UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

~~[X]~~

~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934~~

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934

For the quarterly period ended March 31, ~~2020~~2021

~~[ ]~~

~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934~~

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934

For the transition period from ___________to ____________

Commission File Number001-37464

CEMTREX, INC.

(Exact name of registrant as specified in its charter)

Delaware

30-0399914

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

276 Greenpoint Ave, Suite 208, Brooklyn, NY		11222
(Address of principal executive offices)		(Zip Code)

~~631-756-9116~~

~~(Registrant’s telephone number, including area code)~~

631-756-9116

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol	Name of each exchange on which registered
Common Stock	CETX	Nasdaq Capital Market
Series 1 Preferred Stock	CETXP	Nasdaq Capital Market
Series 1 Warrants	CETXW	Nasdaq Capital Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

[X]

Yes

[ ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

[X]

Yes

[ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

	Large accelerated filer [ ]		Accelerated filer [ ]
	Non-accelerated filer [X]		Smaller reporting company [X]
			Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

[ ]

Yes

[X]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

As of ~~May 11, 2020,~~June 18, 2021, the issuer had ~~9,807,410~~18,711,463 shares of common stock issued and outstanding.

Table of Contents

CEMTREX, INC. AND SUBSIDIARIES

INDEX

		Page

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets as of March 31, ~~2020~~2021 (Unaudited) and September 30, ~~2019 (Unaudited)~~2020 (Restated)	3

	Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss) for the three ~~and six~~ months ended March 31, ~~2020~~2021 (Unaudited) and March 31, ~~2019 (Unaudited)~~2020 (Restated)	4

	Consolidated Statement of Stockholders’ Equity for the ~~six~~three months ended March 31, ~~2020~~2021 (Unaudited)/(Restated)	5

	Consolidated Statement of Stockholders’ Equity for the ~~six~~three months ended March 31, ~~2019~~2020 (Unaudited)/(Restated)	6

	Condensed Consolidated Statements of Cash Flow for the ~~six~~three months ended March 31, ~~2020~~2021 (Unaudited) and March 31, ~~2019 (Unaudited)~~2020 (Restated)	7

	Notes to Unaudited Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2023

Item 4.	Controls and Procedures	2428

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	2529

Item 1A	Risk Factors	2529

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2529

Item 6.	Exhibits	2530

SIGNATURES		2632

Part I. Financial Information

Item 1. Financial Statements

Cemtrex, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

~~(Unaudited)~~


	March 31,			September 30,			(UNAUDITED)			(Restated)
	2020			2019			March 31,			September 30,
Assets							2021			2020
Current assets
Cash and equivalents	$	2,809,591		$	1,769,994		$	15,573,734		$	19,490,061
Restricted cash		1,254,353			1,088,091			1,706,926			1,582,798
Short-term investments		14,439			412,730			522,612			887,746
Accounts receivables, net		6,527,413			6,458,984
Accounts receivables - related party		227,109			227,019
Notes receivable - short-term		1,713,371			1,713,371
Trade receivables, net								5,403,292			6,686,797
Trade receivables - related party								1,498,776			1,432,209
Inventory –net of allowance for inventory obsolescence		5,646,435			5,207,155			7,358,808			6,793,806
Prepaid expenses and other assets		1,979,774			2,000,265			1,820,031			1,188,317
Total current assets		20,172,485			18,877,609			33,884,179			38,061,734

Property and equipment, net		19,688,546			16,776,552			7,335,201			6,961,751
Right-of-use assets		1,023,234			-			2,862,154			2,728,380
Assets held for sale								8,323,321			8,323,321
Goodwill		4,370,894			4,370,894			5,886,096			4,370,894
Notes receivable - long-term		1,586,918			1,586,918
Deferred tax asset		2,098,711			2,282,867
Other		1,332,418			497,857			1,074,861			744,207
Total Assets	$	50,273,206		$	44,392,697		$	59,365,812		$	61,190,287

Liabilities & Stockholders’ Equity
Liabilities & Stockholders’ Equity (Deficit)
Current liabilities
Accounts payable	$	3,183,746		$	4,236,945		$	2,314,545		$	2,857,817
Short-term liabilities		5,160,060			6,817,534			6,595,935			7,034,510
Lease liabilities - short-term		317,004			22,718			764,108			721,036
Deposits from customers		42,240			33,074			96,468			29,660
Accrued expenses		2,589,424			2,673,646			2,676,724			2,392,487
Deferred revenue		1,717,590			1,433,803			1,473,041			1,651,784
Accrued income taxes		337,848			419,541			553			89,318
Total current liabilities		13,347,912			15,637,261			13,921,374			14,776,612

Long-term liabilities
Loans payable to bank, net of current portion		2,086,158			2,240,526
Long-term lease liabilities, net of current portion		737,629			20,061
Notes payable, net of current portion		5,086,255			2,817,661
Mortgage payable, net of current portion		2,380,781			-
Loans payable to bank								1,323,989			1,871,201
Long-term lease liabilities								2,106,545			2,027,406
Notes payable								3,154,743			6,029,999
Mortgage payable								2,306,834			2,355,542
Other long-term liabilities		1,131,428			1,221,549			1,075,171			1,063,733
Series 1 preferred stock dividends payable		1,026,900			-
Paycheck Protection Program Loans								5,406,477			2,169,437
Deferred Revenue - long-term		432,920			489,535			784,667			467,329
Total long-term liabilities		12,882,071			6,789,332			16,158,426			15,984,647

Total liabilities		26,229,983			22,426,593			30,079,800			30,761,259

Commitments and contingencies		-			-			-			-

Stockholders’ equity
Preferred stock , $0.001 par value, 10,000,000 shares authorized,
Series 1, 4,000,000 shares authorized, 2,216,683 shares issued and outstanding as of March 31, 2020 and 2,110,718 shares issued and outstanding as of September 30, 2019 (liquidation value of $10 per share)		2,217			2,111
Series A, 1,000,000 shares authorized, issued and outstanding at March 31, 2020 and September 30, 2019		1,000			1,000
Series C, 100,000 shares authorized, issued and outstanding at March 31, 2020		100			-
Common stock, $0.001 par value, 20,000,000 shares authorized, 7,939,628 shares issued and outstanding at March 31, 2020 and 3,962,790 shares issued and outstanding at September 30, 2019		7,940			3,963
Shareholders’ equity
Preferred stock , $0.001 par value, 10,000,000 shares authorized,Series 1, 3,000,000 shares authorized, 1,795,004 shares issued and outstanding as of March 31, 2021 and 2,156,784 shares issued and outstanding as of September 30, 2020 (liquidation value of $10 per share)								1,795			2,157
Series A, 1,000,000 shares authorized, zero shares issued and outstanding at March 31, 2021 and 1,000,000 shares issued and outstanding at September 30, 2020 - 1,000 Series C, 100,000 shares authorized, 50,000 shares issued and outstanding at March 31, 2021 and 100,000 shares issued and outstanding at September 30, 2020								50			100
Common stock, $0.001 par value, 50,000,000 shares authorized, 18,711,463 shares issued and outstanding at March 31, 2021 and 17,622,539 shares issued and outstanding at September 30, 2020								18,711			17,623
Additional paid-in capital		46,895,763			40,344,837			58,320,570			60,221,766
Accumulated deficit		(24,357,704	)		(20,067,685	)
Retained earnings (accumulated deficit)								(31,758,563	)		(32,520,084	)
Treasury stock at cost		(190,483	)		-			(148,291	)		(148,291	)
Accumulated other comprehensive income (loss)		638,627			796,004			1,824,350			1,777,112
Cemtrex stockholders’ equity		22,997,460			21,080,230
Total Cemtrex stockholders’ equity								28,258,622			29,351,383
Non-controlling interest		1,045,763			885,874			1,027,390			1,077,645
Total liabilities and stockholders’ equity	$	50,273,206		$	44,392,697
Total liabilities and shareholders’ equity							$	59,365,812		$	61,190,287

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

Cemtrex, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss)

~~(Unaudited)~~

For the three months ended For the six months ended
March 31, 2021 March 31, 2020 March 31, 2021 March 31, 2020
Revenues 9,260,385 12,113,847 18,096,461 24,333,930
Cost of revenues 5,331,501 6,767,743 10,162,107 13,639,340
Gross profit 3,928,884 5,346,104 7,934,354 10,694,590

Operating expenses
General and administrative 5,249,985 5,458,071 10,667,181 10,032,481
Research and development 641,497 404,933 1,275,722 781,519
Total operating expenses 5,891,482 5,863,004 11,942,903 10,814,000
Operating income/(loss) (1,962,598 ) (516,900 ) (4,008,549 ) (119,410 )

Other income/(expense)
Other income/(expense) 1,679,944 447,792 2,630,932 672,117
Settlement Agreement - Related Party 3,674,165 - 3,674,165 -
Interest Expense (849,076 ) (1,348,298 ) (1,458,017 ) (1,830,820 )
Total other income/(expense), net 4,505,033 (900,506 ) 4,847,080 (1,158,703 )

Net loss before income taxes 2,542,435 (1,417,406 ) 838,531 (1,278,113 )
Income tax benefit/(expense) (98,477 ) (189,543 ) (127,431 ) (189,543 )
Net income/(loss) 2,443,958 (1,606,949 ) 711,100 (1,467,656 )

Less income in noncontrolling interest (10,174 ) (7,848 ) (50,421 ) 187,063
Net income/(loss) attributable to Cemtrex, Inc. shareholders $ 2,454,132 $ (1,599,101 ) $ 761,521 $ (1,654,719 )

Net income/(loss) $ 2,443,958 $ (1,606,949 ) $ 711,100 $ (1,467,656 )
Other comprehensive income/(loss)
Foreign currency translation gain/(loss) (87,972 ) (749,826 ) (40,491 ) (166,800 )
Defined benefit plan actuarial gain/(loss) 87,895 - 87,895 -
Comprehensive income/(loss) 2,443,881 (2,356,775 ) 758,504 (1,634,456 )

Less comprehensive income/(loss) attributable to noncontrolling interest 19,625 (897 ) 50,255 (214,237 )

Comprehensive income/(loss) attributable to Cemtrex, Inc. shareholders $ 2,424,256 $ (2,355,878 ) $ 708,249 $ (1,420,219 )

Income/(loss) Per Share-Basic $ 0.13 $ (0.26 ) $ 0.04 $ (0.31 )
Income/(loss) Per Share-Diluted $ 0.13 $ (0.26 ) $ 0.04 $ (0.31 )

Weighted Average Number of Shares-Basic 18,559,113 6,250,761 18,195,731 5,292,167
Weighted Average Number of Shares-Diluted 18,629,064 6,250,761 18,200,974 5,292,167

For the three months ended For the six months ended
March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019

Revenues $ 12,113,847 $ 11,725,407 $ 24,333,930 $ 17,442,996
Cost of revenues 6,767,743 6,918,609 13,639,340 10,448,612
Gross profit 5,346,104 4,806,798 10,694,590 6,994,384

Operating expenses
General and administrative 5,728,274 7,084,194 10,581,231 10,308,626
Research and development 404,933 471,611 781,519 851,128
Total operating expenses 6,133,207 7,555,805 11,362,750 11,159,754
Operating loss (787,103 ) (2,749,007 ) (668,160 ) (4,165,370 )

Other income (expense)
Other Income (expense) 447,792 5,990 672,117 (4,570 )
Loss on equity interests - - - (342,776 )
Interest expense (1,348,298 ) (516,746 ) (1,830,820 ) (632,012 )
Total other expense, net (900,506 ) (510,756 ) (1,158,703 ) (979,358 )

Net loss before income taxes (1,687,609 ) (3,259,763 ) (1,826,863 ) (5,144,728 )
Income tax benefit/(expense) (189,543 ) 1,173,461 (189,543 ) 1,173,509
Loss from continuing operations (1,877,152 ) (2,086,302 ) (2,016,406 ) (3,971,219 )

Loss from discontinued operations, net of tax - (253,720 ) - (545,103 )

Net loss (1,877,152 ) (2,340,022 ) (2,016,406 ) (4,516,322 )

Less noncontrolling interest (7,848 ) (356,155 ) 187,063 (356,155 )
Net loss (1,869,304 ) $ (1,983,867 ) $ (2,203,469 ) $ (4,160,167 )
Preferred dividends 1,026,900 - 2,086,550 957,780
Net loss available to Cemtrex, Inc. shareholders $ (2,896,204 ) $ (1,983,867 ) $ (4,290,019 ) $ (5,117,947 )

Other comprehensive loss
Foreign currency translation loss (740,403 ) (171,208 ) (157,377 ) (1,028,760 )
Other comprehensive income attribitable to noncontrolling interest (8,745 ) - (27,174 ) -
Comprehensive loss $ (749,148 ) $ (171,208 ) $ (184,551 ) $ (1,028,760 )

Comprehensive loss $ (3,645,352 ) $ (2,155,075 ) $ (4,474,570 ) $ (6,146,707 )

Loss Per Share-Basic
Continuing Operations (0.46 ) (1.12 ) (0.81 ) (2.68 )
Discontinued Operations - (0.14 ) - (0.32 )
Loss Per Share-Diluted
Continuing Operations $ (0.46 ) $ (1.12 ) $ (0.81 ) $ (2.68 )
Discontinued Operations $ - $ (0.14 ) $ - $ (0.32 )

Weighted Average Number of Shares-Basic 6,250,761 1,774,636 5,292,167 1,705,770
Weighted Average Number of Shares-Diluted 6,250,761 1,774,636 5,292,167 1,705,770
~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements~~
~~Cemtrex, Inc. and Subsidiaries~~
~~Condensed Consolidated Statement of Stockholders’ Equity~~
~~(Unaudited)~~

Preferred Stock
Series 1

Preferred Stock
Series A

Preferred Stock
Series C
Common Stock Retained Accumulated
Par Value $0.001 Par Value $0.001 Par Value $0.001 Par Value $0.01 Additional
Earnings
Treasury other Cemtrex Non-
Number of Number of Number of Number of Paid-in (Accumulated Stock, Comprehensive Stockholders’ controlling
Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit) At cost Income(loss) Equity interest
Balance at September 30, 2019 2,110,718 $ 2,111 1,000,000 $ 1,000 - $ - 3,962,790 $ 3,963 $ 40,344,837 $ (20,067,685 ) $ - $ 796,004 $      21,080,230 $ 885,874
Comprehensive income 564,597 564,597
Share-based compensation 100,000 100 119,004 119,104
Shares issued to pay accounts payable 18,358 18 27,565 27,583
Shares sold in Securities Purchase Agreements 338,393 338 359,712 360,050
Stock issued to pay notes payable 105,042 105 130,147 130,252
Dividends paid in Series 1 preferred shares 105,965 106 1,059,544 (1,059,650 ) -
Noncontrolling interest 18,429 18,429 176,482
Net loss (334,165 ) (334,165 )
Balance at December 31, 2019 2,216,683 $ 2,217 1,000,000 $ 1,000 100,000 $ 100 4,424,583 $ 4,424 $ 42,040,809 $ (21,461,500 ) $ - $ 1,379,030 $ 21,966,080 $ 1,062,356
Comprehensive income (749,148 ) (749,148 )
Share-based compensation 24,104 24,104
Shares sold in Securities Purchase Agreements 847,000 847 1,160,253 1,161,100
Stock issued to pay notes payable 2,518,045 2,519 3,499,747 3,502,266
Accrued dividends (1,026,900 ) (1,026,900 )
Shares issued for services 150,000 150 170,850 171,000
Purchase of treasury stock (190,483 ) (190,483 )
Noncontrolling interest 8,745 8,745 (16,593 )
Net loss (1,869,304 ) (1,869,304 )
Balance at March 31, 2020 2,216,683 $ 2,217   1,000,000 $ 1,000 100,000 $ 100   7,939,628 $ 7,940 $   46,895,763 $   (24,357,704 ) $   (190,483 ) $ 638,627 $ 22,997,460 $   1,045,763
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5 4
Cemtrex, Inc. and Subsidiaries
Condensed Consolidated Statement of Stockholders’ Equity
(Unaudited/Restated)
Preferred Stock
Series 1 Preferred Stock
Series A Preferred Stock
Series C Common Stock Par Retained Accumulated
Par Value $0.001 Par Value $0.001 Par Value $0.001 Value $0.01 Additional Earnings Treasury other Cemtrex Non-
Number of Number of Number of Number of Paid-in (Accumulated Stock, Comprehensive Stockholders’ controlling
Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit) At cost Income(loss) Equity interest
Balance at September 30, 2020, as reported     2,156,784 $ 2,157 1,000,000 $ 1,000     100,000 $ 100 17,622,539 $ 17,623 $ 63,313,336 $ (33,172,690 ) $ (148,291 ) $ 853,643 $ 28,269,693 $ 1,077,645
Adjustment (3,091,570 ) 652,606 923,469
Balance at September 30, 2020, as restated 2,156,784 $ 2,157 1,000,000 $ 1,000 100,000 $ 100 17,622,539 $ 17,623 $ 60,221,766 $ (32,520,084 ) $ (148,291 ) $ 1,777,112 $ 29,351,383 $ 1,077,645
Foreign currency translation gain/(loss) 37,864 37,864
Share-based compensation 16,071 16,071
Shares issued to pay notes payable 345,638 345 �� 407,507 407,852
Dividends paid in Series 1 preferred shares 108,169 108 (108 ) -
Net income/(loss) attributable to noncontrolling interest - (40,247 )
Comprehensive income/(loss) attributable to noncontrolling interest - 9,617
Net loss (1,692,611 ) (1,692,611 )
Balance at December 31, 2020 2,264,953 $ 2,265 1,000,000 $ 1,000 100,000 $ 100 17,968,177 $ 17,968 $ 60,645,236 $ (34,212,695 ) $ (148,291 ) $ 1,814,976 $ 28,120,559 $ 1,047,015
Foreign currency translation gain/(loss) (78,521 ) (78,521 )
Defined benefit plan actuarial gain/(loss) 87,895 87,895
Share-based compensation 49,246 49,246
Shares issued to pay notes payable 743,286 743 1,298,733 1,299,476
Income in noncontrolling interest (19,625 )
Shares and options surrendered in settelment agreement (469,949 ) (470 ) (1,000,000.00 ) (1,000 ) (50,000 ) (50 ) (3,672,645 ) (3,674,165 )
Net income 2,454,132 2,454,132
Balance at March 31, 2021 1,795,004 $ 1,795 - $ - 50,000 $ 50 18,711,463 $ 18,711 $ 58,320,570 $ (31,758,563 ) $ (148,291 ) $ 1,824,350 $ 28,258,622 $ 1,027,390
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
Cemtrex, Inc. and Subsidiaries
Condensed Consolidated Statement of Stockholders’ Equity (Continued)
~~(Unaudited)~~(Unaudited/Restated)

