UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

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

For the quarterly period ended June 30, ~~2022~~2023

☐	~~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 Number 001-37464

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.)

135 Fell Ct. ~~276 Greenpoint Ave~~, ~~Suite 208~~, ~~Brooklyn~~Hauppauge, NY		~~11222~~11788
(Address of principal executive offices)		(Zip 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

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.

☒

~~Yes~~

☐

☒Yes ☐ No

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).

☒

~~Yes~~

☐

☒Yes ☐ No

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 ☒	Smaller reporting company ☒
		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~~

☒

☐ Yes ☒No

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

As of August ~~12, 2022,~~8, 2023, the issuer had ~~26,413,296~~998,334 shares of common stock issued and outstanding.

Table of Contents

~~Table of Contents~~

CEMTREX, INC. AND SUBSIDIARIES

INDEX

		Page

PART I. FINANCIAL INFORMATION		3

Item 1. Financial Statements		3

	Condensed Consolidated Balance Sheets as of June 30, ~~2022~~2023 (Unaudited) and September 30, ~~2021~~2022	3

	Condensed Consolidated Statements of Operations ~~and Comprehensive Income/(Loss)~~ for the three and nine months ended June 30, ~~2022~~2023 and ~~June 30, 2021~~2022 (Unaudited)	4

	Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended June 30, 2023 and 2022 (Unaudited)	5

	Condensed Consolidated Statement of Stockholders’ Equity for the three and nine months ended June 30, ~~2022~~2023 (Unaudited)	56

	Condensed Consolidated Statement of Stockholders’ Equity for the three and nine months ended June 30, ~~2021~~2022 (Unaudited)	67

	Condensed Consolidated Statements of Cash Flow for the nine months ended June 30, ~~2022~~2023 and ~~June 30, 2021~~2022 (Unaudited)	78

	Notes to Unaudited Condensed Consolidated Financial Statements	910

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		26
21
Item 4. Controls and Procedures		31

~~Item 4. Controls and Procedures~~PART II. OTHER INFORMATION		26

~~PART II. OTHER INFORMATION~~Item 1. Legal Proceedings		32
27
Item 1A Risk Factors		32

~~Item 1. Legal Proceedings~~		27

~~Item 1A Risk Factors~~		27

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		2732

Item ~~6. Exhibits~~3. Defaults Upon Senior Securities		2832

Item 4. Mine Safety Disclosures		32
~~SIGNATURES~~	29
Item 5. Other Information		32

Item 6. Exhibits		33

SIGNATURES		34

Part I. Financial Information

Item 1. Financial Statements

Cemtrex, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

	(Unaudited)						(Unaudited)
	June 30,			September 30,			June 30,			September 30,
	2022			2021			2023			2022
Assets
Current assets
Cash and equivalents	$	11,442,487		$	15,426,976		$	5,628,839		$	9,895,761
Restricted cash		1,518,720			1,759,347			805,273			1,577,915
Short-term investments		280,571			14,981			13,663			13,721
Trade receivables, net		7,564,382			7,810,896			7,507,755			5,399,216
Trade receivables - related party		1,472,514			1,487,155			578,388			-
Trade receivables, net								578,388			-
Inventory –net of allowance for inventory obsolescence		8,458,530			5,657,287			8,719,740			8,487,817
Prepaid expenses and other assets		2,407,116			2,585,652			3,089,416			2,421,644
Assets of discontinued operations								-			3,971,693
Total current assets		33,144,320			34,742,294			26,343,074			31,767,767

Property and equipment, net		6,239,239			6,738,944			6,180,771			5,280,442
Right-of-use assets		2,641,960			2,940,127			2,213,341			2,641,198
Royalties receivable - related party								691,611			-
Note receivable - related party								761,585			761,585
Goodwill		7,821,283			7,821,283			3,906,891			3,906,891
Other		1,356,766			697,240			1,646,403			1,399,745
Total Assets	$	51,203,568		$	52,939,888		$	41,743,676		$	45,757,628


Liabilities & Stockholders’ Equity (Deficit)
Liabilities & Stockholders’ Equity
Current liabilities
Accounts payable	$	5,401,538		$	4,235,002		$	3,725,105		$	3,050,937
Short-term liabilities		17,146,234			9,977,972
Accounts payable - related party								3,372			19,133
Accounts payable								3,372			19,133
Short-term liabilities, net of unamortized original issue discounts								17,185,167			16,894,743
Lease liabilities - short-term		819,488			830,791			716,896			754,495
Deposits from customers		113,106			536,220			34,281			73,144
Accrued expenses		1,176,787			1,621,053			3,536,097			2,271,188
Deferred revenue		2,594,517			2,004,170			2,060,570			1,551,088
Accrued income taxes		141,465			448,194			49,075			94,848
Liabilities of discontinued operations								-			805,219
Total current liabilities		27,393,135			19,653,402			27,310,563			25,514,795

Long-term liabilities
Loans payable to bank		141,239			767,279			54,578			110,331
Long-term lease liabilities		1,799,002			2,017,408			1,496,445			1,822,468
Notes payable		228,893			2,350,000			1,379,743			-
Mortgage payable		2,184,404			2,257,785			2,110,020			2,160,169
Other long-term liabilities		825,629			839,171			528,952			807,898
Paycheck Protection Program Loans		97,120			1,032,200			60,695			97,120
Deferred Revenue - long-term		584,003			467,967			623,007			607,309
Total long-term liabilities		5,860,290			9,731,810			6,253,440			5,605,295

Total liabilities		33,253,425			29,385,212			33,564,003			31,120,090

Commitments and contingencies		-			-			-			-

Shareholders’ equity
Preferred stock , $0.001 par value, 10,000,000 shares authorized, Series 1, 3,000,000 shares authorized, 2,079,122 shares issued and 2,015,022 shares outstanding as of June 30, 2022 and 1,885,151 shares issued and 1,821,051 shares outstanding as of September 30, 2021 (liquidation value of $10 per share)		2,079			1,885
Series C, 100,000 shares authorized, 50,000 shares issued and outstanding at June 30, 2022 and September 30, 2021		50			50
Common stock, $0.001 par value, 50,000,000 shares authorized, 26,263,296 shares issued and outstanding at June 30, 2022 and 20,782,194 shares issued and outstanding at September 30, 2021		26,263			20,782
Stockholders’ equity

Preferred stock, $0.001 par value, 10,000,000 shares authorized, Series 1, 3,000,000 shares authorized, 2,293,016 shares issued and 2,228,916 shares outstanding as of June 30, 2023 and 2,079,122 shares issued and 2,015,022 shares outstanding as of September 30, 2022 (liquidation value of $10 per share)								2,293			2,079

Series C, 100,000 shares authorized, 50,000 shares issued and outstanding at June 30, 2023 and September 30, 2022								50			50

Common stock, $0.001 par value, 50,000,000 shares authorized, 957,760 shares issued and outstanding at June 30, 2023 and 754,711 shares issued and outstanding at September 30, 2022								958			755
Additional paid-in capital		66,522,085			61,727,834			68,302,617			66,641,698
Retained earnings (accumulated deficit)		(51,788,053	)		(41,908,062	)
Treasury stock at cost		(148,291	)		(148,291	)
Accumulated other comprehensive income (loss)		2,555,441			2,896,452
Accumulated deficit								(62,947,549	)		(54,929,020	)
Treasury stock, 64,100 shares of Series 1 Preferred Stock at June 30, 2023 and September 30, 2022								(148,291	)		(148,291	)
Accumulated other comprehensive income								2,306,346			2,377,525
Total Cemtrex stockholders’ equity		17,169,574			22,590,650			7,516,424			13,944,796
Non-controlling interest		780,569			964,026			663,249			692,742
Total liabilities and shareholders’ equity	$	51,203,568		$	52,939,888		$	41,743,676		$	45,757,628

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

Cemtrex, Inc. and Subsidiaries

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

(Unaudited)

For the three months ended For the nine months ended
June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Revenues 13,630,846 10,326,431 37,031,550 28,422,892
Cost of revenues 7,754,490 6,198,715 23,233,389 16,360,822
Gross profit 5,876,356 4,127,716 13,798,161 12,062,070

Operating expenses
General and administrative 6,948,959 5,670,019 20,318,196 16,337,200
Research and development 1,048,246 757,966 3,474,674 2,033,688
Total operating expenses 7,997,205 6,427,985 23,792,870 18,370,888
Operating income/(loss) (2,120,849 ) (2,300,269 ) (9,994,709 ) (6,308,818 )

Other income/(expense)
Other income/(expense) 2,072,265 3,901,658 3,337,365 6,532,590
Settlement Agreement - Related Party - - - 3,674,165
Interest Expense (931,059 ) (433,009 ) (3,654,045 ) (1,891,026 )
Total other income/(expense), net 1,141,206 3,468,649 (316,680 ) 8,315,729

Net loss before income taxes (979,643 ) 1,168,380 (10,311,389 ) 2,006,911
Income tax benefit/(expense) 247,941 (40,759 ) 247,941 (168,190 )
Net income/(loss) (731,702 ) 1,127,621 (10,063,448 ) 1,838,721

Less loss in noncontrolling interest (50,909 ) 29,608 (183,457 ) (20,813 )
Net income/(loss) attributable to Cemtrex, Inc. shareholders $ (680,793 ) $ 1,098,013 $ (9,879,991 ) $ 1,859,534

Other comprehensive income/(loss)
Net income/(loss) $ (731,702 ) $ 1,127,621 $ (10,063,448 ) $ 1,838,721
Foreign currency translation loss (200,880 ) (193,554 ) (341,011 ) (234,045 )
Defined benefit plan actuarial gain - - - 87,895
Comprehensive income/(loss) (932,582 ) 934,067 (10,404,459 ) 1,692,571
Less comprehensive loss attributable to noncontrolling interest 50,909 (35,731 ) 183,457 14,524
Comprehensive income/(loss) attributable to Cemtrex, Inc. shareholders $ (983,491 ) $ 969,798 $ (10,587,916 ) $ 1,678,047

Income/(loss) Per Share-Basic $ (0.03 ) $ 0.06 $ (0.41 ) $ 0.10
Income/(loss) Per Share-Diluted $ (0.03 ) $ 0.06 $ (0.41 ) $ 0.10

Weighted Average Number of Shares-Basic 25,777,704 18,711,463 24,316,527 18,368,274
Weighted Average Number of Shares-Diluted 25,777,704 18,711,463 24,316,527 18,368,274

	June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022
	For the three months ended						For the nine months ended
	June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022

Revenues	$	14,730,140		$	12,108,904		$	42,773,779		$	33,268,316
Cost of revenues		8,249,497			7,068,797			23,914,249			21,236,178
Gross profit		6,480,643			5,040,107			18,859,530			12,032,138
Operating expenses
General and administrative		5,376,960			5,381,529			16,456,602			16,095,373
Research and development		1,049,909			1,189,875			3,895,717			3,660,883
Total operating expenses		6,426,869			6,571,404			20,352,319			19,756,256
Operating income/(loss)		53,774			(1,531,297	)		(1,492,789	)		(7,724,118	)
Other income/(expense)
Other income		34,652			2,315,500			394,073			3,336,560
Interest expense		(1,254,185	)		(925,545	)		(3,717,557	)		(3,641,432	)
Total other (expense)/income, net		(1,219,533	)		1,389,955			(3,323,484	)		(304,872	)
Net loss before income taxes		(1,165,759	)		(141,342	)		(4,816,273	)		(8,028,990	)
Income tax benefit/(expense)		(19,641	)		247,941			(19,641	)		247,941
(Loss)/income from Continuing operations		(1,185,400	)		106,599			(4,835,914	)		(7,781,049	)
Income/(loss) from discontinued operations, net of tax		13,281			(838,301	)		(3,212,108	)		(2,282,399	)
Net loss		(1,172,119	)		(731,702	)		(8,048,022	)		(10,063,448	)
Less loss in noncontrolling interest		(25,595	)		(50,909	)		(29,493	)		(183,457	)
Net loss attributable to Cemtrex, Inc. shareholders	$	(1,146,524	)	$	(680,793	)	$	(8,018,529	)	$	(9,879,991	)
Income (loss) per share - Basic & Diluted
Continuing Operations	$	(1.29	)	$	0.21		$	(5.83	)	$	(10.94	)
Discontinued Operations	$	0.01		$	(1.14	)	$	(3.89	)	$	(3.29	)
Weighted Average Number of Shares-Basic & Diluted		897,897			736,506			824,689			694,758

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)

	June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022
	For the three months ended						For the nine months ended
	June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022
Other comprehensive loss
Net loss	$	(1,172,119	)	$	(731,702	)	$	(8,048,022	)	$	(10,063,448	)
Foreign currency translation gain/(loss)		22,470			(200,880	)		(71,179	)		(341,011	)
Comprehensive loss		(1,149,649	)		(932,582	)		(8,119,201	)		(10,404,459	)
Less comprehensive income attributable to noncontrolling interest		25,595			50,909			29,493			183,457
Comprehensive loss attributable to Cemtrex, Inc. shareholders	$	(1,175,244	)	$	(983,491	)	$	(8,148,694	)	$	(10,587,916	)

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)

