SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________

FORM 10-KSB

x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
 
OF THE SECURITIES ACT OF 1934
   
  For the fiscal year ended September 30, 2008

OR

o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
 
OF THE SECURITIES ACT OF 1934
 
Commission File Number: 000-53238

CEMTREX, INC.
(Exact name of small business issuer as specified in its charter)

Delaware
  
30-0399914
(State or other jurisdiction of
  
(IRS Employer Identification No.)
Incorporation or organization)
    

19 Engineers Lane,
Farmingdale, New York 11735
 (Address, including zip code, of principal executive offices)

631-756-9116
(Issuer’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
 
Title of Each Class
  
Name of Each Exchange on Which Registered
Common Stock, $0.001 par value per share
    
 
Securities registered pursuant to Section 12(g) of the Act: None

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 x No o
 
Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. x
 
Issuer's revenues; for the fiscal year ended September 30, 2008 were $6,670,052.00.

 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
 
As of December 15, 2008, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $88,978 based on the average bid and asked price of $0.01 on December 15, 2008.
 
As of December 15, 2008, the registrant had 34,327,862 shares of common stock outstanding.
 
Documents incorporated by reference: None.

Transitional Small Business Disclosure Format (check one):

     Yes o        No x
 
 
Index

 
Part I
  
 
Cautionary Statement Regarding Forward-Looking Statements
  
Item 1
Business
  
Item 1A
Risk Factors
  
Item 2
Properties
  
Item 3
Legal Proceedings
  
Item 4
Submission of Matters to a Vote of Security Holders
  
     
 
Part II
  
Item 5
Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
  
Item 6
Management’s Discussion and Analysis of Financial Condition and Results of Operations
  
Item 7
Financial Statements
  
Item 8
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
Item 8A
Controls and Procedures
  
Item 8B
Other Information
  
     
 
Part III
  
Item 9
Directors, Executive Officers and Corporate Governance
  
Item 10
Executive Compensation
  
Item 11
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
  
Item 12
Certain Relationships and Related Transactions, and Director Independence
  
Item 13
Exhibits
 
Item 14
Principal Accounting Fees and Services
  
     
 
Financial Statements
  
 
Signatures
  

 
 

FORWARD-LOOKING STATEMENTS

Statements in this report may be "forward-looking statements." Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions. These statements are based on current expectations, estimates and projections about our business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may, and are likely to, differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those described above and those risks discussed from time to time in this report, including the risks described under "Risk Factors" and any risks described in any other filings we make with the SEC. Any forward-looking statements speak only as of the date on which they are made, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this report.

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an on-going basis, we evaluate these estimates, including those related to useful lives of real estate assets, cost reimbursement income, bad debts, impairment, net lease intangibles, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. There can be no assurance that actual results will not differ from those estimates.
 
PART I
 
ITEM 1. 
                    BUSINESS
 
Cemtrex Inc. ("Cemtrex" or the "Company") is a Delaware corporation that designs,  engineers, assembles and sells emission monitoring equipment and instruments to the chemicals,  pulp and paper, steel, power,  coal  and  petrochemical industries,  as  well  as  to municipalities,  hospitals,  and  state  and  federal governments.  Cemtrex also markets technologies for controlling of green house gases to generate carbon credits pursuant to Kyoto protocol. The Company has also recently launched a new line of energy efficiency products named Green DCV for commercial buildings.

The Company's current products include the following:

(i)            Emission Monitors:
     o    Opacity monitor: Compliance & non-compliance types
     o    Extractive Continuous Emission Monitors
     o    Ammonia Analyzer
     o    Mercury Analyzer
     o    Insitu Process Analyzers

(ii)           Energy Efficiency Products
 Green Direct Controlled Ventilation (DCV) systems

(iii)         Green House gas Technologies
Control of Ventilation Air methane
Control of Nitrous oxide
Control of carbon Dioxide

On April 27, 1998, the Company was incorporated in the state of Delaware under the name “Diversified American Holdings, Inc.”  On November 13, 1998, the Company’s name was changed to “Strateginet, Inc.”  The Company subsequently changed its name to “Cemtrex Inc.” on December 16, 2004.

On December 30, 2004, the Company purchased certain assets from Ducon Technologies, Inc., which related to a business engaged in designing, assembling, selling and maintaining emission monitors to utilities and industries.  Ducon Technologies Inc. is owned Arun Govil, the Chairman, Chief Executive Officer, Treasurer and President of the Company.  In consideration for the asset purchase, the Company issued to Ducon Technologies, Inc. 1,950,000 shares of its common stock.  The shares were issued under Section 4(2) of the Securities Act of 1933, as amended, and/or Regulation D promulgated by the Securities and Exchange Commission.

 
 

On April 30, 2007, the Company purchased all of the issued and outstanding membership interests of Griffin Filters LLC, (“Griffin”) a company established since 1971 and engaged in the design, engineering & supplying of industrial air filtration equipment from its President.  Arun Govil, the Chairman, Chief Executive Officer, Treasurer and President of the Company, was the owner of 100% of the issued and outstanding membership interests of Griffin.  The Company purchased 100% ownership in Griffin for a purchase price of $ 2,750,000.00. The Company completed the Griffin purchase by (i) paying cash of $700,000.00, (ii) issuing 20,000,000 shares of common stock valued at $750,000.00 and (iii) issuing a four year convertible debenture in the amount of $1,300,000.00, paying interest of 8.0% per year and convertible into 30,000,000 shares of common stock. Griffin had sales and net income of $3,297,409 and $145, 981 respectively for fiscal year ended September 30, 2006. Griffin is now a wholly-owned subsidiary of the Company.