Preferred Stock
Series 1

Preferred Stock
Series A
Common Stock Retained Accumulated
Par Value $0.001 Par Value $0.001 Par Value $0.01 Additional Earnings other Cemtrex Non-
Number of Number of Number of Paid-in (Accumulated Comprehensive Stockholders’ controlling
Shares Amount Shares Amount Shares Amount Capital Deficit) Income(loss) Equity interest
Balance at September 30, 2018 1,914,168 $ 1,914 1,000,000 $ 1,000 1,621,719 $ 1,622 $ 31,496,671 $ 4,262,756 $ (483,297 ) $ 42,344,777 $           -
Foreign currency translations - - - - - - - - (857,552 ) (857,552 )
Share-based compensation - - - - - - 36,108 - - 36,108
Stock issued in Subscription Rights Offering - - - - 25,126 25 138,669 - - 138,694
Stock issued to pay notes payable - - - - 26,342 26 224,974 - - 225,000
Dividends paid in Series 1 preferred shares 95,778 96 - - - - 957,684 (957,780 ) - -
Net loss - - - - - - - (2,176,298 ) - (2,176,298 )
Balance at December 31, 2018 2,009,946 $ 2,010 1,000,000 $ 1,000 1,673,187 $ 1,673 $ 32,854,106 $ 1,128,678 $ (1,340,849 ) $ 32,646,618 $ -
Foreign currency translations - (171,208 ) (171,208 )
Share-based compensation - 36,108 36,108
Stock issued to pay notes payable 117,772 118 713,772 713,890
Shares issued in trust for ATM Offering 62,500 63 (63 ) -
Shares sold in ATM Offering - 203,679 203,679
Shares sold in Securities Purchase Agreement 2,500 3 129,508 129,511
Net loss - (1,983,867 ) (1,983,867 )
Balance at March 31, 2019   2,009,946 $ 2,010   1,000,000 $ 1,000   1,855,959 $ 1,857 $   33,937,110 $ (855,189 ) $ (1,512,057 ) $ 31,574,731 $    -
Preferred Stock Series 1 Preferred Stock Series A Preferred Stock Series C Common Stock Par
Par Value $0.001 Par Value $0.001 Par Value $0.001 Value $0.01
Retained Accumulated
Number Number Number Number Additional Earnings Treasury other Cemtrex Non-
of of of of Paid-in (Accumulated Stock, Comprehensive Stockholders’ controlling
Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit) At cost Income(loss) Equity interest
Balance at September 30, 2019 2,110,718 $ 2,111 1,000,000 $ 1,000 - $ - 3,962,790 $ 3,963 $ 39,339,862 $ (23,679,587 ) $ - $ 1,791,153 $ 17,458,502 $ 885,874
Foreign currency translation gain 582,156 582,156
Share-based compensation 100,000 100 119,004 119,104
Shares issued to pay accounts payable 18,358 18 27,520 27,538
Shares sold in Securities Purchase Agreements, net of offering costs 338,393 338 359,712 360,050
Stock issued to pay notes payable 105,042 105 130,147 130,252
Dividends paid in Series 1 preferred shares 105,965 106 (106 ) -
Net income/(loss) attributable to noncontrolling interest - 194,911
Comprehensive income/(loss) attributable to noncontrolling interest - (18,429 )
Net loss (55,618 ) (55,618 )
Balance at December 31, 2019 2,216,683 $ 2,217 1,000,000 $ 1,000 100,000 $ 100 4,424,583 $ 4,424 $ 39,976,139 $ (23,735,205 ) $ - $ 2,373,309 $ 18,621,984 $ 1,062,356

Foreign currency translation gain (748,929 ) (748,929 )
Share-based compensation 24,104 24,104
Shares sold in Securities Purchase Agreements, net of offering costs 847,000 847 1,160,253 1,161,100
Stock issued to pay notes payable 2,518,045 2,519 3,499,747 3,502,266
Shares issued for services 150,000 150 170,850 171,000
Purchase of treasury stock (190,483 ) (190,483 )
Noncontrolling interest - (16,593 )
Net loss (1,599,101 ) (1,599,101 )
Balance at March 31, 2020 2,216,683 $ 2,217 1,000,000 $ 1,000 100,000 $ 100 7,939,628 $ 7,940 $ 44,831,093 $ (25,334,306 ) $ (190,483 ) $ 1,624,380 $ 20,941,941 $ 1,045,763
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6

Cemtrex, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
~~(Unaudited)~~(Unaudited/Restated)

For the six months ended
March 31,
2020 2019
Cash Flows from Operating Activities

Net loss $ (2,016,406 ) $ (4,516,322 )
Net loss from discontinued operations - (545,103 )
Net loss from continuing operations (2,016,406 ) (3,971,219 )

Adjustments to reconcile net loss to net cash provided/(used) by operating activities:
Depreciation and amortization 1,427,718 2,470,169
Gain/(loss) on disposal of property & equipment 311 -
Amortization of right-of-use assets 281,758 -
Change in allowance for inventory obsolescence (19,569 ) -
Change in allowance for doubtful accounts (6,416 ) -
Share-based compensation 143,208 72,216
Interest expense paid in equity shares 1,004,518 163,890
Income tax benefit - -
Consolidation of equity interest - 1,356,495
Loss on equity interests - 342,776
Changes in operating assets and liabilities net of effects from acquisition of subsidiaries:
Accounts receivable (62,013 ) 1,855,606
Accounts receivable - related party (90 ) 215,220
Inventory (419,711 ) (1,393,477 )
Prepaid expenses and other curent asstets 20,491 (585,445 )
Other assets (834,561 ) (1,186,589 )
Other liabilities (90,121 ) 9,343
Accounts payable (854,616 ) 793,113
Deposits from customers 9,166 93,047
Accrued expenses 171,505 509,276
Deferred revenue 227,172 (287,021 )
Income taxes payable 102,463 (165,794 )
Net cash provided/(used) by operating activities - continuing operations (915,193 ) 291,606
Net cash provided by operating activities - discontinued operations - 2,391,479
Net cash provided/(used) by operating activities (915,193 ) 2,683,085

Cash Flows from Investing Activities
Net change in self-insured benefit deposits 166,262 (113,510 )
Purchase of property and equipment (4,340,023 ) (746,056 )
Proceeds from sale of marketable securities 398,291 -
Purchases of treasury stock (190,483 ) -
Net cash used by investing activities - continuing operations (3,965,953 ) (859,566 )
Net cash used by investing activities - discontinued operations - (119,482 )
Net cash used by investing activities (3,965,953 ) (979,048 )

Cash Flows from Financing Activities
Proceeds from notes payable 2,990,000 -
Payments on notes payable (676,640 ) (214,560 )
Proceeds on bank loans 2,476,000 -
Payments on bank loans (133,414 ) (615,858 )
Proceeds from securities purchase agreements 1,580,100 -
Expenses on securities purchase agreements (58,950 ) -
Proceeds from at-the-market offerings - 360,695
Expenses on at-the-market offerings - (18,323 )
Proceeds from the issuance of Series B Preferred Stock - 500,000
Expenses from the issuance of Series B Preferred Stock - (25,000 )
Revolving line of credit 387,598 1,387,344
Payments on lease liabilities (293,138 ) (11,246 )
Net cash provided by financing activities - continuing operations 6,271,556 1,363,052
Net cash used by financing activities - discontinued operations - (1,417,926 )
Net cash provided/(used) by financing activities 6,271,556 (54,874 )

Effect of currency translation (184,551 ) (1,028,760 )
Net increase in cash, cash equivalents, and restricted cash 1,390,410 1,649,163
Cash, cash equivalents, and restricted cash at beginning of period 2,858,085 2,315,935
Cash, cash equivalents, and restricted cash at end of period $ 4,063,944 $ 2,936,338

Balance Sheet Accounts Included in Cash, Cash Equivalents, and Restricted Cash
Cash and equivalents $ 2,809,591 $ 1,707,685
Restricted cash 1,254,353 1,228,653
Total cash, cash equivalents, and restricted cash $ 4,063,944 $ 2,936,338

Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 342,268 $ 611,444

Cash paid during the period for income taxes $ 188 $ 31,951

Supplemental Schedule of Non-Cash Investing and Financing Activities
Stock issued to pay for products and/or services $ 198,583 $ -
Stock issued to pay notes payable $ 3,632,518 $ 775,000
Dividends paid in equity shares $ 1,059,650 $ 957,780
Amortization of original issue discounts on notes payable $ 317,667 $ -
For the six months ended
March 31,

Cash Flows from Operating Activities 2021 2020
(unaudited) (restated)
Net income/(loss) $ 711,100 $ (1,467,656 )

Adjustments to reconcile net loss to net cash provided/(used) by operating activities:
Depreciation and amortization 680,004 888,391
Gain on disposal of property and equipment 9,219 311
Amortization of right-of-use assets 438,539 281,758
Change in allowance for inventory obsolescence (948,733 ) (19,569 )
Change in allowance for doubtful accounts (137,356 ) (6,416 )
Share-based compansation 65,318 143,208
Income tax expense/ (benefit) 127,431 189,543
Interest expense paid in equity shares 657,329 1,004,518
Accrued interest on notes payable 41,833 291,384
Amortization of original issue discounts on notes payable 475,000 317,667
Gain on marketable securities (1,869,338 ) (338,057 )
Settlement Agreement - Related Party (3,674,165 ) -

Changes in operating assets and liabilities net of effects from acquisition of subsidiaries:
Accounts receivable 1,420,861 (62,013 )
Accounts receivable - related party (71,581 ) (90 )
Inventory 383,731 (419,711 )
Prepaid expenses and other curent asstets (631,714 ) (297,176 )
Other assets 169,346 (834,561 )
Other liabilities 11,438 (90,121 )
Accounts payable (543,272 ) (854,616 )
Operating lease liabilities (450,102 ) (293,138 )
Deposits from customers 66,808 9,166
Accrued expenses 161,820 (143,160 )
Deferred revenue 138,595 227,172
Income taxes payable (88,765 ) 102,463
Net cash used by operating activities (2,856,654 ) (1,370,703 )

Cash Flows from Investing Activities
Purchase of property and equipment (944,601 ) (4,340,023 )
Investment in Virtual Driver Interactive (900,000 ) -
Investment in MasterpieceVR (500,000 ) -
Proceeds from sale of marketable securities 7,080,375 13,083,547
Purchase of marketable securities (4,845,903 ) (12,347,199 )
Purchases of treasury stock - (190,483 )
Note Receivable - Related party - -
Net cash used by investing activities (110,129 ) (3,794,158 )

Cash Flows from Financing Activities
Proceeds from notes payable - 2,990,000
Payments on notes payable (2,070,257 ) (676,640 )
Proceeds on bank loans - 2,476,000
Payments on bank loans (655,276 ) (133,414 )
Proceeds from Paycheck Protection Program Loans 1,970,785 -
Proceeds from securities purchase agreements - 1,580,100
Expenses on securities purchase agreements - (58,950 )
Revolving line of credit - 387,598
Net cash provided/(used) by financing activities (754,748 ) 6,564,694

Effect of currency translation (70,668 ) (193,974 )
Net increase in cash, cash equivalents, and restricted cash (3,721,531 ) 1,399,833
Cash, cash equivalents, and restricted cash at beginning of period 21,072,859 2,858,085
Cash, cash equivalents, and restricted cash at end of period 17,280,660 $ 4,063,944

Balance Sheet Accounts Included in Cash, Cash Equivalents, and Restricted Cash
Cash and equivalents $ 15,573,734 $ 2,809,591
Restricted cash 1,706,926 1,254,353
Total cash, cash equivalents, and restricted cash $ 17,280,660 $ 4,063,944

Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 283,855 $ 342,268

Cash paid during the period for income taxes $ 88,765 $ 188

Supplemental Schedule of Non-Cash Investing and Financing Activities
Investment in Virtual Driver Interactive $ 439,774 $ -
Stock issued to pay for products and/or services $ - $ 198,583
Stock issued to pay notes payable $ 1,707,327 $ 3,632,518
The accompanying notes are an integral part of these unaudited condensed consolidated financial ~~statements~~statements.
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Cemtrex Inc. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1 – ORGANIZATION AND PLAN OF OPERATIONS

Cemtrex was incorporated in 1998, in the state of Delaware and has evolved through strategic acquisitions and internal ~~research & development from a small environmental monitoring instruments company~~growth into a ~~world~~ leading multi-industry technology company. The Company ~~now specializes in the development of Internet of Things (IoT), Artificial Intelligence (AI) and Virtual Reality (VR) enabled technologies that drive innovation~~has expanded in a wide range of sectors, including ~~consumer products,~~smart technologies, virtual and augmented realities, industrial ~~manufacturing, digital applications,~~solutions, and intelligent security ~~& surveillance~~ systems. Unless the context requires otherwise, all references to “we”, “our”, “us”, “Company”, “registrant”, “Cemtrex” or “management” refer to Cemtrex, Inc. and its subsidiaries.

The Company continuously assesses the composition of its portfolio businesses to ensure it is aligned with its strategic objectives and positioned to maximize growth and return in the coming years. During fiscal ~~2019,~~2018, the Company made a strategic decision to exit its Electronics Manufacturing group by selling all companies in that business segment on August 15, 2019. Accordingly, the Company has reported the results of the Electronics Manufacturing business as discontinued operations in the Consolidated Statements of Operations and in the Consolidated Balance Sheets. These changes have been applied for all periods presented. During fiscal 2019, the Company also reached a strategic decision to exit ~~its original~~the environmental products business, which was part of the Industrial Services Segment. Accordingly, the Company has reported the results of the environmental control products business as discontinued operations in the Consolidated Statements of Operations and ~~sold those operations.~~in the Consolidated Balance Sheets.

Now the Company has two business segments, consisting of (i) Advanced Technologies (AT) and (ii) Industrial Services (IS).

Advanced Technologies (AT)

Cemtrex’s Advanced Technologies segment delivers cutting-edge technologies in the Internet of Things (IoT)~~, Wearables~~ and Smart Devices, such as the SmartDesk. Through the Company’s advanced engineering and product design, the Company delivers Virtual Reality (VR) and Augmented Reality (AR) ~~products~~solutions that provide higher productivity, progressive design and impactful experiences for consumer products, ~~digital applications~~and various commercial and industrial ~~manufacturing.~~applications. The Company is in the process of developing its own virtual reality applications for commercialization over the next couple years.

The AT business segment also includes the Company’s majority owned subsidiary, Vicon Industries, which provides end-to-end security solutions to meet the toughest corporate, industrial and governmental security challenges. Vicon’s products include browser-based ~~Video~~video monitoring systems and ~~facial~~analytics-based recognition systems, cameras, servers, and access control systems for every aspect of security and surveillance in industrial and commercial facilities, federal prisons, hospitals, universities, schools, and federal and state government offices. Vicon provides cutting edge, mission critical security and video surveillance solutions utilizing Artificial Intelligence (AI). based data algorithms.

