in a cashless 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.

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 $ 3,093,960 .

The total fair value of the Warrants upon issuance was $ 17,279,611 .

Given that the gross proceeds received of $ 10,024,083

was less than the total fair value of the liability classified Warrants, the Company recorded a loss on excess fair value of $ 7,255,527

following table summarizes information about shares issuable under warrants outstanding as of June 30, 2024.

that the gross proceeds received of $ 10,024,083 was less than the total fair value of the liability classified Warrants, the Company

recorded a loss on excess fair value of $ 7,255,527 at issuance.

following table summarizes information about shares issuable under warrants outstanding as of December 31, 2024.

SHARES ISSUABLE UNDER WARRANTS OUTSTANDING

Shares Outstanding

Average Exercise Price

Average Remaining Contractual Term (in years)

Warrant Shares Outstanding

Weighted Average Exercise Price

Weighted Average Remaining Contractual Term (in years)

Outstanding at September 30, 2023

4 unchanged sentences

Warrants cancelled

Outstanding at June 30, 2024

Exercisable at June 30, 2024

Outstanding at September 30, 2024

Warrants granted

Warrants exercised

( 1,770,399 )

Warrants forfeited

Warrants cancelled

Exercise price adjustments

( 44,371,916 )

Outstanding at December 31, 2024

October 2, 2024, the Company completed a 60 for 1 reverse stock split.

At the time, the Company had 12,059,879 Series A Warrants and

13,529,410 Series B Warrants outstanding at an exercise price of $ 0.85 .

According to the terms of the Series A and Series B warrants,

in the event of a reverse stock split, the exercise price resets to the lowest VWAP during the period commencing five (5) consecutive

trading days immediately preceding and the five (5) consecutive trading days commencing on the reverse stock split effective date and

the number of warrants are adjusted as to keep the aggregate value of the warrants then outstanding remains unchanged.

On October 7,

2024, it was determined that the exercise price has reset to $ 0.7488 .

following table illustrates the adjustment.

OF WARRANTS ADJUSTMENT

Warrants outstanding

Aggregate Value

Adjusted number of warrants outstanding

Series A Warrants

Series B Warrants

November 26, 2024, the Company completed a 35

for 1 reverse stock split.

At the time, the Company had 1,201,932

Series A Warrants and 15,444,550

Series B Warrants outstanding at an exercise price of $ 0.7488 .

According to the terms of the Series A and Series B warrants, in the event of a reverse stock split, the exercise price resets to

the lowest VWAP during the period commencing five (5) consecutive trading days immediately preceding and the five (5) consecutive

trading days commencing on the reverse stock split effective date and the number of warrants are adjusted as to keep the aggregate

value of the warrants then outstanding remains unchanged.

On December 2, 2024, it was determined that the exercise price has reset

to $ 3.1488 .

following table illustrates the adjustment.

Warrants outstanding

Aggregate Value

Adjusted number of warrants outstanding

Series A Warrants

Series B Warrants

21 – SHARE-BASED COMPENSATION

the three and nine months ended June 30, 2024, and 2023, the Company recognized $ 7,559 and $ 22,675 and $ 26,736 and $ 93,313 of share-based

compensation expense on its outstanding options, respectively.

As of June 30, 2024, $ 40,630 of unrecognized share-based compensation

expense is expected to be recognized over a period of two years.

Future compensation amounts will be adjusted for any change in estimated

the nine months ended June 30, 2024, no options were granted, cancelled, or forfeited.

the three months ended December 31, 2024, and 2023, the Company recognized $ 4,807 and $ 7,557 of share-based compensation expense on its

outstanding options, respectively.

As of December 31, 2024, $ 29,983 of unrecognized share-based compensation expense is expected to be

recognized over a period of two years.

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

the three months ended December 31, 2024, no options were granted, cancelled, or forfeited.

22 – COMMITMENTS AND CONTINGENCIES

3 unchanged sentences

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 condensed

consolidated financial statements.

and insurance coverage, the Corporation does not expect that such legal proceedings will have a material adverse impact on its unaudited

condensed consolidated financial statements.

23 – INCOME TAXES

Company recorded an income tax expense of approximately $ 120,538 and $ 70,751 from continuing operations for the three months ending December

31, 2024, and 2023, respectively.

