UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM10-Q
For the quarterly period ended March 31, 2026
OR
For the transition period from ___________to ____________
Commission File Number 001-37464
CEMTREX, INC.
(Exact name of registrant as specified in its charter)
631-756-9116
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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 ☐ 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).
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.
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 ☒ 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 May 13, 2026, the issuer had 11,121,834 shares of common stock issued and outstanding.
CEMTREX, INC. AND SUBSIDIARIES
INDEX
Part I. Financial Information
Item 1. Financial Statements
Cemtrex, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Condensed Consolidated Statements of Operations
(Unaudited)
Condensed Consolidated Statements of Comprehensive Income/(Loss)
Condensed Consolidated Statement of Stockholders’ Equity
Number of
Shares
Paid-in
Capital
Accumulated
Deficit
Comprehensive
Income
Stockholders’
Equity
Preferred Stock Series 1
Par Value $0.001
Preferred Stock Series C
Common StockPar Value $0.001
Condensed Consolidated Statement of Stockholders’ Equity (Continued)
Common Stock
Condensed Consolidated Statements of Cash Flows
341,982
20,871,752
Condensed Consolidated Statements of Cash Flows (Continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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 company. Unless the context requires otherwise, all references to “we”, “our”, “us”, “Company”, “registrant”, “Cemtrex” or “management” refer to Cemtrex, Inc. and its subsidiaries.
The Company’s reporting segments consist of Security, Industrial Services, and Aerospace and Defense. Additionally, the Company’s operational structure also reports unallocated corporate expenses.
Security
Cemtrex’s Security segment operates under the brand of its subsidiary, Vicon Industries, Inc. (“Vicon”), which provides end-to-end security solutions to meet the toughest corporate, industrial, and governmental security challenges. Vicon’s products include browser-based video monitoring systems and analytics-based recognition systems, cameras, servers, and access control systems for every aspect of security and surveillance in industrial and commercial facilities, federal prisons, hospitals, universities, schools, and federal and state government offices. Vicon provides innovative, mission critical security and video surveillance solutions utilizing Artificial Intelligence (AI) based data algorithms.
Industrial Services
Cemtrex’s Industrial Services segment operates under the brand, Advanced Industrial Services (“AIS”), which offers single-source expertise and services for rigging, millwrighting, in plant maintenance, equipment erection, relocation, and disassembly to diversified customers. AIS installs high precision equipment in a wide variety of industrial markets like automotive, printing & graphics, industrial automation, packaging, and chemicals, among others. AIS is a leading provider of reliability-driven maintenance and contracting solutions for machinery, packaging, printing, chemical, and other manufacturing markets. We help customers seeking to achieve greater plant and asset utilization and efficiency by cutting costs and increasing production from existing assets, including small projects to major capital investments, turnarounds, maintenance, specialty welding services, and high-quality scaffolding and platforms.
Aerospace and Defense
Cemtrex’s Aerospace and Defense segment operates under the brand Invocon, Inc., which offers designing, manufacturing, and supporting advanced instrumentation, wireless sensing, and telemetry systems deployed across satellites, launch vehicles, target missiles, and space-based platforms. Its technologies support numerous government and prime contractor programs, including multiple Space Shuttle and International Space Station systems, and the company maintains long-standing relationships across the Missile Defense Agency and leading aerospace and defense primes.
Common Stock Reverse Stock Split
On October 2, 2024, November 26, 2024, and September 29, 2025, the Company completed 60:1, 35:1, and 15:1 respectively, reverse stock split on its common stock. All share and per share data have been retroactively adjusted for the reverse splits.
Acquisitions
The Company accounts for business combinations are using the acquisition method. The consideration transferred is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred, liabilities incurred, and equity interests issued. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities assumed are measured at their acquisition-date fair values.
On January 8, 2026, the Company completed the acquisition of Invocon, Inc. (“Invocon”). As a result of the transaction, Invocon became a wholly owned subsidiary of the Company. The purchase price of $7,060,000was paid in cash at closing. Invocon will be the launch of the Company’s Aerospace and Defense segment with reporting results beginning in the second quarter of fiscal year 2026. This acquisition is part of the Company’s strategy to grow through strategic acquisitions in stable market sectors.
The purchase price allocation presented below is still preliminary but has been developed based on an estimate of fair values of Invocon’s identifiable tangible and intangible assets acquired and liabilities assumed as of January 8, 2026. The final allocation of the purchase price will be determined within one year from the closing date of the Invocon acquisition.
The acquisition of Invocon was accounted for as a business combination under ASC 805 using the acquisition method of accounting. The assets and liabilities acquired, affected for adjustments to reflect fair values assigned to assets purchased and liabilities assumed, and results of operations, are included in the Company’s condensed consolidated financial statements from the Invocon acquisition date.
The Company determined that developed technology was the primary intangible acquired. Under ASC 820-10-55-3A, fair value should reflect market participant assumptions and the asset’s ability to generate cash flows, supporting an income approach and also states the Multi-Period Excess Earnings Method (“MPEEM”) is typically applied when the subject intangible asset is the primary driver of earnings. Because the developed technology is the primary driver of earnings, the MPEEM appropriately isolates its economic contribution after deducting contributory asset charges. Significant assumptions utilized included projected cash flows, royalty rates, risk free rate commensurate with the period to determine the value of developed software and tradenames.
The consideration transferred and preliminary allocation of Invocon’s tangible and intangible assets and liabilities, are as follows:
SCHEDULE OF CONSIDERATION TRANSFERRED AND PRELIMINARY ALLOCATION OF TANGIBLE AND INTANGIBLE ASSETS AND LIABILITIES
The pro forma summary below presents the results of operations as if the Invocon acquisition occurred on October 1, 2024. Proforma adjustments for the three and six months ended March 31, 2026, includes $(2,214), and $393,750respectively, of interest expense from the Company’s $7,025,000note payable used to fund the transaction, income tax benefit of $2,663, and $148,251of amortization on recognized intangible assets for the three months ended March 31, 2026, and six months ended March 31, 2026. Proforma adjustments for the three and six months ended March 31, 2025, includes $165,475, and $(393,750), respectively, of interest expense from the Company’s $7,025,000note payable used to fund the transaction, $25,000of legal fees related to the acquisition, $148,251of amortization on recognized intangible assets and income tax expense of $727for the three months ended March 31, 2025, $321,502of amortization on recognized intangible assets and $171,604of income tax expense for the six months ended March 31, 2025. The pro forma summary uses estimates and assumptions based on information available at the time. Management believes the estimates and assumptions to be reasonable; however, actual results may have differed significantly from this proforma financial information. The pro forma information does not reflect any cost savings, operating synergies or revenue enhancements that might have been achieved from combining the operations. The unaudited pro forma summary is provided for illustrative purposes only and does not purport to represent the Company’s actual consolidated results of operations had the acquisition been completed as of the date presented, nor should it be considered indicative of Cemtrex’s future consolidated results of operations.