Industrial Services (IS)

Cemtrex’s IS segment, offers single-source expertise and services for rigging, millwrighting, in plant maintenance, equipment erection, relocation, and disassembly to diversified customers. We install high precision equipment in a wide variety of industrial markets like automotive, printing & graphics, industrial automation, packaging, and chemicals, among others. We are a leading provider of reliability-driven maintenance and contracting solutions for the machinery, packaging, printing, chemical, and other manufacturing markets. The focus is on customers seeking to achieve greater asset utilization and reliability to cut costs and increase production from existing assets, including small projects, sustaining capital, turnarounds, maintenance, specialty welding services, and high-quality scaffolding.
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Acquisition of Virtual Driver Interactive
On October 26, 2020, the company acquired Virtual Driver Interactive (“VDI”), a California based provider of innovative driver training simulation solutions for a purchase price of $1,339,774 plus contingent consideration.
For over 10 years, VDI has been known for its effective and engaging driver training systems, designed for users of all ages and skill levels. The Company offers comprehensive training for new teen and novice drivers, along with advanced training for corporate fleets and truck drivers. VDI’s wide range of training courses and system options provide customers with highly portable, affordable and effective solutions, all while focusing on the dangers of distracted driving. Result for VDI will be reported under the AT segment.
The Company paid $900,000 in cash and issued a Note payable in the amount of $439,774. This note carries interest of 5% and is payable in two installments of $239,774 plus accumulated interest on October 26, 2021, and $200,000 plus accumulated interest on October 26, 2022. Additionally, the Company paid contingent consideration of $175,428 in May 2021. There is no further contingent consideration specified in the purchase agreement. The Company has accounted for this acquisition as a business combination and is in the process of calculating the allocation of purchase price. All amounts paid have been included in goodwill in the accompanying condensed consolidated balance sheet.
Strategic Investment
On November 13, 2020, Cemtrex made a $500,000 investment via a simple agreement for future equity(“SAFE”) in MasterpieceVR. The SAFE provides that the Company will automatically receive shares of the entity based on the conversion rate of future equity rounds up to a valuation cap, as defined. MasterpieceVR is a software company that is developing software for content creation using virtual reality. The investment is included in other assets in the accompanying balance sheet and the Company accounts for this investment using the fair value method. No impairment has been recorded for the three and six months ended March 31, 2021.
Potential Impacts of COVID-19 on our Business
The current COVID-19 pandemic has impacted our business operations and the results of our operations in this fiscal year, primarily with delays in expected orders by many customers and new product development. Overall bookings level in both business segments have been impacted. In addition, due to delays in certain supply chain areas, the expected launch times of our new products and new versions of existing products have been delayed for several months. We are also starting to see the costs of certain components that are facing shortages, increase in price which may affect gross margins.
The broader implications of COVID-19 on our results from operations going forward remains uncertain. The COVID-19 pandemic has the potential to cause adverse effects to our customers, suppliers or business partners in locations that have or will experience more pronounced disruptions, which could result in a reduction to future revenue and manufacturing output as well as delays in our new product development activities.
The extent of the pandemic’s effect on our operational and financial performance will depend in large part on future developments, which cannot be reasonably estimated at this time. Future developments include the duration, scope and severity of the pandemic, the actions taken to contain or mitigate its impact both within and outside the jurisdictions where we operate, the impact on governmental programs and budgets, the development of treatments or vaccines, and the resumption of widespread economic activity. Due to the inherent uncertainty of the unprecedented and rapidly evolving situation, we are unable to predict with any confidence the likely impact of the COVID-19 pandemic on our future operations.
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NOTE 2 – INTERIM STATEMENT PRESENTATION

Basis of Presentation and Use of Estimates

The accompanying unaudited condensed consolidated financial information should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Annual Report on Form 10-K for the year ended September 30, ~~2019~~2020, of Cemtrex Inc.
The accompanying condensed consolidated balance sheet has been derived from the audited consolidated financial statements and the notes thereto included in the Annual Report on Form 10-K for the year ended September 30, 2020, adjusted and restated as further discussed in Note 2 of these financial statements. Additionally, the Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss), the Condensed Consolidated Statement of Stockholders’ Equity, the Condensed Consolidated Statements of Cash Flows, and notes to the financial statements related to the results of the three and six month periods ended March 31, 2020, have been restated.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the Unites States (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X pursuant to the requirements of the U.S. Securities and Exchange Commission (‘(“SEC”). Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for the interim periods are not necessarily indicative of the results of operations for the entire year.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the condensed consolidated financial statements, the disclosure of contingent assets and liabilities in the condensed consolidated financial statements and the accompanying notes, and the reported amounts of revenues, expenses and cash flows during the periods presented. Actual amounts and results could differ from those estimates. The estimates and assumptions the Company makes are based on historical factors, current circumstances and the experience and judgment of the Company’s management. The Company evaluates its estimates and assumptions on an ongoing basis.

The condensed consolidated financial statements include the accounts of the Company, its ~~wholly-owned~~wholly owned subsidiaries, Cemtrex Advanced Technologies Inc., Cemtrex Ltd., Cemtrex Technologies Pvt. Ltd., Griffin Filters, LLC, Cemtrex XR Inc., and Advanced Industrial Services, Inc. and the Company’s ~~majority-owned~~majority owned subsidiary Vicon Industries, Inc. and its subsidiaries, Telesite USA, IQInVision, Vicon Industries Ltd., ~~Vicon Deutschland GmbH,~~ and Vicon Systems, Ltd. All inter-company balances and transactions have been eliminated in consolidation.

Restatement of Financial Statements
~~Significant Accounting Policies~~
Background
On February 23, 2021, Cemtrex’s Board of Directors determined that certain transactions between Cemtrex Inc. and ~~Recent~~ First Commercial, a company owned by former Executive Director, former Controlling Shareholder and former CFO, Aron Govil, were incorrectly handled and accounted for.
The total amount of disputed transfers was approximately $7,100,000 and occurred in fiscal year 2017 in the amount of $5,600,000 and in fiscal year 2018 in the amount of $1,500,000. Cemtrex did not find any other such transfers during this period or thereafter, upon further review of the Company’s records.
Upon the Company’s investigation into this matter, the Company has determined that there were inaccuracies in the Company’s financial statements. The financials for the periods 2017 and 2018 were incorrect corresponding to the amounts that were incorrectly accounted for, and subsequent years were affected by the roll forward effects of these entries. The Company found unsupported advertising expenses in the amount of approximately $400,000 on Cemtrex Inc’s income statement for fiscal year 2018 and found that approximately $5,700,000 of intangible assets and $975,000 of research and development expenses, as translated at from Indian Rupee at the time, were recorded on Cemtrex India’s financial statements in fiscal year 2018 and could not be substantiated. The total amount of unsubstantiated transfers recorded by Cemtrex India and the unsupported advertising expense recorded by Cemtrex, Inc. sums to $7,100,000, corresponding with the total amount in question regarding First Commercial transfers during fiscal years 2017 and 2018.
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As part of the restatement investigation, it was determined that the Company did not follow GAAP in the treatment of its Series 1 Preferred dividends. The Company currently has a deficit in retained earnings and in accordance with guidance has reversed the accrual for dividends payable and placed the amount of the accrual back into retained earnings.
Position and Adjusting Entries
The Company has determined that these transactions are not material in the years that they occurred and conclude that prior financial reports can be relied upon. The Company’s determination is based on the following: The adjustments do not cause any changes to the previously reported cash and debt balances as of the end of each of the periods in FY 2019 and 2020. The adjustments also do not cause any changes to revenues in any of the prior periods. In addition, the Company expects to maintain compliance with its debt covenants based on a preliminary review of the covenants for all the impacted periods. The Company has also determined that the adjustments have little effect on the trend of earnings over the last three fiscal years. In 2017 the operations of the Company were vastly different with both the environmental and circuit board manufacturing segments accounting for approximately 75% of revenues. These businesses are now either sold or discontinued. The current reported 2017 financial statements of the Company do not give an accurate representation of the Company today because only 16% of the $120M business operations are still a part of current operations.
The table below represents the balances of the affected accounts on the Condensed Consolidated Balance Sheets as of September 30, 2020, the Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss) for the three and six months ended March 31, 2020, Condensed Consolidated Statement of Stockholders’ Equity, and the Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 2020.
Condensed Consolidated Balance Sheets
Balance as reported on September 30, 2020 Adjustment of net value of intangible assets Cumulative effect of derecognition of expenses Loss on amounts transferred to First Commercial Restatement on Dividends Cumulative effect of currency translation Adjusted balance at September 30, 2020

Property and equipment, net $ 9,558,936 $ (2,597,185 ) $ 6,961,751
Series 1 preferred stock dividends payable $ 1,081,690 $ (1,081,690 ) $ -
Additional paid-in capital $ 63,313,336 $ (3,091,570 ) $   60,221,766
Retained earnings (accumulated deficit) $ (33,172,690 ) $ 3,579,346 $ (7,100,000 ) $ 4,173,260 $ (32,520,084 )
Accumulated other comprehensive income $ 853,643 $ 923,469 $ 1,777,112
Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss)
For the three months ended
March 31, 2020
Previously reported Adjustments Adjusted

Net Income income/(loss) attributable to Cemtrex, Inc. shareholders $ (1,886,648 ) $ 287,547 $ (1,599,101 )
Foreign currency translation gain/(loss) $ (750,696 ) $ 870 $ (749,826 )
Loss Per Share-Basic $ (0.30 ) $ 0.05 $ (0.26 )
Loss Per Share-Diluted $ (0.30 ) $ 0.05 $ (0.26 )
For the six months ended
March 31, 2020
Previously reported Adjustments Adjusted

Net loss available to Cemtrex, Inc. shareholders $ (2,203,469 ) $ 548,750 $ (1,654,719 )
Foreign currency translation gain $ (157,377 ) $ (9,423 ) $ (166,800 )
Loss Per Share-Basic $ (0.42 ) $ 0.10 $ (0.31 )
Loss Per Share-Diluted $ (0.42 ) $ 0.10 $ (0.31 )
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Condensed Consolidated Statement of Stockholders’ Equity
For the six months ended
March 31, 2020
Previously reported Adjustments Adjusted

Retained earnings (accumulated deficit) at September 30, 2019 $ (20,067,685 ) $ (3,611,902 ) $ (23,679,587 )
Net income/(loss) $ (2,203,469 ) $ 548,750 $ (1,654,719 )
Retained earnings (accumulated deficit) at March 31, 2020 $ (24,357,704 ) $ (976,602 ) $ (25,334,306 )
Accumulated other comprehensive income/(loss)at September 30, 2019 $ 796,004 $ 806,889 $ 1,602,893
Comprehensive income/(loss) $ 564,597 $ (870 ) $ 563,727
Accumulated other comprehensive income/(loss) at March 31, 2020 $ 1,379,030 $ 806,019 $ 2,185,049
Additional paid-in capital $ 46,895,763 $ (2,064,670 ) $ 44,831,093
Condensed Consolidated Statements of Cash Flows
For the six months ended
March 31, 2020
Previously reported Adjustments Adjusted

Net loss $ (2,016,406 ) $ 548,750 $ (1,467,656 )
Depreciation and amortization $ 1,427,718 $ (539,327 ) $ 888,391
Net cash used by operating activities $ (1,380,126 ) $ 9,423 $ (1,370,703 )
Effect of currency translation $ (184,551 ) $ (9,423 ) $ (193,974 )
On February 26, 2021, the Company entered into a Settlement Agreement and Release with Aron Govil regarding these transactions.
As part of the Settlement Agreement, Mr. Govil was required to pay the Company consideration of $7,100,000 (the “Settlement Amount”) by entering into the Agreement. The Settlement Amount was satisfied in a combination of Mr. Govil forfeiting certain Preferred Stock and outstanding options and executing a secured note in the amount of $1,533,280. The Independent Board of Directors in coordination with Management concluded the settlement represented fair value.
In March 2021, Mr. Govil returned to the Company 1,000,000 shares of Series A Preferred Stock, 50,000 Shares of Series C Preferred Stock, 469,949 shares of Series 1 Preferred Stock, and forfeited all outstanding options to purchase shares of commons stock (collectively, the “Securities”). For the purposes of accounting recognition, the Company determined the fair value of the Series A, Series C, and Series 1 Preferred stock based on the closing trading value of the Series 1 Preferred Stock on the date of the agreement. The options surrendered were valued using the Black-Scholes option pricing model.
The Company recognized the gain with respect to the surrendered Securities during this reporting period. The gain of $3,674,165 is reported as Settlement Agreement - Related Party on the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss).
As discussed above, Mr. Govil also executed a secured promissory note (the “Note”) in the amount of $1,533,280. The Note matures and is due in full in two years and bears interest at 9% per annum and is secured by all of Mr. Govil’s assets. Mr. Govil also agreed to sign an affidavit confessing judgment in the event of a default on the Note. While the Company believes the note is fully collectible, in accordance with ASC 450-30, Gain Contingencies, the Company determined the gain will not be recognized until the note is paid. Accordingly, the note and associated gain is not presented on the Company’s Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss).
Accounting Pronouncements

Significant Accounting Policies

Note 2 of the Notes to Consolidated Financial Statements, included in the annual report on Form 10-K for the year ended September 30, ~~2019,~~2020, includes a summary of the significant accounting policies used in the preparation of the consolidated financial statements.

~~Recently Adopted Accounting Pronouncements~~
~~Adoption of ASU 2016-02 (Topic 842)~~
On October 1, 2019, the Company adopted ASU 2016-02 (Topic 842), “Leases”. ASU 2016-02 requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors may use the effective date method and elected certain practical expedients allowing the Company not to reassess:
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● ~~whether expired or existing contracts contain leases under the new definition of a lease;~~
● ~~lease classification for expired or existing leases; and~~
● ~~whether previously capitalized initial direct costs would qualify for capitalization under Topic 842.~~

~~The Company also made the accounting policy decision not to recognize lease assets and liabilities for leases with a term of 12 months or less.~~
~~See Note 10 for the impact implementing this standard had on our financial statements.~~
Recently Issued Accounting Standards
In August 2018, the FASB issued amended guidance, Fair Value Measurement: Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, to modify the disclosure requirements on fair value measurements based on the concepts in the FASB Concepts Statements, including the consideration of costs and benefits. The new standard is effective for the Company from October 1, 2020. The Company believes adoption will not have a material effect on the Company’s financial position.

In December 2019, the FASB issued amended guidance, Simplifying the Accounting for Income Taxes, to remove certain exceptions to the general principles from ASC 740 - Income Taxes, and to improve consistent application of U.S. GAAP for other areas of ASC 740 by clarifying and amending existing guidance. The guidance is effective for the Company ~~from~~on October 1, 2021; early adoption is permitted. The Company is currently evaluating the effect the guidance will have on its consolidated financial statement disclosures, results of operations and financial position.
~~Reclassifications~~
~~Certain reclassifications have been made~~In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU No. 2020-04”). The update provides optional guidance for a limited period to ~~prior period amounts to conform to~~ease the ~~current period presentation.~~potential burden in accounting for (or recognizing the effects of) contract modifications on financial reporting caused by reference rate reform. ASU 2020-04 is effective for all entities as of March 12, 2020, through December 31, 2022. The Company adopted this guidance in the second quarter of 2020. The adoption of this guidance had no impact on the Company’s Condensed Consolidated Financial Statements or the related disclosures.

NOTE 3 – LOSS PER COMMON SHARE

Basic 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 months ended For the six months ended
March 31, March 31,
2020 2019 2020 2019

Basic weighted average shares outstanding 6,250,761 1,774,636 5,292,167 1,705,770
Dilutive effect of options - - - -
Dilutive effect of convertible debt - - - -
Diluted weighted average shares outstanding 6,250,761 1,774,636 5,292,167 1,705,770
For the three and six months ended March 31, 2021, and 2020, ~~and 2019, 1,483,965 and 538,076 shares of common stock, respectively,~~the following items were excluded from the computation of diluted ~~earnings~~net loss per common share ~~because the~~as their effect ~~of their inclusion would be anti-dilutive.~~is anti-dilutive:
For the three months ended For the six months ended
March 31, March 31,
2021 2020 2021 2020

Warrants to purchase shares 433,965 433,965 433,965 433,965
Options 880,049 1,050,000 944,757 1,050,000

NOTE 4 – SEGMENT INFORMATION

The Company reports and evaluates financial information for two segments: Advanced Technologies (AT) segment, and the Industrial Services (IS) segment. The AT segment develops smart devices and provides progressive design and development solutions to create impactful experiences for mobile, web, virtual and augmented reality, wearables and television as well as providing cutting edge, mission critical security and video surveillance. The IS segment offers single-source expertise and services for rigging, millwrighting, in plant maintenance, equipment erection, relocation, and disassembly to diversified customers in USA in industries such as: ~~chemical,~~manufacturing, steel, printing, construction, & petrochemical.
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The following tables summarize the Company’s segment information:

For the three months ended For the six months ended For the three months ended For the six months ended
March 31, March 31, March 31, March 31,
2020 2019 2020 2019 2021 2020 2021 2020
Revenues from external customers
Advanced Technologies 6,186,400 6,927,778 $ 13,411,633 $ 7,395,613 $ 5,487,414 $ 6,186,400 $ 10,160,283 $ 13,411,633
Industrial Services 5,927,447 4,797,629 10,922,297 10,047,383 $ 3,772,971 5,927,447 7,936,178 10,922,297
Total revenues 12,113,847 11,725,407 $ 24,333,930 $ 17,442,996 $ 9,260,385 $ 12,113,847 $ 18,096,461 $ 24,333,930

Gross profit
Advanced Technologies 3,331,799 3,028,005 6,874,586 $ 3,303,475 $ 2,646,926 $ 3,331,799 $ 4,993,198 $ 6,874,586
Industrial Services 2,014,305 1,778,793 �� 3,820,004 3,690,909 1,281,958 2,014,305 2,941,156 3,820,004
Total gross profit 5,346,104 4,806,798 $ 10,694,590 $ 6,994,384 $ 3,928,884 $ 5,346,104 $ 7,934,354 $ 10,694,590