	Shares		Amount			Shares		Amount		Shares		Amount		Capital			Deficit)			At cost			Income(loss)			Equity			interest			Shares		Amount		Shares		Amount		Shares		Amount		Capital			Deficit			Stock			Income(loss)			Equity			interest
	Preferred Stock Series 1					Preferred Stock Series C				Common Stock Par							Retained						Accumulated									Preferred Stock Series 1				Preferred Stock Series C				Common Stock Par										Treasury Stock, 64,100
	Par Value $0.001					Par Value $0.001				Value $0.01				Additional			Earnings			Treasury			other			Cemtrex			Non-			Par Value $0.001				Par Value $0.001				Value $0.001										shares of
	Number of					Number of				Number of				Paid-in			(Accumulated			Stock,			Comprehensive			Stockholders’			controlling			Number of				Number of				Number of				AdditionalPaid-in			Accumulated			Series 1 Preferred			Accumulated otherComprehensive			Cemtrex Stockholders’			Non-controlling
	Shares		Amount			Shares		Amount		Shares		Amount		Capital			Deficit)			At cost			Income(loss)			Equity			interest			Shares		Amount		Shares		Amount		Shares		Amount		Capital			Deficit			Stock			Income(loss)			Equity			interest
Balance at September 30, 2021		1,885,151	$	1,885	-		50,000	$	50		20,782,194	$	20,782	$	61,727,834		$	(41,908,062	)	$	(148,291	)	$	2,896,452		$	22,590,650		$	964,026
Balance at September 30, 2022																																	2,079,122	$	2,079		50,000	$	50		754,711	$	755	$	66,641,698		$	(54,929,020	)	$	(148,291	)	$	2,377,525		$	13,944,796		$	692,742
Foreign currency translation gain/(loss)																								59,492			59,492																											223,569			223,569
Share-based compensation															45,371												45,371																		39,842												39,842
Shares issued to pay notes payable											2,891,016		2,891		3,285,180												3,288,071														39,016		39		232,106												232,145
Dividends paid in Series 1 preferred shares		94,602		95											(95	)											-						104,341		104										(104	)											-
Income/(loss) attributable to noncontrolling interest																											-			(51,872	)																										-			(59,163	)
Net loss				-	-				-				-					(4,477,951	)		-						(4,477,951	)									-		-									(6,277,211	)		-						(6,277,211	)
Balance at December 31, 2021		1,979,753	$	1,980	-		50,000	$	50		23,673,210	$	23,673	$	65,058,290		$	(46,386,013	)	$	(148,291	)	$	2,955,944		$	21,505,633		$	912,154
Balance at December 31, 2022																																	2,183,463	$	2,183		50,000	$	50		793,727	$	794	$	66,913,542		$	(61,206,231	)	$	(148,291	)	$	2,601,094		$	8,163,141		$	633,579
Foreign currency translation gain/(loss)																							$	(199,623	)		(199,623	)																										(317,218	)		(317,218	)
Share-based compensation														$	27,046												27,046																		26,735												26,735
Shares issued with note payable											1,000,000	$	1,000	$	694,400												695,400
Additional rounding shares issued for reverse stock split																																									19,314		19		(19	)											-
Income/(loss) attributable to noncontrolling interest																											-		$	(80,676	)																										-			55,265
Shares issued to pay for services																																									15,529		15		102,485												102,500
Net loss				-	-				-				-				$	(4,721,247	)		-						(4,721,247	)					-		-		-		-									(594,794	)		-						(594,794	)
Balance at March 31, 2022		1,979,753		1,980	-		50,000		50		24,673,210		24,673		65,779,736			(51,107,260	)		(148,291	)		2,756,321			17,307,209			831,478
Balance at March 31, 2023																																	2,183,463	$	2,183		50,000	$	50		828,570	$	828	$	67,042,743		$	(61,801,025	)	$	(148,291	)	$	2,283,876		$	7,380,364		$	688,844
Foreign currency translation gain/(loss)																								(200,880	)		(200,880	)																										22,470			22,470
Share-based compensation															38,985												38,985																		26,736												26,736
Dividends paid in Series 1 preferred shares																																	109,553		110										(110	)											-
Shares issued to pay notes payable											1,590,086		1,590		703,463												705,053														122,702		123		1,193,883												1,194,006
Dividends paid in Series 1 preferred shares		99,369		99											(99	)											-
Income/(loss) attributable to noncontrolling interest																											-			(50,909	)																										-			(25,595	)
Shares issued to pay for services																																									6,488		7		39,365												39,372
Net loss				-	-				-				-					(680,793	)		-						(680,793	)									-		-		-							(1,146,524	)		-			-			(1,146,524	)		-
Balance at June 30, 2022		2,079,122		2,079	-		50,000		50		26,263,296		26,263		66,522,085			(51,788,053	)		(148,291	)		2,555,441			17,169,574			780,569
Balance at June 30, 2023																																	2,293,016	$	2,293		50,000	$	50		957,760	$	958	$	68,302,617		$	(62,947,549	)	$	(148,291	)	$	2,306,346		$	7,516,424		$	663,249

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

Cemtrex, Inc. and Subsidiaries

Condensed Consolidated Statement of Stockholders’ Equity (Continued)

(Unaudited)

	Shares			Amount			Shares			Amount			Shares			Amount			Shares		Amount		Capital			Deficit)			At cost			Income(loss)			Equity			interest			Preferred Stock Series 1				Preferred Stock Series C				Common Stock Par										Treasury Stock,64,100
	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				Value $0.001										shares of
	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				Additional Paid-in			Accumulated			Series 1 Preferred			Accumulated other Comprehensive			Cemtrex			Non- controlling
	Number of						Number of						Number of						Number of				Paid-in			(Accumulated			Stock,			Comprehensive			Stockholders’			controlling			Shares		Amount		Shares		Amount		Shares		Amount		Capital			Deficit			Stock			Income(loss)			Stockholders’Equity			interest
	Shares			Amount			Shares			Amount			Shares			Amount			Shares		Amount		Capital			Deficit)			At cost			Income(loss)			Equity			interest
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		$	(34,100,067	)	$	(148,291	)	$	1,812,457		$	27,806,745		$	1,042,300
Balance at September 30, 2021																																										1,885,151	$	1,885		50,000	$	50		593,777	$	594	$	61,748,022		$	(41,908,062	)	$	(148,291	)	$	2,896,452		$	22,590,650		$	964,026
Foreign currency translation gain/(loss)																																	37,864			37,864																											59,492			59,492
Share-based compensation																								16,071												16,071																		45,371												45,371
Shares issued to pay notes payable																				345,638		345		407,507												407,852														82,600		83		3,287,988												3,288,071
Dividends paid in Series 1 preferred shares		108,169			108																			(108	)											-						94,602		95										(95	)											-
Income/(loss) attributable to noncontrolling interest																																				-			(40,247	)																										-			(51,872	)
Net loss					-						-						-					-					(1,692,611	)		-						(1,692,611	)									-		-									(4,477,951	)		-						(4,477,951	)
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			(35,792,678	)		(148,291	)		1,850,321			26,575,921			1,002,053

Balance at December 31, 2021																																										1,979,753	$	1,980		50,000	$	50		676,377	$	677	$	65,081,286		$	(46,386,013	)	$	(148,291	)	$	2,955,944		$	21,505,633		$	912,154
Foreign currency translation gain/(loss)																																	(97,423	)		(97,423	)																										(199,623	)		(199,623	)
Defined benefit plan actuarial gain/(loss)																																	87,895			87,895
Share-based compensation																																																						27,046												27,046
Shares issued with note payable																																																		28,571		29		695,371												695,400
Income/(loss) attributable to noncontrolling interest																																																																		-			(80,676	)
Net loss																																										-		-		-		-									(4,721,247	)		-						(4,721,247	)
Balance at March 31, 2022																																										1,979,753	$	1,980		50,000	$	50		704,948	$	706	$	65,803,703		$	(51,107,260	)	$	(148,291	)	$	2,756,321		$	17,307,209		$	831,478
Balance																																										1,979,753	$	1,980		50,000	$	50		704,948	$	706	$	65,803,703		$	(51,107,260	)	$	(148,291	)	$	2,756,321		$	17,307,209		$	831,478
Foreign currency translation gain/(loss)																																																															(200,880	)		(200,880	)
Share-based compensation																								49,246												49,246																		38,985												38,985
Shares issued to pay notes payable																				743,286		743		1,298,733												1,299,476														45,432		45		705,008												705,053
Income in noncontrolling interest																																							(10,174	)
Shares and options surrendered in settelment agreement		(469,949	)		(470	)		(1,000,000	)		(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			(33,338,546	)		(148,291	)		1,840,793			26,695,082			991,879
Foreign currency translation gain/(loss)																																	(199,677	)		(199,677	)
Dividends paid in Series 1 preferred shares		90,147			90																			(90	)											-						99,369		99										(99	)											-
Share-based compensation																								45,587												45,587
Shares granted to pay notes payable																								480,509												480,509
Income in noncontrolling interest																																				-			35,731
Net income					-						-						-					-					1,098,013			-						1,098,013
Net income/ (loss)																											1,098,013									1,098,013
Balance at June 30, 2021		1,885,151			1,885			-			-			50,000			50			18,711,463		18,711		58,846,576			(32,240,533	)		(148,291	)		1,641,116			28,119,514			1,027,610
Income/(loss) attributable to noncontrolling interest																																																																		-			(50,909	)
Net loss																																														-		-									(680,793	)		-						(680,793	)
Balance at June 30, 2022																																										2,079,122	$	2,079		50,000	$	50		750,380	$	751	$	66,547,597		$	(51,788,053	)	$	(148,291	)	$	2,555,441		$	17,169,574		$	780,569
Balance																																										2,079,122	$	2,079		50,000	$	50		750,380	$	751	$	66,547,597		$	(51,788,053	)	$	(148,291	)	$	2,555,441		$	17,169,574		$	780,569

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

~~Cemtrex, Inc. and Subsidiaries~~

~~Condensed Consolidated Statements of Cash Flows~~

~~(Unaudited)~~

For the nine months ended
June 30,
Cash Flows from Operating Activities 2022 2021

Net income/(loss) $ (10,063,448 ) $ 1,838,721

Adjustments to reconcile net income/(loss) to net cash used by operating activities
Depreciation and amortization 1,346,383 972,186
Loss on disposal of property and equipment
161,814
18,583
Noncash lease expense 615,354 653,175
Change in allowance for doubtful accounts (7,584 ) (161,101 )
Share-based compensation 111,402 110,904
Income tax expense/ (benefit) (247,941 ) 168,190
Interest expense paid in equity shares 1,627,046 818,348
Accrued interest on notes payable 635,001 64,748
Amortization of original issue discounts on notes payable 908,333 575,000
Gain on marketable securities (2,234,478 ) (2,407,841 )
Discharge of Paycheck Protection Program Loans (971,500 ) (3,349,700 )
Settlement Agreement - Related Party - (3,674,165 )

Changes in operating assets and liabilities net of effects from acquisition of subsidiaries:
Accounts receivable 254,098 1,613,682
Accounts receivable - related party 14,641 (78,594 )
Inventory (2,801,243 ) (1,875,591 )
Prepaid expenses and other current assets 178,536 (976,050 )
Other assets (159,526 ) 149,778
Other liabilities (13,542 ) 15,019
Accounts payable 1,166,536 30,327
Operating lease liabilities (546,896 ) (650,535 )
Deposits from customers (423,114 ) 9,567
Accrued expenses (444,266 ) (78,851 )
Deferred revenue 706,383 124,637
Income taxes payable (58,788 ) (88,987 )
Net cash used by operating activities (10,246,799 ) (6,178,550 )

Cash Flows from Investing Activities
Purchase of property and equipment (1,003,121 ) (1,113,658 )
Proceeds from sale of property and equipment
51,262
-
Investment in MasterpieceVR (500,000 ) (500,000 )
Investment in related party - (1,075,428 )
Proceeds from sale of marketable securities 12,182,932 9,134,159
Purchase of marketable securities (10,214,044 ) (6,290,747 )
Net cash used by investing activities
517,029
154,326

Cash Flows from Financing Activities
Proceeds from notes payable 8,000,000 -
Payments on notes payable (1,176,763 ) (2,145,257 )
Payments on capital lease liabilities - (20,061 )
Payments on bank loans (920,939 ) (957,186 )
Proceeds from Paycheck Protection Program Loans - 2,942,285
Net cash provided/(used) by financing activities 5,902,298 (180,219 )

Effect of currency translation (397,644 ) (386,160 )
Defined benefit plan actuarial gain/(loss) - 87,895
Net decrease in cash, cash equivalents, and restricted cash (3,827,472 ) (6,204,443 )
Cash, cash equivalents, and restricted cash at beginning of period 17,186,323 21,072,859
Cash, cash equivalents, and restricted cash at end of period $ 12,961,207 $ 14,570,151

Balance Sheet Accounts Included in Cash, Cash Equivalents, and Restricted Cash
Cash and equivalents $ 11,442,487 $ 12,879,278
Restricted cash 1,518,720 1,690,873
Total cash, cash equivalents, and restricted cash $ 12,961,207 $ 14,570,151

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

Cemtrex, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	For the nine months ended
	June 30,
Cash Flows from Operating Activities	2023			2022

Net loss	$	(8,048,022	)	$	(10,063,448	)

Adjustments to reconcile net loss to net cash used by operating activities
Depreciation and amortization		698,269			1,038,138
Loss on disposal of property and equipment		69,611			161,814
Noncash lease expense		614,254			524,500
Bad debt expense (recovery)		(155	)		(7,584	)
Share-based compensation		93,313			111,402
Income tax expense/ (benefit)		-			(247,941	)
Interest expense paid in equity shares		276,151			1,627,046
Accrued interest on notes payable		1,858,631			635,001
Amortization of original issue discounts on notes payable		1,200,200			908,333
Gain/(loss) on marketable securities		58			(2,234,478	)
Discharge of Paycheck Protection Program Loans		-			(971,500	)

Changes in operating assets and liabilities net of effects from acquisition of subsidiaries:
Trade receivables		(2,108,384	)		445,590
Trade receivables - related party		(578,388	)		14,641
Inventory		(231,923	)		(2,565,778	)
Prepaid expenses and other current assets		(667,772	)		125,344
Other assets		(246,658	)		(159,526	)
Accounts payable		816,040			1,012,206
Accounts payable - related party		(15,761	)		-
Operating lease liabilities		(550,019	)		(456,042	)
Deposits from customers		(38,863	)		(374,978	)
Accrued expenses		1,264,909			(444,238	)
Deferred revenue		525,180			470,685
Income taxes payable		(45,773	)		(59,588	)
Other liabilities		(278,946	)		(159,526	)
Net cash used by operating activities - continuing operations		(5,394,048	)		(10,669,927	)
Net cash provided by operating activities - discontinued operations		2,474,863			41,562
Net cash used by operating activities		(2,919,185	)		(10,628,365	)

Cash Flows from Investing Activities
Purchase of property and equipment		(761,470	)		(727,955	)
Proceeds from sale of property and equipment		26,205			51,262
Investment in MasterpieceVR		-			(500,000	)
Proceeds from sale of marketable securities		-			12,182,932
Purchase of marketable securities		-			(10,214,044	)
Net cash (used in)/provided by investing activities - continuing operations		(735,265	)		792,195
Net cash used by investing activities - discontinued operations		-			(39,388	)
Net cash (used in)/provided by investing activities		(735,265	)		752,807

Cash Flows from Financing Activities
Proceeds from notes payable		-			8,000,000
Payments on debt		(844,370	)		(1,176,763	)
Payments on Paycheck Protection Program Loans		(20,154	)		-
Payments on bank loans		(416,467	)		(920,939	)
Net cash provided by financing activities - continuing operations		(1,280,991	)		5,902,298
Net cash used by financing activities - discontinued operations		-			-
Net cash (used)/provided by financing activities		(1,280,991	)		5,902,298

Effect of currency translation		(104,123	)		(397,840	)
Net decrease in cash, cash equivalents, and restricted cash		(4,935,441	)		(3,973,260	)
Cash, cash equivalents, and restricted cash at beginning of period		11,473,676			17,186,323
Cash, cash equivalents, and restricted cash at end of period	$	6,434,112		$	12,815,223

Balance Sheet Accounts Included in Cash, Cash Equivalents, and Restricted Cash
Cash and equivalents	$	5,628,839		$	11,442,487
Less cash attributed to discontinued operations		-			(145,984	)
Restricted cash		805,273			1,518,720
Total cash, cash equivalents, and restricted cash	$	6,434,112		$	12,815,223

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

Cemtrex, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Continued)

(Unaudited)

Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest	$	483,665	$	432,930	$	382,575	$	483,665

Cash paid during the period for income taxes	$	306,729	$	88,765
Cash paid during the period for income taxes, net of refunds					$	45,773	$	306,729

Supplemental Schedule of Non-Cash Investing and Financing Activities
Investment in Virtual Driver Interactive	$	-	$	439,774
Stock issued to pay notes payable	$	3,993,124	$	2,187,837
Shares issued to pay for services					$	141,872	$	-
Shares issued to pay notes payable					$	1,426,151	$	3,993,124
Purchase of property and equipment through vendor financing					$	1,125,000	$	-
Shares issued in connection with note payable	$	700,400	$	-	$	-	$	700,400
Financing of right of use assets	$	317,187	$	-
Investment in right of use asset					$	186,397	$	317,187

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

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 growth into a leading multi-industry ~~technology~~ company. ~~The Company has expanded in a wide range of sectors, including smart technologies, virtual and augmented realities, industrial solutions, and intelligent security systems.~~ Unless the context requires otherwise, all references to “we”, “our”, “us”, “Company”, “registrant”, “Cemtrex” or “management” refer to Cemtrex, Inc. and its subsidiaries.

