CETX 10-K & 10-Q changes, risk factors and insider trading

Adverse economic conditions can also lead to increased credit and collectability risk on our trade receivables; the failure of derivative counterparties and other financial institutions; limitations on our ability to issue new debt; reduced liquidity; and declines in the fair values of our financial instruments. These and other impacts can materially adversely affect our business, results of operations, financial conditioncondition, and stock price.

Our business can be impacted by political events, trade and other international disputes, war, terrorism, natural disasters, public health issues, industrial accidentsaccidents, and other business interruptions.

Restrictions on international trade, such as tariffs and other controls on imports or exports of goods, technology or data, can materially adversely affect our operations and supply chain and limit our ability to offer and distribute products and services to customers. The impact can be particularly significant if these restrictive measures apply to countries and regions where we derive a significant portion of our revenues and/or have significant supply chain operations. Restrictive measures can require us to take various actions, including changing suppliers and restructuring business relationships. Changing our operations in accordance with new or changed restrictions on international trade can be expensive, time-consumingtime-consuming, and disruptive to our operations. Such restrictions can be announced with little or no advance notice, and we may not be able to effectively mitigate all adverse impacts from such measures. For example, tensions between governments, including the U.S. and China, have in the past led to tariffs and other restrictions being imposed on our business. If disputes and conflicts further escalate in the future, actions by governments in response could be significantly more severe and restrictive and could materially adversely affect our business. Political uncertainty surrounding trade and other international disputes could also have a negative effect on consumer confidence and spending, which could adversely affect our business.

Many of our operations and facilities, as well as critical business operations of our suppliers and contract manufacturers, are in locations that are prone to earthquakes and other natural disasters. In addition, such operations and facilities are subject to the risk of interruption by fire, power shortages, nuclear power plant accidents and other industrial accidents, terrorist attacks and other hostile acts, ransomware and other cybersecurity attacks ,attacks, labor disputes, public health issues, including pandemics such as the COVID-19 pandemic, and other events beyond our control. Global climate change is resulting in certain types of natural disasters, such as droughts, floods, hurricanes hurricanes, and wildfires, occurring more frequently or with more intense effects. Such events can make it difficult or impossible for us to manufacture and deliver products to our customers, create delays and inefficiencies in our supply and manufacturing chain, and result in slowdowns and outages to our product and service offerings, and negatively impact consumer spending and demand in affected areas. Following an interruption to our business, we can require substantial recovery time, experience significant expenditures to resume operations, and lose significant sales.

We must comply with various laws and regulations relating to the import and export of products, services and technology from the U.S. and other countries having jurisdiction over our operations, which may affect our transactions with certain customers, business partnerspartners, and other persons. In certain circumstances, export control and economic sanctions regulations may prohibit the export of certain products, services, and technologies and in other circumstances, we may be required to obtain an export license before exporting a controlled item. The length of time required by the licensing processes can vary, potentially delaying the shipment of products or performance of services and the recognition of the corresponding revenue. In addition, failure to comply with any of these regulations could result in civil and criminal, monetary and non-monetary penalties, disruptions to our business, limitations on our ability to import and export products and services and damage to our reputation. Moreover, any changes in export control or sanctions regulations may further restrict the export of our products or services, and the possibility of such changes requires constant monitoring to ensure we remain compliant. Any restrictions on the export of our products or product lines could have a material adverse effect on our competitive position, results of operations, cash flowsflows, or financial condition.

While our working capital and current debt indicate a substantial doubt regarding the Company’s ability to continue as a going concern, the Company has historically, from time to time, satisfied and may continue to satisfy certain short-term liabilities through the issuance of common stock, thus reducing our cash requirement to meet our operating needs. The Company has approximately $3.9$5.0 million in cash as of September 30, 2024.2025. Additionally, the Company has (i) secured a line of credit for its Vicon brand to fund operations, which as of September 30, 2024,2025, has available capacity of $1.9$1.6 million, and a line of credit for its AIS brand with a $3.5 million capacity that has not been drawn upon, (ii) continually reevaluate our pricing model on our Vicon brand to improve margins on those products and introducing new innovative products to grow revenues, (iii) raised approximately $9.0$12.5 million in net proceeds through our May 2024 equity financingfinancing, and anticipateraised an additional $5 to $10$5.7 million when the Series B warrants are exercised, and (iv) subsequent to the balance sheet date and anticipate an additional $2.4 million when the remaining Series B warrants are exercised, (iv) raised approximately $1.2 million in net proceeds from our May 2025 equity offering and an additional $4.0 million in December 2025, and (v) has effected a 60:11, 35:1, and a 3515:1 reverse stock splitsplits on our common stock to remain trading on the Nasdaq Capital Markets, and improve our ability to potentially raise capital through equity offerings that we may use to satisfy debt. In the event additional capital is raised through equity offerings and/or debt is satisfied with equity, it may have a dilutive effect on our existing stockholders. While the Company believes these plans if successful, would be sufficient to meet the capital demands of our current operations for at least the next twelve months, there is no guarantee that we will succeed. Overall, there is no guarantee that cash flow from our existing or future operations and any external capital that we may be able to raise will be sufficient to meet our working capital needs. The Company currently does not have adequate cash or available liquidity/available capacity on our lines of credit to meet our long-term needs and our above plans in the short term may prove to be inadequate to continue as a going concern. Thus, despite our cash on hand, our ability to draw on our credit line, or changes to our pricing models, and other safeguards, we may be unable to meet our obligations as they become due over the next twelve months beyond the issuance date .date.