The Company designs,  engineers, assembles and sells emission monitoring equipment and instruments to the chemicals,  pulp and paper, steel, power,  coal  and  petrochemical industries,  as  well  as  to municipalities,  hospitals,  and  state  and  federal governments.  The Company’s emission monitoring systems are installed at the exhaust stacks of industrial facilities and are used to measure the outlet flue gas concentrations of regulated pollutants, such as sulfur dioxide, hydrogen chloride, hydrogen sulfide, nitrous oxides, ammonia, nitrogen oxide, carbon dioxide, carbon monoxide and other regulated pollutants. Through use of our equipment and instrumentation, our clients can monitor the exhausts to the atmosphere from their facilities and comply with Environmental Protection Agency and state and local emission regulations on dust, particulate, fumes, acid gases and other regulated pollutants into the atmosphere.
 
The Company also markets technologies and services for carbon credit projects through abatement of greenhouse gases such as Methane, Nitrous Oxide and carbon Dioxide, pursuant to the Kyoto protocol and assists project owners in the selling of carbon credits globally. Carbon Credits are emission offsets that are generated from greenhouse gases abatement, renewable energy such as solar & wind, and energy efficiency projects which displace carbon emissions from traditional fossil fuel sources like coal, oil or gas with the subsequent reduction in greenhouse gas emissions. Companies, agencies and governments buy, sell, bank and trade Carbon Credits called Certified Emission Reductions or CERs.  Cemtrex provides consulting services for such projects and arranges for investment equity and the sales of CERs for its customers.
 
The Company has recently launched a line of energy efficiency products named Green DCV (Direct Control Ventilation) from commercial buildings. The direct ventilation control by Green DCV, achieves energy savings by precisely controlling the flow of outside air into a building based upon occupancy levels. This is done by continuous multiple parameter monitoring of carbon dioxide, non-human generated pollutants, and other comfort related factors simultaneously in several zones in a multiplexed commercial building. Green DCV incorporates economizers into its design as well to provide efficient energy consumption while reducing unnecessary expenses.
 
INDUSTRY BACKGROUND

The market for environmental control systems and technologies is directly dependent upon governmental regulations and their enforcement. During the past three decades, federal, state and local governments have realized the contaminated air poses significant threats to public health and safety, and, in response, have enacted legislation designed to curb emissions of a variety of air pollutants.  Management believes that the existence of governmental regulations creates demand for the Company’s emission monitoring equipment and environmental control systems.

These governmental regulations affect nearly every industrial activity. The principal federal legislation that was created is the Clean Air Act of 1970, as amended (Clean Air Act). This legislation requires compliance with ambient air quality standards and empowers the Environmental Protection Agency (EPA) to establish and enforce limits on the emissions of various pollutants from specific types of facilities. The states have primary responsibility for implementing these standards and, in some cases, have adopted standards more stringent than those established by the EPA. In 1990, amendments to the Clean Air Act were adopted which address, among  other things, the country acid rain problem by imposing strict control on the emissions of sulfur dioxide from power plants.  During 1997, EPA approved regulations for ozone related emissions and in 1998 EPA issued regulations requiring utilities in 22 states to significantly reduce Nitrogen oxides emissions.

According to scientists, the Earth's surface has risen in temperature by about 1 degree Fahrenheit in the past century. There is increasing evidence that certain human activities are contributing to this change in temperature through activities that increase the levels of greenhouse gases, primarily carbon dioxide, methane, and nitrous oxide, in the atmosphere. Greenhouse gases trap heat that would normally escape back into the atmosphere, thus increasing the Earth's natural greenhouse effect and increasing temperature over time.

 
 

The Earth's climate is predicted to change because human activities are altering the chemical composition of the atmosphere through the buildup of greenhouse gases—primarily carbon dioxide (CO2), methane (CH4), and nitrous oxide (NOx). The heat-trapping property of these gases is undisputed. Although uncertainty exists about exactly how Earth's climate responds to these gases, global temperatures are rising.

EPA Clean Air market Programs
 
EPA’s Clean air market programs include various market-based regulatory programs designed to improve air quality. Clean air markets include various market-based regulatory programs designed to improve air quality by reducing outdoor concentrations of fine particles, sulfur dioxide, nitrogen oxides, mercury, ozone and other significant air emissions. The most well-known of these programs are EPA’s Acid Rain Program and the NOx Trading Programs, which reduce emissions of sulfur dioxide (SO2) and nitrogen oxides (NOx)–compounds produced by fossil fuel combustion.
 
Acid Rain Program
 
The goal of the Acid Rain Program is to achieve significant environmental and public health benefits through reductions in emissions of sulfur dioxide (SO2) and nitrogen oxides (NOx), the primary causes of acid rain. To achieve this goal at the lowest cost to society, the program employs both traditional and innovative, market-based approaches for controlling air pollution. In addition, the program encourages energy efficiency and pollution prevention.
 
"Acid rain" is a broad term referring to a mixture of wet and dry deposition (deposited material) from the atmosphere containing higher than normal amounts of nitric and sulfuric acids. The precursors, or chemical forerunners, of acid rain formation result from both natural sources, such as volcanoes and decaying vegetation, and man-made sources, primarily emissions of SO2 and NOx resulting from fossil fuel combustion. In the United States, roughly 2/3 of all SO2 and 1/4 of all NOx come from electric power generation that relies on burning fossil fuels, like coal.  Acid rain occurs when these gases react in the atmosphere with water, oxygen, and other chemicals to form various acidic compounds. The result is a mild solution of sulfuric acid and nitric acid. When sulfur dioxide and nitrogen oxides are released from power plants and other sources, prevailing winds blow these compounds across state and national borders, sometimes over hundreds of miles.
 