Operating (loss) income
Operating loss
Advanced Technologies (901,017 ) (2,437,421 ) $ (640,025 ) $ (3,667,729 ) $ (1,693,377 ) $ (630,814 ) $ (3,535,723 ) $ (91,275 )
Industrial Services 113,914 (311,586 ) (28,135 ) (497,641 ) (269,221 ) 113,914 (472,826 ) (28,135 )
Total operating income/(loss) (787,103 ) (2,749,007 ) $ (668,160 ) $ (4,165,370 )
Total operating loss $ (1,962,598 ) $ (516,900 ) $ (4,008,549 ) $ (119,410 )

Other income (expense)
Other income/(expense)
Advanced Technologies (850,329 ) 18 $ (1,072,396 ) $ (391,564 ) $ 3,497,148 $ (850,329 ) $ 3,864,383 $ (1,072,396 )
Industrial Services (50,177 ) (510,774 ) (86,307 ) (587,794 ) 735,518 (50,177 ) 710,330 (86,307 )
Total other income (expense) (900,506 ) (510,756 ) $ (1,158,703 ) $ (979,358 )
Total other expense $ 4,232,666 $ (900,506 ) $ 4,574,713 $ (1,158,703 )

Depreciation and Amortization (restated) (restated)
Advanced Technologies 381,841 - $ 766,067 $ 536,194 $ 89,746 $ 111,638 $ 205,578 $ 226,740
Industrial Services 371,524 473,029 661,651 104,021 229,680 371,524 474,426 661,651
Total depreciation and amortization 753,365 473,029 $ 1,427,718 $ 640,215 $ 319,426 $ 483,162 $ 680,004 $ 888,391

~~The Company generates revenue from product sales and services from its subsidiaries located in the United States, The United Kingdom, and India. Revenue information for the Company is as follows:~~
For the three months ended For the six months ended
March 31, March 31, March 31, March 31,
Revenues 2020 2019 2020 2019
U.S. Operations $ 11,972,359 $ 11,458,836 $ 24,123,410 $ 17,176,425
Non-U.S. Operations 141,488 266,571 210,520 266,571
$ 12,113,847 $ 11,725,407 $ 24,333,930 $ 17,442,996
March 31, September 30,
2020 2020
(restated)
Identifiable Assets
Advanced Technologies $ 32,297,470 $ 36,732,018
Industrial Services 18,025,093 15,590,448
Discontinued operations 8,867,821 8,867,821
Total Assets $ 59,190,384 $ 61,190,287

NOTE 5 – FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level hierarchy is applied to prioritize the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The three levels of the fair value hierarchy under the guidance for fair value measurements are described below:

Level 1 — Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Our Level 1 assets include cash equivalents, banker’s acceptances, trading securities investments and investment funds. We measure trading securities investments and investment funds at quoted market prices as they are traded in an active market with sufficient volume and frequency of transactions.
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Level 2 — Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified contractual term, a Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3 — Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date. Level 3 assets and liabilities include cost method ~~investments, goodwill, intangible assets, and property, plant and equipment, which are measured at fair value using a discounted cash flow approach when they are impaired.~~investments. Quantitative information for Level 3 assets and liabilities reviewed at each reporting period includes indicators of significant deterioration in the earnings performance, credit rating, asset quality, business prospects of the investee, and financial indicators of the investee’s ability to continue as a going concern.

The Company’s fair value assets at March 31, ~~2020 and 2019~~2021 are as ~~follows;~~follows.

Quoted Prices Significant Quoted Prices
in Active Other Significant Balance in Active Significant
Markets for Observable Unobservable as of Markets for Other Significant Balance
Identical Assets Inputs Inputs March 31, Identical
Assets Observable
Inputs Unobservable
Inputs as of
March 31,
(Level 1) (Level 2) (Level 3) 2020 (Level 1) (Level 2) (Level 3) 2021
Assets
Investment in trading securities
Investment in marketable securities
(included in short-term investments) $ 14,439 $                  - $                  - $ 14,439 $ 522,612 $ - $ - $ 522,612

Investment in MasterpieceVR $ 500,000 $ 500,000
(included in Other assets)
$ 14,439 $ - $ - $ 14,439
$ 522,612 $ - $ 500,000 $ 1,022,612

~~Quoted Prices~~ ~~Significant~~
~~in Active~~ ~~Other~~ ~~Significant~~ ~~Balance~~
~~Markets for~~ ~~Observable~~ ~~Observable~~ ~~as of~~
~~Identical Assets~~ ~~Inputs~~ ~~Inputs~~ ~~March 31,~~
~~(Level 1)~~ ~~(Level 2)~~ ~~(Level 3)~~ ~~2019~~
~~Assets~~
~~Investment in trading securities~~
~~(included in short-term investments)~~ $ - $ - $              - $         -
$ - $ - $ - $ -
NOTE 6 – RESTRICTED CASH

A subsidiary of the Company participates in a consortium in order to self-insure group care coverage for its employees. The plan is administrated by Benecon Group and the Company makes monthly deposits in a trust account to cover medical claims and any administrative costs associated with the plan. These funds, as required by the plan are restricted in nature and amounted to ~~$1,254,353~~$1,549,511 as of March 31, ~~2020. The~~2021. Additionally, the Company ~~also records~~has a ~~liability~~standby letter of credit for ~~claims that have been incurred but not recorded at~~deposit on a building lease and payable against. a money market account, the ~~end of each year. The~~ amount of the ~~liability~~standby letter of credit is ~~determined by Benecon Group. The liability recorded in accrued expenses amounted to $123,127 and $118,889 as of March 31, 2020 and September 30, 2019, respectively.~~$157,415.
NOTE 7 – ACCOUNTS RECEIVABLE, NET

Accounts receivables, net consist of the following:

March 31, September 30, March 31, September 30,
2020 2019 2021 2020
Accounts receivable $ 7,127,048 $ 7,065,035 $ 5,606,784 $ 7,027,645
Allowance for doubtful accounts (599,635 ) (606,051 ) (203,492 ) (340,848 )
$ 6,527,413 $ 6,458,984 $ 5,403,292 $ 6,686,797

Accounts receivable include amounts due for shipped products and services rendered.

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

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NOTE 8 – INVENTORY, NET

Inventory, net, consist of the following:

March 31, September 30, March 31, September 30,
2020 2019 2021 2020
Raw materials $ 3,970,103 $ 4,917,700 $ 4,170,573 $ 3,959,888
Work in progress 918,604 543,857 137,037 995,184
Finished goods 4,676,371 3,683,810 6,677,658 6,413,927
9,565,078 9,145,367 10,985,268 11,368,999

Less: Allowance for inventory obsolescence (3,918,643 ) (3,938,212 ) (3,626,460 ) (4,575,193 )
Inventory –net of allowance for inventory obsolescence $ 5,646,435 $ 5,207,155 $ 7,358,808 $ 6,793,806

NOTE 9 – PROPERTY AND EQUIPMENT

Property and equipment are summarized as follows:

March 31, September 30,
March 31, September 30, 2021 2020
2020 2019 (restated)
Land $ 790,373 $ - $ 790,373 $ 790,373
Building and leasehold improvements 3,860,019 1,233,733 3,950,430 3,875,796
Furniture and office equipment 604,542 614,569 677,643 621,790
Computers and software 4,911,334 5,166,922 269,851 264,940
Trade show display 89,330 89,330 89,330 89,330
Machinery and equipment 24,093,211 23,463,953 14,594,734 13,668,263
34,348,809 30,568,507 20,372,361 19,310,492

Less: Accumulated depreciation (14,660,263 ) (13,791,955 ) (13,037,160 ) (12,348,741 )
Property and equipment, net $ 19,688,546 $ 16,776,552 $ 7,335,201 $ 6,961,751

Depreciation expense for the three ~~months ended March 31, 2020~~ and ~~2019 were $753,365 and $1,829,924, respectively. Depreciation expense for the~~ six months ended March 31, 2021, and 2020 were $319,426 and ~~2019 were $1,427,718~~$483,162, and ~~$2,470,169,~~$680,004 and $888,391, respectively.
NOTE 10 – LEASES

ASC 842, “Leases”, requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors are required to recognize and measure leases at either the effective date (the “effective date method”) or the beginning of the earliest period presented (the “comparative method”) using a modified retrospective approach. Under the effective date method, the Company’s comparative period reporting is unchanged. In contrast, under the comparative method, the Company’s date of initial application is the beginning of the earliest comparative period presented, and the Topic 842 transition guidance is then applied to all comparative periods presented. Further, under either transition method, the standard includes certain practical expedients intended to ease the burden of adoption. The Company adopted ASC 842 October 1, 2019, using the effective date method and elected certain practical expedients allowing the Company not to reassess:

● whether expired or existing contracts contain leases under the new definition of a lease;
● lease classification for expired or existing leases; and
● whether previously capitalized initial direct costs would qualify for capitalization under Topic 842.
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The Company also made the accounting policy decision not to recognize lease assets and liabilities for leases with a term of 12 months or less.

The Company entered into a financing lease for a single vehicle in the Industrial services segment with a term of 3 years. The Company enters into operating leases for its facilities in New York, United Kingdom, and India, as well as for vehicles for use in our Industrial Services segment. The operating lease terms range from 2 to 57 years. The Company excluded the renewal option on its applicable facility leases from the calculation of its right-of-use assets and lease liabilities.

Finance and operating lease liabilities consist of the following:

March 31, September 30,
2020 2019
March 31,
2021

September 30,
2020

Lease liabilities - current
Finance leases $ 22,452 $ 22,452 $ 8,501 $ 20,061
Operating leases 294,552 - 755,607 700,975
317,004 22,452 764,108 721,036

Lease liabilities - net of current portion
Finance leases $ 9,207 $ 20,061 $ - $ -
Operating leases 728,422 - 2,106,545 2,027,406
$ 737,629 $ 20,061 $ 2,106,545 $ 2,027,406

A reconciliation of undiscounted cash flows to finance and operating lease liabilities recognized in the condensed consolidated balance sheet at March 31, ~~2020~~2021, is set forth below:

Finance leases Operating Leases Total
Years ending September 30, Finance leases Operating Leases Total
Remainder of 2020 $ 11,872 $ 243,334 $ 255,206
2021 19,970 409,446 429,416 8,528 404,419 412,947
2022 - 274,682 274,682 - 799,784 799,784
2023 - 157,338 157,338 - 616,607 616,607
2024 - 34,385 34,385 - 480,881 480,881
2025 - 457,078 457,078
2026 & Thereafter - 573,198 573,198
Undiscounted lease payments 31,842 1,119,185 1,151,027 8,528 3,331,967 3,340,495
Amount representing interest (183 ) (96,211 ) (96,394 ) (27 ) (469,815 ) (469,842 )
Discounted lease payments $ 31,659 $ 1,022,974 $ 1,054,633 $ 8,501 $ 2,862,152 $ 2,870,653

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Additional disclosures of lease data are set forth below:

~~Six months ended~~
~~March 31, 2020~~
~~Lease costs:~~
~~Finance lease costs:~~
~~Amortization of right-of-use assets~~ ~~11,456~~
~~Interest on lease liabilities~~ ~~416~~
~~Operating lease costs:~~ ~~156,777~~
~~Total lease cost~~ ~~168,649~~
~~Other information:~~
~~Cash paid for amounts included in the measurement of lease liabilities:~~
~~Operating leases~~ ~~11,872~~
~~Finance leases~~ ~~398,580~~
~~410,452~~
~~Weighted-average remaining lease term - finance leases (months)~~ 16
~~Weighted-average remaining lease term - operating leases (months)~~ 28
~~Weighted-average discount rate - finance leases~~ ~~6.95~~ %
~~Weighted-average discount rate - operating leases~~ ~~6.57~~ %
Six months ended
March 31, 2021 March 31, 2020
Lease costs:
Finance lease costs:
Depreciation of finance lease assets $ 11,456 $ 11,456
Interest on lease liabilities 61 416

Operating lease costs:
Amortization of right-of-use assets 438,539 275,822
Interest on lease liabilities 34,613 20,375
Total lease cost $ 484,669 $ 308,069

Other information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating leases $ 450,102 $ 11,872
Finance leases 20,034 398,580
$ 470,136 $ 410,452

Weighted-average remaining lease term - finance leases (months) 3 16
Weighted-average remaining lease term - operating leases (months) 72 28

Weighted-average discount rate - finance leases 3.63 % 3.63 %
Weighted-average discount rate - operating leases 6.85 % 6.57 %

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.

NOTE 11 – PREPAID AND OTHER CURRENT ASSETS

On March 31, 2021, the Company had prepaid and other current assets consisting of prepayments on inventory purchases of $1,040,370, other current assets of $779,661. On September 30, 2020, the Company had prepaid and other current assets consisting of prepayments on inventory purchases of ~~$31,033, other current assets of $1,948,741. On September 30, 2019, the Company had prepaid and other current assets consisting of prepayments on inventory purchases of $530,447,~~$101,308, and other current assets of ~~$1,469,818.~~$1,087,009.

NOTE 12 - OTHER ASSETS

As of March 31, 2021, the Company had other assets of $1,074,861 which was comprised of rent security of $294,978, a strategic investment in MasterpieceVR of $500,000, and other assets of $280,074. As of September 30, 2020, the Company had other assets of ~~$1,332,418~~$744,207 which was comprised of rent security deposits of ~~$137,530,~~$294,553 and other assets of ~~$1,194,888. As of September 30, 2019, the Company had other assets of $497,857 which was comprised of rent security of $140,246 and other assets of $357,611.~~$449,654.
~~NOTE 13 – SHORT-TERM LIABILITIES~~
~~The Company’s subsidiaries have revolving lines of credit with various banks in order to fund operations. As of March 31, 2020, the balance of these accounts was $813,410.~~
~~As of March 31, 2020, there were $4,346,650 in current portion of long-term liabilities.~~

NOTE 1413 – RELATED PARTY TRANSACTIONS

On 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, is President, for total consideration of $550,000. As of March 31, 2021, and September 30, 2020, there ~~were $227,109~~was $1,498,776 and $1,432,209 in receivables due from Ducon Technologies, Inc., respectively. At March 31, 2021, $500,000 of the balance due is for the sale of Griffin, which was due in February 2021, and the remaining balance are various receivables with various due dates within the next fiscal year. The Company is currently negotiating a payment agreement surrounding all these amounts due.
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Please see Note 2 for further transactions relating to Aron Govil.
NOTE 14 – LINES OF CREDIT AND LONG-TERM LIABILITIES
Lines of credit
The Company currently has a line of credit with Fulton Bank for $3,500,000. The line carries an interest of LIBOR plus 2.00% per annum (2.19% as of March 31, ~~2019,~~2021). At March 31, 2021 there ~~were~~was no ~~payables or receivables due to or from Ducon.~~outstanding balance on this line of credit.

~~NOTE~~Loans payable to bank
On December15, 2015, the Company acquired a loan from Fulton Bank in the amount of $5,250,000 in order to fund the purchase of Advanced Industrial Services, Inc. $5,000,000 of the proceeds went to direct purchase of AIS. This loan carries interest of LIBOR plus 2.25% per annum (2.44% as of March 31, 2021) and is payable on December 15, ~~– LONG-TERM LIABILITIES~~2022. This loan carries loan covenants which the Company was in compliance with as of March 31, 2021.
On December15, 2015, the Company acquired a loan from Fulton Bank in the amount of $620,000 in order to fund the operations of Advanced Industrial Services, Inc. This loan carries interest of LIBOR plus 2.00% per annum (2.19% as of March 31, 2021) and was fully paid on December 15, 2020.
On May 1, 2018, the Company acquired a loan from Fulton Bank in the amount of $400,000 in order to fund new equipment for Advanced Industrial Services, Inc. This loan carries interest of LIBOR plus 2.00% per annum (2.19% as of March 31, 2021) and is payable on May 1, 2023. This loan carries loan covenants which the Company was in compliance with as of March 31, 2021.
On January 28, 2020, the Company acquired a loan from Fulton Bank in the amount of $360,000 in order to fund new equipment for Advanced Industrial Services, Inc. This loan carries interest of LIBOR plus 2.25% per annum (2.44% as of March 31, 2021) and is payable on May 1, 2023. This loan carries loan covenants which the Company was in compliance with as of March 31, 2021.

Notes payable
On October 25, 2019, the Company, issued a note payable to an independent third-party in the amount of $1,725,000. This note carries interest of 8% and matures on April 25, 2021. After deduction of an original issue discount of $225,000 and legal fees of $5,000, the Company received $1,495,000 in cash.

On December 23, 2019, the Company, issued a note payable to an independent ~~third-party~~private lender in the amount of $1,725,000. This note carries interest of 8% and matures on June 23, 2021. After deduction of an original issue discount of $225,000 and legal fees of $5,000, the Company received $1,495,000 in cash. This note was satisfied on November 2, 2020.
On April 24, 2020, the Company, issued a note payable to an independent private lender in the amount of $1,725,000. This note carries interest of 8% and matures on October 24, 2021. After deduction of an original issue discount of $225,000 and legal fees of $5,000, the Company received $1,495,000 in cash. This note was satisfied on January 21, 2021.
On September 30, 2020, the Company, issued a note payable to an independent private lender in the amount of $4,605,000. This note carries interest of 8% and matures on March 30, 2022. After deduction of an original issue discount of 600,000 and legal fees of $5,000, the Company received $4,000,000 in cash.