We have incurred net losses, including net losses attributable to Cemtrex, Inc. shareholders of $28.1 million in 2025, $7.2 million in 2024, $9.2 million in 2023, and $13.0 million in 2022. We have an accumulated deficit of $71.4$99.4 million as of September 30, 2024.2025. We expect to continue to incur significant product development, sales and marketing and administrative expenses. As a result, we will need to generate significant revenues to achieve profitability. We cannot be certain that we will achieve profitability in the future or, if we achieve profitability, to sustain it. If we do not achieve and maintain profitability, the market price for our common stock may decline, perhaps substantially.

The Company may, from time to time invest excess cash that the Company has on hand in large cap securities listed on major exchanges, including stocks and options. The Company’s investments can be negatively affected by liquidity, credit deterioration, financial results, market and economic conditions, political risk, sovereign risk, interest rate fluctuationsfluctuations, or other factors.

As of September 30, 2025, our total indebtedness was approximately $16.8 million, including notes payable of $8.5 million, revolving line of credit of $3.2 million, mortgage payable of $3.2 million, and bank loans of $1.9 million. By comparison, as of September 30, 2024, our total indebtedness was approximately $21.05 million, including notes payable of $12.4 million, revolving line of credit of $3.1 million, mortgage payable of $3.3 million, bank loans of $2.2 million, and $0.05 million of PPP loans. By comparison,For as2025 Septemberand 30, 2023, our total indebtedness was2024 approximately $24.4$12.1 million, including notes payable of $18.1 million,million mortgage payable of $3.4 million, vendor financed purchase of $0.7 million, bank loans of $1.3 million, and $0.9 million of PPP loans. For 2024 and 2023 approximately $7.9 million and $14.5 million, respectively, of such debt is classified as current. This substantial debt could have important consequences, including the following: (i) a substantial portion of our cash flow from operations may be dedicated to the payment of principal and interest on indebtedness, thereby reducing the funds available for operations, future business opportunities and capital expenditures; (ii) our ability to obtain additional financing for working capital, debt service requirements and general corporate purposes in the future may be limited; (iii) we may face a competitive disadvantage to lesser leveraged competitors; (iv) our debt service requirements could make it more difficult to satisfy other financial obligations; and (v) we may be vulnerable in a downturn in general economic conditions or in our business and we may be unable to carry out activities that are important to our growth .growth.

From time to time, we may need to reduce our prices in response to competitive and customer pressures and to maintain our market share. Competition and customer pressures may also restrict our ability to increase prices in response to commodity and other input cost increases. Our results of operations will suffer if profit margins decrease, as a result of a reduction in prices, increased input costscosts, or other factors, and if we are unable to increase sales volumes to offset those profit margin decreases. We may also need to increase spending on marketing, advertisingadvertising, and new product innovation to protect existing market share or increase market share. The success of our investments is subject to risks, including uncertainties about trade and consumer acceptance. As a result, our increased expenditures may not maintain or enhance market share and could result in lower profitability.

We are a smaller public company, and we face rapid technological change in many of our product marketsmarkets, and we may not be able to introduce any successful new products or any enhancements to our existing products on a timely basis, or at all. This could result in prolonged and significant losses. In addition, our introduction of new products could adversely affect sales of certain of our existing products if these new products directly compete with our existing products. If our competitors develop innovative technologies that are superior to our products or if we fail to accurately anticipate market trends and respond on a timely basis with our own innovations, we may not achieve sufficient growth in its revenues to attain profitability or if we do, we may not be able sustain profitability.

We rely on information technology networks and systems, including the Internet, to process, transmit, and store electronic and financial information; to manage a variety of business processes and activities; and to comply with regulatory, legal, and tax requirements. We also depend on our information technology infrastructure for digital marketing and sales activities and for electronic communications among our locations, personnel, customers, and suppliers around the world. Many of the information technology systems used by us globally have been in place for many years and not all hardware and software are currently supported by vendors. These information technology systems are susceptible to damage, disruptions, or shutdowns due to failures during the process of upgrading or replacing software, databasesdatabases, or components thereof, power outages, hardware failures, computer viruses, cyber-attacks, telecommunication failures, user errors, or catastrophic events. If our information technology systems suffer severe damage, disruption, or shutdown and our business continuity plans do not effectively resolve the issues in a timely manner, our product sales, financial condition, and results of operations may be materially affected, and we could experience delays in reporting our financial results.

Our customers’ storage and use of data to operate their businesses and deliver services to their consumers is essential to their use of our platform, which stores, transmits and processes our customers’ proprietary information and personal information relating to them, their employeesemployees, and their consumers. If a security breach were to occur, as a result of third-party action, employee error, breakdown of our internal security processes and procedures, malfeasance or otherwise, and the confidentiality, integrity or availability of our customers’ data were disrupted, we could incur significant liability to our customers, to partners and to individuals whose information was being stored by our customers, and our platform may be perceived as less desirable, which could negatively affect our business and damage our reputation.