NOx Trading Program
 
The goal of the NOx Trading Program is to reduce the transport of ground-level ozone across large distances. The Ozone Transport Commission (OTC) NOx Budget Program was implemented from 1999 to 2002 and was replaced by the NOx Budget Trading Program—also known as the “NOx SIP Call”—in 2003. The NOx SIP Call  Program is a market-based cap and trade program created to reduce emissions of nitrogen oxides (NOx) from power plants and other large combustion sources in the eastern United States. NOx is a prime ingredient in the formation of ground-level ozone (smog), a pervasive air pollution problem in many areas of the eastern United States. The NOx Budget Trading Program was designed to reduce NOx emissions during the warm summer months, referred to as the ozone season, when ground-level ozone concentrations are highest.
 
Clean Air Interstate Rule (CAIR)
 
On March 10, 2005, EPA issued the Clean Air Interstate Rule (CAIR). This rule provides states with a solution to the problem of power plant pollution that drifts from one state to another. CAIR covers 28 eastern states and the District of Columbia. The rule uses a cap and trade system to reduce the target pollutants—sulfur dioxide (SO2) and nitrogen oxides (NOx)—by 70 percent.
 
The goal of the Clean Air Interstate Rule (CAIR) is to permanently cap emissions of SO2 and NOx in the eastern U.S. States must achieve the required emission reductions using one of two compliance options: (1) meet the state’s emission budget by requiring power plants to participate in an EPA-administered interstate cap and trade system, or (2) meet an individual state emissions budget through measures of the state’s choosing.
 
Clean Air Mercury Rule (CAMR)
 
On March 15, 2005, EPA issued the Clean Air Mercury Rule (CAMR) to permanently cap and reduce mercury emissions from coal-fired power plants for the first time ever. This rule makes the United States the first country in the world to regulate mercury emissions from utilities.
 
 
 
 
The goal of the Clean Air Mercury Rule (CAMR) is to reduce mercury emissions from coal-fired power plants through “standards of performance” for new and existing utilities and a market-based cap and trade program.
 
CAMR establishes “standards of performance” limiting mercury emissions from new and existing coal-fired power plants, and creates a market-based cap and trade program that will reduce nationwide utility emissions of mercury in two distinct phases. The first phase cap is 38 tons and emissions will be reduced by taking advantage of “co-benefit” reductions—that is, mercury reductions achieved by reducing sulfur dioxide (SO2) and nitrogen oxides (NOx) emissions under Clean Air Interstate Rule (CAIR). In the second phase, due in 2018, coal-fired power plants will be subject to a second cap, which will reduce emissions to 15 tons upon full implementation.
 
EPA Emission Monitoring Requirements
 
EPA’s emissions monitoring requirements are designed to ensure the compliance with its current regulations pursuant to various programs. The emission monitoring requirements ensure that the emissions data collected is of a known, consistent, and high quality, and that the mass emissions data from source to source are collected in an equitable manner. This is essential to support the Clean Air Markets Program’s mission of promoting market-based trading programs as a means for solving air quality problems
 
Continuous emissions monitoring (CEM) is instrumental in ensuring that the mandated reductions of SO2, NOx mercury and other pollutants are achieved. While traditional emissions limitation programs have required facilities to meet specific emissions rates, the current Program requires an accounting of each ton of emissions from each regulated unit. Compliance is then determined through a direct comparison of total annual emissions reported by CEM and allowances held for the unit.
 
CEM is the continuous measurement of pollutants emitted into the atmosphere in exhaust gases from combustion or industrial processes. EPA has established requirements for the continuous monitoring of SO2, volumetric flow, NOx, diluent gas, and opacity for units regulated under the Acid Rain Program. In addition, procedures for monitoring or estimating carbon dioxide (CO2) are specified. The CEM rule also contains requirements for equipment performance specifications, certification procedures, and recordkeeping and reporting.
 
The Acid Rain Program uses a market-based approach to reduce SO2 emissions in a cost-effective manner. (One allowance is an authorization to emit 1 ton of SO2 during or after a specified calendar year; a utility may buy, sell, or hold allowances as part of its compliance strategy.) Complete and accurate emissions data are key to implementing this market-based approach.
 
An essential feature of smoothly operating markets is a method for measuring the commodity being traded. The CEM data supplies the gold standard to back up the paper currency of emissions allowances. The CEM requirements Management believes instills confidence in the market-based approach by verifying the existence and value of the traded allowance.
 
The owner or operator of a unit regulated under the Acid Rain Program must install CEM systems on the unit unless otherwise specified in the regulation. CEM systems include:
 
 
·
An SO2 pollutant concentration monitor.
 
 
·
A NOx pollutant concentration monitor.
 
 
·
A volumetric flow monitor.
 
 
·
An opacity monitor.
 
 
·
A diluent gas (O2 or CO2) monitor.
 
 
·
A computer-based data acquisition and handling system (DAHS) for recording and performing calculations with the data.
 
All CEM systems must be in continuous operation and must be able to sample, analyze, and record data at least every 15 minutes. All emissions and flow data will be reduced to 1-hour averages. The rule specifies procedures for converting the hourly emissions data into the appropriate units of measure.
 