SCHEDULE OF PRO FORMA STATEMENTS OF OPERATIONS
$
On February 5, 2026, the Company, through its subsidiary AIS, acquired substantially all the assets of Richland Industries LLC (“Richland”), an industrial services and fabrication company located in Tennessee. In connection with the transaction, AIS established a new subsidiary, AIS Tennessee, Inc (“AIS – TN”), as part of the Company’s Industrial Services Segment. The acquisition was made to bring in vital services that AIS had previously outsourced. The purchase price of $600,000 was paid via a note payable issued by Fulton Bank. This note carries interest of 6.09% and matures on February 1, 2031. In addition, the Company purchased Richland’s primary facility for $4,900,000 via a $3,920,000 mortgage issued by Fulton Bank and the balance including taxes, closing costs, and fees in cash. This mortgage has carries interest of SOFR plus 2.75% and matures on February 1, 2041.
The acquisition of Richland was accounted for as a business combination under ASC 805 using the acquisition method of accounting. The assets and liabilities acquired, affected for adjustments to reflect fair values assigned to assets purchased and liabilities assumed, and results of operations, are included in the Company’s condensed consolidated financial statements from the Richland acquisition date.
The purchase price allocation presented below is still preliminary but has been developed based on an estimate of fair values of Richland 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 Richland acquisition.
The consideration transferred and preliminary allocation of AIS - TN tangible and intangible assets and liabilities, are as follows:
The pro forma summary below presents the results of operations as if the Richland acquisition occurred on October 1, 2024. Proforma adjustments for the three and six months ended March 31, 2026, includes $10,008, and $13,976, respectively, of interest expense from the Company’s 600,000 note payable used to fund the transaction, and income tax benefit of $22,537 for the three months ended March 31, 2026, and $114,432 of income tax benefit for the six months ended March 31, 2026. Proforma adjustments for the three and six months ended March 31, 2025, includes $9,347, and $18,564, respectively, of interest expense from the Company’s600,000 note payable used to fund the transaction, and income tax benefit of $37,364 for the three months ended March 31, 2025, and $63,230 of income tax expense for the six months ended March 31, 2025. The pro forma summary uses estimates and assumptions based on information available at the time. Management believes the estimates and assumptions to be reasonable; however, actual results may have differed significantly from this proforma financial information. The pro forma information does not reflect any cost savings, operating synergies or revenue enhancements that might have been achieved from combining the operations. The unaudited pro forma summary is provided for illustrative purposes only and does not purport to represent the Company’s actual consolidated results of operations had the acquisition been completed as of the date presented, nor should it be considered indicative of Cemtrex’s future consolidated results of operations.
Going Concern Considerations
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared assuming the Company will continue as a going concern and in accordance with generally accepted accounting principles in the United States of America. The going concern basis of presentation assumes that the Company will continue in operation one year after the date these financial statements are issued and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. Pursuant to the requirements of the ASC 205, management must evaluate whether there are conditions or events, considered in the aggregate, which raise substantial doubt about the Company’s ability to continue as a going concern for one year from the date these financial statements 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 as of the date the financial statements are issued. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued.
The Company has incurred substantial net losses attributable to Cemtrex, Inc. stockholders of $28,112,368and $7,229,491for fiscal years 2025 and 2024, respectively and a net losses attributable to Cemtrex, Inc. stockholders of $19,649,099 for the six months ended March 31, 2026, and has debt obligations over the next fiscal year of $10,806,016that raise substantial doubt with respect to the Company’s ability to continue as a going concern.
While the Company’s losses 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. These transactions add additional significant non-operational expenses which are non-cash in nature. The Company has $7,910,118in cash and cash equivalents and restricted cash as of March 31, 2026. Additionally, the Company has (i) secured a line of credit for its Vicon brand to fund operations, which as of March 31, 2026, has available capacity of approximately $1,100,000, (ii) continually reevaluate our pricing model on the Company’s Vicon brand to improve margins on those products, (iii) raised $5,675,332through the exercise of our Series B warrants during the six months ended March 31, 2026 (iv) raised $10,000,000in gross proceeds in equity offering during the six months ended March 31, 2026 (v) Invested approximately $5,000,000 of the Company’s surplus cash in various marketable securities to generate income on those investments. 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 the Company’s current operations for at least the next twelve months, there is no guarantee that the Company 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. The unaudited condensed consolidated financial statements do not include any adjustments relating to this uncertainty.
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 Company’s Annual Report on Form 10-K for the year ended September 30, 2025.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the Unites States (“U.S. 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.
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, 2025, includes a summary of the significant accounting policies used in the preparation of the unaudited condensed consolidated financial statements.
Recently Adopted Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires public entities to disclose consistent categories and greater disaggregation of information in the rate reconciliation and for income taxes paid. It also includes certain other amendments to improve the effectiveness of income tax disclosures. The guidance is effective for financial statements issued for annual periods beginning after December 15, 2024, with early adoption permitted. The Company adopted this standard on October 1, 2025. The Company does not believe that this will have a material effect on the unaudited condensed consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Effective
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, to amend certain disclosure and presentation requirements for a variety of topics within the Accounting Standards Codification (“ASC”). These amendments align the requirements in the ASC to the removal of certain disclosure requirements set out in Regulation S-X and Regulation S-K, announced by the SEC. The effective date for each amended topic in the ASC is the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective. Early adoption is prohibited. The Company does not anticipate that the ASU will have a material effect on the Company’s unaudited financial statements and related disclosures.
In November 2024, the FASB issued ASU 2024-03, “Income Statement (Topic 220): Reporting Comprehensive Income - Expense Disaggregation Disclosures, Disaggregation of Income Statement Expenses”, that requires public companies to disclose, in interim and reporting periods, additional information about certain expenses in the financial statements. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted and is effective on either a prospective basis or retrospective basis. The Company is currently assessing the potential impacts of adoption on the unaudited condensed consolidated financial statements.
In November 2024, the FASB issued ASU 2024-04, “Debt with Conversion and Other Options (Subtopic 470-20), which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. ASU 2024-04 is effective for annual periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities that have adopted the amendments in Update 2020-06. Adoption can be on a prospective or retrospective basis. The Company is currently in the process of evaluating the impact of adoption on the unaudited condensed consolidated financial statements.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326). This guidance contains amendments that provide decision-useful information to investors and other financial statement users while reducing the time and effort necessary to analyze and estimate credit losses for current accounts receivable and current contract assets. The amendments will be effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. The Company is currently evaluating the impact of ASU 2025-05 on its unaudited condensed consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU 2025-11 - Interim Reporting (“ASU 2025-11”) which is intended to improve the navigability of the guidance in ASC 270, Interim Reporting, and clarify when it applies. Under the amendments, an entity is subject to ASC 270 if it provides interim financial statements and notes in accordance with GAAP. ASU 2025-11 also addresses the form and content of such financial statements, interim disclosures requirements, and establishes a principle under which an entity must disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, and early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2025-11 may have on the Company’s unaudited consolidated financial statements.
In April 2026, the FASB issued Accounting Standards Update No. 2026-01, Equity (Topic 505): Initial Measurement of Paid-in-Kind Dividends on Equity-Classified Preferred Stock. The amendments in this Update clarify that PIK dividends on equity-classified preferred stock should be initially measured at the amount specified in the agreement, generally calculated by multiplying the PIK dividend rate by the liquidation value of the preferred stock outstanding. The standard is effective for the Company for fiscal years beginning after December 15, 2026. The Company is currently evaluating the impact the adoption of ASU 2026-01 may have on the Company’s unaudited consolidated financial statements.
The Company does not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying unaudited condensed consolidated financial statements.
Correction of an Immaterial Error in Previously Issued Financial Statements
Subsequent to the issuance of our financial statements for the quarter ended March 31, 2026, an immaterial error was identified and has been corrected in our historical information related to the net income/(loss) in noncontrolling interest. On February 24, 2025, the Company filed a Certificate of Amendment to the Certificate of Incorporation for Vicon Industries Inc. This amendment effected a reverse stock split which exchanged 98,521 for 6 shares of common stock and reduces the number of authorized common shares from 75,000,000 to 15,000.
The effects of the correction to the individual effected line items in our Consolidated Statement of Operations are as follows:
SCHEDULE OF EFFECTS OF CORRECTION TO CONSOLIDATED STATEMENT OF OPERATIONS
NOTE 3 – REVENUE
The following table illustrates the approximate disaggregation of the Company’s revenue based off timing of revenue recognition for the three and six months ended March 31, 2026, and 2025:
SCHEDULE OF DISAGGREGATION OF REVENUE RECOGNITION
NOTE 4 – INCOME/(LOSS) PER COMMON SHARE
Basic net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss 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 six months ended March 31, 2026, and 2025, the following items were excluded from the computation of diluted net loss per common share as their effect is anti-dilutive:
SCHEDULE OF COMPUTATION OF DILUTED NET LOSS PER COMMON SHARE AS ANTI-DILUTIVE EFFECT
For the three and six months ended March 31, 2026, and 2025, loss per share basic and diluted for continuing operations are calculated as follows:
SCHEDULE OF LOSS PER SHARE BASIC AND DILUTED FOR CONTINUING OPERATIONS
Weighted Average Number of Shares-Basic
Weighted Average Number of Shares-Diluted
Loss per share - Basic - Continuing Operations
Loss per share - Diluted - Continuing Operations
(0.03
0.06
(0.04
(0.58
In accordance with ASC 260-45-13, the common shares underlying the Series A Warrants under the alternative cashless exercise have been included in the calculation of the weighted average shares.
NOTE 5 – SEGMENT INFORMATION
The Company reports and evaluates financial information for three reportable segments: the Security segment, Industrial Services segment, and the Aerospace and Defense segment. The Chief Operating Decision Maker (“CODM”) for all segments is Saagar Govil, the CEO of the Company.
Unallocated corporate expenses mainly relate to payroll and benefits for corporate officers, investor relation expenses, accounting expenses related to audit and taxes, legal expenses related to corporate matters, interest expense on notes payable, and Series A and B Warrants transaction losses.
The following tables summarize the Company’s reportable segment information and unallocated corporate expenses:
SCHEDULE OF SEGMENT INFORMATION
The following table summarizes the Company’s identifiable assets by segment as of March 31, 2026, and September 30, 2025.
SCHEDULE OF IDENTIFIABLE ASSETS BY SEGMENT
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. Additionally, there was restricted cash in escrow per the purchase agreement with Heisey Mechanical Ltd. Additionally, there are funds in escrow related to bond requirements on certain public projects and deposit guarantees.
The Company’s restricted cash as of March 31, 2026, and September 30, 2025, are summarized below.
SCHEDULE OF RESTRICTED CASH
NOTE 7 – FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level hierarchy is applied to prioritize the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
The three levels of the fair value hierarchy under the guidance for fair value measurements are described below:
Level 1 — Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Our Level 1 assets include cash equivalents, banker’s acceptances, trading securities, investments, and investment funds. The Company measures trading securities investments and investment funds at quoted market prices as they are traded in an active market with sufficient volume and frequency of transactions.
Level 2 — Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified contractual term, a Level 2 input must be observable for substantially the full term of the asset or liability.
Level 3 — Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date. Level 3 assets and liabilities include cost method investments. 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 liabilities at March 31, 2026, and September 30, 2025, are as follows.
SCHEDULE OF FAIR VALUE OF LIABILITIES
Digital Assets – SOL
On July 29, 2025, and January 7, 2026, the Company invested $998,642, and 1,000,567, respectively, in Solana (SOL) and staked our holdings. SOL is a fungible crypto asset that meets the criteria for an intangible asset, resides on a distributed ledger, is secured by cryptography, and does not grant enforceable rights to underlying goods or services to its holder. The digital assets were measured at fair value after acquisition, with changes reported in net income. Staking earnings are recorded as revenue.
Digital Asset staking allows holders of specific cryptocurrencies to earn rewards for helping to validate blocks of transaction data as it is submitted to the blockchain network.
The staking process serves two key purposes:
The staking process uses incentives and penalties governed by computer-based rules to encourage honest participation in the network. Stakers who act within the rules of the protocol receive rewards for their contributions, while those who act dishonestly can face penalties, such as losing their staked cryptocurrency through a process called slashing. Staking rewards are distributed as newly minted cryptocurrency units, oftentimes at a proportionate rate to the amount a person stakes. With some proof-of-stake blockchains, depositing more assets in a staking smart contract increases the chance of being selected to validate blocks. This mechanism is based on the assumption that those with more “skin in the game” are more likely to act within the best interests of the network because they have more to lose financially if their assets are slashed (confiscated by the network). However, to avoid favoring wealthier participants, some protocols incorporate randomness to ensure everyone, including those with smaller stakes, has a chance to earn rewards.