Our platform and third-party applications available on, or that interface with, our platform have been and, in the future, may be subject to distributed denial of service attacks (“DDoS”), a technique used by hackers to take an internet service offline by overloading its services. Since techniques used to deliver DDoS attacks are evolving, we may be unable to implement adequate preventative measures or stop DDoS attacks or security breaches while they are occurring. We cannot guarantee that applicable recovery systems, security protocols, network protection mechanismsmechanisms, and other procedures are or will be adequate to prevent network and service interruption, system failurefailure, or data loss. In addition, computer malware, viruses, ransomware, extortion, and hacking and phishing attacks or social engineering incidents by third parties are prevalent in our industry. Any actual or perceived DDoS attack or security breach could damage our reputation and brand, expose us to a risk of litigation and possible liability and require us to expend significant capital and other resources to respond to and/or alleviate problems caused by the DDoS attack or security breach.

Moreover, our platform and third-party applications available on, or that interface with, our platform could be breached if vulnerabilities in our platform or third-party applications are exploited by unauthorized third parties or due to employee error, breakdown of our internal security processes and procedures, malfeasance, or otherwise. If these third parties fail to adhere to adequate data security practices, or in the event of a breach of their networks, our own and our customers’ data may be improperly accessed, usedused, or disclosed. Further, threat actors may attempt to fraudulently induce employees or customers into disclosing sensitive information such as usernames, passwords or other information or otherwise compromise the security of our internal networks, electronic systemssystems, and/or physical facilities in order to gain access to our data or our customers’ data. As a result of our increased visibility, the size of our customer base, and the increasing amount of confidential information we process, we believe that we are increasingly a target for such breaches and attacks. This threat may intensify in the event of retaliatory cyberattacks stemming from geopolitical events such as Russia’s invasion of Ukraine. In addition to our own platform and applications, some of the third parties we work with may receive information provided by us, by our customers, or by our customers’ consumers through web or mobile applications. If these third parties fail to adhere to adequate data security practices, or in the event of a breach of their networks, our own and our customers’ data may be improperly accessed, usedused, or disclosed.

We seek to have many sources of supply for each of our major requirements in order to avoid significant dependence on any onesingle or a few suppliers. suppliers. However, the supply of materials or other items could be disrupted by natural disasters, international trade tariffs, wars, pandemics, pandemics, disputes and or other events. Despite market price volatility for certain requirements and materials pricing pressures at some of our businesses, the raw materials and various purchased components needed for our products have generally been available in sufficient quantities. quantities. In some instances, lead times have extended beyond normal due to logistic delays and labor shortages occurring globally. Some of our products, however, require the use of raw materials that are available from only a limited number of regions around the world, are available from only a limited number of suppliers, or may be subject to significant fluctuations in market prices. Our results of operations may be adversely affected if we have difficulty obtaining these raw materials, our key suppliers experience financial difficulties, the quality of available raw materials deteriorates, or there are significant price increases for these raw materials. Our inability to recover increased costs through increased sales prices could have an adverse impact on our results of operations. For periods in which the prices for these raw materials rise, we may be unable to pass on the increased cost to our customers, which would result in decreased sales margins for the products in which they are used. For periods in which prices for these raw materials decline, we may be required, as has occurred in the past, to write down our inventory carrying cost of these raw materials and products. Depending on the extent of the difference between market price and our carrying cost, the write-down could have a significant adverse effect on our results of operations.

Our ability to establish, maintain and enforce intellectual property rights with respect to our proprietary technologies, patents, patent applications, softwaresoftware, and other rights will be a significant factor in determining our future financial and operating performance. We seek to protect our intellectual property rights by relying on a combination of patent, trade secretsecret, and copyright laws. We also use confidentiality and other provisions in our agreements that restrict access to and disclosure of our confidential know-how and trade secrets.

From our customers’ standpoint, the strength of the intellectual property under which we control can be a critical determinant of the value of our products and services. If we are unable to secure, protect and enforce our intellectual property, it may become more difficult for us to attract new customers. Any such development could have a material adverse effect on our business, prospects, financial conditioncondition, and results of operations.

We may not have sufficient financial resources to defend our intellectual property rights or otherwise successfully defend against claims that we have infringed on a third party’s intellectual property and, as a result, it may adversely affect our business, financial conditioncondition, and results of operations.

Even if such claims are not valid, they could subject us to significant costs. In addition, it may be necessary in the future to enforce our intellectual property rights to determine the validity and scope of the proprietary rights of others. Litigation may also be necessary to defend against claims of infringement or invalidity by others. We may not have sufficient financial resources to defend our intellectual property rights or otherwise to successfully defend the company against valid or spurious claims that we have infringed upon the intellectual property rights of others. An adverse outcome in litigation or any similar proceedings could force us to take actions that could harm its business. These include: (i) ceasing to sell products that contain allegedly infringing property; (ii) obtaining licenses to the relevant intellectual property which we may not be able to obtain on terms that are acceptable, or at all; (iii) indemnifying certain customers or strategic partners if it is determined that we have infringed upon or misappropriated another party’s intellectual property; and (iv) redesigning products that embody allegedly infringing intellectual property. Any of these results could adversely and significantly affect our business, financial conditioncondition, and results of operations. In addition, the cost of defending or asserting any intellectual property claim, both in legal fees and expenses, and the diversion of management resources, regardless of whether the claim is valid, could be significant and lead to significant and protracted losses.