During the first quarter of fiscal year 2023, The Company ~~has two business~~reorganized its reporting segments to be in line with its current structure consisting of (i) ~~Advanced Technologies (AT) and~~Security (ii) Industrial Services ~~(IS).~~and (iii) Cemtrex Corporate.

~~Advanced Technologies (AT)~~Security

Cemtrex’s ~~Advanced Technologies~~Security segment operates ~~several brands that deliver cutting-edge software~~under the brand of its majority owned subsidiary, Vicon Industries, Inc. (“Vicon”), which provides end-to-end security solutions to meet the toughest corporate, industrial and ~~hardware technologies:~~governmental security challenges. Vicon’s products include browser-based video monitoring systems and analytics-based recognition systems, cameras, servers, and access control systems for every aspect of security and surveillance in industrial and commercial facilities, federal prisons, hospitals, universities, schools, and federal and state government offices. Vicon provides innovative, mission critical security and video surveillance solutions utilizing Artificial Intelligence (AI) based data algorithms.

	-	~~Vicon Industries –~~ Vicon Industries, a majority owned subsidiary, provides end-to-end video security solutions to meet the toughest corporate, industrial and governmental security challenges. Vicon’s products include browser-based video monitoring systems and analytics-based recognition systems, cameras, servers, and access control systems for every aspect of security and surveillance in industrial and commercial facilities, federal prisons, hospitals, universities, schools, and federal and state government offices. Vicon provides cutting edge, mission critical security and video surveillance solutions utilizing Artificial Intelligence (AI) based data algorithms.
	-	~~SmartDesk –~~ ~~SmartDesk is focused on reinventing the workspace through developing state-of-the-art, modern, fully integrated, workplace solutions.~~
	-	~~Cemtrex XR (“CXR”)~~ – CXR is focused on realizing the potential of the metaverse. CXR delivers Virtual Reality (VR) and Augmented Reality (AR) solutions that provide higher productivity, progressive design and impactful experiences for consumer products, and various commercial and industrial applications. The Company is in the process of developing virtual reality applications for commercialization in the metaverse over the next couple years. CXR also invests in emerging startups focused on building best in class solutions for the metaverse.
	-	~~Virtual Driver Interactive (“VDI”)~~ ~~– VDI provides innovative driver training simulation solutions for effective and engaging learning for all ages and skills.~~
	-	~~Bravo Strong~~ ~~– Bravo Strong is a gaming and content studio working to building games and experiences for the metaverse.~~
	-	~~good tech (formerly Cemtrex Labs)~~ ~~– good tech provides mobile, web, and enterprise software application development services for startups to large enterprises.~~

Industrial Services ~~(IS)~~

Cemtrex’s ISIndustrial Services segment operates ~~through a~~under the brand, Advanced Industrial Services (“AIS”), ~~that~~which offers single-source expertise and services for rigging, millwrighting, in plant maintenance, equipment erection, relocation, and disassembly to diversified customers. ~~We install~~AIS installs high precision equipment in a wide variety of industrial markets like automotive, printing & graphics, industrial automation, packaging, and chemicals, among others. ~~We are~~AIS is 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.

Cemtrex Corporate

~~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 of $175,428~~.

~~For over 10 years, VDI has been known for its effective and engaging driver training systems, designed for users~~Cemtrex’s Corporate segment is the holding company 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. Results 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~~our other two ~~installments of $239,774~~ ~~plus accumulated interest on October 26, 2021, and $200,000~~ ~~plus accumulated interest on October 26, 2022. Additionally, the Company paid contingent consideration of $175,428~~ in May 2021. There is no further contingent consideration specified in the purchase agreement. The Company has accounted for this acquisition as a business combination and has allocated the purchase price as follows, $~~876,820~~ ~~to proprietary software, $39,992~~ ~~to inventory, and $598,391~~ ~~to goodwill.~~segments.

~~Strategic Investment~~Sale of former Cemtrex Brands

On November ~~13, 2020, Cemtrex made a $500,000~~ ~~investment~~22, 2022, the Company entered into two Asset Purchase Agreements and ~~on January 19, 2022, made an additional $500,000~~ ~~investment via a simple agreement~~one Simple Agreement for ~~future equity~~Future Equity (“SAFE”) ~~in MasterpieceVR. The SAFE provides that~~with the Company’s CEO, Saagar Govil, to secure the sale of the subsidiaries Cemtrex Advanced Technologies, Inc, which include the brand SmartDesk, and Cemtrex XR, Inc., which include the brands Cemtrex XR, Virtual Driver Interactive, Bravo Strong, and good tech (formerly Cemtrex Labs), to Mr. Govil.

On November 22, 2022, the Company ~~will automatically receive shares of~~completed the entity based on the conversion rate of future equity rounds up to a valuation cap, as defined. MasterpieceVR is a software company that is developing software for content creation using virtual reality. The investment is included in other assets in the accompanying balance sheet and the Company accounts for this investment and recorded at cost. No impairment has been recordedabove disposition for the ~~period ended June 30, 2022.~~following consideration.

●

Cemtrex XR, Inc.

○

$895,000 comprised of:

	■	$75,000 in cash payable at Closing; and
	■	5% royalty of all revenues on the Business to be paid 90 days after the end of each calendar year for the next three years; and should the total sum of royalties due be less than $820,000 at the end of the three-year period, Purchaser shall be obligated to pay the difference between $820,000 and the royalties paid.

●

Cemtrex Advanced Technologies, Inc.

	○	$10,000 in cash payable at Closing; and
	○	5% royalty of all revenues on the Business to be paid 90 days after the end of each calendar year for the next 5 years; and
	○	$1,600,000 in SAFE (common equity) at any subsequent fundraising or exit above $5M with a $10M cap.

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

~~Potential Impacts~~Common Stock Reverse Stock Split

On January 25, 2023, the company completed a 35:1 reverse stock split on its common stock. All share and per share data have been retroactively adjusted for this reverse split.

Notice of ~~COVID-19~~Delisting, Extension of cure period, and Subsequent Compliance

Series 1 Preferred Stock

On July 29, 2022, the Company received a notification letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, because the closing bid price for the Company’s Series 1 preferred stock listed on ~~our Business~~Nasdaq was below $1.00 for 30 consecutive trading days, the Company no longer met the minimum bid price requirement for continued listing on The Nasdaq Capital Market under Nasdaq Marketplace Rule 5550(a)(2), requiring a minimum bid price of $1.00 per share (the “Minimum Bid Price Requirement”).

On January 26, 2023, the Company received a notification letter from the Listing Qualifications Department of Nasdaq notifying the Company that, it had been granted an additional 180 days or until July 24, 2023, to regain compliance with the Minimum Bid Price Requirement based on the Company meeting the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing on the Capital Market with the exception of the bid price requirement, and the Company’s written notice of its intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary.

On July 25, 2023, the Company received a Notice of Staff Determination from the Listing Qualifications Department of Nasdaq notifying the Company that its Series 1 Preferred Stock had not gained compliance and would be suspended from trading at the opening of business on August 3, 2023. The Company has requested a hearing regarding the delisting that has been scheduled for September 14, 2023, which will stay the suspension and filing of Form 25-NSE with the Securities and Exchange Commission.

The Company intends to continue actively monitoring the bid price for its Series 1 preferred stock between now and the hearing date and will consider available options to resolve the deficiency and regain compliance with the Minimum Bid Price Requirement.

Common Stock

On January 24, 2022, the Company received a notification letter from the Listing Qualifications Department of Nasdaq notifying the Company that, because the closing bid price for the Company’s common stock listed on Nasdaq was below $1.00 for 30 consecutive trading days, the Company no longer met the minimum bid price requirement for continued listing on The Nasdaq Capital Market under Nasdaq Marketplace Rule 5550(a)(2), requiring a minimum bid price of $1.00 per share (the “Minimum Bid Price Requirement”).

On July 26, 2022, the Company received a notification letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC Nasdaq notifying the Company that, it had been granted an additional 180 days or until January 23, 2023, to regain compliance with the Minimum Bid Price Requirement based on the Company meeting the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing on the Capital Market with the exception of the bid price requirement, and the Company’s written notice of its intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary.

On January 26, 2023, the Company received a notification letter from the Listing Qualifications Department of Nasdaq notifying the Company that it has not regained compliance with Listing Rule 5550(a)(2) and accordingly would be delisted from the Capital Market. The Company then requested and had been granted a hearing to occur on March 16, 2023, appealing this determination to a Hearings Panel (the “Panel”), pursuant to the procedures set forth in the Nasdaq Listing Rule 5800 Series.

On February 8, 2023, the Company received a notification letter from the Listing Qualifications Department of Nasdaq notifying the Company that it has regained compliance with Listing Rule 5550(a)(2) and is in compliance with all applicable listing standards. The Company’s common stock will continue to be listed and traded on The Nasdaq Stock Market.

Going Concern Considerations

The ~~COVID-19 pandemic impacted our business operations~~accompanying condensed consolidated financial statements of the Company have been prepared assuming the Company will continue as a going concern and ~~the results of our operations during fiscal years 2020 and 2021, primarily~~in accordance with delays in orders by many customers and new product development, including newer versions of surveillance software since our technical facility in Pune, India had been under lock down on multiple occasions. Overall bookings levelgenerally accepted accounting principles in the ~~IS segment~~United States of ~~our business were down by more than 20%, compared~~America. The going concern basis of presentation assumes that the Company will continue in operation one year after the date these financial statements are issued and will be able to ~~fiscal 2019 levels, however our AT segment had experienced relatively less slow down. Bookings~~realize its assets and ~~revenue~~discharge its liabilities and commitments in the normal course of business. Pursuant to the requirements of the ASC 205, management must evaluate whether there are ~~recovering~~conditions or events, considered in ~~this fiscal year compared to last year. However, due to ongoing delays in certain supply chain areas,~~ the ~~expected launch times of our new products and new versions has resulted in delays of several months. These supply chain issues have also affected~~aggregate, which raise substantial doubt about the Company’s ability to ~~obtain inventory~~continue as a going concern for ~~our current bookings, and~~one year from the date these financial statements are issued.

This evaluation does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented or are not within control of the Company ~~has~~as of the date the financial statements are issued. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a ~~buildup of inventory levels to remain competitive and keep backlog orders at a minimum. Additionally, increased costs and~~going concern within one year after the ~~need to increase wages to retain talent may cause our gross margin percentages to shrink and our operational costs to rise. In response to these increased costs,~~date that the ~~Company has implemented an ongoing review of our pricing to cover these additional costs while remaining competitive.~~financial statements are issued.

The ~~broader implications~~Company has incurred substantial losses of ~~COVID-19~~$13,020,958 and $7,807,995 for fiscal years 2022 and 2021, respectively, and has losses on ~~our results from~~continuing operations going forward remains uncertain. The COVID-19 pandemic and the resulting supply chain issues and inflation has the potential to cause adverse effects to our customers, suppliers or business partners in locations that have or will experience more pronounced disruptions, which could result in a reduction to future revenue and manufacturing output as well as delays in our new product development activities. However, opportunities in the video surveillance field have been growing for ~~Vicon products.~~

The extent of the pandemics effect on our operational and financial performance will depend in large part on future developments, which cannot be reasonably estimated at this time. Future developments include the emergence of new virus variants that are more contagious or harmful than prior variants, the actions taken to contain or mitigate its impact both within and outside the jurisdictions where we operate, the impact on governmental programs and budgets, the development of treatments or vaccines, and the resumption of widespread economic 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.

~~Going Concern~~

~~For~~ the nine months ~~ended~~ending June 30, ~~2022, the Company has incurred net losses~~2023 of $~~10,063,448~~4,835,914 ~~with~~and has debt obligations over the next year of $17,185,167 and working capital deficit of $~~5,757,185~~967,489 ~~as of June 30, 2022. The decrease in working capital over the past nine months is mainly due~~, that raise substantial doubt with respect to the ~~increase in the short-term portion of the~~ Company’s ~~liabilities, $17,146,234~~ability to continue as a going concern. ~~at June 30, 2022.~~

While our working capital and current debt indicate a substantial doubt regarding the Company’s ability to continue as a going concern, the Company has historically, from time to time, satisfied and may continue to satisfy certain short-term liabilities through the issuance of common stock, thus reducing our cash requirement to meet our operating needs. ~~Based~~Additionally, the Company has sold unprofitable brands, reducing the cash required to maintain those brands, reevaluated our pricing model on ~~this,~~our Vicon brand to improve margins on those products, and has effected a 35:1 reverse stock split on our common stock to remain trading on the Nasdaq Capital Markets, and improve our ability to potentially raise capital through equity offerings that we may use to satisfy debt. In the event additional capital is raised through equity offerings and/or debt is satisfied with equity, it may have a dilutive effect on our existing stockholders. While the Company believes ~~that our cash on hand and cash generated by operations is~~these plans are sufficient to meet the capital demands of our current operations for at least the next twelve months. Any major increases in sales, particularly in new products, may require substantial capital investment. Failure to obtain sufficient capital could materially adversely impact our growth potential.

months, the is no guarantee that we will succeed. Overall, there is no guarantee that cash flow from our existing or future operations and any external capital that we may be able to raise will be sufficient to meet our ~~expansion goals and~~ working capital needs. The Company currently does not have adequate cash to meet our short or long-term needs. The condensed consolidated financial statements do not include any adjustments relating to this uncertainty.

1012

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, ~~2021,~~2022, of Cemtrex, Inc.

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.

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.

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

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, ~~2021,~~2022, includes a summary of the significant accounting policies used in the preparation of the consolidated financial statements.

Recently Issued Accounting Standards

~~ASU~~In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial ~~Instrument~~Instruments (“Update 2016-13”). Update 2016-13 replaced the incurred loss model with an expected loss model, which is referred to as the current expected credit loss (“CECL”) model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including but not limited to trade receivables. For public business entities, the new standard became effective for annual reporting periods beginning after December 15, 2022, including interim periods within that reporting period. The Company is currently evaluating the impact of this ASU on our financial statements.

In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU No. 2021-08”). ASU No. 2021-08 will require companies to apply the definition of a performance obligation under ASC Topic 606 to recognize and measure contract assets and contract liabilities (i.e., deferred revenue) relating to contracts with customers that are acquired in a business combination. Under current U.S. GAAP, an acquirer generally recognizes assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers, at fair value on the acquisition date. ASU No. 2021-08 will result in the acquirer recording acquired contract assets and liabilities on the same basis that would have been recorded by the acquiree before the acquisition under ASC Topic 606. ASU No. 2021-08 is effective for fiscal years beginning after December 15, ~~2022. This is not expected to apply to the Company as financial instruments giving rise to credit risk are not utilized by the Company.~~

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40). The new ASU addresses issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options. This amendment is effective for all entities, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early2022, with early adoption is permitted. The Company is currently evaluating the impact of this ~~new~~ASU on our financial statements.