The following is a summary of monitoring method requirements and options:
 
 
·
All existing coal-fired units serving a generator greater than 25 megawatts and all new coal units must use CEMs for SO2, NOx, flow, and opacity.
 
 
 
 
 
·
Units burning natural gas may determine SO2 mass emissions by: (1) measuring heat input with a gas flowmeter and using a default emission rate; or (2) sampling and analyzing gas daily for sulfur and using the volume of gas combusted; or (3) using CEMs.
 
 
·
Units burning oil may monitor SO2 mass emissions by one of the following methods:
 
 
1.
daily manual oil sampling and analysis plus oil flow meter (to continuously monitor oil usage)
 
 
2.
sampling and analysis of diesel fuel oil as-delivered plus oil flow meter
 
 
3.
automatic continuous oil sampling plus oil flow meter
 
 
4.
SO2 and flow CEMs.
 
 
·
Gas-fired and oil-fired base-loaded units must use NOx CEMs.
 
 
·
Gas-fired peaking units and oil-fired peaking units may either estimate NOx emissions by using site-specific emission correlations and periodic stack testing to verify continued representativeness of the correlations, or use NOx CEMS. The emission correlation method has been significantly streamlined in the revised rule.
 
 
·
All gas-fired units using natural gas for at least 90 percent of their annual heat input and units burning diesel fuel oil are exempt from opacity monitoring.
 
 
·
For CO2 all units can use either (1) a mass balance estimation, or (2) CO2 CEMs, or (3) O2 CEMs in order to estimate CO2 emissions.
 
PRODUCTS

The Company offers a range of products and systems, incorporating diverse technologies, to address the needs of a wide variety of industries and their environmental regulations. Management believes that the Company provides a single source responsibility for design, engineering, assembly, installation and maintenance of systems to its customers. The Company’s products are designed to operate so as to allow its users to determine their compliance with the latest governmental emissions regulations. The Company’s products measure the concentrations of various regulated pollutants in the flue gases discharging the exhaust stacks at various utilities and industries.

The Company's current products include the following:

Opacity monitor: Compliance & non-compliance types

Management believes that the Company’s Laser Opacity monitor provides the highest accuracy and long-term reliability available for stack opacity and dust measurements.  An EPA-compliant monitoring system, the monitor is a lightweight, efficient solution for determining opacity or dust concentration in stack gases.  Proven in many installations worldwide, it advances the state of opacity monitoring with higher levels of accuracy, flexible installation and reduced long-term maintenance.

Extractive Continuous Emission Monitors (CEMS)

Cemtrex provides direct-extractive and dilution-extractive CEMS  equipment & systems that are applicable for utilities, industrial boilers, FGD systems, SCR-NOx control, furnaces, gas turbines, process heaters, incinerators, and process controls.  In addition to traditional CEMS designed for maximum reliability and minimal maintenance in monitoring criteria pollutants, the Company can also accurately quantify other gaseous compounds through in-situ or extractive FTIR systems. The Company’s Extractive CEMS can be configured to monitor for one or all of the following: • NOx • SO2 • CO2 • O2 • CO • THC • Mercury • H2S • HCl & HF Acid • NH3 • Particulate • Opacity • Volumetric Flow and Moisture.

Ammonia Analyzer

The flue gas stream which contain ammonia, nitrogen oxides and in some cases sulfur dioxide utilize Ultra Violet radiation techniques for measurements. All these components absorb UV radiation, and therefore can be monitored by process analyzers that utilize UV absorbance techniques for detection.
 
 
 

Mercury Analyzer

The EPA Clean Air Mercury rule requires that all coal fired power plants must provide continuous mercury monitoring by 2009. Management believes that Cemtrex's SM4 mercury monitor, a result of 10 years experience in mercury monitoring business, provides reliable online measurements at a much lower cost than any other competing model in the market. Cemtrex SM4 is the first instrument working on a thermo catalytic principle avoiding wet chemical sample treatment. As a consequence, the Company has found that maintenance demand has been drastically minimized. Management believes that it is the only monitor that required no maintenance at a coal fired utility wet stack, no carrier gases, no water and 95% data availability SM4 uses straight extractive Teflon sheathed Hastelloy probe with no plugging or corrosion.

Energy Efficiency Products

Green Direct Controlled Ventilation (DCV) systems
 
Green House gas Technologies
Control of Ventilation Air methane
Control of Nitrous oxide
Control of carbon Dioxide

PRODUCT DEVELOPMENT

Company is currently developing a technology to economically control carbon dioxide gas from flue gases exhausting the stacks of power plants. Company has setup a pilot plant to test and verify its own proprietary concept to control carbon dioxide emissions from power plants.

The Company is not dependent on, nor expects to become dependent on, any one or a limited number of suppliers.  The Company buys parts and components to assemble its equipment and products. The Company does not manufacture or fabricate its own products or systems.  The Company relies on sub-suppliers and third party vendors to procure from or fabricate its components based on the Company’s design, engineering and specifications. The Company also enters into subcontracts for field installation, which the Company supervises; and Company manages all technical, physical and commercial aspects of the performance of the Company contracts. To date, the Company has not experienced difficulties either in obtaining fabricated components and other materials and parts or in obtaining qualified subcontractors for installation work.

PARTS, REPAIR AND REFURBISHMENT SERVICES

The Company also provides  replacement  and spare  parts  and  repair  and  refurbishment services for its emission monitoring systems following the expiration of its warranties  which  generally range up to 12 months. The Company has experienced only minimal costs from its warranties.