We intend to make acquisitions of complementary (including competitive) businesses, productsproducts, and technologies. However, any future acquisitions may result in material transaction costs, increased interest and amortization expenses related to goodwill and other intangible assets, increased depreciation expense and increased operating expenses, any of which could have an adverse effect on our operating results and financial position. Acquisitions will require integration of acquired assets and management into our operations to realize economies of scale and control costs. Acquisitions may involve other risks, including diversion of management attention that would otherwise be available for ongoing internal development of our business and risks inherent in entering markets in which we have no or limited prior experience. In connection with future acquisitions, we may make potentially dilutive issuances of equity securities. In addition, consummation of acquisitions may subject us to unanticipated business uncertainties, contingent liabilities or legal matters relating to those acquired businesses for which the sellers of the acquired businesses may not fully indemnify us. There can be no assurance that our business will grow through acquisitions, as anticipated.

Our financial success is dependent to a significant degree upon the efforts of Saagar Govil, our Chairman, PresidentPresident, and Chief Executive Officer. Saagar Govil possesses management, financial expertise, engineering, salessales, and marketing experience concerning our company that our other officers do not have. We have not entered into an employment arrangement with Mr. Govil, and we have not obtained key man insurance over him. There can be no assurance that Saagar Govil will continue to provide services to us. A voluntary or involuntary departure by Saagar Govil could have a materially adverse effect on our business operations if we were not able to attract a qualified replacement for him in a timely manner.

We are a “controlled company” under Nasdaq Listing Rules. Approximately 90% of our outstanding voting shares, which includes our common stock, Series C preferred stock and Series 1 preferred stock, are beneficially held by Saagar Govil, our Chairman, PresidentPresident, and Chief Executive Officer. Pursuant to certificate of designation for our Series C preferred, each outstanding share of Series C Preferred Stock is 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 a result of Saagar Govil’s ownership of our common stock, Series C preferred stock, and Series 1 preferred stock, he controls, and will control in the future, substantially all matters requiring approval by the stockholders of our company, including the election of all directors and approval of significant corporate transactions. This could make it impossible for public stockholders to influence the affairs of our company.

The market prices of the securities of early-stage companies, particularly companies like ours without consistent product revenues and earnings, have been highly volatile and are likely to remain highly volatile in the future. This volatility has often been unrelated to the operating performance of particular companies. In the past, companies that experience volatility in the market price of their securities have often faced securities class action litigation. Whether or not meritorious, litigation brought against us could result in substantial costs, divert our management’s attention and resourcesresources, and harm our financial condition and results of operations.

In the event of our liquidation, winding up or dissolution, our assets would be available to make payments to holders of all existing and future indebtedness and Series 1 preferred stock before payments to holders of our common stock. In the event of our bankruptcy, liquidation or winding up, there may not be sufficient assets remaining, after paying amounts to the holders of our indebtedness and Series 1 preferred stock, to pay anything to common stockholders. As of September 30, 2024,2025, we had total consolidated liabilities of approximately $39.2$39.1 million and 2,456,8272,705,327 shares issued and 2,392,7272,641,227 shares of Series 1 preferred stock outstanding. Any liquidation, winding up or dissolution of our company or of any of our wholly or partially owned subsidiaries would have a material adverse effect on holders of our common stock .stock.

Effective June 30, 2020, the SEC implemented Regulation Best Interest requiring that “A broker, dealer, or a natural person who is an associated person of a broker or dealer, when making a recommendation of any securities transaction or investment strategy involving securities (including account recommendations) to a retail customer, shall act in the best interest of the retail customer at the time the recommendation is made, without placing the financial or other interest of the broker, dealer, or natural person who is an associated person of a broker or dealer making the recommendation ahead of the interest of the retail customer.” This is a significantly higher standard for broker-dealers to recommend securities to retail customers than before under FINRA “suitability rules. FINRA suitability rules do still apply to institutional investors and require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending securities to their customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectivesobjectives, and other information, and for retail customers determine the investment is in the customer’s “best interest” and meet other SEC requirements. Both SEC Regulation Best Interest and FINRA’s suitability requirements may make it more difficult for broker-dealers to recommend that their customers buy speculative, low-priced securities. They may affect investing in our common stock or our preferred stock, which may have the effect of reducing the level of trading activity in our securities. As a result, fewer broker-dealers may be willing to make a market in our common stock or our preferred stock, reducing a stockholder’s ability to resell shares of our common stock or our preferred stock.