On June 30, 2022, the FASB issued ASU 2022-03 Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”), which (1) clarifies the guidance ~~will~~in ASC 820 on the fair value measurement of an equity security that is subject to a contractual sale restriction and (2) requires specific disclosures related to such an equity security. Under current guidance, stakeholders have observed diversity in practice related to whether contractual sale restrictions should be considered in the measurement of the fair value of equity securities that are subject to such restrictions. On the basis of interpretations of existing guidance and the current illustrative example in ASC 820-10-55-52 of a restriction on ~~its~~the sale of an equity instrument, some entities use a discount for contractual sale restrictions when measuring fair value, while others view the application of such a discount to be inconsistent with the principles of ASC 820. To reduce the diversity in practice and increase the comparability of reported financial information, ASU 2022-03 clarifies this guidance and amends the illustrative example. ASU No. 2022-03 is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company is currently evaluating the impact of this ASU on our financial statements.

The Company does not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying condensed consolidated financial statements.

NOTE 3 – DISCONTINUED OPERATIONS

On November 22, 2022, the Company entered into two Asset Purchase Agreements and one Simple Agreement for Future Equity (“SAFE”) with the Company’s CEO, Saagar Govil, to secure the sale of the subsidiaries Cemtrex Advanced Technologies, Inc, which include the brand SmartDesk, and Cemtrex XR, Inc., which include the brands Cemtrex XR, Virtual Driver Interactive, Bravo Strong, and good tech (formerly Cemtrex Labs), to Mr. Govil

Due to the on-going losses and risk associated with the SmartDesk business the Company has valued the royalty and SAFE agreement associated with the SmartDesk sale at $0 and considers such consideration to be a gain contingency.

Based on sales projections for Cemtrex XR, Inc., the Company does not believe that it will exceed the sales levels required to exceed the $820,000 royalties due and has not accounted for any additional royalties at this time. In accordance with ASC 310 – Receivables, the Company has discounted the royalties due and during the nine-month ended June 30, 2023, has recognized $691,611 of royalties due and will amortize the remaining amount over the period the royalties are due.

1114

The following table summarizes the loss on the sale recorded during the three months ended December 31, 2022, included in Income/(loss) from discontinued operations, net of tax in the accompanying condensed consolidated statement of Operations:

SUMMARY OF LOSS ON SALE


Purchase Price	$	745,621
Less cash and cash equivalents transferred		(699,423	)
Less liabilities assumed		(10,924	)
Net purchase price	$	35,274

Assets Sold
Accounts receivable, net	$	625,638
Inventory, net		980,730
Prepaid expenses and other assets		502,577
Property and equipment, net		837,808
Goodwill		598,392
Total Assets Sold		3,545,145
Liabilities Transferred
Accounts payable		370,774
Short-term liabilities		364,775
Long-term liabilities		318,981
Total Liabilities Transferred		1,054,530
Net assets sold	$	2,490,615

Pretax loss on sale of Cemtrex Advanced Technologies, Inc, and Cemtrex XR, Inc.Companies	$	(2,455,341	)

Assets and liabilities included within discontinued operations on the Company’s Condensed Consolidated Balance Sheets at June 30, 2023, and September 30, 2022, are as follows;

SCHEDULE OF ASSETS AND LIABILITIES INCLUDED WITHIN DISCONTINUED OPERATIONS

	June 30,		September 30,
	2023		2022
Assets
Current assets
Cash and equivalents	$	-	$	714,420
Trade receivables, net		-		561,470
Inventory –net of allowance for inventory obsolescence		-		1,043,865
Prepaid expenses and other assets		-		153,461
Total current assets		-		2,473,216

Property and equipment, net		-		825,850
Other		-		672,627
Total Assets	$	-	$	3,971,693

Liabilities
Current liabilities
Accounts payable	$	-	$	205,622
Short-term liabilities		-		464,429
Deposits from customers		-		125,032
Accrued expenses		-		10,136
Total current liabilities		-		805,219

Long-term liabilities
Deferred revenue				6,273
Total long-term liabilities		-		6,273
Total liabilities	$	-	$	811,492

During the first quarter of fiscal 2023, Vicon completed the closure of its discontinued operating entity Vicon Systems, Ltd. located in Israel. The Company received funds related to benefit obligations of $96,095, which at the time of operational closure were not guaranteed to be retrievable. The company paid $7,010 in consulting fees for assistance in retrieving these funds. The net amount of $89,085 is recognized on the Company’s Condensed Consolidated Income Statement as part of the Loss on Discontinued Operations.

Gain/(loss) from discontinued operations, net of tax and the loss on sale of discontinued operations, net of tax, of Cemtrex Advanced Technologies, Inc. and Cemtrex XR, Inc., sold during the first quarter of fiscal year 2023, which are presented in total as discontinued operations, net of tax in the Company’s Condensed Consolidated Statements of Operations for the three and nine month periods ended June 30, 2023 and 2022, are as follows:

	2023			2022			2023			2022
	Three months ended June 30,						Nine months ended June 30,
	2023			2022			2023			2022
Total net sales	$	-		$	1,521,942		$	649,061		$	3,763,234
Cost of sales		-			685,693			228,086			1,997,211
Operating, selling, general and administrative expenses		1,443			1,425,801			1,297,507			4,036,614
Other (income)/expenses		-			248,749			3,195			11,808
Income (loss) from discontinued operations		(1,443	)		(838,301	)		(879,727	)		(2,282,399	)
Amortization of discounted royalties		14,724			-			33,875			-
Loss on sale of discontinued operations		-			-			(2,455,341	)		-
Adjustment of benefit obligation		-			-			89,085			-
Income tax provision		-			-			-			-
Discontinued operations, net of tax	$	13,281		$	(838,301	)	$	(3,212,108	)	$	(2,282,399	)

NOTE 34 – 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 and ~~mine~~nine months ended June 30, ~~2022,~~2023, and ~~2021,~~2022, the following items were excluded from the computation of diluted net loss per common share as their effect is anti-dilutive:

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

	2023		2022		2023		2022
	For the three months ended				For the nine months ended
	June 30,				June 30,
	2023		2022		2023		2022

Options		28,796		34,579		28,796		34,579

1 2 3 4
For the three months ended For the nine months ended
June 30, June 30,
2022 2021 2022 2021

Warrants to purchase shares - 433,965 - 433,965
Options 1,210,260 1,383,965 1,210,260 1,383,965
Net loss per common share anti-dilutive effect 1,210,260 1,383,965 1,210,260 1,383,965

NOTE 45 – SEGMENT INFORMATION

During the first quarter of fiscal year 2023, the Company reorganized its reporting segments to be in line with its current structure. The Company reports and evaluates financial information for 2three current segments: ~~Advanced Technologies (AT)~~the Security segment, Industrial Services segment and the ~~Industrial Services (IS)~~Corporate segment. The AT segment develops smart devices and provides progressive design and development solutions to create impactful experiences for mobile, web, virtual and augmented reality, wearables and television as well as providing cutting edge, mission critical security and video surveillance. The IS segment offers single-source expertise and services for rigging, millwrighting, in plant maintenance, equipment erection, relocation, and disassembly to diversified customers in USA in industries such as: manufacturing, steel, printing, construction, & petrochemical.

The following tables summarize the Company’s segment information:

SCHEDULE OF SEGMENT INFORMATION

2022 2021 2022 2021
For the three months ended For the nine months ended
June 30, June 30,
2022 2021 2022 2021
Revenues from external customers
Advanced Technologies $ 8,162,855 $ 5,845,958 $ 21,503,679 $ 16,006,241
Industrial Services $ 5,467,991 4,480,473 15,527,871 12,416,651
Total revenues $ 13,630,846 $ 10,326,431 $ 37,031,550 $ 28,422,892

Gross profit
Advanced Technologies $ 4,219,490 $ 2,693,677 $ 9,245,092 $ 7,686,875
Industrial Services 1,656,866 1,434,039 4,553,069 4,375,195
Total gross profit $ 5,876,356 $ 4,127,716 $ 13,798,161 $ 12,062,070

Operating income/(loss)
Advanced Technologies $ (3,426,264 ) $ (1,650,221 ) $ (13,252,823 ) $ (5,185,944 )
Industrial Services 1,305,415 (650,048 ) 3,258,114 (1,122,874 )
Total operating loss $ (2,120,849 ) $ (2,300,269 ) $ (9,994,709 ) $ (6,308,818 )

Other income/(expense)
Advanced Technologies $ 1,252,826 $ 4,955,782 $ (135,094 ) $ 5,666,112
Industrial Services $ (111,620 ) (1,487,133 ) (181,586 ) 2,649,617
Total other expense $ 1,141,206 $ 3,468,649 $ (316,680 ) $ 8,315,729

Depreciation and Amortization
Advanced Technologies $ 309,634 $ 103,177 $ 816,604 $ 308,755
Industrial Services 174,066 189,005 529,779 663,431
Total depreciation and amortization $ 483,700 $ 292,182 $ 1,346,383 $ 972,186

	Security			Industrial Services			Corporate			Consolidated			Security			Industrial Services			Corporate			Consolidated
	Three months ended June 30, 2023												Nine months ended June 30, 2023
	Security			Industrial Services			Corporate			Consolidated			Security			Industrial Services			Corporate			Consolidated
Revenues	$	9,015,279		$	5,714,861		$	-		$	14,730,140		$	25,933,921		$	16,839,858		$	-		$	42,773,779
Cost of revenues		4,610,443			3,639,054			-			8,249,497			13,005,314			10,908,935			-			23,914,249
Gross profit	$	4,404,836		$	2,075,807		$	-		$	6,480,643		$	12,928,607		$	5,930,923		$	-		$	18,859,530
Operating expenses
Sales, general, and administrative		3,182,509			912,387			1,032,183			5,127,079			9,494,634			3,437,565			2,826,134			15,758,333
Depreciation and amortization		90,630			159,251			-			249,881			161,833			484,157			52,279			698,269
Research and development		1,049,909			-			-			1,049,909			3,895,717			-			-			3,895,717
Operating income/(loss)	$	81,788		$	1,004,169		$	(1,032,183	)	$	53,774		$	(623,577	)	$	2,009,201		$	(2,878,413	)	$	(1,492,789	)

Other income/(expense)	$	(282,857	)	$	(7,281	)	$	(929,395	)	$	(1,219,533	)	$	(58,065	)	$	(68,707	)	$	(3,196,712	)	$	(3,323,484	)

June 30, September 30,
2022 2021
Identifiable Assets
Advanced Technologies $ 34,098,148 $ 33,850,496
Industrial Services 17,105,420 19,089,392
Total Assets $ 51,203,568 $ 52,939,888

	Security			Industrial Services			Corporate			Consolidated			Security			Industrial Services			Corporate			Consolidated
	Three months ended June 30, 2022												Nine months ended June 30, 2022
	Security			Industrial Services			Corporate			Consolidated			Security			Industrial Services			Corporate			Consolidated
Revenues	$	6,640,913		$	5,467,991		$	-		$	12,108,904		$	17,740,445			15,527,871		$	-		$	33,268,316
Cost of revenues		3,257,672			3,811,125			-			7,068,797			10,261,376			10,974,802			-			21,236,178
Gross profit	$	3,383,241		$	1,656,866		$	-		$	5,040,107		$	7,479,069		$	4,553,069		$	-		$	12,032,138
Operating expenses
Sales, general, and administrative		3,057,839			1,081,392			814,487			4,953,718			8,483,955			3,706,041			2,867,239			15,057,235
Depreciation and amortization		217,497			174,066			36,248			427,811			398,707			529,779			109,652			1,038,138
Research and development		1,189,875			-			-			1,189,875			3,660,883			-			-			3,660,883
Operating (loss)/income	$	(1,081,970	)	$	401,408		$	(850,735	)	$	(1,531,297	)	$	(5,064,476	)	$	317,249		$	(2,976,891	)	$	(7,724,118	)

Other income/(expense)	$	(83,355	)	$	(104,797	)	$	1,578,107		$	1,389,955		$	741,330		$	(181,586	)	$	(864,616	)	$	(304,872	)

	2023		2022
	June 30,		September 30,
	2023		2022
Identifiable Assets
Security	$	20,631,185	$	15,257,235
Industrial Services		17,302,398		16,658,984
Corporate		3,810,093		9,869,716
Discontinued operations		-		3,971,693
Total Assets	$	41,743,676	$	45,757,628

NOTE 6 – RESTRICTED CASH

NOTE 57 – 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~~The Company measures trading securities investments and investment funds at quoted market prices as they are traded in an active market with sufficient volume and frequency of transactions.

Level 2 — Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified contractual term, a Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3 — Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date. Level 3 assets and liabilities include cost method investments. 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 June 30, ~~2022~~2023, and September 30, ~~2021,~~2022, are as follows.

SCHEDULE OF FAIR VALUE OF ASSETS

Quoted Prices Significant - -
in Active Other Significant Balance
Markets for Observable Unobservable as of
Identical Assets Inputs Inputs June 30,
(Level 1) (Level 2) (Level 3) 2022
Assets
Investment in marketable securities
(included in short-term investments) $ 280,571 $ - $ - $ 280,571

Fair value assets $ 280,571 $ - $ - $ 280,571

Quoted Prices Significant
in Active Other Significant Balance
Markets for Observable Unobservable as of
Identical Assets Inputs Inputs September, 30
(Level 1) (Level 2) (Level 3) 2021
Assets
Investment in marketable securities
(included in short-term investments) $ 14,981 $ - $ - $ 14,981

Fair value assets $ 14,981 $ - $ - $ 14,981

	(Level 1)		(Level 2)		(Level 3)		2023
	Quoted Prices		Significant
	in Active		Other		Significant		Balance
	Markets for		Observable		Unobservable		as of
	Identical Assets		Inputs		Inputs		June 30,
	(Level 1)		(Level 2)		(Level 3)		2023
Assets
Investment in marketable securities
(included in short-term investments)	$	13,663	$	-	$	-	$	13,663


Fair value assets	$	13,663	$	-	$	-	$	13,663

~~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 $~~1,518,720~~ ~~at June 30, 2022 and $1,601,932~~ at September 30, 2021. Additionally, the Company had a standby letter of credit for deposit on a building lease and payable against a money market account. The amount of the standby letter of credit is $0 ~~and $517,415~~ ~~as of June 30, 2022 and September 30, 2021, respectively.~~

	(Level 1)		(Level 2)		(Level 3)		2022
	Quoted Prices		Significant
	in Active		Other		Significant		Balance
	Markets for		Observable		Unobservable		as of
	Identical Assets		Inputs		Inputs		September 30,
	(Level 1)		(Level 2)		(Level 3)		2022
Assets
Investment in marketable securities
(included in short-term investments)	$	13,721	$	-	$	-	$	13,721

Fair value assets	$	13,721	$	-	$	-	$	13,721

NOTE 78 – TRADE RECEIVABLES, NET

~~Accounts~~Trade receivables, net consist of the following:

SCHEDULE OF ~~ACCOUNTS RECEIVABLE,~~TRADE RECEIVABLES, NET

	June 30,			September 30,			June 30,			September 30,
	2022			2021			2023			2022
Trade receivables	$	7,735,790		$	7,989,888		$	7,757,039		$	5,648,655
Allowance for doubtful accounts		(171,408	)		(178,992	)		(249,284	)		(249,439	)
Accounts receivables, net, total	$	7,564,382		$	7,810,896		$	7,507,755		$	5,399,216

~~Accounts receivable~~

Trade receivables include amounts due for shipped products and services rendered.