The Company’s standard terms of sale disclaim any liability for consequential or indirect losses or damages stemming from any failure of the Company’s products or systems or any component thereof.  The Company seeks indemnification from its subcontractors for any loss, damage or claim arising from the subcontractors' failure to perform.

COMPETITION

The Company faces substantial competition in each of its principal markets.  Most of its competitors are larger and have greater financial resources than the Company; several are divisions of multi-national companies. The Company competes on the basis of price, engineering and technological expertise, know-how and the quality of its products, systems and services.  Additionally, the Company’s management believes that the successful performance of the Company’s installed products and systems is a key factor in gaining business as customers typically prefer to make significant purchases from a company with a solid performance history.
 
 
 
 
We obtain virtually all our contracts through competitive bidding. Although price is an important factor and may in some cases be the governing factor, it is not always determinative, and contracts are often awarded on the basis of the efficiency or reliability of products and the engineering and technical expertise of the bidder. Several companies market products that compete directly with our products. Other companies offer products that potential customers may consider to be acceptable alternatives to our products and services. We face direct competition from companies with far greater financial, technological, manufacturing and personnel resources, including Thermo Fisher Scientific Inc., Tekran Instruments Corporation, Altech Environment USA, Shaw Group, and Horiba Instruments Inc. in the emissions monitoring business.
 
INTELLECTUAL PROPERTY

Over the years, the Company has developed proprietary technologies that give it an edge in competing with its competitors. Thus, the Company relies on a combination of trade secrets and know-how to protect its intellectual property. The Company has not filed any patents.

MARKETING

The Company relies on manufacturing representatives, distributors, direct salespersons, magazine advertisements, internet advertising, trade shows, trade directories and catalogue listings to market our products and services. The Company uses more than eight manufacturing sales representatives in the United States backed by its senior management and technical professionals. The Company’s arrangements with independent sales representatives accord each a defined territory within which to sell some or all of the Company’s products  and  systems,  provide  for the payment of  agreed-upon  sales commissions  and are  terminable  at  will.  The Company’s sales representatives do not have authority to execute contracts on the Company’s behalf.

The Company’s sales representatives also serve as ongoing liaison function between us and our customers during the installation phase of our products and systems and address customers' questions or concerns arising thereafter. The Company selects representatives based upon industry reputation, prior sales performance including number of prospective leads generated and sales closure rates, and the breadth of territorial coverage, among other criteria.

Technical inquiries received from potential customers are referred to our engineering personnel. Thereafter, the Company’s sales and engineering personnel jointly prepare a budget for future planning, a proposal, or a final bid.  The period between initial customer contact and issuance of an order is generally between two and twelve months.

CUSTOMERS

The Company’s principal customers are engaged in refining, power, chemical, mining and metallurgical processing.  Historically,  most  of our customers  have  purchased  individual  products  or  systems  which,  in  many instances, operate in conjunction with products and systems supplied by others. For several years, the Company has marketed its products as integrated custom engineered emission monitoring systems and environmental management solutions. No one single customer accounts for a large percentage of our annual sales.

On most projects, the Company is responsible to its customers for all phases of the design, assembly, supply and, if included, field installation of its products and systems. The successful completion of a project is generally determined by a successful operational test of the supplied equipment conducted by our field service technician in the presence of the customer.

TECHNOLOGY

The Company has developed a broad range of emission monitoring technological base.  The Company’s equipment and instruments are used: (i) to measure particulate, carbon dioxide, nitrogen oxides, mercury and sulfur dioxide from coal-fired power plants, (ii) to measure particulate from cement plants, (iii) to measure hydrocarbons, particulate and sulfur dioxide from refineries, (iv) to measure hydrogen sulfide, carbon monoxide, ammonia, hydrocarbons and other regulated pollutants from chemical plants, steel plants, incinerators and other industrial exhausts. Our emission monitors are capable of meeting all current federal and local emission monitoring standards.  The Company has not filed any patents with respect to its technology.
 
 
 

BONDING AND INSURANCE

While only a very few of our contracts require the Company to procure bid and performance bonds, such requirements are prevalent for large projects or projects  partially or fully funded by federal, state or local governments. A bid bond guarantees that a bidder will execute a contract if it is awarded the job and a performance bond guarantees performance of the contract.  The Company does not presently have a bank credit line to back bid or performance bonds. Thus, the Company cannot bid on certain contracts.

In certain cases, the Company is able to secure large contracts by accepting progress payments with retention provisions in lieu of bonds.

The Company currently maintains different types of insurance, including general liability and property coverage.  The Company does not maintain product liability insurance with respect to its products and equipment.  Management believes that the insurance coverage that it is adequate for our current business needs.

GOVERNMENT REGULATION

Significant environmental laws, particularly the Federal Clean Air Act, have been enacted in response to public concern about the environment.  The Company believe that compliance with and enforcement of these laws and  regulations create the demand for our products and systems and largely determine  the level of  expenditures  that  customers  will  make  to  monitor the  emissions  from  their facilities. The Federal Clean Air Act, initially adopted in 1970 and extensively amended in 1990, requires compliance with ambient air quality standards and empowers the EPA to establish and enforce limits on the emission of various pollutants from specific types of industrial facilities.  States have primary responsibility for implementing these standards, and, in some cases, have adopted more stringent standards.
 