We expect that significant additional capital may be needed in the future to continue our planned operations, expanded research and development activities and costs associated with operating a public company. The Company may also require capital to acquire or invest in complementary businesses, products, or technologies, or to obtain the right to use such complementary technologies. We have no commitments with respect to any acquisition or investment; however, we seek opportunities and transactions that management believes will be advantageous to the Company and its operations or prospects. To raise capital, we may sell Common Stock, convertible securitiessecurities, or other equity securities in one or more transactions at prices and in a manner we determine from time to time. If we sell Common Stock, convertible securities or other equity securities, investors may be materially diluted by subsequent sales. Such sales may also result in material dilution to our existing stockholders, and new investors could gain rights, preferencespreferences, and privileges senior to the holders of our Common Stock, including the securities sold in this offering. The aggregate number of shares of our Common Stock that may be issued pursuant to stock awards under our 2020 Equity Compensation Plan as of September 30, 2024,2025, is 282 shares. Increases in the number of shares available for future grant or purchase may result in additional dilution, which could cause our stock price to decline.

Although our Common Stock is listed on the Nasdaq Capital Market, the exchange will require us to meet certain financial, public float, bid price and liquidity standards on an ongoing basis in order to continue the listing of our Common Stock. If we fail to meet these continued listing requirements, our Common Stock may be subject to delisting. Delisting from the Nasdaq Capital Market could make trading our common stock more difficult for investors, potentially leading to declines in our share price and liquidity. Without a Nasdaq Capital Market listing, stockholders may have a difficult time getting a quote for the sale or purchase of our stock, the sale or purchase of our stock would likely be made more difficult and the trading volume and liquidity of our stock could decline. Delisting from the Nasdaq Capital Market could also result in negative publicity and could also make it more difficult for us to raise additional capital. The absence of such a listing may adversely affect the acceptance of our common stock as currency or the value accorded by other parties. Further, if we are delisted, we would also incur additional costs under state blue sky laws in connection with any sales of our securities. These requirements could severely limit the market liquidity of our common stock and the ability of our stockholders to sell our common stock in the secondary market. If our common stock is delisted by Nasdaq, our common stock may be eligible to trade on an over-the-counter quotation system, such as the OTC Pink, OTCQB and OTCQX markets, where an investor may find it more difficult to sell our stock or obtain accurate quotations as to the market value of our common stock. In the event our common stock is delisted from the Nasdaq Capital Market, we may not be able to list our common stock on another national securities exchange or obtain quotation on an over-the counter quotation system .system.

Critical Accounting Policies and Estimates

The Company classifies inventory markdowns in the income statement as a component of cost of goods sold. These markdowns are estimates, which could vary significantly from actual requirements if future economic conditions, customer demanddemand, or competition differ from expectations.

There was $1,044,530$1,034,798 and $618,021$1,044,530 in inventory obsolescence reservereserves at September 30, 2024,2025, and 2023,2024, respectively.

OnThe October 1, 2018, the Company adoptedaccounts ASUfor 2014-09,revenue in accordance with ASC 606, Revenue from Contracts with Customers (Topic “ASC 606”), using the modified retrospective. transition method. Under the guidance of the standard, revenue represents the amount received or receivable for goods and services supplied by the Company to its customers. Company recognizes revenue at the time a good or service is transferred to a customer and the customer obtains control of that good or receives the service performed. Most of the Company’s sales arrangements with customers in the Security segment are short-term in nature involving single performance obligations related to the delivery of goods or repair of equipment and generally provide for transfer of control at the time of shipment to the customer. Additionally, the Company issues additional licenses for its proprietary software. These licenses have terms of 1, 3, and 5 years. The Company records deferred revenue and recognizes the revenue over the period of the license. The transaction price is a negotiated price with each customer and is allocated to its performance obligations based on stand-alone selling price. The Company generally permits returns of product or repaired equipment due to defects; however, returns are historically insignificant. Billing terms vary by customer and product but generally do not exceed 90 days.

The Company records deferred revenue when receiving cash in advance of delivering services to the customer. The deferred revenue is reversed, reversed, and revenue is recognized when those services are delivered. The amounts were $1,866,014, $1,955,635, $2,311,334, and $1,788,507$2,311,334, as of September September30, 30,2025, 2024, 2023, and 20222023 respectively, recorded as Deferred revenue. Short-term deferred revenue of $1,297,616$1,383,036 is expected to be recognized over the next 12 months The Company records a liability when receiving cash in advance of delivering goods to the customer. The revenue is recognized, and the deposit is applied to the invoice for those goods when those goods are delivered. The company recorded Deposits from customers of $408,415, $57,434, and $73,144 as of September 30, 2024, 2023, and 2022 respectively. These amounts are short-term and are expected to be recognized over the next 12 months.

Assessing the Company’s goodwill for impairment analyses is complex and highly judgmental due to the nature of qualitive assessment and, where necessary, the significant estimation required to determine the fair value of the reporting units. In particular, the fair value estimate is sensitive to significant assumptions, such as future operating results, cash flowsflows, and the weighted average cost of capital. These significant assumptions are forward looking and could be materially affected by future market or economic conditions.

For the year September 30, 2025, no impairment of the Company’s goodwill was recorded. For the year ended September 30, 2024, the Company recorded $530,475 of impairment for Goodwill in the Security Segment. For the year September 30, 2023, no impairment of the Company’s goodwill was recorded.

Our Security segment revenues for the year ended September 30, 2024,2025, decreasedincreased by $2,337,571$6,376,893 or 7%,20%, to $32,021,899$38,398,792 from $34,359,470$31,021,899 for the the year ended September 30, 2023.2024. This decreaseincrease is due to decreaseda demandlarge sale valued at $10,375,000 for security technology products under our Vicon brand. This sale represents 27% of the revenue for this segment for the year ended September 30, 2025.

