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 $7,060,000 was 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 $393,750 respectively, of interest expense from the Company’s $7,025,000 note payable used to fund the transaction, income tax benefit of $2,663, and $148,251 of 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 $7,025,000 note payable used to fund the transaction, $25,000 of legal fees related to the acquisition, $148,251 of amortization on recognized intangible assets and income tax expense of $727 for the three months ended March 31, 2025, $321,502 of amortization on recognized intangible assets and $171,604 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.

 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 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’s 600,000 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 $28,112,368 and $7,229,491 for 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 $10,806,016 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 $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 the Company’s 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 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.