The 1990  amendments  to the  Federal  Clean Air Act  require, among other matters, reductions in the emission of sulfur oxides, believed to be the cause of "acid rain," in the emission of 189 identified  hazardous air pollutants and toxic  substances  and the  installation  of  equipment  and systems  which will contain certain named toxic substances used in industrial processes in the event of  sudden,  accidental,  high-volume  releases.  Such  amendments  also  extend regulatory coverage to many facilities previously exempt due to their small size and  require  the EPA to  identify  those  industries  which will be required to install the mandated control  technology for the industry to reduce the emission of hazardous air pollutants from their  respective  plants and  facilities.  The Montreal Protocol, adopted in 1987, as well as EPA regulations issued in 1992, call for the phase-out of CFCs. In addition,  regulations promulgated by the EPA in 1993  further  limit  the  concentration  of  pollutants,  such  as  hydrogen chloride, sulfur dioxide,  chlorine, heavy metals and hazardous solid substances in the form of extremely  fine dust,  from sewage  sludge  incinerators.  Sewage sludge facilities are required to comply with these regulations. Compliance with all these regulations can only be achieved by first monitoring the pertinent emission levels.

EMPLOYEES

The Company employs 21 full time and three part time employees, consisting of one executive officer, five managers, ten technical engineers, and five clerical and administrative support persons.  None of our employees are represented by a labor union. In addition, the Company utilizes commission sales personnel and contract design engineers, on an as needed basis. There are no employment agreements.

FACILITIES

The Company does not own any real estate.

The Company leases its principal office at Farmingdale, New York, 4000 square feet of office and warehouse/shop space in a single story commercial structure on a month to month lease from Ducon Technologies Inc., at a monthly rental of $ 2,157.00. The Company’s subsidiary Griffin Filters LLC leases approx. 10,000 sq. ft. of office and warehouse space in Liverpool, New York from a third party in a five year lease at a monthly rent of $ 4,225.00 expiring on March 30, 2012.  The Company has no plans to acquire any property in the immediate future. The Company believes that its current facilities are adequate for its needs through the next six months, and that, should it be needed, suitable additional space will be available to accommodate expansion of the Company's operations on commercially reasonable terms, although there can be no assurance in this regard. There are no written agreements.

 
 

ITEM 1 A. 
RISK FACTORS
 
Investing in our common stock involves a high degree of risk. You should consider carefully the risks and uncertainties described below, together with all of the other information in this report, including the consolidated financial statements and the related notes appearing at the end of this annual report on Form 10-KSB, with respect to any investment in shares of our common stock. If any of the following risks actually occurs, our business, financial condition, results of operations and future prospects would likely be materially and adversely affected. In that event, the market price of our common stock could decline and you could lose all or part of your investment.
 
RISKS RELATED TO OUR BUSINESS

 o    We are substantially dependent upon the success and market acceptance of our technology. The failure of the emissions monitoring and controls market to develop as we anticipate, would adversely affect our business.

The Company's success is largely dependent on increased market acceptance of our emission monitoring equipment and control systems. If acceptance of emissions monitoring equipment does not continue to grow, then the Company’s revenues may be significantly reduced.

o    If we are unable to develop new products, our competitors may develop and market products with better features that may reduce demand for our potential products.

The Company may not be able to introduce any new products or any enhancements to its existing products on a timely basis, or at all.  In addition, the introduction by the Company of any new products could adversely affect the sales of certain of its existing products. If the Company's competitors develop innovative emissions testing technology that are superior to the Company's products or if the Company fails to accurately anticipate market trends and respond on a timely basis with its own innovations, the Company may not achieve sufficient growth in its revenues to attain profitability.

o    We have incurred losses for the fiscal year ending September 30, 2007, and we may incur losses for the foreseeable future.
 
We had net loss of $123,565 for the fiscal year ended September 30, 2007. These losses have resulted principally from expenses incurred in the extensive demonstration testing of its new SM4 compliance mercury monitors at various utility sites and the low gross margin product line of Griffin Filters. We may continue to incur significant expenditures related to research and development, selling and marketing and general and administrative activities as well as capital expenditures and anticipate that our expenses and losses may increase in the foreseeable future as we expand our business however, for the year ended September 30, 2008, we generated a profit of $118,078.  Further, as a public company we will also incur significant legal, accounting and other expenses that we did not incur as a private company. To maintain profitability, we will need to generate significant additional revenues with significantly improved gross margins. It is uncertain when, if ever, we will return to profitability. Even if we were to become profitable, we might not be able to sustain or increase profitability on a quarterly or annual basis.

o    The Company faces constant changes in governmental standards by which our products are evaluated.

The Company believes that, due to the constant focus on the environment and clean air standards throughout the world, a requirement in the future to adhere to new and more stringent regulations both domestically and abroad is possible as governmental agencies seek to improve standards required for certification of products intended to promote clean air.  In the event our products fail to meet these ever-changing standards, some or all of our products may become obsolete.

o    The future growth of our business depends, in part, on enforcement of existing emissions-related environmental regulations and further tightening of emission standards worldwide.

The Company expects that the future business growth will be driven, in part, by the enforcement of existing emissions-related environmental regulations and tightening of emissions standards worldwide.  If such standards do not continue to become stricter or are loosened or are not enforced by governmental authorities, it could have a material adverse effect on our business, operating results, financial condition and long-term prospects.

o  We may incur substantial costs enforcing our proprietary information, defending against third-party patents, invalidating third-party patents or licensing third-party intellectual property, as a result of litigation or other proceedings relating to patent and other intellectual property rights.
 
 
 

The Company considers its technology and procedures proprietary.  In particular, the Company depends substantially on its flexibility to develop custom engineered solutions for various applications and be responsive to customer needs.  The Company has not filed for any patents for its technologies.

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

o    Product defects could cause the Company to incur significant product liability, warranty, repair and support costs and damage its reputation which would have a material adverse effect on its business.