Our Industrial Services segment revenues for the year ended September 30, 2024,2025, increased by $9,832,893$3,237,544 or 39%,9%, to $34,841,985$38,079,529 from $25,009,092$34,841,985 for the year ended September 30, 2023.2024. This increase is mainly due to an increased demand for the segment’s products and services and additional revenue related to the acquisition of Heisey Mechanical completed in the fourth quarter of fiscal year 2023.services.

Gross profit in our Security segment was $19,085,754 or 50% of the segment’s revenues for the year ended September 30, 2025, as compared to gross profit of $16,167,339 or 50% of the segment’s revenues for the year ended September 30, 2024, as compared to gross profit of $17,106,300 or 50% of the segment’s revenues for the year ended September 30, 2023.2024. Gross profit as a percentage of revenuesrevenue remained consistent in the yearsyear ended September 30, 2024,2025, compared to the year ended September 30, 2023.2024.

Gross profit in our Industrial Services segment was $13,193,005 or 35% of the segment’s revenues for the year ended September 30, 2025, as compared to gross profit of $11,310,865 or 32% of the segment’s revenues for the year ended September 30, 2024, as compared to gross profit of $8,579,526 or 34% of the segment’s revenues for the year ended September 30, 2023.2024. Gross profit as a percentage of revenues decreasedincreased in the year ended September 30, 2024,2025, compared to the year ended September 30, 2023,2024, and was primarily due to lowerdue to improved margins related to Heiseyon projects that were in operation atduring the time of the Heisey acquisition.year.

General and Administrative Expenses for the year ended September 30, 2024,2025, increased by $4,930,679$565,541 or 21%2% to $28,860,019$29,425,560 from $23,929,340$28,860,019 for the the year ended September 30, 2023.2024. The increase in general and administrative expenses is mainly due to increases in salariesdepreciation, insurance, rent and wages,utilities, travel,with insurance, rent and utilities asbeing athe result of the acquisitionnew ofoffice Heisey completedestablished in theSpringfield fourthNJ, quarterand fringe of fiscalbenefits yeardue 2023.to increased premiums for employee benefit programs.

Research and Development expenses decreased by $1,004,315 or 30% to $2,353,140 from $3,357,455, for the years ended September 30, 2024, and 2023 were $3,357,455 and $3,267,994, 2024, respectively. The increase decrease in Research and Development expenses are primarily related to the Security Segment’s development of proprietary technology and next generation solutions associated with security and surveillance systems software.software which have now come to market.

For the year ended September 30, 2025, the Company recorded no goodwill impairment. For the year ended September 30, 2024, the Company recognized a goodwill impairment charge of $530,475 related to its Security Segment. Goodwill is tested annually for impairment or if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount.

Other expense for the year ended September 30, 2024,2025, was $2,206,604$27,823,914 as compared to $4,489,605$2,206,604 for the year ended 2023.2024. Other expense for the year ended September 30, 2024,2025, was mainly driven by interest expense on the Company’s debt, loss on the excess fair value of the Company’s Series A and Series B Warrants exercised during the year, and by the changes in the fair value of the Series A and Series B warrants outstanding at September 30, 2025. Other expense for the year ended September 30, 2024, was mainly driven by interest expense on the Company’s debt, issuance costs of $995,333, related to the May 2024 Equity Financing, and loss on the excess fair value of certain prefunded warrants issued in May 2024, offset by the changes in the fair value of the Series A and Series B warrants outstanding at September 30, 2024. Other expense for the year ended September 30, 2023, was mainly driven by interest expense on the Company’s debt and included an employee retention credit of $416,502.

Income Tax Benefit/(Expense)

Working capital was $5,184,339 at September 30, 2025, compared to $8,103,457 at September 30, 2024, compared to $1,948,923 at September 30, 2023.2024. This includes cash and cash equivalents and restricted cash of $6,347,041 at September 30, 2025, and $5,420,392 at September 30, 2024, and $6,349,562 at September 30, 2023, respectively. The increasedecrease in working capital was primarily due to the decreaseincrease in the Company’s current maturities of long-term liabilities of $9,775,334,$4,193,120, a result of the standstilltiming agreement withof the holder of $12,440,555 ofCompany notes payable coming due and a decrease in the Company’s cashtrade andreceivables cashfrom equivalentsrelated parties of $1,432,399$280,295 and and a decrease in inventory of $1,750,690.$403,585.

Operating activities for continuing operations usedprovided $3,949,360$159,315 of cash for the year ended September 30, 2024,2025, compared to using $4,724,305 of$3,949,360 cash for the year ended September 30, 2023. Cash provided by operating activities for discontinued operations for the year ended September 30, 2023, was $2,491,581.2024.

Trade receivables increased by $1,949,981$1,973,748 or 21%18% to $13,133,424 at September 30, 2025, from $11,159,676 at September 30, 2024, from $9,209,695 at September 30, 2023.2024. The increase in trade receivables is mainly due to increased revenues and receivables related to the business generated by the acquisition of Heisey.revenues.