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

NOTE 89 – INVENTORY, NET

Inventory, net, consist of the following:

SCHEDULE OF INVENTORY, NET

	June 30,			September 30,			June 30,			September 30,
	2022			2021			2023			2022
Raw materials	$	2,520,373		$	1,957,410		$	1,130,327		$	1,375,933
Work in progress		231,123			429,871			95,773			120,026
Finished goods		6,619,379			5,191,007			8,099,426			8,080,235
Inventory, gross		9,370,875			7,578,288			9,325,526			9,576,194

Less: Allowance for inventory obsolescence		(912,345	)		(1,921,001	)		(605,786	)		(1,088,377	)
Inventory –net of allowance for inventory obsolescence	$	8,458,530		$	5,657,287		$	8,719,740		$	8,487,817

~~NOTE 9 –~~ ~~PROPERTY AND EQUIPMENT~~

~~Property and equipment are summarized as follows:~~

~~SUMMARY OF PROPERTY AND EQUIPMENT~~

June 30, September 30,
2022 2021
Land $ 790,373 $ 790,373
Building and leasehold improvements 2,932,111 2,892,900
Furniture and office equipment 534,185 501,885
Computers and software 1,313,816 1,105,681
Machinery and equipment 12,392,900 12,984,959
Property and equipment, gross 17,963,385 18,275,798

Less: Accumulated depreciation (11,724,146 ) (11,536,854 )
Property and equipment, net $ 6,239,239 $ 6,738,944

~~Depreciation expense for the three months ended June 30, 2022, and 2021 were $483,700, and $292,182, respectively, and for the nine months ended June 30, 2022, and 2021 were $1,346,383, and $972,186, respectively.~~

NOTE 10 – ~~LEASES~~PREPAID AND OTHER CURRENT ASSETS

~~ASC 842, “Leases”, requires that a lessee recognize the~~Prepaid and other current 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.~~

~~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 operating leases for its facilities in New York, United Kingdom, and India, as well as for vehicles for use in our Industrial Services segment. The operating lease terms range from 1 to 7 ~~years. The Company excluded the renewal option on its applicable facility leases from the calculation of its right-of-use assets and lease liabilities.~~

~~Finance and operating lease liabilities consist~~consisting of the following:

SUMMARY OF ~~FINANCE~~PREPAID AND ~~OPERATING LEASE LIABILITIES~~OTHER CURRENT ASSETS

June 30, September 30,
2021 2021
Lease liabilities - current
Finance leases $ - $ -
Operating leases 819,488 830,791
819,488 830,791

Lease liabilities - net of current portion
Finance leases $ - $ -
Operating leases 1,799,002 2,017,408
$ 1,799,002 $ 2,017,408

~~A reconciliation of undiscounted cash flows to finance and operating lease liabilities recognized in the condensed consolidated balance sheet at June 30, 2022, is set forth below:~~

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

Years ending September 30, Finance leases Operating Leases Total
2022 - 275,319 275,319
2023 - 834,504 834,504
2024 - 660,865 660,865
2025 - 638,531 638,531
2026 & Thereafter - 702,252 702,252
Undiscounted lease payments - 3,111,471 3,111,471
Amount representing interest - (492,981 ) (492,981 )
Discounted lease payments $ - $ 2,618,490 $ 2,618,490

~~Additional disclosures of lease data are set forth below:~~

~~SCHEDULE OF LEASE COSTS~~

Nine months ended
June 30, 2022 June 30, 2021
Lease costs:
Finance lease costs:
Depreciation of finance lease assets $ - $ 17,184
Interest on lease liabilities - 88

Operating lease costs:
Operating lease expense $ 686,124 $ 727,374

Other information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating leases $ 546,896 $ 650,535
Finance leases - 28,535
$ 546,896 $ 679,070

Weighted-average remaining lease term - finance leases (months) 0 3
Weighted-average remaining lease term - operating leases (months) 33 58

Weighted-average discount rate - finance leases N/A 3.63 %
Weighted-average discount rate - operating leases 5.66 % 6.85 %

~~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.~~

	June 30, 2023		September 30, 2022

Prepaid expenses	$	344,300	$	536,820
Prepaid inventory		1,427,013		220,553
Deferred costs		60,169		40,626
Prepaid income taxes		402,048		604,840
VAT & GST tax receivable		289,371		236,986
Contract assets		566,515		781,819
Prepaid expenses and other assets total	$	3,089,416	$	2,421,644

NOTE 11 – ~~PREPAID~~PROPERTY AND ~~OTHER CURRENT ASSETS~~EQUIPMENT

OnProperty and equipment are summarized as follows:

SUMMARY OF PROPERTY AND EQUIPMENT

	June 30,			September 30,
	2023			2022
Land	$	790,373		$	790,373
Building and leasehold improvements		2,915,918			2,906,953
Furniture and office equipment		574,645			546,548
Computers and software		1,333,135			365,892
Machinery and equipment		10,725,259			11,242,709
Property and equipment, gross		16,339,330			15,852,475
Less: Accumulated depreciation		(10,158,559	)		(10,572,033	)
Property and equipment, net	$	6,180,771		$	5,280,442

Depreciation expense for the three months ended June 30, 2023, and 2022, ~~the Company had prepaid~~were $249,881 and ~~other current assets consisting of prepayments on inventory purchases of~~ $~~439,143~~427,811, ~~costs~~respectively. Depreciation expense for the nine months ended June 30, 2023, and ~~estimated earnings in excess of billings on uncompleted contracts of~~2022, were $~~504,618~~698,269, and ~~other current assets of~~ $~~1,463,355. On September 30, 2021, the Company had prepaid and other current assets consisting of prepayments on inventory purchases of $298,707~~1,038,138, ~~costs and estimated earnings in excess of billings on uncompleted contracts of $1,148,243, and other current assets of $1,138,702~~.respectively.

NOTE 12 – OTHER ASSETS

AsOn November 13, 2020, Cemtrex made a $500,000 investment and on January 19, 2022, made an additional $500,000 investment via a simple agreement for future equity (“SAFE”) in MasterpieceVR. The SAFE provides that the Company will automatically receive shares of the entity based on the conversion rate of future equity rounds up to a valuation cap, as defined. MasterpieceVR is a software company that is developing software for content creation using virtual reality. The investment is included in other assets in the accompanying balance sheet and the Company accounts for this investment and recorded at cost. No impairment has been recorded for the three and nine months ended June 30, ~~2022,~~2023.

Other assets consist of the ~~Company had other assets of $1,356,766~~ ~~which was comprised of rent security of $90,791, a strategic investment in MasterpieceVR of $1,000,000, and other assets of $265,975. As of September 30, 2021, the Company had other assets of $697,240~~ ~~which was comprised of rent security deposits of $84,362, Investment in Masterpiece VR valued at $500,000, and other assets of $112,878~~.following:

SCHEDULE OF OTHER ASSETS

	June 30, 2023		September 30, 2022
Rental deposits	$	251,739	$	204,388
Investment in Masterpiece VR		1,000,000		1,000,000
Other deposits		64,626		24,467
Demonstration equipment supplied to resellers		330,038		170,890
Other assets total	$	1,646,403	$	1,399,745

NOTE 13 – 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, ~~its President,~~ for total consideration of $550,000. ~~As of June 30,~~On July 31, 2022, ~~and September 30, 2021, there was $1,472,514~~ ~~and $1,487,155~~ ~~in receivables due from Ducon Technologies, Inc., respectively.~~ ~~At June 30, 2022, $500,000 of~~ the ~~balance due is for the sale of Griffin, which was due in February 2021, and the remaining balance are various receivables with various due dates within the next fiscal year. The~~ Company ~~has~~ negotiated a payment agreement surrounding the sale of Griffin Filters, LLC and other liabilities due to Cemtrex, ~~Inc.~~Inc. totaling ~~761,585.~~$761,585. This agreement is in the form of a secured promissory note earning interest at a rate of 5% per annum and matures on July 31, ~~2024. The remaining~~2024.

As of June 30, 2023, and September 30, 2022, there was $~~710,929~~3,372 ~~represents~~and $19,133 payable due to Ducon Technologies, Pvt Ltd., respectively.

Receivables of $708,512 that represented the amount due from Ducon to Cemtrex Technologies Pvt. Ltd. the Company’s subsidiary based in India ~~and is still in negotiation.~~

On February 23, 2021, Cemtrex’s Board of Directors determined that certain transactions between Cemtrex Inc. and First Commercial, a company owned by former Executive Director, former Controlling Shareholder and former CFO, Aron Govil, were ~~incorrectly handled and accounted for.~~

~~The total amount of disputed transfers was approximately $7,100,000~~ ~~and occurred~~written off to bad debt 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 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~~2022.

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 with a total value of $7,100,000~~ (the “Settlement Amount”) by entering into the Agreement. The Settlement Amount was satisfied in a combination of Mr. Govil forfeiting certain Preferred Stock and outstanding options and executing a secured note in the amount of $~~1,533,280. The Independent~~transactions Cemtrex’s Board of Directors ~~in coordination with Management concluded the settlement represented fair value.~~

~~In March 2021,~~determined were incorrectly handled and accounted for. 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 the second quarter of fiscal year 2021. The gain of $3,674,165~~ ~~is reported as Settlement Agreement – Related Party on the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss).~~

~~As discussed above, Mr. Govil also~~ executed a secured promissory note (the “Note”) in the amount of $1,533,280. The Note ~~matures~~matured and iswas due in full inon ~~two years~~February 26, 2023, and ~~bears~~bore interest at 9% per annum and iswas secured by all of Mr. Govil’s assets. On April 27, 2023, the Company and Mr. Govil signed an amendment to the note, extending the maturity date one year to February 28, 2024. Mr. Govil also ~~agreed to sign~~signed an affidavit confessing judgment in the event of a default on the Note. While the Company believes the note isto be fully collectible, in accordance with ASC 450-30, Gain Contingencies, the Company determined the gain ~~will~~was not to 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~~Operations.

On November 22, 2022, the Company entered into two Asset Purchase Agreements and ~~Comprehensive Income/(Loss)~~one Simple Agreement for Future Equity (“SAFE”) with the Company’s CEO, Saagar Govil, to secure the sale of the subsidiaries Cemtrex Advanced Technologies, Inc, and Cemtrex XR, Inc., which include the brands SmartDesk, Cemtrex XR, Virtual Driver Interactive, Bravo Strong, and good tech (formerly Cemtrex Labs), to Mr. Govil (see NOTE 1).

As of June 30, 2023, there was $578,388 in trade receivables due from these companies. Of these receivables $131,922 are related to costs paid by Cemtrex related to payroll during the transition of employees to the new company and some subscription services that are set up on auto pay with a credit card. The remaining $446,466 is related to services provided by Cemtrex Technologies Pvt. Ltd. in the normal course of business.

As of June 30, 2023, there were royalties receivable from the sale of Cemtrex, XR, Inc. of $691,611.

NOTE 14 – LEASES

The Company is party to contracts where we lease property from others under contracts classified as operating leases. The Company primarily leases office and operating facilities, vehicles, and office equipment. The weighted average remaining term of our operating leases was approximately 3 years at June 30, 2023, and 3 years at June 30, 2022. Lease liabilities were $2,213,341 with $716,896 classified as short-term at June 30, 2023, and $2,576,963 with $754,495, classified as short-term at September 30, 2022. The weighted average discount rate used to measure lease liabilities was approximately 5.64% at June 30, 2023, and 5.66% at June 30, 2022. The Company used the rate implicit in the lease, where known, or its incremental borrowing rate as the rate used to discount the future lease payments.

The Company 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’s corporate segment leases approximately 100 square feet of office space in Brooklyn, NY on a month-to-month lease at a rent of $600 per month.

A reconciliation of undiscounted cash flows to operating lease liabilities recognized in the condensed consolidated balance sheet at June 30, 2023, is set forth below:

SCHEDULE OF RECONCILIATION OF UNDISCOUNTED CASH FLOWS TO OPERATING LEASE LIABILITIES

Years ending September 30,	Operating Leases
2023		211,721
2024		786,889
2025		764,530
2026		684,449
2027 & Thereafter		289,528
Undiscounted lease payments		2,737,117
Amount representing interest		(523,776	)
Discounted lease payments	$	2,213,341

Lease costs for the three and nine months ended June 30, 2023, and 2022 are set forth below.:

SCHEDULE OF LEASE COSTS

	2023		2022		2023		2022
	For the three months ended				For the nine months ended
	June 30,				June 30,
	2023		2022		2023		2022
Operating lease costs		193,843		223,595		678,489		592,958
Total lease cost	$	193,843	$	223,595	$	678,489	$	592,958

NOTE 1415 – LINES OF CREDIT AND LONG-TERM LIABILITIES

~~Lines~~On January 12, 2023, the Company entered into a standstill agreement with Streeterville Capital, LLC. The lender has agreed to refrain and forbear temporarily from making redemptions under the notes for a period ending on April 12, 2023. In addition, the company has agreed to an increase of ~~credit~~

~~The Company currently has a line~~the outstanding balance of ~~credit with Fulton Bank~~the note issued on September 30, 2021, for the original amount of $~~3,500,000~~5,755,000 by $148,000, and the outstanding balance of the note issued on February 22, 2022, for the original amount of $9,205,000 by $303,422. The ~~line carried~~aggregate amount of $451,422 has been recorded as interest expense on the Company’s Consolidated Condensed Statement of ~~LIBOR plus~~ ~~2.00% per annum (2.075% as~~Operations and Condensed Consolidated Statements of ~~September 30, 2021).~~ Cash Flow.

On ~~June 10, 2022, The~~February 15, 2023, the Company and Fulton Bank agreed to an amendment ~~of the line of credit to carry interest at the Secured Overnight Financing Rate (“SOFR”) plus~~ ~~2.37% per annum (3.87% as of June 30, 2022). At June 30, 2022 and September 30, 2021, there was~~ 0 ~~outstanding balance on this line of credit. The terms of this line of credit are subject~~ to the ~~bank’s review annually on February 1.~~

~~Loans payable to bank~~Master Agreement Regarding Financial Covenants and Financial Deliverables dated September 22, 2020.