Thes taxes are related to our international operations and state taxes of certain subsidiaries.

of year-end 2024, the Company had federal, state, and UK net operating losses (“NOL”) of approximately $ 71.7 million, $ 5.2

million, and $ 1.7 million respectively.

The Company has pre 2018 TCJA NOLs and post 2017 TCJA NOLs.

Pre 2018 NOLs will expire in 20 years

with the first amount expiring in 2030 and the post 2017 NOLs can be carried forward indefinitely.

Generally, state NOLs have different

NOL carryforward rules, with some pre-2018 NOLs being able to be carried forward indefinitely.

The first amount of state NOLs begin to

expire in 2038.

In accordance with Section 382 of the U.S.

Internal Revenue Code, the usage of the Company’s NOL carryforwards

is subject to annual limitations following greater than 50% ownership changes.

Tax returns for the years ended 2021 through 2024 are

subject to review by tax authorities.

Company’s effective tax rate for the three months ended December 31, 2024, and 2023, was ( .42 %) and ( 5.69 %) respectively.

24 – SUBSEQUENT EVENTS

August 2, 2024, we filed a Certificate of Amendment to our Certificate of Incorporation with the Secretary of State of Delaware to increase

our authorized shares of common stock from 50,000,000 shares to 70,000,000 shares, par value $ 0.001 per share.

July 22, 2024, the Board of Directors of the Company approved, and the holders of an excess of a majority of the outstanding shares of

our classes of voting stock of the Company have executed a written consent in lieu of a special meeting approving a Certificate of Amendment

to our Certificate of Incorporation to authorize a reverse split of our outstanding shares of common stock, par value $ 0.001 per share,

with a split ratio of between 1 for 10 and 1 for 20 , which will be determined by the Board of Directors at any time or times for a period

of 12 months after the date of the written consent.

Pursuant to Rule 14c-2 under the Exchange Act, this corporate action will not be

effected until at least twenty (20) calendar days after the mailing of the Information Statement to our stockholders.

following table, which is for illustrative purposes only, illustrates the effects of Reverse Split at certain exchange ratios within

the foregoing range, without giving effect to any adjustments for fractional shares of common stock, on our outstanding shares of common

stock and authorized shares of capital stock as of the Balance Sheet date.

SHARES OF COMMON STOCK AND AUTHORIZED SHARES OF CAPITAL STOCK

Reverse Split

Reverse Stock Split

Common Stock Authorized (1)

Preferred Stock Authorized

Common Stock Issued and Outstanding

Common Stock Underlying Options and Warrants

Common Stock Available for Grant under 2020

Equity Compensation Plan

(1) Considers

the increase in authorized shares which became effective on August 2, 2024.

July 11, 22, and 23, 2024, the Company issued an aggregate of 900,000 shares of common stock to satisfy the exercise of 300,000 Series

A Warrants under the alternative cashless exercise.

August 8, 2024, the Company issued 185,186 shares of common stock in exchange for services rendered.

Modification and Removal of Minimum Royalty Guarantee

January 6, 2025, the Company and Saagar Govil signed an agreement to revise the purchase price structure and payment terms.

Agreement’s Purchase Price provisions was amended to reflect that the Purchase Price will solely consist of the royalties based on the

actual revenues generated in the three years following closing.

The provision requiring the total sum of royalties to reach a minimum

of $ 820,000 , with any shortfall to be paid by Purchaser, was removed from the Agreement due to a downward net working capital adjustment

related to the transaction.

Additionally,

it was agreed that the payment terms due under the royalties shall be as follows commencing on January 1, 2025:

Year (Jan 2025) Monthly Payment:

Year (Jan 2026) Monthly Payment:

Payment at the end of the Second Year (12/31/26):

Total outstanding royalties

transaction was approved by the Board of Directors with Saagar Govil abstaining from the vote.

of December 31, 2024, management had been engaged in negotiations with Mr.

Govil regarding the amendment to the contract, as both parties

sought to modify the agreement as stated above.

Based on the status of negotiations at year-end and the high likelihood that the modification

would be finalized, management determined that it was appropriate to remove the previously recognized royalty receivable of $ 280,545

from the financial statements as of December 31, 2024.

adjustment reflects additional information about conditions that existed at the balance sheet date and was accounted for as a recognized

subsequent event in accordance with ASC 855, Subsequent Events.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements