UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934
For the quarterly period ended December 31, 2025
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934
For the transition period from ___________to ____________
Commission File Number 001-37464
CEMTREX, INC.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction
of incorporation or organization)
(I.R.S. Employer
Identification No.)
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 February 13, 2026, the issuer had 10,078,089 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 Loss
Condensed Consolidated Statement of Stockholders’ Equity
Preferred Stock
Comprehensive Income
Stockholders’Equity
Condensed Consolidated Statement of Stockholders’ Equity (Continued)
Accumulated
Deficit
Condensed Consolidated Statements of Cash Flows
For the three months ended
December 31,
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 and Industrial Services. 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 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.
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.
Additionally, there was an error in the calculation of the weighted average shares for the three months ended December 31, 2024, for the reverse stock splits on October 2, 2024, and November 26, 2024, the following table summarizes the correction prior to the adjustment for the reverse stock split on September 29, 2025.
SCHEDULE OF ERROR CORRECTION REVERSE STOCK SPLIT
For the threemonths endedDecember 31, 2024Corrections
This error affected the calculation of the weighted average shares at September 30, 2025, the following table summarizes the correction.
For the year endedSeptember 30, 2025
Corrections
Acquisitions
On January 8, 2026, the Company completed the acquisition of Invocon. As a result of the transaction, Invocon became a wholly owned subsidiary of the Company. The purchase price of $7,060,000 was paid in cash at closing. Invocon will launch of the Company’s Aerospace and Defense segment with reporting results beginning in the second quarter of fiscal year 2026.
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 as part of the Company’s Industrial Services Segment. 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.
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 losses of $28,112,368 and $7,229,491 for fiscal years 2025 and 2024, respectively and a loss of $20,556,147for the three months ended December 31, 2025, and has debt obligations over the next fiscal year of $6,662,656 that 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 $20,505,781 in cash and cash equivalents as of December 31, 2025. Additionally, the Company has (i) secured a line of credit for its Vicon brand to fund operations, which as of December 31, 2025, has available capacity of approximately $420,000, (ii) continually reevaluate our pricing model on the Company’s Vicon brand to improve margins on those products, (iii) raised $5,657,264 through the exercise of our Series B warrants during the quarter ended December 31, 2025 (iv) raised $6,000,000 in gross proceeds in equity offering during the quarter ended December 31, 2025, and an additional $4,000,000in gross proceeds subsequent to December 31, 2025. 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. There has been no 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 unauditedfinancial 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.
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.
NOTE 3 – REVENUE
The following table illustrates the approximate disaggregation of the Company’s revenue based off timing of revenue recognition for the three months ended December 31, 2025, and 2024:
SCHEDULE OF DISAGGREGATION OF REVENUE RECOGNITION
NOTE 4 – 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 months ended December 31, 2025, and 2024, the following items were excluded from the computation of diluted net loss per common share as their effect is anti-dilutive:
SCHEDULE OF COMPUTATION OF DILUTED NET LOSS PER COMMON SHARE AS ANTI-DILUTIVE EFFECT
For the three months ended December 31, 2025, and 2024, loss per share basic and diluted for continuing operations are calculated as follows:
SCHEDULE OF LOSS PER SHARE BASIC AND DILUTED FOR CONTINUING OPERATIONS
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 two reportable segments: the Security segment and the Industrial Services segment. The Chief Operating Decision Maker (“CODM”) for all segments is Saagar Govil, the CEO of the Company.
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 December 31, 2025, and September 30, 2025.
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 December 31, 2025, 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 December 31, 2025, and September 30, 2025, are as follows.
SCHEDULE OF FAIR VALUE OF LIABILITIES
Quoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable
Inputs
(Level 3)
Inputs (Level 3)
Digital Assets – SOL
On July 29, 2025, the Company invested $998,642 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 December 31, 2025, and September 30, 2025, are as follows.
SCHEDULE OF DIGITAL ASSETS HOLDINGS
The following table is a summary of our digital assets as of December 31, 2025.
SUMMARY OF DIGITAL ASSETS
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 December 31, 2025, 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 December 31, 2025.
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 $1,042,321 and $1,034,798 at December 31, 2025, 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 December 31, 2025, and 2024, was $412,395 and $337,259, 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
Changes in the carrying amount of goodwill, by segment, were as follows:
SCHEDULE OF GOODWILL BY SEGMENT
As of December 31, 2025, and September 30, 2025, accumulated impairment losses of $3,846,475 have been recorded related to the Security 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 three months ended December 31, 2025, and 2024.
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 months ended December 31, 2025, and 2024, were as follows:
SCHEDULE OF DEFERRED REVENUE
For the three months ended December 31, 2025, and 2024, the Company recognized revenue of $499,890, and $501,666, 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 months ended December 31, 2025, and 2024, the Company recognized revenue of $1,271,877 and $760,431, 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 months ended December 31, 2025, and 2024.
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 December 31, 2025, there were royalties receivable from the sale of Cemtrex, XR, Inc. of $462,467, of which $240,000 is considered short-term and is presented on the Company’s unaudited Condensed Consolidated Balance Sheet under the caption “Trade receivables, net – related party. The Company has taken a $165,771 allowance for expected credit losses against these royalties.
As of December 31, 2025, there was $527,877in trade receivables due from the Cemtrex XR successor company, CXR, Inc. Of these receivables $240,000is the short term due on the royalties on CXR Inc.’s revenues. The remaining $287,877is related to the services provided by Cemtrex Technologies Pvt. Ltd. in the normal course of business.
NOTE 18 – EXPECTED CREDIT LOSSES
The following table summarized the Company’s activity for expected credit losses for the three months ended December 31, 2025.
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 2.43 years at December 31, 2025, and 3.30 years at December 31, 2024. The weighted average discount rate used to measure lease liabilities was approximately 6.31% at December 31, 2025, and 6.22% at December 31, 2024. The Company used the rate implicit in the lease, where known, or its incremental borrowing rate as the rate used to discount the future lease payments.
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 $6,225 for the three months ended December 31, 2025, and $11,381 for the three months ended December 31, 2024. A reconciliation of undiscounted cash flows to operating lease liabilities recognized in the unaudited condensed consolidated balance sheet at December 31, 2025, is set forth below:
SCHEDULE OF RECONCILIATION OF UNDISCOUNTED CASH FLOWS TO OPERATING LEASE LIABILITIES
Lease costs for the three months ended December 31, 2025, and 2024 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 $5,000,000from 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”) and matures twenty-four months24 from the closing date. 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 December 31, 2025, the Company had enough eligible assets to access approximately $2,400,000 of the credit line. The Company was in compliance with all loan covenants as of December 31, 2025. As of December 31, 2025, and September 30, 2025, this loan had a balance of $1,948,258, 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 beginning at six (6) months from the issuance date. After deduction of legal fees of $25,000, the Company received $7,000,000 in 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 $1,050,00 will automatically be added to the outstanding balance. The Company recorded this fee on January 1, 2026.
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 three months ended December 31, 2025, 135,592 shares of Series 1 Preferred Stock were issued to pay dividends to holders of Series 1 Preferred Stock.
As of December 31, 2025, 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.
Common Stock
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 three months ended December 31, 2025, 29,943 shares of common stock were issued for the exercise of 9,981 Series A Warrants under the Alternative Cashless Exercise option as adjusted for exercise price adjustments.
During the three months ended December 31, 2025, there were 67,671 shares issued for rounding on September 29, 2025, reverse stock split.
During the three months ended December 31, 2025, 2,316,480 shares of common stock were issued for the exercise of 2,316,480 Series B Warrants which generated $5,657,264 in proceeds.
During the three months ended December 31, 2025, 3,000,296 shares of the Company’s common stock have been issued to satisfy $7,756,167of notes payable, $87,833 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.
Series A and Series B Warrants
The following table summarizes information about shares issuable under warrants outstanding as of December 31, 2025.
SCHEDULE SHARES ISSUABLE UNDER WARRANTS OUTSTANDING
Warrant Shares
Outstanding
Weighted Average
Exercise Price
Remaining
Contractual Term (in years)
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
Adjusted number of
warrants outstanding
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 three months ended December 31, 2025, and 2024 the company recognized a loss on the fair value of the common shares issued for the exercised warrants of $4,674,806 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 three months ended December 31, 2025, and 2024 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.
December 2025 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.
NOTE 22 – SHARE-BASED COMPENSATION
For the three months ended December 31, 2025, and 2024, the Company recognized $0 and $4,087 of share-based compensation expense on its outstanding options, respectively. As of December 31, 2025, there was no unrecognized share-based compensation expense.
During the three months ended December 31, 2025, 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 months ended December 31, 2025, and 2024, the Company recorded an income tax expense of approximately $266,326 and $120,538, 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 months ended December 31, 2025, and 2024, were (1.31%) and (0.42%) respectively.
NOTE 25 – SUBSEQUENT EVENTS
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.
On January 8, 2026, the Company completed the acquisition of Invocon. As a result of the transaction, Invocon became a wholly owned subsidiary of the Company. The purchase price of $7,060,000 was paid in cash at closing. Invocon will launch the Company’s Aerospace and Defense segment with reporting results beginning in the second quarter of fiscal year 2026.
On various dates in January 2026, the Company issued 8,030 shares of common stock to satisfy 8,030 Series B Warrants. The exercises raised $18,068 of cash.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Except for historical information contained in this report, the matters discussed are forward-looking statements that involve risks and uncertainties. When used in this report, words such as “anticipates”, “believes”, “could”, “estimates”, “expects”, “may”, “plans”, “potential” and “intends” and similar expressions, as they relate to the Company or its management, identify forward-looking statements. Our operations involve risks and uncertainties, many of which are outside our control, and any one of which, or a combination of which, could materially affect our results of operations and whether the forward-looking statements ultimately prove to be correct. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. Such forward-looking statements are based on the beliefs of the Company’s management, as well as assumptions made by and information currently available to the Company’s management. Among the factors that could cause actual results to differ materially are the following: the effect of business and economic conditions; the impact of competitive products and their pricing; unexpected manufacturing or supplier problems; the Company’s ability to maintain sufficient credit arrangements; changes in governmental standards by which our environmental control products are evaluated and the risk factors reported from time to time in the Company’s SEC reports, including its recent report on Form 10-K. The Company undertakes no obligation to update forward-looking statements as a result of future events or developments.
General Overview
Cemtrex’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.
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 December 31, 2025, and 2024
Revenues
Our Security segment revenues for the three months ended December 31, 2025, increased by $57,829 or 1% to $5,511,528 from $5,453,699 for the three months ended December 31, 2024. This increase is mainly due to increased demand for the Company’s products.
Our Industrial Services segment revenues for the three months ended December 31, 2025, increased by $2,324,956 or 28%, to $10,611,156 from $8,286,200, for the three months ended December 31, 2024. This increase is mainly due to increased demand for the segment’s services.
There was unallocated revenue under the Corporate segment of $10,627 for the three months ended December 31, 2025. This revenue is related to the Company’s investment in digital assets.
Gross Profit
Gross Profit for the three months ended December 31, 2025, was $5,621,866 or 35% of revenues as compared to gross profit of $5,701,936 or 41% of revenues for the three months ended December 31, 2024.
Gross profit in our Security segment was $2,160,678 or 39% of the segment’s revenues for the three months ended December 31, 2025, as compared to gross profit of $2,839,759 or 52% of the segment’s revenues for the period ended December 31, 2024. Gross profit in our security segment have been impacted by tariffs.