On March 3, 2020, Vicon, a subsidiary of the Company amended the $5,600,000 Term Loan Agreement with NIL Funding Corporation (“NIL”). Upon closing, $500,000 of outstanding borrowings were repaid to NIL, additionally, another $500,000 is to be paid in one year. The Agreement requires monthly payments of accrued interest that began on October 1, 2018. This note carries interest of 8.85% and matures on March 30, 2022. This note carries loan covenants which the Company is in compliance with as of March 31, ~~2020~~
~~Long-term lease liabilities~~2021.

On October 1, 2019, the Company adopted ASU 2016-02 (Topic 842), “Leases”. ASU 2016-02 requires that a lessee recognize the assets and liabilities that arise from operating leases. As of March 31, 2020, the Company has lease liabilities of $1,054,633 of which $317,004 is classified as short-term. The Company has calculated that at September 30, 2019 it would have had an additional $1,351,317 with $289,235 classified as short-term.
Mortgage Payable

On January 28, 2020, the Company’s subsidiary, Advanced Industrial Services, Inc., completed the purchase of two buildings for a total purchase price of $3,381,433. The Company paid $905,433 in cash and acquired a mortgage from Fulton Bank in the amount of $2,476,000. This mortgage carries interest of LIBOR plus 2.50% per annum (2.69% as of March 31, 2021) and is payable on January 28, 2040. This loan carries loan covenants similar to covenants on The Company’s other loans from Fulton Bank.
As of March 31, 2021, the Company was in compliance with these covenants.
~~Series 1 preferred stock dividends payable~~
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Paycheck Protection Program Loans

~~On March 20,~~In April and May of 2020, the Company ~~had announced~~and its subsidiaries applied for and were granted $3,471,100 in Paycheck Protection Program loans under the CARES Act. These loans bear interest of 1% and mature in two years. The Company will apply for and fully expects these loans to be forgiven under the provisions of the CARES Act and any subsequent legislation that ~~it would pay its semiannual dividend~~may be applicable. These loans are recorded under Paycheck Protection Program Loans on our Condensed Consolidated Balance Sheet as of September 30, 2020, net of the short-term portion of $710,046. In April and June of 2021 $3,156,700 and $193,000 of these loans were forgiven.
On January 24, 2021, and April 17, 2021, subsidiaries of the company received additional $1,970,785 and $971,500, respectively, of Paycheck Protection Program funds as part of the second Paycheck Protection Program for which the subsidiary qualifies due to the ~~holders~~decrease in revenues. These loans bear interest of record on close of business on March 31, 2020 of Series 1 Preferred Stock by April 6, 2020. In light of the COVID-19 lock down announced by the state government, the Company on March 26, 2020, decided to postpone the payment of this dividend for 90 days. The Company intends to pay these dividends with shares of Series 1 Preferred Stock1% and ~~had thus accrued the dividend.~~mature in five years.

NOTE 16 15– STOCKHOLDERS’ EQUITY

Preferred Stock

The Company is authorized to issue 10,000,000 shares of Preferred Stock, $0.001 par value. As of March 31, ~~2020,~~2021, and September 30, ~~2019,~~2020, there were ~~3,316,683~~1,845,004 and ~~3,110,718~~3,364,953 shares issued and outstanding, respectively.

Series 1 Preferred Stock

On March 30, 2020, the Company amended the Certificate of Designation (the “Amended Certificate of Designation”) for our Series 1 Preferred Stock (the “Series 1 Stock”). The Amended Certificate of Designation increased the number of authorized preferred shares under the designation for our Series 1 Preferred Stock from 3,000,000 shares to 4,000,000 shares.

For the six months ended March 31, ~~2020, 105,965~~2021, 108,169 shares of Series 1 Preferred Stock were issued to pay ~~$1,059,650 worth of~~ dividends to holders of Series 1 Preferred Stock.

During the ~~six months~~three-month period ended March 31, ~~2020,~~2021, the Company ~~purchased 162,888~~retired 469,949 shares of ~~its~~ Series 1 Preferred Stock ~~on the open market at an average price per share of $1.17, for an aggregate cost of approximately $190,483,~~surrendered by Aron Govil as part of ~~its ongoing share repurchase program announced earlier. The Company intends to retire these shares.~~the settlement agreement (see Note 2).

As of March 31, ~~2020,~~2021, and September 30, ~~2019,~~2020, there were ~~2,216,683~~1,795,004 and ~~2,110,718~~2,156,784 shares of Series 1 Preferred Stock issued and outstanding, respectively.

Series A Preferred stock

During the ~~six-month~~three-month period ended March 31, ~~2020,~~2021, the Company ~~did not issue any~~retired 1,000,000 shares of Series A Preferred ~~Stock.~~Stock surrendered by Aron Govil as part of the settlement agreement (see Note 2).

As of March 31, ~~2020,~~2021, and September 30, ~~2019,~~2020, there were zero and 1,000,000 shares of Series A Preferred Stock issued and ~~outstanding.~~outstanding, respectively.

Series C Preferred Stock

On October 3, 2019, pursuant to Article IV of our Articles of Incorporation, our Board of Directors voted to designate a class of preferred stock entitled Series C Preferred Stock, consisting of up to one hundred thousand (100,000) shares, par value $0.001. Under the Certificate of Designation, holders of Series C Preferred Stock are entitled to the number of votes equal to the result of (i) the total number of shares of Common Stock outstanding at the time of such vote multiplied by 10.01, and divided by (ii) the total number of shares of Series C Preferred Stock outstanding at the time of such vote, at each meeting of our shareholders with respect to any and all matters presented to our shareholders for their action or consideration, including the election of directors.

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~~For~~
During the ~~six months~~three-month period ended March 31, ~~2020, 100,000~~2021, the Company retired 50,000 shares of Series C Preferred Stock ~~were issued to~~surrendered by Aron Govil ~~Executive Director and CFO of the Company~~ as part of ~~his employment agreement. In order to determine~~ the ~~fair market value of these shares the Company used the closing price of its Series 1 preferred stock of $0.95 on October 3, 2019.~~settlement agreement (see Note 2).

As of March 31, 2021, and September 30, 2020, there were 50,000 and 100,000 shares of Series C Preferred Stock issued and ~~outstanding.~~outstanding, respectively.

Common Stock

The Company is authorized to issue ~~20,000,000~~50,000,000 shares of common stock, $0.001 par value. As of March 31, ~~2020,~~2021, there were ~~7,939,628~~18,711,463 shares issued and outstanding and at September 30, ~~2019,~~2020, there were ~~3,962,790~~17,622,539 shares issued and outstanding.

During the six months ended March 31, ~~2020, 2,623,087~~1,088,654 shares of the Company’s common stock have been issued to satisfy ~~$2,628,000~~$550,000 of notes payable, ~~$100,908~~$191,556 in accrued interest, and ~~$903,610~~$465,772 of excess value of shares issued recorded as interest ~~expense; 1,185,393 shares were issued in Securities Subscription Agreements (See below); 168,358 shares were issued in exchange for $198,583 of goods and services.~~
~~Subscription Rights Offering~~expense.

~~On December 4, 2019, the “Company entered into a Subscription Agreement relating~~Shares Surrendered in Settlement
In March 2021, Mr. Govil returned to the ~~public offering~~Company 1,000,000 shares of ~~338,393~~Series A Preferred Stock, 50,000 Shares of Series C Preferred Stock, 469,949 shares ~~(the “Shares”~~of Series 1 Preferred Stock, and forfeited all outstanding options to purchase shares of commons stock (collectively, the “Securities”). For the purposes of accounting recognition, the Company determined the fair value of the ~~Company’s common~~Series A, Series C, and Series 1 Preferred stock ~~par~~based on the closing trading value ~~$0.001 per share, all of which were sold by the Company (the “Offering”) to an accredited investor. The Offering price~~ of the ~~Shares was $1.12 per share for gross proceeds of $379,000. After deducting offering expenses of $18,950~~Series 1 Preferred Stock on the ~~Company received $360,050 in net proceeds.~~
~~On January 24, 2020, the “Company entered into a Subscription Agreement relating to the public offering of 500,000 shares (the “Shares”)~~date of the ~~Company’s common stock, par value $0.001 per share, all of which~~agreement. The options surrendered were ~~sold by~~valued using the Company (the “Offering”) to an accredited investor. The Offering price of the Shares was $1.50 per share for gross proceeds of $750,000. After deducting offering expenses of $37,500 the Company received $712,500 in net proceeds.Black-Scholes option pricing model.
On February 26, 2020, the “Company entered into a Subscription Agreement relating to the public offering of 347,000 shares (the “Shares”) of the Company’s common stock, par value $0.001 per share, all of which were sold by the Company (the “Offering”) to an accredited investor. The Offering price of the Shares was $1.30 per share for gross proceeds of $451,100. After deducting offering expenses of $2,500 the Company received $448,600 in net proceeds.
NOTE 17 16– SHARE-BASED COMPENSATION

For the six months ended March 31, ~~2020~~2021, and ~~2019,~~2020, the Company recognized ~~$143,108~~$65,317 and ~~$72,216~~$143,208 of share-based compensation expense on its outstanding options, respectively. As of March 31, ~~2020, $396,583~~2021, $443,964 of unrecognized share-based compensation expense is expected to be recognized over a period of ~~four~~five years. Future compensation amounts will be adjusted for any change in estimated forfeitures.

NOTE 18 17– COMMITMENTS AND CONTINGENCIES

The Company has moved its corporate activities to New York City with a month-to-month lease of 2,500 square feet of office space at a rate of $13,000 per ~~month that expires June 30, 2020.~~month. The Company has recognized $78,000 of lease expense for this lease, for the six months ended March 31, ~~2020.~~2021.

The Company’s IS segment owns approximately 25,000 square feet of warehouse space in Manchester, PA and approximately 43,000 square feet of office and warehouse space in York, PA. The IS segment also leases approximately 15,500 square feet of warehouse space in Emigsville, PA from a third party in a three-year lease at a monthly rent of $4,555 expiring on August 31, 2022. The Company has paid $27,330 for this lease, for the six months ended March 31, 2021.

The Company’s AT segment leases (i) approximately 6,700 square feet of office and warehouse space in Pune, India from a third party in an five year lease at a monthly rent of $6,453 (INR456,972) expiring on February 28, 2024, the Company has ~~recognized~~paid $38,718 ~~of lease expense~~ for this lease, for the six months ended March 31, ~~2020,~~2021, (ii) approximately ~~27,000~~30,000 square feet of office and warehouse space in Hauppauge, New York from a third party in a ~~five-year~~seven-year lease at a monthly rent of ~~$25,480~~$28,719 expiring on ~~April 30, 2020,~~March 31, 2027, the Company ~~has recognized $152,880 of lease expense~~paid $172,314 for this ~~lease, for~~property, during the six months ended March 31, ~~2020,~~2021 and (iii) approximately 9,400 square feet of office and warehouse space in Hampshire, England in a fifteen-year lease with at a monthly rent of $7,329 (£5,771) which expires on March 24, 2031 and contains provisions to terminate in ~~2021 and~~ 2026, the Company has ~~recognized~~paid $43,974 ~~of lease expense~~ for this lease for the six months ended March 31, ~~2020.~~2021.

~~NOTE 19 – DISCONTINUED OPERATIONS~~
During fiscal 2019, the Company reached a strategic decision to exit the environmental products business, which was part of Industrial Services group. Additionally, the Company sold its Electronics Manufacturing segment. Accordingly, the Company has reported the results of the environmental control products business and the Electronics Manufacturing segment as discontinued operations in the Consolidated Statements of Operations and in the Consolidated Balance Sheets.
Income (loss) from discontinued operations, net of tax and the loss on sale of discontinued operations, net of tax, of the ROB Cemtrex Companies and the environmental products business which are presented in total as discontinued operations, net of tax in the Company’s Consolidated Statements of Operations for the three and six months ended March 31, 2020 and 2019, are as follows:
Three months ended March 31, Six months ended March 31,
2020 2019 2020 2019

Total net sales $ - $ 11,882,090 $ - $ 23,449,045
Cost of sales - 7,239,496 - 13,998,915
Operating, selling, general and administrative expenses - 4,924,822 - 9,764,142
Other expenses - (28,747 ) - 297,751
Income (loss) from discontinued operations - (253,481 ) - (611,763 )
Loss on sale of discontinued operations - - - -
Income tax provision - 239 - (66,660 )
Discontinued operations, net of tax $ - $ (253,720 ) $ - $ (545,103 )
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NOTE 20 18- SUBSEQUENT EVENTS

Cemtrex has evaluated subsequent events up to the date the condensed consolidated financial statements were issued. Cemtrex concluded that the following subsequent events have occurred and require recognition or disclosure in the condensed consolidated financial statements.

~~Notice of Delisting~~
On April 21, 2020, 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 Common Stock (CETX) listed on Nasdaq was below $1.00 for 30 consecutive trading days, the Company no longer meets the minimum bid price requirement for continued listing on The Nasdaq Capital Market under Nasdaq Marketplace Rule 5550(a)(2), requiring a minimum bid price of $1.00 per share (the “Minimum Bid Price Requirement”).
Given the recent market conditions, Nasdaq has determined to toll the compliance periods for the bid price and market value of publicly held shares requirements through June 30, 2020. In that regard, on April 16, 2020, Nasdaq filed an immediately effective rule change with the Securities and Exchange Commission. As a result, the compliance periods for the Price-based Requirements will be reinstated on July 1, 2020.
The notification has no immediate effect on the listing of the Company’s Common Stock (CETX). In accordance with Nasdaq Marketplace Rule 5810(c)(3)(A), the Company has a period of 180 calendar days from July 1, 2020, or until December 28, 2020, to regain compliance with the Minimum Bid Price Requirement. If at any time before December 28, 2020 the bid price of the Company’s Common Stock closes at or above $1.00 per share for a minimum of 10 consecutive business days, Nasdaq will provide written notification that the Company has achieved compliance with the Minimum Bid Price Requirement.
~~Potential Impacts of COVID-19 on our Business~~Paycheck Protection Program Loan

~~The impact~~On April 17, 2021, a subsidiary of the ~~coronavirus disease 2019 (“COVID-19”) pandemic continues to unfold. The extent~~Company received an additional $971,500 of the pandemic’s effect on our operational and financial performance will depend in large part on future developments, which cannot be reasonably estimated at this time. Future developments include the duration, scope and severity of the pandemic, the actions taken to contain or mitigate its impact both within and outside the jurisdictions where we operate, the impact on governmental programs and budgets, the development of treatments or vaccines, and the resumption of widespread economic activity. Due to the inherent uncertainty of the unprecedented and rapidly evolving situation, we are unable to predict with any confidence the likely impact of the COVID-19 pandemic on our future operations.
Paycheck Protection Program ~~Loan~~funds as part of the second Paycheck Protection Program for which the subsidiary qualifies due to the decrease in revenues.

In April and ~~May~~June of ~~2020, the Company received $3,471,100 under the~~2021 $3,156,700 and $193,000 of our first round Paycheck Protection Program ~~(“PPP”) established as part~~Loans were forgiven.
Series 1 Preferred Stock Dividend
On March 18, 2021, The Board of Directors of Cemtrex, Inc. passed a resolution that the company will pay its dividend on Series 1 Preferred Stock in additional shares of Series 1 Preferred Stock. The holders of the ~~Coronavirus Aid, Relief and Economic Security Act (“CARES Act”). These loans have a six-month deferral on payments, mature two years after receipt of funds, and carry an annual interest~~Series 1 Preferred Stock are entitled to receive dividends at the rate of ~~1%.~~10% annually, based on the $10.00 per share Preference Amount, payable semiannually. The Company ~~intends~~issued 90,147 shares of our Series 1 Preferred Stock on April 6, 2021, to ~~follow all~~ the ~~requirements to convert these loans to grants.~~holders of record on close of business on March 31, 2021.

~~Common shares issued subsequent to financial statements date.~~
In April and May of 2020, the Company issued 1,597,782 shares of common stock to satisfy $1,050,000 worth of notes payable. Additionally, the Company issued 270,000 shares in exchange for consulting services valued at $230,000.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Except for historical information contained in this report, the matters discussed are forward-looking statements that involve risks and uncertainties. When used in this report, words such as “anticipates”, “believes”, “could”, “estimates”, “expects”, “may”, “plans”, “potential” and “intends” and similar expressions, as they relate to the Company or its management, identify forward-looking statements. Our operations involve risks and uncertainties, many of which are outside our control, and any one of which, or a combination of which, could materially affect our results of operations and whether the forward-looking statements ultimately prove to be correct. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. Such forward-looking statements are based on the beliefs of the Company’s management, as well as assumptions made by and information currently available to the Company’s management. Among the factors that could cause actual results to differ materially are the following: the effect of business and economic conditions; the impact of competitive products and their pricing; unexpected manufacturing or supplier problems; the Company’s ability to maintain sufficient credit arrangements; changes in governmental standards by which our environmental control products are evaluated and the risk factors reported from time to time in the Company’s SEC reports, including its recent report on Form 10-K. The Company undertakes no obligation to update forward-looking statements as a result of future events or developments.