Investing activities for continuing operations used $1,257,393$2,960,739 of cash during the year ended September 30, 2024,2025, compared to $5,628,400$1,257,393 used in the year ended September 30, 2023.2024. Investing activities for fiscal year 2025 were mainly driven by the purchase of property and equipment and investment in digital assets. Investing activities for fiscal year 2024 were mainly driven by the purchase of property and equipment. Investing activities for fiscal year 2023 were mainly driven by the purchase of property and equipment and the acquisition of Heisey Mechanical.

Financing activities provided $4,398,599 of cash for the year ended September 30, 2024, as compared to $2,036,655 provided in the year ended September 30, 2023. In fiscal 2024 our financing activities were mainly comprised of proceeds from the Company’s equity public offering, payments on debt, and activity on the revolving line of credit. In fiscal 2023 our financing activities were mainly comprised of financing of the acquisition of Heisey and the building purchase The Company has incurred substantial losses of $7,229,491$28,112,368 and $9,196,875$7,229,491 for fiscal years 20242025 and 2023,2024, respectively, and has debt obligations over the next fiscal year of $7,857,388$12,101,593 and working capital of $8,103,457,$5,184,339, that raise substantial doubt with respect to the Company’s ability to continue as a going concern, as discussed in Item 1A of this Form 10-K.

The Company’s reporting segments consist of SecuritySecurity, Industrial Services and IndustrialAerospace Services.and Defense. Additionally, the Company’s operational structure also reports unallocated corporate expenses.

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

Results of Operations – For the three months ended MarchJune 31,30, 2026, and 2025

The Company’s Security segment revenues for the threenine months ended MarchJune 31,30, 2026, decreased by $11,204,595$12,477,086 or 66%42% to $5,776,557$17,539,579 from $16,981,152$30,016,665 for the threenine months ended MarchJune 31,30, 2025. This decrease is mainly due to a large sale valued at $10,375,000 for security technology technology products under our Vicon brand during the quarterprior nine-month period ended MarchJune 31,30, 2025.

The Company’s Industrial Services segment revenues for the threenine months ended MarchJune 31,30, 2026, increased by $768,929$3,683,833 or 7%,13%, to $11,038,046$31,622,994 from $10,269,117,$27,939,161, for the threenine months ended MarchJune 31,30, 2025. This increase is mainly due to the revenues from the acquisition of Richland,Richland LLC.

The Company’s newly established Aerospace and Defense segment generated revenues of $1,232,592$3,434,897 for the threenine months ended MarchJune 31, 2026 There was unallocated revenue under the Corporate segment of $14,172 for the three months ended March 31,30, 2026. This revenue is related to the Company’s investment in digital assets.

Gross Profit for the threenine months ended MarchJune 31,30, 2026, was $6,847,204$20,165,860 or 38% of revenues as compared to gross profit of $12,165,455$25,237,897 or 45%44% of revenues for the threenine months ended MarchJune 31,30, 2025.

Gross profit in our Security segment was $2,530,694$7,757,943 or 44% of the segment’s revenues for the threenine months ended MarchJune 31,30, 2026, as compared to gross profit of $8,803,856$15,597,177 or 52% of the segment’s revenues for the nine-month period ended MarchJune 31,30, 2025. Gross profit in our security segment decreased as a result of the large sale mentioned above, additionally gross profits have been impacted by increased costs, tariffs and fuel surcharges on shipping. The Company is currently evaluating the potential impact of tariff refunds on future gross profit percentages.

Gross profit in our Industrial Services segment was $3,781,523$9,934,435 or 34%31% of the segment’s revenues for the threenine months ended MarchJune 31,30, 2026, 2026, as compared to gross profit of $3,361,599$9,640,720 or 33%35% of the segment’s revenues for the nine-month period ended MarchJune 31,30, 2025. Gross profit increased in the threenine months ended MarchJune 31,30, 2026, compared to the threenine months ended MarchJune 31,30, 2025, was mainly due to the acquisition acquisition of Richland, LLC which lowered outsourcing costs now provided by AIS – TN, formerly Richland LLC.

Gross profit in the Company’s newly established Aerospace and Defense segment was 520,815$2,436,064 or 42%71% of revenues for the threenine months ended MarchJune 31,30, 2026

General and administrative expensesexpenses, including depreciation and amortization expenses, for the threenine months ended MarchJune 31,30, 2026, increased $1,701,641 $3,373,343 or 25%16% to $8,472,383$24,863,716 from $6,770,742$21,490,373 for the threenine months ended MarchJune 31,30, 2025. The increase in general and administrative expenses is mainly related to the additional expenses related to the acquisition of Invocon and Richland.

Research and Development expenses for the threenine months ended MarchJune 31,30, 2026, were $546,858$1,473,483 compared to $777,889$2,054,537 for the threenine months ended MarchJune 31,30, 2025, a decrease of $231,031$581,054, or 30%.28%. Research and Development expenses are related to the Security segment’s development of next generation solutions associated with security and surveillance systems software and the Aerospace and Defense segment’s development and improvement of their products.