Staking incentives, in the form of additional SOL, are recognized on the date received at the fair market value on that date. There are no lockups or restrictions on the Company’s digital asset holdings due to staking.
The Company’s digital assets as of March 31, 2026, and September 30, 2025, are as follows.
SCHEDULE OF DIGITAL ASSETS HOLDINGS
The following table is a summary of our digital assets as of March 31, 2026.
SUMMARY OF DIGITAL ASSETS
Marketable Securities
Marketable securities utilizing Level 1 inputs include active exchange-traded equity securities and equity index funds, as these securities all have quoted prices in active markets. These marketable securities are trading securities and are recorded at fair value. Unrealized gains and losses are reported under the caption other income/(expense), net on the Company’s Condensed Consolidated Statements of Operations.
Warrant Liabilities
The value of the Series A Warrants is based on the market value of our common stock on the balance sheet date.
The fair value of the Series B Warrants is estimated on the balance sheet date using the Black-Scholes model, which requires inputs based on certain subjective assumptions, including the fair value of the Company’s common shares, expected share price volatility, the expected term of the award, the risk-free interest rate for a period that approximates the expected term of the option, and the Company’s expected dividend yield.
At March 31, 2026, and September 30, 2025, the following inputs were used in the Black-Scholes model.
SCHEDULE OF FAIR VALUE INPUTS USED IN BLACK-SCHOLES MODEL
The following table summarizes information on warrant liabilities as of March 31, 2026.
SCHEDULE OF WARRANT LIABILITIES ACTIVITY
NOTE 8 – TRADE RECEIVABLES, NET
Trade receivables, net consisted of the following:
SCHEDULE OF TRADE RECEIVABLES, NET
Trade receivables include amounts due for shipped products and services rendered.
Allowance for credit losses include estimated losses resulting from the inability of our customers to make the required payments.
NOTE 9 – PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consisted of the following:
SUMMARY OF PREPAID EXPENSES AND OTHER CURRENT ASSETS
NOTE 10 – INVENTORY, NET
Inventory, net consisted of the following:
SCHEDULE OF INVENTORY, NET
The Company maintained an allowance for obsolete inventories of $1,019,828 and $1,034,798 at March 31, 2026, and September 30, 2025, respectively.
NOTE 11 – PROPERTY AND EQUIPMENT
Property and equipment are summarized as follows:
SUMMARY OF PROPERTY AND EQUIPMENT
Depreciation expense for the three months ended March 31, 2026, and 2025, was $458,939 and $319,507, respectively, depreciation expense for the six months ended March 31, 2026, and 2025, was $877,126 and $666,252, respectively, and is recorded in cost of revenues and general and administrative expenses on the Company’s unaudited condensed consolidated statements of operations.
NOTE 12 – GOODWILL AND INTANGIBLE ASSETS
Changes in the carrying amount of goodwill, by segment, were as follows:
SCHEDULE OF GOODWILL BY SEGMENT
As of March 31, 2026, and September 30, 2025, accumulated impairment losses of $3,846,475 have been recorded related to the Security segment.
On January 8, 2026, the Company acquired Invocon, as part of the fair market evaluation for the purchase price accounting, the company recognized intangible assets in the form of the company trade name and internal developed technologies.
Changes in the carrying amount of intangible assets, by segment, were as follows:
SCHEDULE OF INTANGIBLE ASSETS BY SEGMENT
NOTE 13 – OTHER ASSETS
On November 13, 2020, and January 19, 2022, Cemtrex made $500,000 in investments, on July 18, 2023, and October 5, 2023, made additional $100,000 in investments, and on October 17, 2024, and November 18, 2024, made additional $50,000 in investments on each respective date, via a simple agreement for future equity (“SAFE”) in MasterpieceVR. The SAFE provides that the Company will automatically receive shares of the entity based on the conversion rate of future equity rounds up to a valuation cap, as defined. MasterpieceVR is a software company that is developing software for content creation using virtual reality. The investment is included in other assets in the accompanying unaudited condensed consolidated balance sheet and the Company accounts for this investment and records it at cost. No impairment has been recorded for the six months ended March 31, 2026, and 2025.
Other assets consisted of the following:
SCHEDULE OF OTHER ASSETS
NOTE 14 – ACCRUED EXPENSES
Accrued expenses consisted of the following:
SCHEDULE OF ACCRUED EXPENSES
NOTE 15 – DEFERRED REVENUE
The Company’s deferred revenue for the three and six months ended March 31, 2026, and 2025, were as follows:
SCHEDULE OF DEFERRED REVENUE
For the three months ended March 31, 2026, and 2025, the Company recognized revenue of $495,402and $501,666, respectively. For the six months ended March 31, 2026, and 2025, the Company recognized revenue of $914,003, and $885,962, respectively, that was previously included in the beginning balance of deferred revenues.
NOTE 16 – CONTRACT ASSETS AND LIABILITIES
Project contracts typically provide for a schedule of billings on percentage of completion of specific tasks inherent in the fulfillment of the Company’s performance obligation(s). The schedules for such billings usually do not precisely match the schedule on which costs are incurred. As a result, contract revenue recognized in the statements of operations can and usually does differ from amounts that can be billed to the customer at any point during the contract. Amounts by which cumulative contract revenue recognized on a contract as of a given date exceeds cumulative billings and unbilled receivables to the customer under the contract are reflected as a current asset in the unaudited condensed consolidated balance sheets under the caption “Contract assets.” Amounts by which cumulative billings to the customer under a contract as of a given date exceed cumulative contract revenue recognized are reflected as a current liability in the unaudited condensed consolidated balance sheets under the caption “Contract liabilities.” Conditional retainage represents the portion of the contract price withheld until the work is substantially complete for assurance of the Company’s obligations to complete the job.
The following is a summary of the Company’s uncompleted contracts:
SCHEDULE OF CONTRACT ASSETS AND LIABILITIES
For the three and six months ended March 31, 2026, and 2025, the Company recognized revenue of $130,471 and $342,725, and $1,402,348 and $1,103,156, respectively, that was previously included in the beginning balance of contract liabilities.
The following table summarizes the net activity of the contract assets and contract liabilities for the three and six months ended March 31, 2026, and 2025.
SUMMARY OF CONTRACT ASSETS AND CONTACT LIABILITIES
NOTE 17 – RELATED PARTY TRANSACTIONS
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.
On January 6, 2025, the Company and Saagar Govil signed an agreement to revise the purchase price structure and payment terms.