General Overview

Cemtrex was incorporated in 1998, in the state of Delaware and has evolved through strategic acquisitions and internal ~~research & development~~ ~~from a small environmental monitoring instruments company~~growth into a ~~world~~ leading multi-industry technology company. The Company ~~now specializes in the development of Internet of Things (IoT), Artificial Intelligence (AI) and Virtual Reality (VR) enabled technologies that drive innovation~~has expanded in a wide range of sectors, including ~~consumer products,~~smart technologies, virtual and augmented realities, industrial ~~manufacturing, digital applications,~~solutions, and intelligent security ~~& surveillance~~ systems. Unless the context requires otherwise, all references to “we”, “our”, “us”, “Company”, “registrant”, “Cemtrex” or “management” refer to Cemtrex, Inc. and its subsidiaries.

The Company continuously assesses the composition of its portfolio businesses to ensure it is aligned with its strategic objectives and positioned to maximize growth and return in the coming years. During fiscal ~~2019,~~2018, the Company made a strategic decision to exit its Electronics Manufacturing group by selling all companies in that business segment on August 15, 2019. Accordingly, the Company has reported the results of the Electronics Manufacturing business as discontinued operations in the Consolidated Statements of Operations and in the Consolidated Balance Sheets. These changes have been applied for all periods presented. During fiscal 2019, the Company also reached a strategic decision to exit ~~its original~~the environmental products business, which was part of the Industrial Services Segment. Accordingly, the Company has reported the results of the environmental control products business as discontinued operations in the Consolidated Statements of Operations and ~~sold those operations.~~in the Consolidated Balance Sheets.

Now the Company has two business segments, consisting of (i) Advanced Technologies (AT) and (ii) Industrial Services (IS).

Advanced Technologies (AT)

Cemtrex’s Advanced Technologies segment delivers cutting-edge technologies in the Internet of Things (IoT)~~, Wearables~~ and Smart Devices, such as the SmartDesk. Through the Company’s advanced engineering and product design, the Company delivers Virtual Reality (VR) and Augmented Reality (AR) ~~products~~solutions that provide higher productivity, progressive design and impactful experiences for consumer products, ~~digital applications~~and various commercial and industrial ~~manufacturing.~~applications. The Company is in the process of developing its own virtual reality applications for commercialization over the next couple years.

The AT business segment also includes the Company’s majority owned subsidiary, Vicon Industries, which provides end-to-end security solutions to meet the toughest corporate, industrial and governmental security challenges. Vicon’s products include browser-based ~~Video~~video monitoring systems and ~~facial~~analytics-based recognition systems, cameras, servers, and access control systems for every aspect of security and surveillance in industrial and commercial facilities, federal prisons, hospitals, universities, schools, and federal and state government offices. Vicon provides cutting edge, mission critical security and video surveillance solutions utilizing Artificial Intelligence (AI). based data algorithms.
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Industrial Services (IS)

Cemtrex’s IS segment, offers single-source expertise and services for rigging, millwrighting, in plant maintenance, equipment erection, relocation, and disassembly to diversified customers. We install high precision equipment in a wide variety of industrial markets like automotive, printing & graphics, industrial automation, packaging, and chemicals, among others. We are a leading provider of reliability-driven maintenance and contracting solutions for the machinery, packaging, printing, chemical, and other manufacturing markets. The focus is on customers seeking to achieve greater asset utilization and reliability to cut costs and increase production from existing assets, including small projects, sustaining capital, turnarounds, maintenance, specialty welding services, and high-quality scaffolding.
Significant Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon the accompanying unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and the related disclosures at the date of the financial statements and during the reporting period. Although these estimates are based on our knowledge of current events, our actual amounts and results could differ from those estimates. The estimates made are based on historical factors, current circumstances, and the experience and judgment of our management, who continually evaluate the judgments, estimates and assumptions and may employ outside experts to assist in the evaluations.

Certain of our accounting policies are deemed “significant”, as they are both most important to the financial statement presentation and require management’s most difficult, subjective or complex judgments as a result of the need to make estimates about the effect of matters that are inherently uncertain. For a discussion of our significant accounting policies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended September 30, ~~2019.~~2020.

Results of Operations - For the three months ending March 31, ~~2020~~2021, and ~~2019~~2020

Total revenue for the three months ended March 31, 2021, and 2020 was $9,260,385 and ~~2019 was~~ $12,113,847, ~~and $11,725,407,~~ respectively, ~~an increase~~a decrease of ~~$388,440,~~$2,853,462, or 3%24%. Loss from ~~continuing~~ operations for the three months ended March 31, 2021, was $1,962,598 compared to $516,900 for the three months ended March 31, 2020, ~~and 2019 was $1,877,152 and $2,086,302, respectively, a decrease~~an increase on the loss of ~~$209,150,~~$1,445,698, or ~~10%~~280%. Total revenue for the quarter ~~increased,~~decreased, as compared to total revenue in the same period last year, due to ~~sales increases in~~shutdowns and limited operations of businesses due to the ~~Industrial Services Segment.~~COVID-19 crisis. Loss from ~~continuing~~ operations ~~decreased~~increased due to ~~reorganization and cost saving measures enacted by management in~~decreased revenues as a result of the ~~last fiscal year.~~COVID-19 crisis.

Revenues

Our Advanced Technologies segment revenues for the three months ended March 31, ~~2020,~~2021, decreased by ~~$741,738~~$698,986 or 11% to ~~$6,186,400~~$5,487,414 from ~~$6,927,778~~$6,186,400 for the three months ended March 31, ~~2019.~~2020. This decrease is mainly due to the impact of the COVID-19 crisis.

Our Industrial Services segment revenues for the three months ended March 31, ~~2020, increased~~2021, decreased by ~~$1,129,818~~$2,154,476 or ~~24%~~36%, to ~~$5,927,447~~$3,772,971 from ~~$4,797,629~~$5,927,447 for the three months ended March 31, ~~2019. The increase was primarily~~2020. This decrease is mainly due to the ~~timing and recognition~~impact of ~~revenue.~~the COVID-19 crisis.

Gross Profit

Gross Profit for the three months ended March 31, 2021, was $3,928,884 or 42% of revenues as compared to gross profit of $5,346,104 or 44% of revenues for the three months ended March 31, 2020. Gross profit decreased in the three months ended March 31, 2021, compared to the three months ended March 31, 2020, due to lower revenues. The Company’s gross profit margins vary from product to product and from customer to customer.
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General and Administrative Expenses
General and administrative expenses for the three months ended March 31, 2021, decreased $208,086 or 4% to $5,249,985 from $5,458,071 for the three months ended March 31, 2031. General and administrative expenses as a percentage of revenue was 57% and 45% of revenues for the three-month periods ended March 31, 2021, and 2020. The increase in General and Administrative Expenses as a percentage of revenue is the reduction in revenues from the same quarter last year and the decrease on a dollar per dollar basis is the result of decreased travel, marketing and sales expenses.
Research and Development Expenses
Research and Development expenses for the three months ended March 31, 2021, was $641,497 compared to $404,933 for the three months ended March 31, 2020. Research and Development expenses are primarily related to the Advanced Technologies Segment’s development of proprietary technology and further developments of the SmartDesk and Artificial Intelligence (AI) and next generation solutions associated with security and surveillance systems software.
Other Income/(Expense)
Other income/(expense) for the second quarter of fiscal 2021, was $4,505,033 as compared to $(900,506) for the first quarter of fiscal 2020. Other income/(expense) for the three months ended March 31, 2021, included the following one-time items (i) the settlement with Aron Govil (see Note 2), generated other income of $3,674,165, (ii) employee retention credits of $736,899. Additionally, the company had realized and unrealized gains on marketable securities of $926,622.
Provision for Income Taxes
During the second quarter of fiscal 2021, the Company recorded an income tax provision of $98,477compared to $189,543 for the second quarter of fiscal 2020. The provision for income tax is based upon the projected income tax from the Company’s various U.S. and international subsidiaries that are subject to their respective income tax jurisdictions and the Company’s projected ability to utilize net loss carryforwards.
Net income/(loss) attributable to Cemtrex, Inc. shareholders
The Company had a net income attributable to Cemtrex, Inc. shareholders of $2,454,132, or 27% of revenues, for the three-month period ended March 31, 2021 as compared to a net loss attributable to Cemtrex, Inc. shareholders of $1,599,101 or 13% of revenues, for the three months ended March 31, 2020. Net income/(loss) attributable to Cemtrex, Inc. shareholders increased in the second quarter as compared to the same period last year was primarily due to other income items mentioned above.
Results of Operations - For the six months ending March 31, 2021, and 2020
Total revenue for the six months ended March 31, 2021, and 2020 was ~~$5,346,104~~$18,096,461 and $24,333,930, respectively, a decrease of $6,237,469, or 26%. Loss from operations for the six months ended March 31, 2021, was $4,008,549 compared to $119,410 for the six months ended March 31, 2020, an increase on the loss of $3,889,139, or 3,257%. Total revenue for the period decreased, as compared to total revenue in the same period last year, due to shutdowns and limited operations of businesses due to the COVID-19 crisis. Loss from operations increased due to decreased revenues as a result of the COVID-19 crisis.
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Revenues
Our Advanced Technologies segment revenues for the six months ended March 31, 2021, decreased by $3,251,350 or 24% to $10,160,283 from $13,411,633 for the six months ended March 31, 2020. This decrease is mainly due to the impact of the COVID-19 crisis.
Our Industrial Services segment revenues for the six months ended March 31, 2021, decreased by $2,986,119 or 27%, to $7,936,178 from $10,922,297 for the six months ended March 31, 2020. This decrease is mainly due to the impact of the COVID-19 crisis.
Gross Profit
Gross Profit for the six months ended March 31, 2021, was $7,934,354 or 44% of revenues as compared to gross profit of ~~$4,806,798~~$10,694,590 or ~~41%~~44% of revenues for the ~~three~~six months ended March 31, ~~2019.~~2020. Gross profit ~~increased~~decreased in the ~~three~~six months ended March 31, 2021, compared to the six months ended March 31, 2020, ~~compared to the three months ended March 31, 2019~~ due to ~~a shift by management in the last fiscal year to focus on products with higher gross margins.~~lower revenues. The Company’s gross profit margins vary from product to product and from customer to customer.

General and Administrative Expenses

General and administrative expenses for the ~~three~~six months ended March 31, ~~2020 decreased $1,355,920~~2021, increased $634,700 or ~~19%~~6% to ~~$5,728,274~~$10,667,181 from ~~$7,084,194~~$10,032,481 for the ~~three~~six months ended March 31, ~~2019.~~2020. General and administrative expenses as a percentage of revenue was ~~47%~~59% and ~~60%~~41% of revenues for the ~~three-month~~six-month periods ended March 31, ~~2020~~2021, and ~~2019.~~2020. The ~~decrease~~increase in General and Administrative Expenses ~~both~~ as a percentage of revenue is the reduction in revenues from the same period last year and the increase on a dollar per dollar basis is the result of ~~reduction in overhead~~increased personnel, legal and accounting fees, and marketing and sales expenses.
Research and Development Expenses

Research and Development expenses for the ~~three~~six months ended March 31, ~~2020~~2021, was ~~$404,933~~$1,275,722 compared to ~~$471,611~~$781,519 for the ~~three~~six months ended March 31, ~~2019.~~2020. Research and Development expenses are primarily related to the Advanced Technologies Segment’s development of proprietary technology and further developments of the SmartDesk and Artificial Intelligence (AI) ~~connected~~and next generation solutions associated with security and surveillance systems software.

Other Income/(Expense)

Other income/(expense) for the first and second ~~quarter~~quarters of fiscal ~~2020~~2021 was ~~$(900,506)~~$4,847,080 as compared to ~~$(510,756)~~$(1,158,703) for the first and second ~~quarter~~quarters of fiscal ~~2019.~~2020. Other income/~~(Expense)~~(expense) for the ~~three~~six months ended March 31, ~~2020 was primarily due to interest expense.~~2021, included the following one-time items (i) the settlement with Aron Govil (see Note 2), generated other income of $3,674,165, (ii) employee retention credits of $736,899. Additionally, the company had realized and unrealized gains on marketable securities of $1,869,366.

Provision for Income Taxes

During the first and second ~~quarter~~quarters of fiscal ~~2020~~2021 the Company recorded an income tax provision of ~~$189,543~~$127,431 compared to ~~a benefit of $1,173,461~~$189,543 for the second quarter of fiscal ~~2019.~~2020. The provision for income tax is based upon the projected income tax from the Company’s various U.S. and international subsidiaries that are subject to their respective income tax ~~jurisdictions.~~jurisdictions and the Company’s projected ability to utilize net loss carryforwards.

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

The Company had a ~~comprehensive loss~~net income attributable to Cemtrex, Inc. shareholders of ~~$3,645,352~~$711,100, or ~~30%~~4% of revenues, for the ~~three-month~~six-month period ended March 31, ~~2020~~2021, as compared to a ~~comprehensive~~net loss attributable to Cemtrex, Inc. shareholders of ~~$2,155,075~~$1,654,719 or ~~18%~~7% of revenues, for the three months ended March 31, ~~2019. Comprehensive loss~~2020. Net income/(loss) attributable to Cemtrex, Inc. shareholders increased in the second quarter as compared to comprehensive loss in the same period last year, as a result of an increase in interest expense, foreign currency translation, and the accrual of the Series 1 Preferred Stock dividend.
~~Results of Operations - For the six months ending March 31, 2020 and 2019~~
Total revenue for the six months ended March 31, 2020 and 2019 was $24,333,930 and $17,442,996, respectively, an increase of $6,890,934, or 40%. Loss from continuing operations for the six months ended March 31, 2020 and 2019 was $2,016,406 and $3,971,219, respectively, a decrease of $1,954,813, or 49%. Total revenue for the first two quarters increased, as compared to total revenue in the same period last year, due to sales increases in the Advanced Technologies Segment. Loss from continuing operations decreased due to reorganization and cost saving measures enacted by management in the last fiscal year.
~~Revenues~~
Our Advanced Technologies segment revenues for the six months ended March 31, 2020, increased by $6,016,020or 81% to $13,411,633 from $7,395,613 for the six months ended March 31, 2019. This increase represents mainly the consolidation of Vicon Industries, Inc starting in the second quarter of fiscal year 2019.
Our Industrial Services segment revenues for the six months ended March 31, 2020, increased by $874,914 or 9%, to $10,922,297 from $10,047,383 for the six months ended March 31, 2019. The increase was primarily due to the timing and recognition of revenue.
~~Gross Profit~~
Gross Profit for the six months ended March 31, 2020 was $10,694,590 or 44% of revenues as compared to gross profit of $6,994,384 or 40% of revenues for the six months ended March 31, 2019. Gross profit increased in the six months ended March 31, 2020, compared to the six months ended March 31, 2019 due to a shift by management in the last fiscal year to focus on products with higher gross margins. The Company’s gross profit margins vary from product to product and from customer to customer.
~~General and Administrative Expenses~~
General and administrative expenses for the six months ended March 31, 2020 increased $272,605 or 3% to $10,581,231 from $10,308,626 for the six months ended March 31, 2019. General and administrative expenses as a percentage of revenue was 43% and 59% of revenues for the six-month periods ended March 31, 2020 and 2019. The decrease in General and Administrative Expenses both as a percentage of revenue is the result of reduction in overhead expenses. This increase on a dollar per dollar basis represents mainly the consolidation of Vicon Industries, Inc starting in the second quarter of fiscal year 2019.
~~Research and Development Expenses~~
Research and Development expenses for the six months ended March 31, 2020 was $781,519 compared to $851,128 for the six months ended March 31, 2019. Research and Development expenses are primarily related to the Advanced Technologies Segment’s development of proprietary technology and further developments of the SmartDesk and Artificial Intelligence (AI) connected with security and surveillance systems software.
~~Other Income/(Expense)~~
Other income/(expense) for the first and second quarters of fiscal 2020 was $(1,158,073) as compared to $(979,358) for the first and second quarters of fiscal 2019. Other income/(Expense) for the six months ended March 31, 2020 was primarily due to interest expense.
~~Provision for Income Taxes~~
During the first and second quarters of fiscal 2020 the Company recorded an income tax provision of $189,543 compared to a benefit of $1,173,509 for the second quarter of fiscal 2019. The provision for income tax is based upon the projected income tax from the Company’s various U.S. and international subsidiaries that are subject to their respective income tax jurisdictions.
~~Comprehensive loss~~
The Company had a comprehensive loss of $4,474,570 or 18% of revenues, for the six-month period ended March 31, 2020 as compared to a comprehensive loss of $6,146,707 or 35% of revenues, for the six months ended March 31, 2019. Comprehensive loss decreased in the first and second quarters as compared to ~~comprehensive loss in~~ the same period last year ~~as a result of the decrease in general and administrative expenses.~~was primarily due to other income items mentioned above.
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Effects of Inflation

The Company’s business and operations have not been materially affected by inflation during the periods for which financial information is presented.