Although the Company rigorously tests its products, defects may be discovered in future or existing products. These defects could cause the Company to incur significant warranty, support and repair costs and divert the attention of its research and development personnel. It could also significantly damage the Company's reputation and relationship with its distributors and customers which would adversely affect its business. In addition, such defects could result in personal injury or financial or other damages to customers who may seek damages with respect to such losses. A product liability claim against the Company, even if unsuccessful, would likely be time consuming and costly to defend.

o    The markets in which we operate are highly competitive, and many of our competitors have significantly greater resources than we do.

There is significant competition among companies that provide emissions monitoring systems.  Several companies market products that compete directly with our products.  Other companies offer products that potential customers may consider to be acceptable alternatives to our products and services.  We face direct competition from companies with far greater financial, technological, manufacturing and personnel resources, including Thermo Fisher Scientific Inc., Tekran Instruments Corporation, Altech Environment USA, Shaw Group, and Horiba Instruments Inc. in the emissions monitoring business. Newly developed products could be more effective and cost efficient than our current or future products.  Many of the current and potential future competitors have substantially more engineering, sales and marketing capabilities and broader product lines than we have. 

o    The Company’s results may fluctuate due to certain regulatory, marketing and competitive factors over which we have little or no control.

The factors listed below, some of which we cannot control, may cause our revenue and results of operations to fluctuate significantly:

 
·
the existence and enforcement of government environmental regulations. If these regulations are not maintained or enforced then the market for Company’s products could deteriorate;
 
·
Retaining and keeping qualified employees and management personnel;
 
·
Ability to upgrade our products to keep up with the changing market place requirements;
 
·
Ability to keep up with our competitors who have much higher resources than us;
 
·
Ability to find sub-suppliers and sub-contractors to assemble and install our products;
 
·
General economic conditions of the industry and the ability of potential customers to spend money on setting up new industries that require our products;
 
·
Ability to maintain or raise adequate working capital required for the operations and future growth; and
 
·
Ability to retain our CEO and other senior key personnel.

o   The loss of our senior management and failure to attract and retain qualified personnel in a competitive labor market could limit our ability to execute our growth strategy, resulting a slower rate of growth.

 
 

We depend on the continued service of our senior management. Due to the nature of our business, we may have difficulty locating and hiring qualified personnel and retaining such personnel once hired. The loss of the services of any of our key personnel, or our failure to attract and retain other qualified and experienced personnel on acceptable terms, could limit our ability to execute our growth strategy resulting in a slower rate of growth.

o    General economic downturns in general would have a material adverse effect on the Company's business, operating results and financial condition.

The Company's operations may in the future experience substantial fluctuations from period to period as a consequence of general economic conditions affecting consumer spending. Therefore, any economic downturns in general would have a material adverse effect on the Company's business, operating results and financial condition.

o    A demand for payment of the outstanding loan or the conversion into non-assessable share of common stock of the Company may have an adverse effect on the Company.

On April 30, 2007, the Company issued a $1,300,000 Convertible Debenture to Arun Govil, the Company’s Chairman, CEO, President and Treasurer, in conjunction with the purchase of Griffin Filters, Inc. pursuant to the Agreement and Assignment of Membership Interests between Arun Govil and Cemtrex, Inc. The debenture carries an 8% annual interest rate with interest payable semiannually in arrears on the first business day of January and July each year. The debenture principle is due and payable on April 30, 2011.

The debenture has the right of conversion into 30,000,000 non-assessable shares of common stock of the Company at $0.001 (par value) per share. Conversion is not exercisable prior to December 31, 2007. Commencing December 31, 2007 and continuing to April 30, 2011, the Debenture Holder shall have the right of conversion subject o the terms and conditions of the debenture. In the event the face amount of the debenture is not fully converted on or before April 30, 2011, the conversion rights will lapse.

RISKS RELATED TO INVESTMENT IN THE COMMON STOCK OF THE COMPANY

o We may need additional funds in the future. We may be unable to obtain additional funds or if we obtain financing it may not be on terms favorable to us. You may lose your entire investment.

Based on our current plans, we believe our existing cash and cash equivalents along with cash generated from operations will be sufficient to fund our operating expenses and capital requirements through June 30, 2009, although there is no assurance of this result, we may need funds in the future. If our capital resources are insufficient to meet future capital requirements, we will have to raise additional funds. If we are unable to obtain additional funds on terms favorable to us, we may be required to cease or reduce our operating activities.

o If we raise additional funds by selling additional shares of our capital stock, the ownership interests of our stockholders will be diluted.

o Our stock trades on the Pink Sheets electronic quotation system.

The Company’s Common Stock currently trades on the Pink Sheets electronic quotation system under the symbol “CTEI.PK”. The Pink Sheets is a decentralized market regulated by the Financial Industry Regulatory Authority in which securities are traded via an electronic quotation system.  There can be no assurance that a trading market for the Company's shares will continue to exist in the future, and there can be no assurance that an active trading market will develop or be sustained. The market price of the shares of Common Stock is likely to be highly volatile and may be significantly affected by factors such as actual or anticipated fluctuations in the Company's operating results, announcements of technological innovations, new products or new contracts by the Company or its competitors, developments with respect to proprietary rights, adoption of new government regulations affecting the environment, general market conditions and other factors. In addition, the stock market has from time to time experienced significant price and volume fluctuations that have particularly affected the market price for the common stocks of technology companies. These types of broad market fluctuations may adversely affect the market price of the Company's common stock. See Risk Factor “Our stock price may be highly volatile” below.

o  Our shares of common stock are thinly traded, so stockholders may be unable to sell at or near ask prices or at all if they need to sell shares to raise money or otherwise desire to liquidate their shares.
 