On ~~December 15, 2015,~~March 3, 2023, the Company ~~acquired a~~and NIL Funding agreed at an amendment to the term loan ~~from Fulton Bank~~agreement dated September 18, 2018. This agreement amends the maturity date to December 31, 2024, and amends the interest rate to 11.5%. Additionally, the Company paid $10,000 in ~~the amount~~fees and made an additional principal payment of $~~5,250,000~~100,000 ~~in order~~on March 29, 2023, and is required to ~~fund the purchase~~make another additional principal payment of ~~Advanced Industrial Services, Inc.~~ $~~5,000,000~~100,000 ~~of the proceeds went to direct purchase of AIS. This loan carried interest of LIBOR plus~~ ~~2.25% per annum (2.325% as of September 30, 2021). On June 10, 2022,~~on or before March 29, 2024. The Company ~~and Fulton Bank agreed to an~~has accounted for this amendment ~~of the loan to carry interest at SOFR plus~~ ~~2.37% per annum (3.87~~% as ~~of June 30, 2022). This loan is payable on December 15, 2022. This loan carries loan covenants which the Company was in compliance with as of June 30, 2022. The outstanding balance on this loan was $492,031~~ ~~and $1,218,680, on June 30, 2022, and September 30, 2021, respectively. This loan is secured by the assets of the Company.~~a debt modification.

On May ~~1, 2018,~~3, 2023, the Company ~~acquired a loan from Fulton Bank in the amount of $400,000~~ ~~in order to fund new equipment for Advanced Industrial Services, Inc. This loan carried interest of LIBOR plus~~ ~~2.00% per annum (2.075% as of September 30, 2021). On June 10, 2022, The Company~~ and ~~Fulton Bank~~Streeterville Capital, LLC. agreed to an amendment ofto the ~~loan to carry interest at SOFR plus~~ ~~2.37% per annum (3.87% as of June 30, 2022). This loan is payable~~note issued on ~~May 1, 2023. This loan carries loan covenants which the Company was in compliance with as of June 30, 2022. The outstanding balance on this loan was $84,581~~ ~~and $149,914, on June 30, 2022, and~~ September 30, 2021, ~~respectively. This loan is secured by~~for the ~~assets~~original amount of $5,755,000. The agreement extends the maturity date to June 30, 2024, in exchange for a fee of 5% of the outstanding balance or approximately $252,912 added to the outstanding balance of the note. The Company has accounted for this amendment as a debt modification.

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 carried interest of LIBOR plus~~ ~~2.25% per annum (2.325% as of September 30, 2021). On June 10, 2022,~~April 3, 2023, The Company and ~~Fulton Bank agreed~~SeKureID Solutions Corp., entered into a software license agreement, where the company obtained the right to ~~an amendment~~use source code for its security products in exchange for $1,125,000 payable in (15) fifteen equal monthly installments of $75,000. The current balance of $900,000 is presented on the ~~loan to carry interest at SOFR plus~~ ~~2.37% per annum (3.87~~%Condensed Consolidated Balance Sheets as of June 30, ~~2022). This loan is payable on May 1, 2023. This loan carries loan covenants which the Company was in compliance with as~~2023, under Short-term liabilities, net of ~~June 30, 2022. The outstanding balance on this loan was $201,975~~ ~~and $258,060, on June 30, 2022, and September 30, 2021, respectively. This loan is secured by the assets of the Company~~unamortized original issue discounts.

~~Notes payable~~

~~On September 30, 2020, the Company, issued a note payable to an independent private lender in the amount of $4,605,000. This note carried interest of~~ 8~~% and matured on~~ ~~March 30, 2022. After deduction of an original issue discount of $600,000~~ ~~and legal fees of $5,000, the Company received $4,000,000~~ ~~in cash. As of June 30, 2022, and September 30, 2021, this note had a balance of $~~0 ~~and $2,256,448, respectively. As of June 30, 2022, and September 31, 2021, this note had unamortized original issue discount balance of $~~0 ~~and $200,000, respectively~~

~~On September 30, 2021, the Company, issued a note payable to an independent private lender in the amount of $5,755,000. This note carries interest of~~ 8~~% and matures on~~ ~~March 30, 2023. After deduction of an original issue discount of $750,000~~ ~~and legal fees of $5,000, the Company received $5,000,000~~ ~~in cash. As of June 30, 2022, and September 30, 2021, this note had a balance of $5,306,176~~ ~~and $5,005,000, respectively. As of June 30, 2022, and September 31, 2021, this note had unamortized original issue discount balance of $375,000~~ ~~and $750,000, respectively.~~

~~On February 22, 2022, the Company, issued a note payable to an independent private lender in the amount of $9,205,000. This note carries interest of~~ 8~~% and matures on~~ ~~August 22, 2023. After deduction of an original issue discount of $1,200,000~~ ~~and legal fees of $5,000, the Company received $8,000,000~~ ~~in cash. Additionally, the Company issued~~ ~~1,000,000~~ ~~shares of its common stock to the lender. The fair market value of the stock of $700,400~~ ~~was recognized as interest expense on the Company’s Condensed Consolidated Statement of Operations and Comprehensive Income/(Loss). As of June 30, 2022, this note had a balance of $9,470,561. As of June 30, 2022, this note had unamortized original issue discount balance of $866,667~~.

~~On March 30, 2022, Vicon, a subsidiary of the Company, amended the $5,600,000~~ ~~Term Loan Agreement with NIL Funding Corporation (“NIL”). Upon closing, $500,000~~ ~~of outstanding borrowings were repaid to NIL. The Agreement requires monthly payments of accrued interest that began on October 1, 2018. This note carries interest of~~ ~~8.85% and matures on~~ ~~March 30, 2023. This note carries loan covenants which the Company is in compliance with as of June 30, 2022. As of June 30, 2022, and September 30, 2021, this note had a balance of $2,897,743~~ ~~and $3,604,743, respectively.~~

1822

~~Mortgage Payable~~The following table outlines the Company’s lines of credit and secured liabilities.

SCHEDULE OF LINES OF CREDIT AND LIABILITIES

					June 30,			September 30,
	Interest Rate		Maturity		2023			2022
Fulton Bank line of credit $3,500,000 - The terms of this line of credit are subject to the bank’s review annually on February 1.	Secured Overnight Financing Rate (“SOFR”) plus 2.37% (7.46% as of June 30, 2023 and 5.35% as of September 30, 2022)			N/A	$	-		$	-

Fulton Bank loan $5,250,000 for the purchase of AIS $5,000,000 of the proceeds went to the direct purchase of AIS.	SOFR plus 2.37%(7.46% as of June 30, 2023 and 5.35% as of September 30, 2022)			12-15-2022		-			247,284

Fulton Bank loan $400,000 fund equipment for AIS.	SOFR plus 2.37% (7.46% as of June 30, 2023 and 5.35% as of September 30, 2022)			05-01-2023		-			63,280

Fulton Bank - $360,000 fund equipment for AIS. The Company was in compliance with loan covenants as of June 30, 2023. This loan is secured by certain assets of the Company.	SOFR plus 2.37% (7.46% as of June 30, 2023 and 5.35% as of September 30, 2022).			01-31-2025		128,086			183,839

Fulton Bank mortgage $2,476,000. The Company was in compliance with loan covenants as of June 30, 2023. This loan is secured by the underlying asset	SOFR plus 2.62% (7.71% as of June 30, 2023 and 5.6% as of September 30, 2022).			01-28-2040		2,195,515			2,245,664

Note payable - $439,774. For the purchase of VDI. Payable in two installments on October 26, 2021, and October 26, 2022.	5	%		10-26-2022		-			219,370

Note payable - $5,755,000 - Less original issue discount $750,000 and legal fees $5,000, net cash received $5,000,000 Unamortized original issue discount balance of $0 and $250,000, as of June 30, 2023 and September 30, 2022 respectively.	8	%		06-30-2024		4,899,908			4,943,929

Note payable - $9,205,000. Less original issue discount $1,200,000 and legal fees $5,000,net cash received $8,000,000. 28,572 shares of common stock valued at $700,400 recognized as additional original issue discount. Unamortized original issue discount balance of $105,578 and $1,064,778 as of June 30, 2023 and September 30, 2022 respectivly.	8	%		08-23-2023		10,491,283			9,738,632

Term Loan Agreement with NIL Funding Corporation (“NIL”) - $5,600,000 The Company was in compliance with loan covenants as of June 30, 2023.	11.50	%		12-31-2024		2,179,743			2,804,743

Paycheck Protection Program loan - $121,400 - The issuing bank determined that this loan qualifies for loan forgiveness; however the Company is awaiting final approval from the Small Business Administration.	1	%		05-05-2025		101,246			121,400

Software License Agreement - $1,125,000, for the purchase of software source code for use in our Security segment products	N/A			06-03-2024		900,000			-
Total lines of credit and secured liabilities					$	20,895,781		$	20,568,141
Less: Current maturities						(17,185,167	)		(16,894,743	)
Less: Unamortized original issue discount						(105,578	)		(1,305,778	)
Lines of credit and secured liabilities, Long Term					$	3,605,036		$	2,367,620

~~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 carried interest of LIBOR plus~~ ~~2.50% per annum (2.575% as of September 30, 2021). On June 10, 2022, The Company and Fulton Bank agreed to an amendment of the mortgage to carry interest at SOFR plus~~ ~~2.62% per annum (4.12% as of June 30, 2022 ). This mortgage is payable on~~ ~~January 28, 2040~~. This loan carries loan covenants similar to covenants on the Company’s other loans from Fulton Bank. As of June 30, 2022, the Company was in compliance with these covenants. As of June 30, 2022, and September 30, 2021, this mortgage had a balance of $~~2,265,733~~ ~~and $2,339,114, respectively.~~

~~Paycheck Protection Program Loans~~

~~In April and May of 2020, and January and April of 2021, the Company and its subsidiaries applied for and were granted $6,413,385~~ ~~in Paycheck Protection Program loans under the CARES Act. These loans bear interest of~~ 2~~% and mature in two years. The Company has applied for and received loan forgiveness under the provisions of the CARES Act for $6,291,985. The remaining loan of $121,400~~ ~~has been modified with a maturity date of~~ ~~May 5, 2025~~ ~~and payments starting in June of 2022 and is recorded under Paycheck Protection Program Loans on our Condensed Consolidated Balance Sheet as of June 30, 2022, net of the short-term portion of $24,280. The issuing bank determined that this loan qualifies for loan forgiveness, however the Company is awaiting final approval from the Small Business Administration.~~

NOTE 1516 – STOCKHOLDERS’ EQUITY

Preferred Stock

The Company is authorized to issue 10,000,000 shares of Preferred Stock, $0.001 par value. As of June 30, ~~2022,~~2023, and September 30, ~~2021,~~2022, there were ~~2,129,122~~2,343,016 and ~~1,935,151~~2,129,122 shares issued and2,278,916 and 2,065,022 shares outstanding, respectively.

Series 1 Preferred Stock

During the nine months ended June 30, ~~2022,~~2023, ~~193,971~~213,894 shares of Series 1 Preferred Stock were issued to pay dividends to holders of Series 1 Preferred Stock.

As of June 30, ~~2022,~~2023, and September 30, ~~2021,~~2022, there were ~~2,079,122~~2,293,016 and ~~1,885,151~~2,079,122 shares of Series 1 Preferred Stock issued and2,228,916 and 2,015,022 shares of Series 1 Preferred Stock 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.

As of June 30, ~~2022,~~2023, and September 30, ~~2021,~~2022, there were 50,000 shares of Series C Preferred Stock issued and outstanding.

Common Stock

The Company is authorized to issue 50,000,000 shares of common stock, $0.001 par value. As of June 30, ~~2022,~~2023, there were ~~26,263,296~~957,760 shares issued and outstanding and at September 30, ~~2021,~~2022, there were ~~20,782,194~~754,711 shares issued and outstanding.

On January 25, 2023, the Company completed a 35:1 reverse stock split on its common stock. All share and per share data have been retroactively adjusted for this reverse split. On February 2, 2023, 19,314 shares were issued for rounding shares of the reverse stock split.

During the nine months ended June 30, ~~2022,~~ 2023,~~4,481,102~~161,718 shares of the Company’s common stock have been issued to satisfy $~~2,712,500~~487,716 of notes payable, $~~353,978~~662,284 in accrued interest, and $~~926,646~~276,151 of excess value of shares issued recorded as interest expense. ~~An additional~~ ~~1,000,000~~ ~~shares were issued in connection with a note payable issued on February 22, 2022.~~

During the nine months ended June 30, 2023, 22,017 shares of the Company’s common stock have been issued in exchange for services valued at $141,872.

NOTE 1617 – SHARE-BASED COMPENSATION

For the nine months ended June 30, ~~2022,~~2023, and ~~2021,~~2022, the Company recognized $~~111,402~~93,313 and $~~110,904~~111,402 of share-based compensation expense on its outstanding options, respectively. As of June 30, ~~2022,~~2023, $~~269,142~~76,831 of unrecognized share-based compensation expense is expected to be recognized over a period of ~~four~~two years. Future compensation amounts will be adjusted for any change in estimated forfeitures.

During the nine months ended June 30, 2023, options to purchase 2,931 shares of the Company’s common stock at an exercise price of $13.65 per share and options to purchase 2,858 shares of the Company’s common stock at an exercise price of $40.95 per share were cancelled.

NOTE 1718 – COMMITMENTS AND CONTINGENCIES

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

~~The~~ Company’s ISIndustrial Services segment owns approximately 25,000 square feet of warehouse space in Manchester, PA and approximately 43,000 square feet of office and warehouse space in York, PA. The ISIndustrial Services segment also leases approximately 15,500 square feet of warehouse space in Emigsville, PA from a third party in a ~~three-year~~three-year lease at a monthly rent of $4,555 expiring on August 31, ~~2022.~~2025.

The Company’s ATSecurity 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, (ii) approximately 30,000 square feet of office and warehouse space in Hauppauge, New York from a third party in a ~~seven-year~~seven-year lease at a monthly rent of $28,719 expiring on March 31, 2027 ~~and~~, (iii) approximately 9,400 square feet of office and warehouse space in Hampshire, England in a ~~fifteen-year~~fifteen-year lease with at a monthly rent of $7,329 (£5,771) which expires on March 24, 2031 and contains provisions to terminate in ~~2026.~~2026, and (iv) approximately 280 square feet of office space in Clovis, CA on a month-to-month lease at a monthly rent of $1,504.

NOTE 1819 – SUBSEQUENT EVENTS

Heisey Mechanical Acquisition

On July 1, 2023, the Company completed the acquisition of a service contractor and steel fabricator that specializes in industrial and water treatment markets, Heisey Mechanical, Ltd. (“Heisey”) based in Columbia, Pennsylvania to expand the Company’s Industrial Services segment.

The total consideration given by Cemtrex ~~has evaluated subsequent events up~~ to the ~~date~~shareholder of Heisey for full control, was approximately $2,400,000 with $2,160,000 in cash, $240,000 in a seller’s note. Cemtrex funded the ~~condensed consolidated financial statements were issued. Cemtrex~~transaction with a $2,160,000 term loan from Fulton Bank. Approximately $25,000 in acquisition costs will be capitalized. The real estate the business occupies is expected to be purchased later for $1,500,000.