The Agreement’s Purchase Price provisions were amended to reflect that the Purchase Price will solely consist of the royalties based on the actual revenues generated in the three years following closing. The provision requiring the total sum of royalties to reach a minimum of $820,000, with any shortfall to be paid by Purchaser, was removed from the Agreement.
Additionally, it was agreed that the payment terms due under the royalties shall be as follows commencing on January 1, 2025:
This transaction was approved by the Board of Directors with Saagar Govil abstaining from the vote.
Based on the new payment terms, management determined that it was appropriate to remove the previously recognized royalty receivable of $280,545from the financial statements as of December 31, 2024.
As of March 31, 2026, there were royalties receivable from the sale of Cemtrex, XR, Inc. of $664,000, all of which is considered short-term and is presented on the Company’s unaudited Condensed Consolidated Balance Sheet under the caption “Trade receivables, net – related party. The Company has taken a $381,550 allowance for expected credit losses against these royalties.
As of March 31, 2026, there was $548,554 in trade receivables due from the Cemtrex XR successor company, CXR, Inc. Of these receivables $282,450 is the net due on the royalties on CXR Inc.’s revenues. The remaining $266,104 is related to the services provided by Vicon Security Technologies Pvt Ltd. (formerly Cemtrex Technologies Pvt. Ltd.) in the normal course of business. During the year ended September 30, 2025, the Company recorded $60,628 in current expected credit losses on receivables due from CXR Inc.
NOTE 18 – EXPECTED CREDIT LOSSES
The following table summarized the Company’s activity for expected credit losses for the six months ended March 31, 2026.
SCHEDULE OF CURRENT EXPECTED CREDIT LOSSES
NOTE 19 – 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 3.23 years at March 31, 2026, and 3.30 years at March 31, 2025. The weighted average discount rate used to measure lease liabilities was approximately 6.16% at March 31, 2026, and 6.22% at March 31, 2025. 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 has a single lease that is classified as a finance lease for equipment acquired as part of the Richland acquisition. The remaining term of this lease is 0.58 years with a discount rate of 1.76% as of March 31, 2026.
The Company has elected not to recognize lease assets and liabilities for leases with a term of 12 months or less.
The Company’s security segment leases approximately 350 square feet of office space in Clovis, CA on a month-to-month lease at a rent of $2,075 per month. Short-term rent expense was $12,840 for the six months ended March 31, 2026, and $25,671 for the six months ended March 31, 2025.
A reconciliation of undiscounted cash flows to finance and operating lease liabilities recognized in the unaudited condensed consolidated balance sheet at March 31, 2026, is set forth below:
SCHEDULE OF RECONCILIATION OF UNDISCOUNTED CASH FLOWS TO OPERATING LEASE LIABILITIES
Finance Leases
Lease costs for the three and six months ended March 31, 2026, and 2025 are set forth below:
SCHEDULE OF LEASE COSTS
NOTE 20 – LINES OF CREDIT AND LONG-TERM LIABILITIES
Revolving line of credit
On October 5, 2023, the Company obtained a revolving line of credit in the amount of $5,000,000 from Pathward, N.A.. The interest rate will be a rate which is equal to three percentage points (3%) in excess of that rate shown in the Wall Street Journal as the prime rate (the “Effective Rate”) matures twenty-four months24 from the closing date, and if not specifically terminated, renews for one-year periods. This loan is secured by the Company’s eligible accounts receivable and eligible finished goods inventory. The Company’s ability to borrow against the line of credit is limited by the value of the eligible assets. As of March 31, 2026, the Company had enough eligible assets to access approximately $3,100,000 of the credit line. The Company was in compliance with all loan covenants as of March 31, 2026. As of March 31, 2026, and September 30, 2025, this loan had a balance of $2,035,697, and $3,176,096, respectively.
Notes payable
On November 7, 2025, the Company issued a note payable to Streeterville Capital, LLC in the amount of $7,025,000. This note carries interest between November 7, 2025, and December 31, 2025, of SOFR (3.87% as of December 31, 2025), after December 31, 2025, 8%, This Note matures eighteen (18) months from the issuance date with redemptions of up to $700,000 a month beginning at six (6) months from the issuance date. After deduction of legal fees of $25,000, the Company received $7,000,000in cash. Additionally, this note contains an additional interest provision that if this note is outstanding on January 1, 2026, a one-time additional interest fee of $1,050,00which is being amortized over the remaining life of the loan, as of March 31, 2026, there is $853,125 of unamortized interest. As of March 31, 2026, this note had a balance of $8,281,006.
On February 5, 2026, the company issued a promissory note to Fulton Bank in the amount of $600,000 for the purchase of Richland Industries, LLC. This note carries interest of 6.09% requires 60 monthly payments of interest and principal and matures on February 1, 2031. As of March 31, 2026, the note had a balance of $590,787.
On February 5, 2026, the Company acquired a mortgage in the amount of $3,920,000from Fulton Bank to finance the purchase of the property formerly owned by Richland Industries, LLC. The mortgage carries interest at the Secured Overnight Financing Rate (SOFR) plus 2.75% and matures on February 1, 2046. As of March 31, 2026, this loan had a balance of $3,912,200.
The following table outlines the Company’s secured liabilities:
SCHEDULE OF LINES OF CREDIT AND AND LONG TERM LIABILITIES
NOTE 21 – STOCKHOLDERS’ EQUITY
Series 1 Preferred Stock
The Company’s Series 1 Preferred Stock is quoted on the OTC Markets OTCID tier under the symbol “CETXP.”
During the six months ended March 31, 2026, 135,592 shares of Series 1 Preferred Stock were issued to pay dividends to holders of Series 1 Preferred Stock.
As of March 31, 2026, and September 30, 2025, there were 2,840,919 and 2,705,327 shares of Series 1 Preferred Stock issued and 2,776,819and 2,641,227 shares of Series 1 Preferred Stock outstanding, respectively.
On October 2, 2024, November 26, 2024, and September 29, 2025, the Company completed a 60:1, 35:1, and 15:1 respectively, reverse stock split on its common stock. All share and per share data have been retroactively adjusted for the reverse splits.
During the six months ended March 31, 2026, 29,943 shares of common stock were issued for the exercise 9,981 Series A Warrants, under the Alternative Cashless Exercise option as adjusted for exercise price adjustments. During the three months ended March 31, 2026, no Series A Warrants were exercised.
During the six months ended March 31, 2026, there 67,671 shares of common stock issued for rounding on the September 29, 2025, reverse stock split. During the three months ended March 31, 2026, no rounding shares were issued.