Liquidity and Capital Resources

Working capital was ~~$6,824,573~~$19,962,805 at March 31, ~~2020~~2021, compared to ~~$3,240,348~~$23,285,122 at September 30, ~~2019.~~2020. This includes cash and equivalents and restricted cash of ~~$4,063,944~~$17,280,660 at March 31, ~~2020~~2021, and ~~$2,858,085~~$21,072,859 at September 30, ~~2019,~~2020, respectively. The ~~increase~~decrease in working capital was primarily due to the ~~increase in~~reduction of the Company’s ~~current assets~~cash and equivalents, and trade receivables during the first and second quarters of ~~$1,249,876 and a decrease in the Company’s current liabilities of $2,289,349.~~fiscal year 2021.

Accounts receivable ~~increased $68,429~~decreased $1,283,505 or 1%19% to ~~$6,527,413~~$5,403,292 at March 31, ~~2020~~2021, from ~~$6,458,984~~$6,686,797 at September 30, ~~2019.~~2020. The ~~increase~~decrease in accounts receivable is attributable to ~~higher sales~~lower revenues in the first and second quarters of fiscal year ~~2020.~~2021 due to the COVID-19 crisis.

Inventories increased ~~$439,280~~$565,002 or 8% to ~~$5,646,435~~$7,358,808 at March 31, ~~2020~~2021, from ~~$5,207,155~~$6,793,806 at September 30, ~~2019.~~2020. The increase inventories is attributable to the purchase of inventories for new products the Company plans to ~~fulfill sales bookings not shipped~~ship in the ~~second quarter.~~future.

Operating activities used ~~$748,931~~$2,856,654 cash for the six months ended March 31, 2021, compared to using $1,370,703 cash for the six months ended March 31, 2020. The increase in operating cash flows was primarily due to the decrease in the Company’s accounts receivable, as compared to the same period a year ago.
Investment activities used $110,129 of cash for the six months ended March 31, 2020 compared to providing $178,096 of cash for the six months ended March 31, 2019. The decrease in operating cash flows was primarily due to the increase in operating assets, as compared to the same period a year ago. Discontinued operations for the six months ended March 31, 2019 provided cash of $2,391,479.
~~Investment activities used $4,132,215 of cash for the six months ended March 31, 2020~~2021, compared to using cash of ~~$746,056~~$3,794,158 during the six-month period ended March 31, ~~2019.~~2020. Investing activities for the first ~~and second quarters~~quarter of fiscal year ~~2020~~2021 were driven by the Company’s investment in Virtual Driver Interactive, MasterpieceVR Software, purchase of fixed assets, ~~offset by proceeds from the sale of~~and marketable ~~securities. Discontinued operations for the six months ended March 31, 2019 used cash of $119,482.~~securities transactions.

Financing activities ~~provided $6,271,556~~used $754,748 of cash in the six-month period ended March 31, ~~2020~~2021, as compared to providing cash of ~~$1,363,052~~$6,564,694 in the six-month period ended March 31, ~~2019.~~2020. Financing activities were primarily driven by ~~proceeds from notes payable, proceeds from bank loans, and proceeds from securities purchase agreements offset by~~ payments on bank loans ~~notes payable, expenses of~~and notes payable and ~~equity offerings, and use~~proceeds from the second round of ~~the Company’s revolving credit lines. Discontinued operations for the six months ended March 31, 2019 used cash of $1,417,926.~~Paycheck Protection Program loans.

We believe that our cash on hand and cash generated by operations is sufficient to meet the capital demands of our current operations during the ~~2020~~2021 fiscal year (ending September 30, ~~2020)~~2021). Any major increases in sales, particularly in new products, may require substantial capital investment. Failure to obtain sufficient capital could materially adversely impact our growth potential.

Overall, there is no guarantee that cash flow from our existing or future operations and any external capital that we may be able to raise will be sufficient to meet our expansion goals and working capital needs.
27
Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures reporting as promulgated under the Exchange Act is defined as controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms. Disclosure controls and procedures include without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Our CEO and our CFO have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, ~~2020.~~2021. Based on their evaluation, our management has concluded that as of March 31, ~~2020~~2021, there is a material weakness in our internal control over financial reporting. The material weakness relates to the Company lacking sufficient accounting personnel. The shortage of accounting personal resulted in the Company lacking entity level controls around the review of period-end reporting processes, accounting policies and public disclosures. This deficiency is common in small companies, similar to us, with limited personnel.
Notwithstanding the conclusion by our Chief Executive Officer and Chief Financial Officer that our disclosure controls and procedures as of March 31, 2021, were not effective, and notwithstanding the material weakness in our internal control over financial reporting described below, management believes that the unaudited condensed financial statements and related financial information included in this Quarterly Report fairly present in all material respects our financial condition, results of operations and cash flows as of the dates presented, and for the periods ended on such dates, in conformity with GAAP.

In order to mitigate the material weakness, the Board of Directors has assigned a priority to the short-term and long-term improvement of our internal control over financial reporting. Our Board of Directors will work with management to continuously review controls and procedures to identified deficiencies and implement remediation within our internal controls over financial reporting and our disclosure controls and procedures.

Changes in Internal Control Over Financial Reporting

While there was no change in the Company’s internal control over financial reporting during the Company’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting, the Company is taking steps to improve its internal controls by obtaining additional accounting personnel.

Limitations on the Effectiveness of Controls

Our management, including our CEO and CFO, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.

28
Part II Other Information

Item 1. Legal Proceedings.

NONE.

Item 1A. Risk Factors

See Risk Factors included in our Annual Report on Form 10-K for ~~2019.~~2020.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

During the six months ended March 31, 2020, the Company issued an aggregate of ~~2,791,445~~1,088,654 shares of common stock in exchange for aggregate consideration of ~~$3,831,101,~~$1,207,328, which was used for working capitaland research and ~~development~~.development. Such shares were issued pursuant to the exemption contained under Section 4(a)(2) of the Securities Act of 1933, as amended.
29

Item 6. Exhibits

Exhibit No. Description
2.2 Stock Purchase Agreement regarding the stock of Advanced Industrial Services, Inc., AIS Leasing Company, AIS Graphic Services, Inc., and AIS Energy Services, LLC, Dated December 15, 2015. ~~(6)~~(8)
2.3 Asset Purchase agreement between Periscope GmbH and ROB Centrex Assets UG, ROB Cemtrex Automotive GmbH, and ROB Cemtrex Logistics GmbH. (7)
3.1 Certificate of Incorporation of the Company.(1)
3.2 By Laws of the Company.(1)
3.3 Certificate of Amendment of Certificate of Incorporation, dated September 29, 2006.(1)
3.4 Certificate of Amendment of Certificate of Incorporation, dated March 30, 2007.(1)
3.5 Certificate of Amendment of Certificate of Incorporation, dated May 16, 2007.(1)
3.6 Certificate of Amendment of Certificate of Incorporation, dated August 21, 2007.(1)
3.7 Certificate of Amendment of Certificate of Incorporation, dated April 3, 2015.(3)
3.8 Certificate of Designation of the Series A Preferred Shares, dated September 8, 2009.(2)
3.9 Certificate of Designation of the Series 1 Preferred Stock.(11)
3.10 Certificate of Amendment of Certificate of Incorporation, dated September 7, 2017 (12)
3.11 Certificate of Designations of Series B Redeemable Convertible Preferred Stock..(21)
3.12 Certificate of Correction to the Certificate of Amendment to the Amended and Restated Certificate of Incorporation, as amended, of Cemtrex, Inc (6)
3.13 Amended Certificate of Designation of the Series 1 Preferred Shares, dated March 30, 2020.(16)
3.14 Certificate of Amendment of Certificate of Incorporation, dated July 29, 2020 (20)
3.15 Certificate of Correction of Certificate of Incorporation, dated July 29, 2021, filed October 7, 2020 (9)
4.1 Form of Subscription Rights Certificate. (10)
4.2 Form of Series 1 Preferred Stock Certificate. (10)
4.3 Form of Series 1 Warrant. (10)
4.4 Form of Common Stock Purchase Warrant, dated March 22, 2019. (14)
10.1 ~~Dealer-Manager Agreement between Cemtrex, Inc. and Advisory Group Equity Services, Ltd. doing business as RHK Capital.dated November 21, 2018 (8)~~
~~10.2~~ ~~At-The-Market Offering Agreement dated January 28, 2019, by and among Cemtrex, Inc. and Advisory Group Equity Services, Ltd. doing business as RHK Capital.(9)~~
~~10.3~~ ~~Securities Purchase Agreement by and between Intercostal Capital, dated July 1, 2019 and Cemtrex, Inc., (13)~~
~~10.4~~ ~~Share transfer and purchase agreement between Cemtrex, Ltd., Cemtrex, Inc. and Finvest GmbH i.G., Dennis Wenz, and Laura Wenz., dated August 15, 2019 (15)~~
~~10.5~~ Amendment of the Term Loan Agreement between Vicon and NIL Funding, dated March 4, 2020.(17)
10.2 Consulting Agreement, dated April 22, 2020 between Centrex, Inc. and Adtron, Inc. (5)
10.3 Securities Purchase Agreement dated June 1, 2020 (18)
10.4 Securities Purchase Agreement dated June 9, 2020 (19)
10.5 Settlement Agreement and Release between Cemtrex, Inc. and Aron Govil dated February 26, 2021 (13)
14.1 Corporate Code of Business Ethics.(4)
21.1* Subsidiaries of the Registrant
31.1* Certification of Chief Executive Officer as required by Rule 13a-14 or 15d-14 of the Exchange Act, as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2* Certification of Vice President of Finance and Principal Financial Officer as required by Rule 13a-14 or 15d-14 of the Exchange Act, as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1* Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act 0f of 2002.
32.2* Certification of Vice President of Finance and Principal Financial Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act 0f of 2002.
101.INS* XBRL Instance Document
101.SCH* XBRL Taxonomy Extension Schema
101.CAL* XBRL Taxonomy Extension Calculation Linkbase
101.DEF* XBRL Taxonomy Extension Definition Linkbase
101.LAB* XBRL Taxonomy Extension Label Linkbase
101.PRE* XBRL Taxonomy Extension Presentation Linkbase

* Filed herewith
1 Incorporated by reference from Form 10-12G filed on May 22, 2008.
2 Incorporated by reference from Form 8-K filed on September 10, 2009.
3 Incorporated by reference from Form 8-K filed on August 22, 2016.
4 Incorporated by reference from Form 8-K filed on July 1, 2016.
5 ~~Intentionally omitted~~ Incorporated by reference from Form S-8 filed on May 1, 2020
6 Incorporated by reference from Form 8-K filed on June 12, 2019.
7 Incorporated by reference from Form 8-K/A filed on November 24, 2017.
8 ~~Incorporated by reference from Form 8-K filed on November 21, 2018.~~
9 Incorporated by reference from Form ~~8-K~~8-K/A filed on ~~January 28, 2019.~~September 26, 2016.
9 Incorporated by reference from Form 10-Q filed on May 28, 2021.
30
10 Incorporated by reference from Form S-1 filed on August 29, 2016, and as amended on November 4, 2016, November 23, 2016, and December 7, 2016.
11 Incorporated by reference from Form 8-K filed on January 24, 2017.
12 Incorporated by reference from Form 8-K filed on September 8, 2017.
13 Incorporated by reference from Form ~~10-K~~8-K filed on ~~July 2, 2019.~~February 26, 2021.
14 Incorporated by reference from Form 8-K filed on March 22, 2019.
15 ~~Incorporated by reference from Form 8-K filed on August 21, 2019.~~ Intentionally left blank
16 Incorporated by reference from Form 8-K filed on April 1, 2020.
17 Incorporated by reference from Form 8-K filed on March 9, 2020.
18 Incorporated by reference from Form 8-K filed on June 4, 2020.
19 Incorporated by reference from Form 8-K filed on June 12, 2020.
20 Incorporated by reference from Form 10-K filed on January 5, 2021.
31
Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Cemtrex, Inc.

Dated: ~~May 14, 2020~~June 23, 2021 By: /s/Saagar Govil ..
Saagar Govil
Chief Executive Officer

Dated: ~~May 14, 2020~~June 23, 2021 /s/ ~~Aron Govil~~Christopher C. Moore .
~~Aron Govil~~Christopher C. Moore
Chief Financial Officer
and Principal Financial Officer

26 32

	For the three months ended						For the six months ended
	March 31, 2021			March 31, 2020			March 31, 2021			March 31, 2020
Revenues		9,260,385			12,113,847			18,096,461			24,333,930
Cost of revenues		5,331,501			6,767,743			10,162,107			13,639,340
Gross profit		3,928,884			5,346,104			7,934,354			10,694,590

Operating expenses
General and administrative		5,249,985			5,458,071			10,667,181			10,032,481
Research and development		641,497			404,933			1,275,722			781,519
Total operating expenses		5,891,482			5,863,004			11,942,903			10,814,000
Operating income/(loss)		(1,962,598	)		(516,900	)		(4,008,549	)		(119,410	)

Other income/(expense)
Other income/(expense)		1,679,944			447,792			2,630,932			672,117
Settlement Agreement - Related Party		3,674,165			-			3,674,165			-
Interest Expense		(849,076	)		(1,348,298	)		(1,458,017	)		(1,830,820	)
Total other income/(expense), net		4,505,033			(900,506	)		4,847,080			(1,158,703	)

Net loss before income taxes		2,542,435			(1,417,406	)		838,531			(1,278,113	)
Income tax benefit/(expense)		(98,477	)		(189,543	)		(127,431	)		(189,543	)
Net income/(loss)		2,443,958			(1,606,949	)		711,100			(1,467,656	)

Less income in noncontrolling interest		(10,174	)		(7,848	)		(50,421	)		187,063
Net income/(loss) attributable to Cemtrex, Inc. shareholders	$	2,454,132		$	(1,599,101	)	$	761,521		$	(1,654,719	)

Net income/(loss)	$	2,443,958		$	(1,606,949	)	$	711,100		$	(1,467,656	)
Other comprehensive income/(loss)
Foreign currency translation gain/(loss)		(87,972	)		(749,826	)		(40,491	)		(166,800	)
Defined benefit plan actuarial gain/(loss)		87,895			-			87,895			-
Comprehensive income/(loss)		2,443,881			(2,356,775	)		758,504			(1,634,456	)

Less comprehensive income/(loss) attributable to noncontrolling interest		19,625			(897	)		50,255			(214,237	)

Comprehensive income/(loss) attributable to Cemtrex, Inc. shareholders	$	2,424,256		$	(2,355,878	)	$	708,249		$	(1,420,219	)

Income/(loss) Per Share-Basic	$	0.13		$	(0.26	)	$	0.04		$	(0.31	)
Income/(loss) Per Share-Diluted	$	0.13		$	(0.26	)	$	0.04		$	(0.31	)

Weighted Average Number of Shares-Basic		18,559,113			6,250,761			18,195,731			5,292,167
Weighted Average Number of Shares-Diluted		18,629,064			6,250,761			18,200,974			5,292,167

	Preferred Stock Series 1				Preferred Stock Series A				Preferred Stock Series C				Common Stock						Retained						Accumulated
	Par Value $0.001				Par Value $0.001				Par Value $0.001				Par Value $0.01				Additional		Earnings			Treasury			other			Cemtrex			Non-
	Number of				Number of				Number of				Number of				Paid-in		(Accumulated			Stock,			Comprehensive			Stockholders’			controlling
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit)			At cost			Income(loss)			Equity			interest
Balance at September 30, 2019		2,110,718	$	2,111		1,000,000	$	1,000		-	$	-		3,962,790	$	3,963	$	40,344,837	$	(20,067,685	)	$	-		$	796,004		$	21,080,230		$	885,874
Comprehensive income																										564,597			564,597
Share-based compensation										100,000		100						119,004											119,104
Shares issued to pay accounts payable														18,358		18		27,565											27,583
Shares sold in Securities Purchase Agreements														338,393		338		359,712											360,050
Stock issued to pay notes payable														105,042		105		130,147											130,252
Dividends paid in Series 1 preferred shares		105,965		106														1,059,544		(1,059,650	)								-
Noncontrolling interest																										18,429			18,429			176,482
Net loss																				(334,165	)								(334,165	)
Balance at December 31, 2019		2,216,683	$	2,217		1,000,000	$	1,000		100,000	$	100		4,424,583	$	4,424	$	42,040,809	$	(21,461,500	)	$	-		$	1,379,030		$	21,966,080		$	1,062,356
Comprehensive income																										(749,148	)		(749,148	)
Share-based compensation																		24,104											24,104
Shares sold in Securities Purchase Agreements														847,000		847		1,160,253											1,161,100
Stock issued to pay notes payable														2,518,045		2,519		3,499,747											3,502,266
Accrued dividends																				(1,026,900	)								(1,026,900	)
Shares issued for services														150,000		150		170,850											171,000
Purchase of treasury stock																							(190,483	)					(190,483	)
Noncontrolling interest																										8,745			8,745			(16,593	)
Net loss																				(1,869,304	)								(1,869,304	)
Balance at March 31, 2020		2,216,683	$	2,217		1,000,000	$	1,000		100,000	$	100		7,939,628	$	7,940	$	46,895,763	$	(24,357,704	)	$	(190,483	)	$	638,627		$	22,997,460		$	1,045,763