Notice of Delisting

On July 25, 2023, the Company received a Notice of Staff Determination from the Listing Qualifications Department of Nasdaq notifying the Company that its Series 1 Preferred Stock had not gained compliance and would be suspended from trading at the opening of business on August 3, 2023. The Company has ~~concluded~~requested a hearing regarding the delisting that ~~there were no subsequent events that occurred~~has been scheduled for September 15, 2023, which will stay the suspension and ~~require recognition or disclosure~~filing of Form 25-NSE with the Securities and Exchange Commission.

Equity shares issued

On July 31, 2023, the Company issued an aggregate of 32,488 shares of common stock to settle $200,000 of notes payable and accrued interest, and $25,792 of excess value of shares issued recorded as interest expense.

On July 6, 2023, the Company issued an aggregate of 1,686 shares of common stock in exchange for services valued at $7,500.

On August 4, 2023, the ~~condensed consolidated financial statements.~~Company issued an aggregate of 6,400 shares of common stock in exchange for services valued at $45,625.

2025

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

~~The~~During the first quarter of fiscal year 2023, the Company ~~has two business~~reorganized its reporting segments to be in line with its current structure, consisting of (i) ~~Advanced Technologies (AT) and~~Security, (ii) Industrial Services, ~~(IS).~~and (iii) Cemtrex Corporate.

~~Advanced Technologies (AT)~~Security

	-	~~Vicon Industries –~~ Vicon Industries, a majority owned subsidiary, provides end-to-end video security solutions to meet the toughest corporate, industrial and governmental security challenges. Vicon’s products include browser-based video monitoring systems and analytics-based recognition systems, cameras, servers, and access control systems for every aspect of security and surveillance in industrial and commercial facilities, federal prisons, hospitals, universities, schools, and federal and state government offices. Vicon provides cutting edge, mission critical security and video surveillance solutions utilizing Artificial Intelligence (AI) based data algorithms.
	-	~~SmartDesk –~~ ~~SmartDesk is focused on reinventing the workspace through developing state-of-the-art, modern, fully integrated, workplace solutions.~~
	-	~~Cemtrex XR (“CXR”)~~ – CXR is focused on realizing the potential of the metaverse. CXR delivers Virtual Reality (VR) and Augmented Reality (AR) solutions that provide higher productivity, progressive design and impactful experiences for consumer products, and various commercial and industrial applications. The Company is in the process of developing virtual reality applications for commercialization in the metaverse over the next couple years. CXR also invests in emerging startups focused on building best in class solutions for the metaverse.
	-	~~Virtual Driver Interactive (“VDI”)~~ ~~– VDI provides innovative driver training simulation solutions for effective and engaging learning for all ages and skills.~~
	-	~~Bravo Strong~~ ~~– Bravo Strong is a gaming and content studio working to building games and experiences for the metaverse.~~
	-	~~good tech (formerly Cemtrex Labs)~~ ~~– good tech provides mobile, web, and enterprise software application development services for startups to large enterprises.~~

Industrial Services ~~(IS)~~

Cemtrex Corporate

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

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, ~~2021.~~2022.

Results of Operations – For the three months ending June 30, ~~2022,~~2023, and ~~2021~~2022

Total revenue for the three months ended June 30, 2023, and 2022 was $14,730,140 and ~~2021 was $13,630,846 and $10,326,431,~~$12,108,904, respectively, an increase of ~~$3,304,415,~~$2,621,236, or ~~32%~~22%. Loss from continuing operations for the three months ended June 30, ~~2022,~~2023, was ~~$2,120,849~~$1,185,400 compared to ~~$2,300,269~~income of $106,599 for the three months ended June 30, ~~2021,~~2022, a decrease ~~on the loss~~ of ~~$179,420,~~$1,291,999, or 8%1,212%. Total revenue for the quarter increased, as compared to total revenue in the same period last year, due to increased demand for the Company’s products and services. ~~Loss~~Income from continuing operations ~~decreased~~became a loss due to ~~increased revenues as compared~~other income related to realized and unrealized gain on marketable securities during the same period in the prior year.

Revenues

Our ~~Advanced Technologies~~Security segment revenues for the three months ended June 30, ~~2022,~~2023, increased by ~~$2,316,897~~$2,374,366 or ~~40%~~36% to ~~$8,162,855~~$9,015,279 from ~~$5,845,958~~$6,640,913 for the three months ended June 30, ~~2021.~~2022. This increase is due to an increased demand for ~~security technology~~the Security segment’s products ~~under our Vicon brand.~~and services.

Our Industrial Services segment revenues for the three months ended June 30, ~~2022,~~2023, increased by ~~$987,518~~$246,870 or ~~22%~~5%, to ~~$5,467,991~~$5,714,861 from ~~$4,480,473~~$5,467,991 for the three months ended June 30, ~~2021.~~2022. This increase is mainly due to an increased demand for the segment’s products and services.

Gross Profit

Gross Profit for the three months ended June 30, ~~2022,~~2023, was ~~$5,876,356~~$6,480,643 or ~~43%~~44% of revenues as compared to gross profit of ~~$4,127,716~~$5,040,107 or ~~40%~~42% of revenues for the three months ended June 30, ~~2021.~~2022.

Gross profit in our Security segment was $4,404,836 or 49% of the segment’s revenues for the three months ended June 30, 2023, as compared to gross profit of $3,383,241 or 51% of the segment’s revenues for the period ended June 30, 2022. Gross profit as a percentage of revenues decreased in the three months ended June 30, 2023, compared to the three months ended June 30, 2022, due to negotiated terms on some sales.

Gross profit in our Industrial Services segment was $2,075,807 or 36% of the segment’s revenues for the three months ended June 30, 2023, as compared to gross profit of $1,656,866 or 30% of the segment’s revenues for the period ended June 30, 2022. Gross profit as a percentage of revenues increased in the three months ended June 30, ~~2022,~~2023, compared to the three months ended June 30, ~~2021,~~2022, was primarily due to ~~price increases implemented throughout the company in response to rising costs of our goods and transportation~~lower subcontractor costs. ~~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 months ended June 30, ~~2022, increased $1,278,940~~2023, decreased $4,569 or ~~23%~~less than 1% to ~~$6,948,959~~$5,376,960 from ~~$5,670,019~~$5,381,529 for the three months ended June 30, ~~2021.~~2022. General and administrative expenses as a percentage of revenues ~~was 51%~~were 37% and ~~55%~~44% of revenues for the three-month periods ended June 30, ~~2022,~~2023, and ~~2021,~~2022, respectively. The ~~increase~~decrease in general and administrative expenses is ~~the result of~~mainly related to decreased general and administrative expenses and professional fees expenses offset by increased personnel ~~travel, depreciation and amortization,~~ and insurance expenses.

Research and Development Expenses

Research and Development expenses for the three months ended June 30, ~~2022, was $1,048,246~~2023, were $1,049,909 compared to ~~$757,966~~$1,189,875 for the three months ended June 30, ~~2021.~~2022, a decrease of $139,966 or 12%. Research and Development expenses are primarily related to the ~~Advanced Technologies~~Security 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)~~Expense

Other ~~income/(expense)~~expense for the ~~third quarter of fiscal 2022,~~three months ended June 30, 2023, was ~~$1,141,206~~$1,219,533, as compared to ~~$3,468,649~~other income of $1,389,955 for the ~~third quarter of fiscal 2021.~~three months ended June 30, 2022. Other ~~income/(expense)~~expense for the three months ended June 30, 2023, was mainly driven by interest on the Company’s debt. Other income for the three months ended June 30, 2022, included one-time realized and unrealized gain on marketable securities of $2,075,125.

Provision for Income Taxes

During the ~~third quarter of fiscal 2022,~~three months ended June 30, 2023, the Company had an income tax expense of $19,641 and a benefit of $247,941 ~~compared to an expense of $40,759~~ for the ~~third quarter of fiscal 2021.~~three months ended June 30, 2022. 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/~~Income/(loss) ~~attributable to Cemtrex, Inc. shareholders~~from Discontinued Operations

~~The Company had a net loss attributable to Cemtrex, Inc. shareholders of $680,739, or 5% of revenues, for~~For the ~~three-month period~~three months ended June 30, ~~2022, as compared~~2023, the Company had income on discontinued operations of $13,281. This income is mainly related to ~~net income attributable to Cemtrex,~~the recognition of the royalties due from CXR, Inc. ~~shareholders of $1,098,013 or 11% of revenues,~~Losses on discontinued operations for the three months ended June 30, ~~2021. Net income/(loss)~~2022, were $838,301 attributable to the operations of the Cemtrex ~~Inc. shareholders decreased~~brands discussed in ~~the third quarter as compared to the same period last year was primarily due to operating, and other expenses mentioned above.~~Note 3.

Results of Operations – For the nine months ending June 30, ~~2022,~~2023, and ~~2021~~2022

Total revenue for the nine months ended June 30, 2023, and 2022 was $42,773,779 and ~~2021 was $37,031,550 and $28,422,892~~$33,268,316, respectively, an increase of ~~$8,608,658,~~$9,505,463, or ~~30%~~29%. Loss from continuing operations for the nine months ended June 30, ~~2022,~~2023, was ~~$9,994,709~~$4,835,914 compared to ~~$6,308,818~~$7,781,049 for the nine months ended June 30, ~~2021, an increase~~2022, a decrease on the loss of ~~$3,685,891,~~$2,945,135, or ~~58%~~38%. Total revenue for the period increased, as compared to total revenue in the same period last year, due to increased demand for the Company’s products and services. Loss from continuing operations ~~increased~~decreased due to increased ~~expenses related~~revenues and improved gross profit margins as compared to ~~personnel costs, depreciation and amortization, insurance, travel, and research and development costs.~~the same period in the prior year.

Revenues

Our ~~Advanced Technologies~~Security segment revenues for the nine months ended June 30, ~~2022,~~2023, increased by ~~$5,497,438~~$8,193,476 or ~~34%~~46% to ~~$21,503,679~~$25,933,921 from ~~$16,006,241~~$17,740,445 for the nine months ended June 30, ~~2021.~~2022. This increase is due to an increased demand for ~~security technology~~the Security segment’s products ~~under our Vicon brand.~~and services.

Our Industrial Services segment revenues for the nine months ended June 30, ~~2022,~~2023, increased by ~~$3,111,220~~$1,311,987 or ~~25%~~8%, to ~~$15,527,871~~$16,839,858 from ~~$12,416,651~~$15,527,871 for the nine months ended June 30, ~~2021.~~2022. This increase is mainly due to an increased demand ~~and increased pricing~~ for the segment’s products and services.

Gross Profit

Gross Profit for the nine months ended June 30, ~~2022,~~2023, was ~~$13,798,161~~$18,859,530 or ~~37%~~44% of revenues as compared to gross profit of ~~$12,062,070~~$12,032,138 or ~~42%~~36% of revenues for the nine months ended June 30, ~~2021.~~2022.

Gross profit in our Security segment was $12,928,607 or 50% of the segment’s revenues for the nine months ended June 30, 2023, as compared to gross profit of $7,479,069 or 42% of the segment’s revenues for the nine-month period ended June 30, 2022. Gross profit as a percentage of revenues ~~decreased~~increased in the nine months ended June 30, ~~2022,~~2023, compared to the nine months ended June 30, ~~2021,~~2022, due to ~~increased cost~~price increases implemented throughout the segment in January 2023 in response to rising costs of our goods and a reduction in transportation costs in 2023, compared to the same period in 2022.

Gross profit in our Industrial Services segment was $5,930,923 or 35% of the segment’s revenues for the nine months ended June 30, 2023, as compared to gross profit of $4,553,069 or 29% of the segment’s revenues for the period ended June 30, 2022. Gross profit as a percentage of revenues ~~as a result of supply chain difficulties and~~ increased ~~transportation costs for goods. The Company’s gross profit margins vary from product~~in the nine months ended June 30, 2023, compared to ~~product and from customer~~the nine months ended June 30, 2022, was primarily due to ~~customer.~~lower subcontractor costs.

General and Administrative Expenses

General and administrative expenses for the nine months ended June 30, ~~2022,~~2023, increased ~~$3,980,996~~$361,229 or ~~24%~~2% to ~~$20,318,196~~$16,456,602 from ~~$16,337,200~~$16,095,373 for the nine months ended June 30, ~~2021.~~2022. General and administrative expenses as a percentage of revenues ~~was 55%~~were 38% and ~~57%~~48% of revenues for the nine-month periods ended June 30, ~~2022,~~2023, and ~~2021,~~2022, respectively. The increase in general and administrative expenses is ~~the result of~~mainly related to increased ~~personnel, travel, depreciation and amortization,~~employee costs and insurance expenses.

Research and Development Expenses

Research and Development expenses for the nine months ended June 30, ~~2022, was $3,474,674~~2023, were $3,895,717 compared to ~~$2,033,688~~$3,660,883 for the nine months ended June 30, ~~2021.~~2022, an increase of $234,834 or 6%. Research and Development expenses are primarily related to the ~~Advanced Technologies~~Security 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)~~Expense

Other ~~income/(expense)~~expense for the ~~first three quarters of fiscal 2022,~~nine months ended June 30, 2023, was ~~$(316,680)~~$3,323,484, as compared to ~~$8,315,729~~an expense of $304,872 for the ~~first three quarters~~nine months ended June 30, 2022. Other expense for the nine months ended June 30, 2023, was mainly driven by interest on the Company’s debt, offset by a one-time income related to employee retention credits of ~~fiscal year 2021.~~$416,502. Other ~~income/(expense)~~expense for the nine months ended June 30, 2022, included the gain on the forgiveness of our PPP loans of $971,500 ~~and the issuance of common stock in connection with a note payable of $700,400~~ and the realized and unrealized gain on marketable securities of $2,235,738.

Provision for Income Taxes

During the ~~first three quarters of fiscal year~~nine months ended June 30, 2023, and 2022, the Company had an income tax expense of $19,641 and a benefit of $247,941 ~~compared to an expense of $168,190 for the first three quarters of fiscal year 2021.~~on income taxes. 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~~Loss from Discontinued Operations

The Company had alosses on discontinued operations of $3,212,108. The losses are comprised of the $2,455,341 loss on the sale of Cemtrex Advanced Technologies, and Cemtrex XR, Inc. The net loss of $879,727 attributable to the operations of the Cemtrex ~~Inc. shareholders~~brands, the recognition of ~~$9,879,991, or 27%~~discounted royalties of ~~revenues, for~~$33,875, and the ~~nine-month period ended June 30, 2022, as compared to~~ net ~~income attributable to Cemtrex, Inc. shareholders~~gain on the recovery of ~~$1,859,534 or 7%~~cash from Vicon Industries Ltd. of ~~revenues,~~$89,085. Losses on discontinued operations for the nine months ended June 30, ~~2021. Net loss~~2022, were $2,282,399 attributable to the operations of the Cemtrex ~~Inc. shareholders increased~~brands discussed in ~~the first three quarters of fiscal year 2022 as compared to the same period last year was primarily due to costs of revenues and operating expenses mentioned above.~~Note 3.

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. In response, the Company has instituted price increases and initiated cost-saving measures to mitigate the effects of inflation on operations.