During the three and six months ended March 31, 2026, 8,030, and 2,324,510 shares of common stock were issued for the exercise of 8,030, and2,324,510 Series B Warrants, respectively which generated $5,675,332 in proceeds.
During the six months ended March 31, 2026, 3,000,296 shares of the Company’s common stock have been issued to satisfy $7,759,168 of notes payable, $84,832 in accrued interest, and $11,798,283 of excess value of shares issued recorded as interest expense. Such shares were issued pursuant to the exemption contained under Section 4(a)(2) of the Securities Act of 1933, as amended. During the three months ended March 31, 2026, no shares were issued to satisfy debt.
Series A and Series B Warrants
The following table summarizes information about shares issuable under warrants outstanding as of March 31, 2026.
SCHEDULE SHARES ISSUABLE UNDER WARRANTS OUTSTANDING
On October 13, 2025, the Company issued shares of common stock to relieve debt. At the time, the Company had 147,324 Series A Warrants and1,519,782 Series B Warrants outstanding at an exercise price of $5.304. According to the terms of the Series A and Series B warrants, in the event of a issuance below the current exercise price, the exercise price resets to the lower of (i) the public offering price, or (ii) the lowest VWAP during the period commencing five (5) consecutive trading days commencing on the republic offering effective date and the number of warrants are adjusted as to keep the aggregate value of the warrants then outstanding remains unchanged. On October 17, 2025, it was determined that the exercise price has reset to $4.56.
The following table illustrates the adjustment.
SCHEDULE OF WARRANTS ADJUSTMENT
On December 11, 2025, the Company closed on a Securities Purchase agreement of common stock. At the time, the Company had 57,120 Series A Warrants and 1,757,778 Series B Warrants outstanding at an exercise price of $4.56. According to the terms of the Series A and Series B warrants, in the event of a public offering, the exercise price resets to the lower of (i) the public offering price, or (ii) the lowest VWAP during the period commencing five (5) consecutive trading days commencing on the republic offering effective date and the number of warrants are adjusted as to keep the aggregate value of the warrants then outstanding remains unchanged. On December 17, 2025, it was determined that the exercise price has reset to $2.433.
On December 30, 2025, the Company closed on a Securities Purchase agreement of common stock. At the time, the Company had 78,489 Series A Warrants and 987,987 Series B Warrants outstanding at an exercise price of $2.433. According to the terms of the Series A and Series B warrants, in the event of a public offering, the exercise price resets to the lower of (i) the public offering price, or (ii) the lowest VWAP during the period commencing five (5) consecutive trading days commencing on the republic offering effective date and the number of warrants are adjusted as to keep the aggregate value of the warrants then outstanding remains unchanged. On January 6, 2026, it was determined that the exercise price has reset to $2.25.
For the six months ended March 31, 2026, and 2025 the company recognized a loss on the fair value of the common shares issued for the exercised warrants of $4,658,582 and a loss of $15,796,105, respectively, which represents the difference between the fair value of the shares issued and the value of the warrants exercised.
For the six months ended March 31, 2026, and 2025 the company recognized a loss on changes in fair value of warrant liability of $688,671, and $10,020,212, respectively, which represents the change in the fair value of the of the warrants unexercised at the measurement period.
Equity Offerings
On December 11, 2025, the Company entered into a Securities Purchase Agreement with a single accredited institutional investor pursuant to which the Company agreed to issue and sell to the Purchaser, in a registered direct offering securities consisting of shares of the Company’s common stock, par value $0.001 per share, and/or pre-funded warrants to purchase shares of Common Stock at $3.00 per share/warrant for aggregate gross proceeds of $2,000,000. The Offering closed on December 11, 2025. The Company issued 310,000 shares of common stock and prefunded warrants to purchase 356,667 shares of common stock. The Prefunded warrants were immediately exercised, and the Company issued 666,667 shares of common stock in the aggregate.
On December 23, 2025, the Company entered into a Securities Purchase Agreement with a single accredited institutional investor pursuant to which the Company agreed to issue and sell to the Purchaser, in a registered direct offering securities consisting of shares of the Company’s common stock, par value $0.001 per share, and/or pre-funded warrants to purchase shares of Common Stock at $2.50per share/warrant for aggregate gross proceeds of $2,000,000. The Offering closed on December 23, 2025. The Company issued 330,000 shares of common stock and prefunded warrants to purchase 470,000 shares of common stock. The Prefunded warrants were immediately exercised, and the Company issued 800,000 shares of common stock in the aggregate.
On December 30, 2025, the Company entered into a Securities Purchase Agreement with a single accredited institutional investor pursuant to which the Company agreed to issue and sell to the Purchaser, in a registered direct offering securities consisting of shares of the Company’s common stock, par value $0.001 per share, and/or pre-funded warrants to purchase shares of Common Stock at $2.25 per share/warrant for aggregate gross proceeds of $2,000,000. The Offering closed on December 30, 2025. The Company issued 330,000 shares of common stock and prefunded warrants to purchase 548,889 shares of common stock. The Prefunded warrants were immediately exercised, and the Company issued 888,889 shares of common stock in the aggregate.
On January 9, 2026, Cemtrex, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with a single accredited institutional investor (the “Purchaser”), pursuant to which the Company agreed to issue and sell to the Purchaser, in a registered direct offering (the “Offering”), securities consisting of shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), and/or pre-funded warrants to purchase shares of Common Stock (the “Pre-Funded Warrants”), for aggregate gross proceeds of $4,000,000. The Offering closed on January 9, 2026. The Company issued 400,000 shares of common stock and prefunded warrants to purchase 1,069,507 shares of common stock, all the prefunded warrants were immediately exercised.
NOTE 22 – SHARE-BASED COMPENSATION
For the six months ended March 31, 2026, and 2025, the Company recognized $0 and $7,183 of share-based compensation expense on its outstanding options, respectively. As of March 31, 2026, there was no unrecognized share-based compensation expense.
During the six months ended March 31, 2026, no options were granted, cancelled, or forfeited.
NOTE 23 – COMMITMENTS AND CONTINGENCIES
From time to time, the Company and its subsidiaries are involved in legal proceedings that are incidental to the operation of our business. The Company continues to defend vigorously against all claims. Although the ultimate outcome of any legal matter cannot be predicted with certainty, based on present information, including assessment of the merits of the particular claim, as well as current accruals and insurance coverage, the Corporation does not expect that such legal proceedings will have a material adverse impact on its unaudited condensed consolidated financial statements.
NOTE 24 – INCOME TAXES
For the three and six months ended March 31, 2026, and 2025, the Company recorded an income tax expense of approximately $73,859 and $110,525,340,185, and 231,063, respectively. These taxes are related to our international operations and state taxes of certain subsidiaries.