	Preferred Stock Series 1				Preferred Stock Series A				Preferred Stock Series C				Common Stock Par
	Par Value $0.001				Par Value $0.001				Par Value $0.001				Value $0.01
																				Retained						Accumulated
	Number				Number				Number				Number				Additional			Earnings			Treasury			other			Cemtrex			Non-
	of				of				of				of				Paid-in			(Accumulated			Stock,			Comprehensive			Stockholders’			controlling
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital			Deficit)			At cost			Income(loss)			Equity			interest
Balance at September 30, 2019		2,110,718	$	2,111		1,000,000	$	1,000		-	$	-		3,962,790	$	3,963	$	39,339,862		$	(23,679,587	)	$	-		$	1,791,153		$	17,458,502		$	885,874
Foreign currency translation gain																											582,156			582,156
Share-based compensation										100,000		100						119,004												119,104
Shares issued to pay accounts payable														18,358		18		27,520												27,538
Shares sold in Securities Purchase Agreements, net of offering costs														338,393		338		359,712												360,050
Stock issued to pay notes payable														105,042		105		130,147												130,252
Dividends paid in Series 1 preferred shares		105,965		106														(106	)											-
Net income/(loss) attributable to noncontrolling interest																														-			194,911
Comprehensive income/(loss) attributable to noncontrolling interest																														-			(18,429	)
Net loss																					(55,618	)								(55,618	)
Balance at December 31, 2019		2,216,683	$	2,217		1,000,000	$	1,000		100,000	$	100		4,424,583	$	4,424	$	39,976,139		$	(23,735,205	)	$	-		$	2,373,309		$	18,621,984		$	1,062,356

Foreign currency translation gain																											(748,929	)		(748,929	)
Share-based compensation																		24,104												24,104
Shares sold in Securities Purchase Agreements, net of offering costs														847,000		847		1,160,253												1,161,100
Stock issued to pay notes payable														2,518,045		2,519		3,499,747												3,502,266
Shares issued for services														150,000		150		170,850												171,000
Purchase of treasury stock																								(190,483	)					(190,483	)
Noncontrolling interest																														-			(16,593	)
Net loss																					(1,599,101	)								(1,599,101	)
Balance at March 31, 2020		2,216,683	$	2,217		1,000,000	$	1,000		100,000	$	100		7,939,628	$	7,940	$	44,831,093		$	(25,334,306	)	$	(190,483	)	$	1,624,380		$	20,941,941		$	1,045,763

	For the six months ended
	March 31,

Cash Flows from Operating Activities		2021			2020
		(unaudited)			(restated)
Net income/(loss)	$	711,100		$	(1,467,656	)

Adjustments to reconcile net loss to net cash provided/(used) by operating activities:
Depreciation and amortization		680,004			888,391
Gain on disposal of property and equipment		9,219			311
Amortization of right-of-use assets		438,539			281,758
Change in allowance for inventory obsolescence		(948,733	)		(19,569	)
Change in allowance for doubtful accounts		(137,356	)		(6,416	)
Share-based compansation		65,318			143,208
Income tax expense/ (benefit)		127,431			189,543
Interest expense paid in equity shares		657,329			1,004,518
Accrued interest on notes payable		41,833			291,384
Amortization of original issue discounts on notes payable		475,000			317,667
Gain on marketable securities		(1,869,338	)		(338,057	)
Settlement Agreement - Related Party		(3,674,165	)		-

Changes in operating assets and liabilities net of effects from acquisition of subsidiaries:
Accounts receivable		1,420,861			(62,013	)
Accounts receivable - related party		(71,581	)		(90	)
Inventory		383,731			(419,711	)
Prepaid expenses and other curent asstets		(631,714	)		(297,176	)
Other assets		169,346			(834,561	)
Other liabilities		11,438			(90,121	)
Accounts payable		(543,272	)		(854,616	)
Operating lease liabilities		(450,102	)		(293,138	)
Deposits from customers		66,808			9,166
Accrued expenses		161,820			(143,160	)
Deferred revenue		138,595			227,172
Income taxes payable		(88,765	)		102,463
Net cash used by operating activities		(2,856,654	)		(1,370,703	)

Cash Flows from Investing Activities
Purchase of property and equipment		(944,601	)		(4,340,023	)
Investment in Virtual Driver Interactive		(900,000	)		-
Investment in MasterpieceVR		(500,000	)		-
Proceeds from sale of marketable securities		7,080,375			13,083,547
Purchase of marketable securities		(4,845,903	)		(12,347,199	)
Purchases of treasury stock		-			(190,483	)
Note Receivable - Related party		-			-
Net cash used by investing activities		(110,129	)		(3,794,158	)

Cash Flows from Financing Activities
Proceeds from notes payable		-			2,990,000
Payments on notes payable		(2,070,257	)		(676,640	)
Proceeds on bank loans		-			2,476,000
Payments on bank loans		(655,276	)		(133,414	)
Proceeds from Paycheck Protection Program Loans		1,970,785			-
Proceeds from securities purchase agreements		-			1,580,100
Expenses on securities purchase agreements		-			(58,950	)
Revolving line of credit		-			387,598
Net cash provided/(used) by financing activities		(754,748	)		6,564,694

Effect of currency translation		(70,668	)		(193,974	)
Net increase in cash, cash equivalents, and restricted cash		(3,721,531	)		1,399,833
Cash, cash equivalents, and restricted cash at beginning of period		21,072,859			2,858,085
Cash, cash equivalents, and restricted cash at end of period		17,280,660		$	4,063,944

Balance Sheet Accounts Included in Cash, Cash Equivalents, and Restricted Cash
Cash and equivalents	$	15,573,734		$	2,809,591
Restricted cash		1,706,926			1,254,353
Total cash, cash equivalents, and restricted cash	$	17,280,660		$	4,063,944

Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest	$	283,855		$	342,268

Cash paid during the period for income taxes	$	88,765		$	188

Supplemental Schedule of Non-Cash Investing and Financing Activities
Investment in Virtual Driver Interactive	$	439,774		$	-
Stock issued to pay for products and/or services	$	-		$	198,583
Stock issued to pay notes payable	$	1,707,327		$	3,632,518

	Balance as reported on September 30, 2020			Adjustment of net value of intangible assets			Cumulative effect of derecognition of expenses		Loss on amounts transferred to First Commercial			Restatement on Dividends			Cumulative effect of currency translation		Adjusted balance at September 30, 2020

Property and equipment, net	$	9,558,936		$	(2,597,185	)											$	6,961,751
Series 1 preferred stock dividends payable	$	1,081,690										$	(1,081,690	)			$	-
Additional paid-in capital	$	63,313,336										$	(3,091,570	)			$	60,221,766
Retained earnings (accumulated deficit)	$	(33,172,690	)				$	3,579,346	$	(7,100,000	)	$	4,173,260				$	(32,520,084	)
Accumulated other comprehensive income	$	853,643													$	923,469	$	1,777,112

	For the three months ended
	March 31, 2020
	Previously reported			Adjustments		Adjusted

Net Income income/(loss) attributable to Cemtrex, Inc. shareholders	$	(1,886,648	)	$	287,547	$	(1,599,101	)
Foreign currency translation gain/(loss)	$	(750,696	)	$	870	$	(749,826	)
Loss Per Share-Basic	$	(0.30	)	$	0.05	$	(0.26	)
Loss Per Share-Diluted	$	(0.30	)	$	0.05	$	(0.26	)

	●	~~whether expired or existing contracts contain leases under the new definition of a lease;~~
	●	~~lease classification for expired or existing leases; and~~
	●	~~whether previously capitalized initial direct costs would qualify for capitalization under Topic 842.~~

	Quoted Prices		Significant						Quoted Prices
	in Active		Other		Significant		Balance		in Active		Significant
	Markets for		Observable		Unobservable		as of		Markets for		Other		Significant		Balance
	Identical Assets		Inputs		Inputs		March 31,		Identical Assets		Observable Inputs		Unobservable Inputs		as of March 31,
	(Level 1)		(Level 2)		(Level 3)		2020		(Level 1)		(Level 2)		(Level 3)		2021
Assets
Investment in trading securities
Investment in marketable securities
(included in short-term investments)	$	14,439	$	-	$	-	$	14,439	$	522,612	$	-	$	-	$	522,612

Investment in MasterpieceVR													$	500,000	$	500,000
(included in Other assets)
	$	14,439	$	-	$	-	$	14,439
									$	522,612	$	-	$	500,000	$	1,022,612

										Finance leases			Operating Leases			Total
Years ending September 30,	Finance leases			Operating Leases			Total
Remainder of 2020	$	11,872		$	243,334		$	255,206
2021		19,970			409,446			429,416			8,528			404,419			412,947
2022		-			274,682			274,682			-			799,784			799,784
2023		-			157,338			157,338			-			616,607			616,607
2024		-			34,385			34,385			-			480,881			480,881
2025											-			457,078			457,078
2026 & Thereafter											-			573,198			573,198
Undiscounted lease payments		31,842			1,119,185			1,151,027			8,528			3,331,967			3,340,495
Amount representing interest		(183	)		(96,211	)		(96,394	)		(27	)		(469,815	)		(469,842	)
Discounted lease payments	$	31,659		$	1,022,974		$	1,054,633		$	8,501		$	2,862,152		$	2,870,653

	~~Six months ended~~
	~~March 31, 2020~~
~~Lease costs:~~
~~Finance lease costs:~~
~~Amortization of right-of-use assets~~		~~11,456~~
~~Interest on lease liabilities~~		~~416~~

~~Operating lease costs:~~		~~156,777~~
~~Total lease cost~~		~~168,649~~

~~Other information:~~
~~Cash paid for amounts included in the measurement of lease liabilities:~~
~~Operating leases~~		~~11,872~~
~~Finance leases~~		~~398,580~~
		~~410,452~~

~~Weighted-average remaining lease term - finance leases (months)~~		16
~~Weighted-average remaining lease term - operating leases (months)~~		28

~~Weighted-average discount rate - finance leases~~		~~6.95~~	%
~~Weighted-average discount rate - operating leases~~		~~6.57~~	%

	Six months ended
	March 31, 2021			March 31, 2020
Lease costs:
Finance lease costs:
Depreciation of finance lease assets	$	11,456		$	11,456
Interest on lease liabilities		61			416

Operating lease costs:
Amortization of right-of-use assets		438,539			275,822
Interest on lease liabilities		34,613			20,375
Total lease cost	$	484,669		$	308,069

Other information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating leases	$	450,102		$	11,872
Finance leases		20,034			398,580
	$	470,136		$	410,452

Weighted-average remaining lease term - finance leases (months)		3			16
Weighted-average remaining lease term - operating leases (months)		72			28

Weighted-average discount rate - finance leases		3.63	%		3.63	%
Weighted-average discount rate - operating leases		6.85	%		6.57	%

	Three months ended March 31,					Six months ended March 31,
	2020		2019			2020		2019

Total net sales	$	-	$	11,882,090		$	-	$	23,449,045
Cost of sales		-		7,239,496			-		13,998,915
Operating, selling, general and administrative expenses		-		4,924,822			-		9,764,142
Other expenses		-		(28,747	)		-		297,751
Income (loss) from discontinued operations		-		(253,481	)		-		(611,763	)
Loss on sale of discontinued operations		-		-			-		-
Income tax provision		-		239			-		(66,660	)
Discontinued operations, net of tax	$	-	$	(253,720	)	$	-	$	(545,103	)

Exhibit No.		Description
2.2		Stock Purchase Agreement regarding the stock of Advanced Industrial Services, Inc., AIS Leasing Company, AIS Graphic Services, Inc., and AIS Energy Services, LLC, Dated December 15, 2015. ~~(6)~~(8)
2.3		Asset Purchase agreement between Periscope GmbH and ROB Centrex Assets UG, ROB Cemtrex Automotive GmbH, and ROB Cemtrex Logistics GmbH. (7)
3.1		Certificate of Incorporation of the Company.(1)
3.2		By Laws of the Company.(1)
3.3		Certificate of Amendment of Certificate of Incorporation, dated September 29, 2006.(1)
3.4		Certificate of Amendment of Certificate of Incorporation, dated March 30, 2007.(1)
3.5		Certificate of Amendment of Certificate of Incorporation, dated May 16, 2007.(1)
3.6		Certificate of Amendment of Certificate of Incorporation, dated August 21, 2007.(1)
3.7		Certificate of Amendment of Certificate of Incorporation, dated April 3, 2015.(3)
3.8		Certificate of Designation of the Series A Preferred Shares, dated September 8, 2009.(2)
3.9		Certificate of Designation of the Series 1 Preferred Stock.(11)
3.10		Certificate of Amendment of Certificate of Incorporation, dated September 7, 2017 (12)
3.11		Certificate of Designations of Series B Redeemable Convertible Preferred Stock..(21)
3.12		Certificate of Correction to the Certificate of Amendment to the Amended and Restated Certificate of Incorporation, as amended, of Cemtrex, Inc (6)
3.13		Amended Certificate of Designation of the Series 1 Preferred Shares, dated March 30, 2020.(16)
3.14		Certificate of Amendment of Certificate of Incorporation, dated July 29, 2020 (20)
3.15		Certificate of Correction of Certificate of Incorporation, dated July 29, 2021, filed October 7, 2020 (9)
4.1		Form of Subscription Rights Certificate. (10)
4.2		Form of Series 1 Preferred Stock Certificate. (10)
4.3		Form of Series 1 Warrant. (10)
4.4		Form of Common Stock Purchase Warrant, dated March 22, 2019. (14)
10.1		~~Dealer-Manager Agreement between Cemtrex, Inc. and Advisory Group Equity Services, Ltd. doing business as RHK Capital.dated November 21, 2018 (8)~~
~~10.2~~		~~At-The-Market Offering Agreement dated January 28, 2019, by and among Cemtrex, Inc. and Advisory Group Equity Services, Ltd. doing business as RHK Capital.(9)~~
~~10.3~~		~~Securities Purchase Agreement by and between Intercostal Capital, dated July 1, 2019 and Cemtrex, Inc., (13)~~
~~10.4~~		~~Share transfer and purchase agreement between Cemtrex, Ltd., Cemtrex, Inc. and Finvest GmbH i.G., Dennis Wenz, and Laura Wenz., dated August 15, 2019 (15)~~
~~10.5~~		Amendment of the Term Loan Agreement between Vicon and NIL Funding, dated March 4, 2020.(17)
10.2		Consulting Agreement, dated April 22, 2020 between Centrex, Inc. and Adtron, Inc. (5)
10.3		Securities Purchase Agreement dated June 1, 2020 (18)
10.4		Securities Purchase Agreement dated June 9, 2020 (19)
10.5		Settlement Agreement and Release between Cemtrex, Inc. and Aron Govil dated February 26, 2021 (13)
14.1		Corporate Code of Business Ethics.(4)
21.1*		Subsidiaries of the Registrant
31.1*		Certification of Chief Executive Officer as required by Rule 13a-14 or 15d-14 of the Exchange Act, as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Vice President of Finance and Principal Financial Officer as required by Rule 13a-14 or 15d-14 of the Exchange Act, as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act 0f of 2002.
32.2*		Certification of Vice President of Finance and Principal Financial Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act 0f of 2002.
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase
101.DEF*		XBRL Taxonomy Extension Definition Linkbase
101.LAB*		XBRL Taxonomy Extension Label Linkbase
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase

*		Filed herewith
1		Incorporated by reference from Form 10-12G filed on May 22, 2008.
2		Incorporated by reference from Form 8-K filed on September 10, 2009.
3		Incorporated by reference from Form 8-K filed on August 22, 2016.
4		Incorporated by reference from Form 8-K filed on July 1, 2016.
5	~~Intentionally omitted~~	Incorporated by reference from Form S-8 filed on May 1, 2020
6		Incorporated by reference from Form 8-K filed on June 12, 2019.
7		Incorporated by reference from Form 8-K/A filed on November 24, 2017.
8	~~Incorporated by reference from Form 8-K filed on November 21, 2018.~~
9	Incorporated by reference from Form ~~8-K~~8-K/A filed on ~~January 28, 2019.~~September 26, 2016.
9		Incorporated by reference from Form 10-Q filed on May 28, 2021.

10		Incorporated by reference from Form S-1 filed on August 29, 2016, and as amended on November 4, 2016, November 23, 2016, and December 7, 2016.
11		Incorporated by reference from Form 8-K filed on January 24, 2017.
12		Incorporated by reference from Form 8-K filed on September 8, 2017.
13		Incorporated by reference from Form ~~10-K~~8-K filed on ~~July 2, 2019.~~February 26, 2021.
14		Incorporated by reference from Form 8-K filed on March 22, 2019.
15	~~Incorporated by reference from Form 8-K filed on August 21, 2019.~~	Intentionally left blank
16		Incorporated by reference from Form 8-K filed on April 1, 2020.
17		Incorporated by reference from Form 8-K filed on March 9, 2020.
18		Incorporated by reference from Form 8-K filed on June 4, 2020.
19		Incorporated by reference from Form 8-K filed on June 12, 2020.
20		Incorporated by reference from Form 10-K filed on January 5, 2021.

	Cemtrex, Inc.

Dated: ~~May 14, 2020~~June 23, 2021	By:	/s/Saagar Govil ..
		Saagar Govil
		Chief Executive Officer

Dated: ~~May 14, 2020~~June 23, 2021		/s/ ~~Aron Govil~~Christopher C. Moore .
		~~Aron Govil~~Christopher C. Moore
		Chief Financial Officer
		and Principal Financial Officer