As discussed in Note 1 of thethis Form 10-Q, the acquisition of Richland, LLC resulted in a bargain purchase gain of 2,068,047$2,068,047 based on the preliminary purchase price allocation. The purchase price allocation is still preliminary but has been developed based on an estimate of fair values of Richland’s identifiable tangible and intangible assets acquired and liabilities assumed as of February 5, 2026. The final allocation of the purchase price will be determined within one year from the closing date of the InvoconRichland acquisition.

Other incomeexpense for the threenine months ended MarchJune 31,30, 2026, was $3,467,711,$17,343,292, as compared to $4,104,211$26,095,977 for the threenine months ended MarchJune 31,30, 2025. 2025. Other incomeexpense for the threenine months ended MarchJune 31,30, 2026, was mainly driven by interest expense related to the bargaindiscount purchaseon gaincommon mentionedshares issued above,for gain the relief on notes payable, loss on the exercise of warrant liabilitiesliabilities, and the change in the fair value of warrant liabilities, offset by interest expense and the change in the fair value of the Company’s digital assets. Other incomeexpense for the threenine months ended MarchJune 31,30, 2025, was mainly driven by the changeloss inon theexcess fair value of warrant liabilities.

During the sixnine months ended MarchJune 31,30, 2026, and 2025, the Company had income tax expense from continuing operations of $340,185$221,184 and $231,063,$245,098, respectively. The provision for income tax is estimated based upon the current income projections of the Company, the effective rate of the prior year, and the Company’s current ability to utilize net loss carryforwards. The Company’s effective tax rate for the sixnine months ended MarchJune 31,30, 2026, and 2025, was (1.79%0.94%) and (1.17%1.00%) respectively.

Working capital was $13,706,571$13,155,389 at MarchJune 31,30, 2026, compared to working capital of $5,184,339 at September 30, 2025. This includes cash and cash equivalents and restricted cash of $7,910,118$9,301,740 at MarchJune 31,30, 2026, and $6,347,041 at September 30, 2025. The increase in working capital was primarily due to cash raised in the equity offerings and Series B Warrant exercises and the payment of the Company’s debt through equity.

Cash used by operating activities for the sixnine months ended MarchJune 31,30, 2026, was $5,310,446$4,900,015 compared to providing $1,600,532$3,410,782 for the sixnine months ended MarchJune 31,30, 2025. Our operating cash flow was mainly the result of our net loss, less the non-cash adjustments, combined with operating changes in inventory, contract assets, prepaid expenses and other current assets, accounts payable, operating lease liabilities, accrued expenses, expenses, and deferred revenues.

Trade receivables increaseddecreased by $192,135$613,244 or 1%5% to $13,325,559$12,520,180 at MarchJune 31,30, 2026, from $13,133,424 at September 30, 2025. The modestdecrease increase in trade receivables is attributable to the acquisitionsdecrease ofin Richlandsales andin Invocon.the Security segment.

Cash used by investing activities for the sixnine months ended MarchJune 31,30, 2026, was $13,972,452$13,278,551 compared to $1,436,452$1,482,232 for the threenine months ended MarchJune 31,30, 2025. Investing activities for the sixnine months ended MarchJune 31,30, 2026, were driven by the Company’s purchase of property and equipment, investment in marketable securities, the acquisition of Richland and Invocon, and investment in digital assets. Investing activities for the sixnine months ended MarchJune 31,30, 2025, were driven by the Company’s purchase of property and equipment and investment in Masterpiece VR.

Cash provided by financing activities for the sixnine months ended MarchJune 31,30, 2026, was $20,871,752$21,151,864 compared to $1,032,254$1,117,811 for the sixnine months ended ended MarchJune 31,30, 2025. Financing activities for the sixnine months ended MarchJune 31,30, 2026, were primarily driven by the proceeds from equity offerings, offerings, proceeds of notes payable and bank loans, and proceeds from the exercise of the Company’s Series B Warrants. Financing activities for the nine months ended June 30, 2025, were primarily driven by the proceeds from the Company’s revolving line of credit, notes payable, and proceeds from the exercise of the Company’s Series B Warrants. Financing activities for the six months ended March 31, 2025, were primarily driven by the proceeds from the Company’s revolving line of credit, notes payable, and proceeds from the exercise of the Company’s Series B Warrants.

The Company’s working capital may not be sufficient to cover operating costs which indicates substantial doubt regarding the Company’s ability to continue as a going concern, the Company has historically, from time to time, satisfied and may continue to satisfy certain short-term liabilities through the issuance of common stock, thus reducing our cash requirement to meet our operating needs. The Company has $7,910,118$9,301,740 in cash and cash equivalents and restricted cash as of MarchJune 31,30, 2026. Additionally, the Company has (i) secured a line of credit for its Vicon brand to fund operations, which as of MarchJune 31,30, 2026, has available capacity of approximately $1,100,000,$622,106, (ii) continually continually reevaluate our pricing model on our Vicon brand to improve margins on those products, (iii) raised $5,675,332$5,787,831 through the exercise of our Series B warrants during the sixnine months ended MarchJune 31,30, 2026 (iv) raised $10,000,000 in gross proceeds in equity offering during during the sixnine months ended MarchJune 31,30, 2026 (v) Invested approximately $5,000,000 of the Company’s surplus cash in various marketable securities to generate income on those investments.2026.