Liquidity and Capital Resources

Working capital deficit was ~~$5,751,185~~$967,489 at June 30, ~~2022,~~2023, compared to ~~$15,088,892~~working capital of $6,252,972 at September 30, ~~2021.~~2022. This includes cash and equivalents and restricted cash of ~~$12,961,207~~$6,434,112 at June 30, ~~2022,~~2023, and ~~$17,186,323~~$11,473,676 at September 30, ~~2021.~~2022. The decrease in working capital was primarily due to the Company’s ~~use~~sale of ~~cash to build inventory~~assets and ~~a shift~~liabilities of ~~liabilities to short-term~~discontinued operations and an increase in accounts payable, accrued expenses, and deferred revenue during the ~~first three quarters of fiscal year 2022.~~nine months ended June 30, 2023.

Trade receivables decreased $246,514 or 3% to $7,564,382 at June 30, 2022, from $7,810,896 at September 30, 2021. The decrease in trade receivables is attributable to increased collection efforts to keep our trade receivables from going past due.

Inventories increased $2,801,243 or 50% to $8,458,530 at June 30, 2022, from $5,657,287 at September 30, 2021. The increase in inventories is attributable to the purchase of inventories for new products the Company plans to ship in the future and to build up stock inventory to account for supply chain issues.

Cash used by operating activities for continuing operations for the six months ended June 30, 2023, and 2022 was $5,394,048 and $10,669,927, respectively. Cash provided by operating activities for discontinued operations for the nine months ended June 30, ~~2022 and 2021~~2023, was ~~$10,246,799 and $6,198,611 respectively.~~$2,474,863, compared to providing cash of $41,562 for the nine months ended June 30, 2022.

Trade receivables increased by $2,108,539 or 39% to $7,507,755 at June 30, 2023, from $5,399,216 at September 30, 2022. The ~~decrease~~increase in ~~operating cash flows was primarily due~~trade receivables is attributable to ~~purchases on inventory and payment of accounts payable and accrued expenses.~~increased sales in the Security segment.

Cash ~~provided~~used by investment activities for continuing operations for the nine months ended June 30, 2023, was $735,265 compared to providing cash of $792,195 for the nine months ended June 30, 2022. Cash used by investing activities for discontinued operations for the nine months ended June 30, 2022, was ~~$517,029 compared to $154,326 for the nine-month period ending June 30, 2021.~~$39,388. Investing activities for the ~~first three quarters of fiscal year 2022~~nine months ended June 30, 2023, were driven ~~mainly~~ by the Company’s ~~net gain on the~~ purchase ~~and sale of marketable securities and the sale~~ of property and equipment.

Cash ~~provided~~used by financing activities for the nine months ended June 30, ~~2022 and 2021 $5,902,298~~2023, was $1,280,991 compared to ~~using~~providing cash of ~~$160,158~~$5,902,298 for the ~~nine-month period ending~~nine months ended June 30, ~~2021.~~2022. Financing activities were primarily driven by payments on the Company’s debt. Financing activities for the nine months ended June 30, 2022, were primarily driven by proceeds from the note payable issued in February of 2022.

~~We believe that our cash on hand and cash generated by operations is sufficient to meet the capital demands of our current operations for the next year (ending June 30, 2023).~~ While our working capital deficit and current debt indicate a substantial doubt regarding the Company’s ability to continue as a going concern, ~~issue,~~ the Company has historically, from time to time, satisfied and may continue to satisfy certain short-term liabilities through the issuance of common stock, thus reducing our cash requirement to meet our operating needs. ~~Any major increases in sales, particularly in new~~Additionally, the Company has recently sold unprofitable brands, reducing the cash required to maintain those brands, reevaluated our pricing model on our Vicon brand to improve margins on those products, and has effected a reverse stock split on our common stock to remain trading on the Nasdaq Capital Markets, and improved our ability to potentially raise capital through equity offerings that we may ~~require substantial~~use to satisfy debt. In the event additional capital ~~investment. Failure~~is raised through equity offerings and/or debt is satisfied with equity, it may have a dilutive effect on our existing stockholders. While the Company believes these plans are sufficient to ~~obtain sufficient~~meet the capital ~~could materially adversely impact~~demands of our ~~growth potential.~~

current operations for at least the next twelve months, there is no guarantee that we will succeed. Overall, there is no guarantee that cash flow from our existing or future operations and any external capital that we may be able to raise will be sufficient to meet our ~~expansion goals and~~ working capital needs. We currently do not have adequate cash to meet our short or long-term needs. The consolidated financial statements do not include any adjustments relating to this uncertainty.

2530

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 June 30, ~~2022.~~2023. Based on their evaluation, our management has concluded that as of June 30, ~~2022,~~2023, our disclosure controls and procedures were not effective and 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~~personnel resulted in the Company lacking entity level controls around the review of period-end reporting processes, accounting policies and public disclosures. Additionally, the Company’s current processes and systems do not provide for necessary timely reconciliation of certain accounts and sufficient consideration regarding recoverability of certain assets. This deficiency is common in small companies, similar to ~~us,~~ours, with limited personnel.

Notwithstanding the conclusion by our Chief Executive Officer and Chief Financial Officer that our disclosure controls and procedures as of June 30, ~~2022,~~2023, 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,~~weaknesses, the ~~Board of Directors~~Company has ~~assigned a priority~~implemented measures that it believes have mitigated these weaknesses but has not had sufficient time to ~~the short-term and long-term improvement of~~fully evaluate these measures. These measures include; (i) updating our ~~internal~~accounting software to ensure tighter control over ~~financial reporting. Our Board~~entries and providing improved data for timely reconciliation of ~~Directors~~certain accounts, and (ii) engaged a third-party consulting firm to provide review of period-end reporting processes, accounting policies and public disclosures. The Company believes that given more time these new measures will ~~work with management to continuously review controls and procedures to identified deficiencies and implement remediation within our~~be sufficient in remediating the material weakness in internal ~~controls over financial reporting and our disclosure controls and procedures.~~controls.

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~~continuing to improve its internal controls ~~by obtaining additional accounting personnel.~~through the actions mentioned above.

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.

2631

Part II Other Information

Item 1. Legal Proceedings.

~~NONE.~~None.

Item 1A. Risk Factors

See Risk Factors included in our Annual Report on Form 10-K ~~for 2021.~~filed with the SEC on December 28, 2022.

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

During the nine months ended June 30, ~~2022 the Company issued an aggregate of 4,481,102~~2023,161,718 shares of the Company’s common stock have been issued to ~~settle $2,712,500~~satisfy $487,716 of notes payable, ~~$353,978~~$662,284 in accrued interest, and ~~$926,646~~$276,151 of excess value of shares issued recorded as interest expense. ~~Additionally,~~

During the nine months ended June 30, 2023, 22,017 shares of the Company’s common stock have been issued in exchange for services valued at $141,872.

Subsequent to the reporting period, the Company issued ~~another 1,000,000~~an aggregate of 32,488 shares ~~in connection with the issuance~~ of ~~a note~~common stock to settle $200,000 of notes payable ~~on February 22, 2022. The fair market~~and accrued interest, and $25,792 of excess value of ~~the~~ shares ~~$700,400 has been~~issued recorded as interest ~~expense on~~expense.

Subsequent to the ~~Company’s Condensed Consolidated Statement~~reporting period, the Company issued an aggregate of ~~Operations and Comprehensive Income/(Loss).~~ 8,086 shares of common stock in exchange for services valued at $53,125.

Such shares were issued pursuant to the exemption contained under Section 4(a)(2) of the Securities Act of 1933, as amended.

Item 3.Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

N/A

Item 5. Other Information

None.

2732

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. (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 Correction to the Certificate of Amendment to the Amended and Restated Certificate of Incorporation, as amended, of Cemtrex, Inc (6)
3.12		Amended Certificate of Designation of the Series 1 Preferred Shares, dated March 30, 2020.(16)
3.13		Certificate of Amendment of Certificate of Incorporation, dated July 29, 2020 (20)
3.14		Certificate of Correction of Certificate of Incorporation, dated July 29, 2021, filed October 7, 2020 (9)
		Certificate of Amendment of Certificate of Incorporation, dated January 12, 2023 (7)
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		Amendment of the Term Loan Agreement between Vicon and NIL Funding, dated March ~~4, 2020.(17)~~3, 2023. (5)
10.2		~~Consulting Agreement, dated April 22, 2020 between Centrex,~~Amendment to Loan Documents Between Advanced Industrial Services, Inc. and ~~Adtron, Inc.~~Fulton Bank, N.A. dated February 24, 2023 (5)
10.3		Amendment to Promissory Note Between Cemtrex, Inc. and Streeterville Capital, LLC dated May 3, 2023 (5)
10.4		Securities Purchase Agreement dated June 1, 2020 (18)
~~10.4~~10.5		Securities Purchase Agreement dated June 9, 2020 (19)
~~10.5~~10.6		Settlement Agreement and Release between Cemtrex, Inc. and Aron Govil dated February 26, 2021 (13)
~~10.6~~10.7		Securities Purchase Agreement dated February 22, 2022 (15)
~~10.7~~10.8		Amendment of the Term Loan Agreement between Vicon and NIL Funding, dated March 30, 2022. (15)
10.9		Asset Purchase agreement between Cemtrex, Inc. and Saagar Govil, dated November 22, 2022 (22)
10.10		Asset Purchase agreement between Cemtrex, Inc. and Saagar Govil, dated November 22, 2022 (22)
10.11		Simple Agreement for Future Equity (SAFE) between Cemtrex, Inc. and Saagar Govil, dated November 18, 2022 (22)
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 Interim Chief Financial Officer and Principal Financial Officer as required by Rule 13a-14 or 15d-14 of the Exchange Act, as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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 Interim Chief Financial Officer and Principal Financial Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act 0f of 2002.
99.1		Order pursuant to Section 8A of the Securities Act – dated September 30, 2022. (21)
101.INS*		Inline XBRL Instance Document
101.SCH*		Inline XBRL Taxonomy Extension Schema
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

*	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	Incorporated by reference from Form ~~S-8~~10-Q filed on May ~~1, 20120~~11, 2023.
6	Incorporated by reference from Form 8-K filed on June 12, 2019.
7	Incorporated by reference from Form ~~8-K/A~~8-K filed on ~~November 24, 2017.~~January 20, 2023.
8	Incorporated by reference from Form 8-K/A filed on 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 8-K filed on February 26, 2021.
14	Incorporated by reference from Form 8-K filed on March 22, 2019.
15	Incorporated by reference from Form 10-Q filed on May 16, 2022.
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.
21	Incorporated by reference from Form 8-K filed on October 4, 2022.
22	Incorporated by reference from Form 8-K filed on November 29, 2022.

2833

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:	August ~~15, 2022~~10, 2023	By:.	/s/ Saagar ~~Govil~~Govil.
			Saagar Govil
			Chief Executive Officer

Dated: August 10, 2023	~~August 15, 2022~~		/s/ Paul J. ~~Wyckoff~~ .Wyckoff.
			Paul J. Wyckoff
			Interim Chief Financial Officer
		and Principal Financial Officer

2934


	For the nine months ended
	June 30,
Cash Flows from Operating Activities	2022			2021

Net income/(loss)	$	(10,063,448	)	$	1,838,721

Adjustments to reconcile net income/(loss) to net cash used by operating activities
Depreciation and amortization		1,346,383			972,186
Loss on disposal of property and equipment		161,814			18,583
Noncash lease expense		615,354			653,175
Change in allowance for doubtful accounts		(7,584	)		(161,101	)
Share-based compensation		111,402			110,904
Income tax expense/ (benefit)		(247,941	)		168,190
Interest expense paid in equity shares		1,627,046			818,348
Accrued interest on notes payable		635,001			64,748
Amortization of original issue discounts on notes payable		908,333			575,000
Gain on marketable securities		(2,234,478	)		(2,407,841	)
Discharge of Paycheck Protection Program Loans		(971,500	)		(3,349,700	)
Settlement Agreement - Related Party		-			(3,674,165	)

Changes in operating assets and liabilities net of effects from acquisition of subsidiaries:
Accounts receivable		254,098			1,613,682
Accounts receivable - related party		14,641			(78,594	)
Inventory		(2,801,243	)		(1,875,591	)
Prepaid expenses and other current assets		178,536			(976,050	)
Other assets		(159,526	)		149,778
Other liabilities		(13,542	)		15,019
Accounts payable		1,166,536			30,327
Operating lease liabilities		(546,896	)		(650,535	)
Deposits from customers		(423,114	)		9,567
Accrued expenses		(444,266	)		(78,851	)
Deferred revenue		706,383			124,637
Income taxes payable		(58,788	)		(88,987	)
Net cash used by operating activities		(10,246,799	)		(6,178,550	)

Cash Flows from Investing Activities
Purchase of property and equipment		(1,003,121	)		(1,113,658	)
Proceeds from sale of property and equipment		51,262			-
Investment in MasterpieceVR		(500,000	)		(500,000	)
Investment in related party		-			(1,075,428	)
Proceeds from sale of marketable securities		12,182,932			9,134,159
Purchase of marketable securities		(10,214,044	)		(6,290,747	)
Net cash used by investing activities		517,029			154,326

Cash Flows from Financing Activities
Proceeds from notes payable		8,000,000			-
Payments on notes payable		(1,176,763	)		(2,145,257	)
Payments on capital lease liabilities		-			(20,061	)
Payments on bank loans		(920,939	)		(957,186	)
Proceeds from Paycheck Protection Program Loans		-			2,942,285
Net cash provided/(used) by financing activities		5,902,298			(180,219	)

Effect of currency translation		(397,644	)		(386,160	)
Defined benefit plan actuarial gain/(loss)		-			87,895
Net decrease in cash, cash equivalents, and restricted cash		(3,827,472	)		(6,204,443	)
Cash, cash equivalents, and restricted cash at beginning of period		17,186,323			21,072,859
Cash, cash equivalents, and restricted cash at end of period	$	12,961,207		$	14,570,151

Balance Sheet Accounts Included in Cash, Cash Equivalents, and Restricted Cash
Cash and equivalents	$	11,442,487		$	12,879,278
Restricted cash		1,518,720			1,690,873
Total cash, cash equivalents, and restricted cash	$	12,961,207		$	14,570,151

Years ending September 30,	Finance leases		Operating Leases			Total
2022		-		275,319			275,319
2023		-		834,504			834,504
2024		-		660,865			660,865
2025		-		638,531			638,531
2026 & Thereafter		-		702,252			702,252
Undiscounted lease payments		-		3,111,471			3,111,471
Amount representing interest		-		(492,981	)		(492,981	)
Discounted lease payments	$	-	$	2,618,490		$	2,618,490

	Nine months ended
	June 30, 2022			June 30, 2021
Lease costs:
Finance lease costs:
Depreciation of finance lease assets	$	-		$	17,184
Interest on lease liabilities		-			88

Operating lease costs:
Operating lease expense	$	686,124		$	727,374

Other information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating leases	$	546,896		$	650,535
Finance leases		-			28,535
	$	546,896		$	679,070

Weighted-average remaining lease term - finance leases (months)		0			3
Weighted-average remaining lease term - operating leases (months)		33			58

Weighted-average discount rate - finance leases		N/A			3.63	%
Weighted-average discount rate - operating leases		5.66	%		6.85	%