As of year-end 2025, the Company had federal, state, and foreign net operating losses (“NOL”) of approximately $68.9 million, $84.0 million, and $9.8 million, respectively. The Company has pre 2018 TCJA NOLs and post 2017 TCJA NOLs. Pre 2018 NOLs will expire in 20 years with the first amount expiring in 2030 and the post 2017 NOLs can be carried forward indefinitely. Generally, state NOLs have different NOL carryforward rules, with some pre-2018 NOLs being able to be carried forward indefinitely. The first amount of state NOLs begin to expire in 2026. In accordance with Section 382 of the U.S. Internal Revenue Code, the usage of the Company’s NOL carryforwards is subject to annual limitations following greater than 50% ownership changes. Tax returns for the years ended 2022 through 2025 are subject to review by tax authorities.
The Company’s effective tax rates for the three and six months ended March 31, 2026, and 2025, were (5.7%) and 1.27%, (1.79%) and(1.17%) respectively.
NOTE 25 – SUBSEQUENT EVENTS
On April 7, 2026, the Company issued 864,588 shares of the Company’s common stock to satisfy $580,000 of notes payable, $68,441 in accrued interest, and $466,878 of excess value of shares issued recorded as interest expense. Such shares were issued pursuant to the exemption contained under Section 4(a)(2) of the Securities Act of 1933, as amended.
On April 17, 2026, the Company issued 150,000shares of the Company’s common stock were issued for the exercise of 150,000Series B Warrants which generated $112,500in proceeds.
On May 8, 2026, the Company issued 29,157 shares of the Company’s common stock to satisfy $25,000 of accrued interest on notes payable, and $950 of excess value of shares issued recorded as interest expense. Such shares were issued pursuant to the exemption contained under Section 4(a)(2) of the Securities Act of 1933, as amended.
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 Company’s reporting segments consist of Security and Industrial Services. Additionally, the Company’s operational structure also reports unallocated corporate expenses.
Cemtrex’s Security segment operates under the brand of its majority owned subsidiary, Vicon Industries, Inc. (“Vicon”), which provides end-to-end security solutions to meet the toughest corporate, industrial, and governmental security challenges. Vicon’s products include browser-based video monitoring systems and analytics-based recognition systems, cameras, servers, and access control systems for every aspect of security and surveillance in industrial and commercial facilities, federal prisons, hospitals, universities, schools, and federal and state government offices. Vicon provides innovative, mission critical security and video surveillance solutions utilizing Artificial Intelligence (AI) based data algorithms.
Cemtrex’s Industrial Services segment operates under the brand, Advanced Industrial Services (“AIS”), which offers single-source expertise and services for rigging, millwrighting, in plant maintenance, equipment erection, relocation, and disassembly to diversified customers. AIS installs high precision equipment in a wide variety of industrial markets like automotive, printing & graphics, industrial automation, packaging, and chemicals, among others. AIS is a leading provider of reliability-driven maintenance and contracting solutions for 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’s Aerospace and Defense segment operates under the brand Invocon, which offers designing, manufacturing, and supporting advanced instrumentation, wireless sensing, and telemetry systems deployed across satellites, launch vehicles, target missiles, and space-based platforms. Its technologies support numerous government and prime contractor programs, including multiple Space Shuttle and International Space Station systems, and the company maintains long-standing relationships across the Missile Defense Agency and leading aerospace and defense primes.
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, 2025.
Results of Operations – For the three months ended March 31, 2026, and 2025
Revenues
The Company’s Security segment revenues for the three months ended March 31, 2026, decreased by $11,204,595 or 66% to $5,776,557 from $16,981,152 for the three months ended March 31, 2025. This decrease is mainly due to a large sale valued at $10,375,000 for security technology products under our Vicon brand during the quarter ended March 31, 2025.
The Company’s Industrial Services segment revenues for the three months ended March 31, 2026, increased by $768,929 or 7%, to $11,038,046 from $10,269,117, for the three months ended March 31, 2025. This increase is mainly due to the revenues from the acquisition of Richland, LLC.
The Company’s newly established Aerospace and Defense segment generated revenues of $1,232,592 for the three months ended March 31, 2026
There was unallocated revenue under the Corporate segment of $14,172 for the three months ended March 31, 2026. This revenue is related to the Company’s investment in digital assets.
Gross Profit
Gross Profit for the three months ended March 31, 2026, was $6,847,204 or 38% of revenues as compared to gross profit of $12,165,455 or 45% of revenues for the three months ended March 31, 2025.
Gross profit in our Security segment was $2,530,694 or 44% of the segment’s revenues for the three months ended March 31, 2026, as compared to gross profit of $8,803,856 or 52% of the segment’s revenues for the period ended March 31, 2025. Gross profit in our security segment decreased as a result of the large sale mentioned above, additionally gross profits have been impacted by 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 or 34% of the segment’s revenues for the three months ended March 31, 2026, as compared to gross profit of $3,361,599 or 33% of the segment’s revenues for the period ended March 31, 2025. Gross profit increased in the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was mainly due to the 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 or 42% of revenues for the three months ended March 31, 2026
General and Administrative Expenses
General and administrative expenses for the three months ended March 31, 2026, increased $1,701,641 or 25% to $8,472,383 from $6,770,742 for the three months ended March 31, 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
Research and Development expenses for the three months ended March 31, 2026, were $546,858 compared to $777,889 for the three months ended March 31, 2025, a decrease of $231,031 or 30%. 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.
Bargain Purchase Gain
As discussed in Note 1 of the Form 10-Q, the acquisition of Richland, LLC resulted in a bargain purchase gain of 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 Invocon acquisition.
Other Income/Expense
Other income for the three months ended March 31, 2026, was $3,467,711, as compared to $4,104,211 for the three months ended March 31, 2025. Other income for the three months ended March 31, 2026, was mainly driven by the bargain purchase gain mentioned above, gain on the exercise of warrant liabilities 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 income for the three months ended March 31, 2025, was mainly driven by the change in the fair value of warrant liabilities.
Provision for Income Taxes
During the three months ended March 31, 2026, and 2025, the Company had income tax expense from continuing operations of $73,859 and $110,525, 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 three months ended March 31, 2026, and 2025, was 5.7% and 1.27% respectively.
Results of Operations – For the six months ended March 31, 2026, and 2025
The Company’s Security segment revenues for the six months ended March 31, 2026, decreased by $11,146,766 or 50% to $11,288,085 from $22,434,851 for the six months ended March 31, 2025. This decrease is mainly due to a large sale valued at $10,375,000 for security technology products under our Vicon brand during the quarter ended March 31, 2025.