Gross profit in our Industrial Services segment was $3,450,471 or 33% of the segment’s revenues for the three months ended December 31, 2025, as compared to gross profit of $2,862,177 or 35% of the segment’s revenues for the period ended December 31, 2024. Gross profit as a percentage of revenues decreased due to lower margins on projects in the three months ended December 31, 2025, compared to the three months ended December 31, 2024.
General and Administrative Expenses
General and administrative expenses for the three months ended December 31, 2025, increased $833,302 or 12% to $7,926,591 from $7,093,289 for the three months ended December 31, 2024. The increase in general and administrative expenses is mainly related to a one-time write off of obsolete demonstration equipment of $441,624, increased legal expenses related to the preliminary work on acquisitions, depreciation on recently acquired fixed assets, and travel related to trade show attendance.
Research and Development Expenses
Research and Development expenses for the three months ended December 31, 2025, were $501,435 compared to $890,083 for the three months ended December 31, 2024, a decrease of $388,648 or 44%. Research and Development expenses are related to the Security Segment’s development of next generation solutions associated with security and surveillance systems software.
Other Income/Expense
Other expense for the three months ended December 31, 2025, was $17,515,652, as compared to expense of $26,265,257 for the three months ended December 31, 2024. Other expense for the three months ended December 31, 2025, was mainly driven by interest expense of $12,123,695 of which $11,798,283 represents the discount on shares issued to settle debt. Other expense for the three months ended December 31, 2024, was mainly driven by a loss on excess fair value of the warrants at exercise of $15,796,105.
Provision for Income Taxes
During the three months ended December 31, 2025, and 2024, the Company had income tax expense from continuing operations of $266,326 and $120,538, 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 December 31, 2025, and 2024, was (1.31%) and (0.42%) 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 $24,748,544 at December 31, 2025, compared to working capital of $5,184,339 at September 30, 2025. This includes cash and cash equivalents and restricted cash of $21,782,533 at December 31, 2025, 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 three months ended December 31, 2025, was $891,914 and $1,201,817 for the three months ended December 31, 2024. 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, and accrued expenses.
Trade receivables decreased by $3,431,109 or 26% to $9,702,315 at December 31, 2025, from $13,133,424 at September 30, 2025. The decrease in trade receivables is attributable to a decrease in sales as compared to the fourth quarter of fiscal year2025.
Cash used by investing activities for the three months ended December 31, 2025, was $253,061 compared to $1,008,899 for the three months ended December 31, 2024. Investing activities for the three months ended December 31, 2025, were driven by the Company’s purchase of property and equipment and investment in marketable securities. Investing activities for the three months ended December 31, 2024, were driven by the Company’s purchase of property and equipment and investment in Masterpiece VR.
Cash provided by financing activities for the three months ended December 31, 2025, was $17,305,299 compared to $2,387,449 for the three months ended December 31, 2024. Financing activities for the three months ended December 31, 2025, were primarily driven by the proceeds from equity offerings, proceeds of a note payable, and proceeds from the exercise of the Company’s Series B Warrants. Financing activities for the three months ended December 31, 2024, 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 $21,782,533 in cash and cash equivalents and restricted cash as of December 31, 2025. Additionally, the Company has (i) secured a line of credit for its Vicon brand to fund operations, which as of December 31, 2025, has available capacity of approximately $420,000, (ii) continually reevaluate our pricing model on our Vicon brand to improve margins on those products, (iii) raised $5,657,264 through the exercise of our Series B warrants during the quarter ended December 31, 2025 (iv) raised $6,000,000 in gross proceeds in equity offering during the quarter ended December 31, 2025, and an additional $4,000,000 in gross proceeds subsequent to December 31, 2025.
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 December 31, 2025. Based on their evaluation, our management has concluded that as of December 31, 2025, 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 December 31, 2025, 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.
During the three months ended December 31, 2025, 3,000,296 shares of the Company’s common stock have been issued to satisfy $7,756,167 of notes payable, $87,833 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.