The Company’s Industrial Services segment revenues for the six months ended March 31, 2026, increased by $3,093,885 or 17%, to $21,649,202 from $18,555,317, for the six months ended March 31, 2025. This increase is mainly due to the revenues from the acquisition of Richland LLC.
The Company’s newly established Aerospace and Defense segment generated revenues of $1,232,592 for the six months ended March 31, 2026
There was unallocated revenue under the Corporate segment of $24,799 for the six months ended March 31, 2026. This revenue is related to the Company’s investment in digital assets.
Gross Profit for the six months ended March 31, 2026, was $12,469,070 or 36% of revenues as compared to gross profit of $17,867,391 or 44% of revenues for the six months ended March 31, 2025.
Gross profit in our Security segment was $4,691,462 or 42% of the segment’s revenues for the six months ended March 31, 2026, as compared to gross profit of $11,643,615 or 52% of the segment’s revenues for the period ended March 31, 2025. Gross profit in our security segment decreased as a result of the large sale mentioned above, additionally gross profits have been impacted by 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 $7,231,994 or 33% of the segment’s revenues for the six months ended March 31, 2026, as compared to gross profit of $6,223,776 or 34% of the segment’s revenues for the period ended March 31, 2025. Gross profit increased in the six months ended March 31, 2026, compared to the six months ended March 31, 2025, was mainly due to the 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 or 42% of revenues for the six months ended March 31, 2026
General and administrative expenses for the six months ended March 31, 2026, increased $2,534,943 or 18% to $16,398,974 from $13,864,031 for the six months ended March 31, 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 six months ended March 31, 2026, were $1,048,293 compared to $1,667,972 for the six months ended March 31, 2025, a decrease of $619,697or 37%. 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.
Other expense for the six months ended March 31, 2026, was $14,047,941, as compared to $22,161,046 for the six months ended March 31, 2025. Other expense for the six months ended March 31, 2026, was mainly driven by the bargain purchase gain mentioned above, loss on the exercise of warrant liabilities, interest expense, and the change in the fair value of the Company’s digital assets. Other expense for the six months ended March 31, 2025, was mainly driven by the loss on excess fair value and change in the fair value of warrant liabilities.
During the six months ended March 31, 2026, and 2025, the Company had income tax expense from continuing operations of $340,185 and $231,063, 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 six months ended March 31, 2026, and 2025, was (1.79%) and (1.17%) respectively.
Effects of Inflation
The Company’s business and operations have been 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 was $13,706,571 at March 31, 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 at March 31, 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 six months ended March 31, 2026, was $5,310,446 compared to providing $1,600,532 for the six months ended March 31, 2025. Our operating cash flow was mainly the result of our net loss, less the non-cash adjustments, combined with operating changes in contract assets, prepaid expenses and other current assets, accounts payable, operating lease liabilities, accrued expenses, and deferred revenues.
Trade receivables increased by $192,135 or 1% to $13,325,559 at March 31, 2026, from $13,133,424 at September 30, 2025. The modest increase in trade receivables is attributable to the acquisitions of Richland and Invocon.
Cash used by investing activities for the six months ended March 31, 2026, was $13,972,452 compared to $1,436,452 for the three months ended March 31, 2025. Investing activities for the six months ended March 31, 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 six months ended March 31, 2025, were driven by the Company’s purchase of property and equipment and investment in Masterpiece VR.
Cash provided by financing activities for the six months ended March 31, 2026, was $20,871,752 compared to $1,032,254 for the six months ended March 31, 2025. Financing activities for the six months ended March 31, 2026, were primarily driven by the proceeds from equity offerings, proceeds of 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 in cash and cash equivalents and restricted cash as of March 31, 2026. Additionally, the Company has (i) secured a line of credit for its Vicon brand to fund operations, which as of March 31, 2026, has available capacity of approximately $1,100,000, (ii) continually reevaluate our pricing model on our Vicon brand to improve margins on those products, (iii) raised $5,675,332 through the exercise of our Series B warrants during the six months ended March 31, 2026 (iv) raised $10,000,000 in gross proceeds in equity offering during the six months ended March 31, 2026 (v) Invested approximately $5,000,000 of the Company’s surplus cash in various marketable securities to generate income on those investments.
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 short or long-term needs. Absent an ability to raise additional outside capital and restructure or refinance all or a portion of our debt, the Company will be unable to meet its obligations as they become due over the next twelve months beyond the issuance date.
Each segment of the Company’s operations has positioned itself for growth and the Company’s long-term objectives include increasing marketing and sales for the Company’s products and services in each segment, increasing the Company’s presence through collaboration partnerships in each segment and through strategic acquisitions of complementary businesses for each segment. These long-term objectives will require sufficient cash to complete, and the Company expects to fund these objectives with cash on hand, issuance of debt, and from proceeds from the sale of the Company’s securities, which may not be sufficient to fully implement our growth initiatives.
The unaudited condensed consolidated financial statements do not include any adjustments relating to this uncertainty.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures reporting as promulgated under the Exchange Act is defined as controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms. Disclosure controls and procedures include without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Our CEO and our CFO have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2026. Based on their evaluation, our management has concluded that as of March 31, 2026, our disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) that occurred during the three months ended March 31, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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.
Part II Other Information
Item 1. Legal Proceedings.
To the Company’s knowledge, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries, threatened against or affecting our Company, our common stock, any of our subsidiaries or of our Company’s or our Company’s subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
Item 1A. Risk Factors
Our business faces many risks, a number of which are described in the section captioned “Risk Factors” in our Annual Report for the year ended September 30, 2025, filed with the SEC on December 29, 2025, and amended on January 16, 2026. The risks described may not be the only risks we face. Other risks of which we are not yet aware, or that we currently believe, are not material, may also materially and adversely impact our business operations or financial results. If any of the events or circumstances described in the risk factors contained in our Annual Report or Quarterly Report occur, our business, financial condition or results of operations could be adversely impacted and the value of an investment in our securities could decline. Investors and prospective investors should consider the risks described in our Annual Report and Quarterly Reports, and the information contained in the section captioned “Forward-Looking Statements” and elsewhere in this Quarterly Report before deciding whether to invest in our securities.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Preferred Stock
During the six months ended March 31, 2026, 3,000,296 shares of the Company’s common stock have been issued to satisfy $7,728,163 of notes payable, $115,837 in accrued interest, and $11,798,283 of excess value of shares issued recorded as interest expense. 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
Item 6. Exhibits
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.