 
 

Our common stock has from time to time been “thinly-traded,” meaning that the number of persons interested in purchasing our common stock at or near ask prices at any given time may be relatively small or non-existent. This situation is attributable to a number of factors, including the fact that we are a small company that is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we become more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot give stockholders any assurance that a broader or more active public trading market for our common shares will develop or be sustained, or that current trading levels will be sustained.
 
o Our common stock will be subject to “penny stock” rules which may be detrimental to investors.
 
If our common stock is not listed on a national exchange or market, the trading market for our common stock may become illiquid. Our common stock trades on the over-the-counter electronic bulletin board and, therefore, is subject to the requirements of certain rules promulgated under the Securities Exchange Act of 1934, which require additional disclosure by broker-dealers in connection with any trades involving a stock defined as a "penny stock".  The Securities and Exchange Commission has adopted regulations which generally define "penny stock" to be any equity security that has a market price (as defined) of less than $5.00 per share or an exercise price of less than $5.00 per share. The securities will become subject to rules that impose additional sales practice requirements on broker-dealers who sell such securities. For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchaser of such securities and have received the purchaser's written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the transaction, of a disclosure schedule prepared by the Securities and Exchange Commission relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer's presumed control over the market. Finally, among other requirements, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently, the "penny stock" rules may restrict the ability of purchasers in this offering to sell the Common Stock offered hereby in the secondary market.
 
o We do not anticipate paying any dividends.
 
No dividends have been paid on the common stock of the Company. The Company does not intend to pay cash dividends on its common stock in the foreseeable future, and anticipates that profits, if any, received from operations will be devoted to the Company's future operations. Any decision to pay dividends will depend upon the Company's profitability at the time, cash available and other relevant factors.
 
o Our stock price may be  highly volatile.

The market price of our common stock, like that of many other technology companies, has been highly volatile and may continue to be so in the future due to a wide variety of factors, including:

 
·
announcements of technological innovations by us, our collaborative partners or our present or potential competitors;
 
·
our quarterly operating results and performance;
 
·
developments or disputes concerning patents or other proprietary rights;
 
·
acquisitions;
 
·
litigation and government proceedings;
 
·
adverse legislation;
 
·
changes in government regulations;
 
·
economic and other external factors; and
 
·
general market conditions.

In addition, potential dilutive effects of future sales of shares of common stock by shareholders and by the Company could have an adverse effect on the market price of our shares.

 
 

o Our principal shareholder has significant influence over our company which could make it impossible for the public stockholders to influence the affairs of the Company.

Approximately 74% of our outstanding voting capital stock is beneficially held by Arun Govil the Company’s Chairman, Chief executive officer, President and Treasurer. In addition, Mr. Govil holds a promissory note that may be convertible into 30,000,000 shares of common stock of the Company at his option.  Consequently, Mr. Govil will be able to control substantially all matters requiring approval by the stockholders of the Company, including the election of all directors and approval of significant corporate transactions. This could make it impossible for the public stockholders to influence the affairs of the Company.
 
ITEM 2. 
PROPERTIES
 
The Company does not own any real estate.

The Company leases its principal office at Farmingdale, New York, 4000 square feet of office and warehouse/shop space in a single story commercial structure on a month to month lease from Ducon Technologies Inc., at a monthly rental of $2,157.00. The Company’s subsidiary Griffin Filters LLC leases approx. 10,000 sq. ft. of office and warehouse space in Liverpool, New York from a third party in a five year lease at a monthly rent of $ 4,225.00 expiring on March 30, 2012.  The Company has no plans to acquire any property in the immediate future. The Company believes that its current facilities are adequate for its needs through the next six months, and that, should it be needed, suitable additional space will be available to accommodate expansion of the Company's operations on commercially reasonable terms, although there can be no assurance in this regard. There are no written agreements.
 
ITEM 3. 
LEGAL PROCEEDINGS

None.
 
ITEM 4. 
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the year ended September 30, 2008.
 
PART II

ITEM 5. 
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The Company’s Common Stock currently trades on the Pink Sheets electronic quotation system under the symbol “CTEI.PK”.

As of December 15, 2008, there were approximately 84 holders of record of the Company's common stock as determined from the Company’s transfer agent’s list.  Such list does not include beneficial owners of securities whose shares are held in the names of various dealers and clearing agencies.
 
On August 21, 2007 the Company completed a 1:25 reverse split of our common stock. The Company is authorized to issue 60,000,000 shares of common stock, $0.001 par value per share.   On December 15, 2008, there were 34,327,862 shares of common stock issued and outstanding and no shares of preferred stock issued or outstanding.

The Company's Common Stock trades on the over-the-counter Pink Sheets.  The price ranges presented below represent the highest and lowest quoted bid prices during the third and fourth quarter for 2006, 2007 and the first, second and third quarters of 2008 reported by Pink Sheets. The quotes represent prices between dealers and do not reflect mark-ups, markdowns or commissions and therefore may not necessarily represent actual transactions.
 
 
 
 
Common Stock
 
Year
  
Period
  
Stock Price
  
       
High
    
Low
  
2006
  
3rd Quarter
   $ 0.80     $ 0.70  
   
4th Quarter
   $ 0.75     $ 0.19  
2007
  
1st Quarter
   $ 0.25     $ 0.12  
   
2nd Quarter
   $ 0.11     $ 0.03  
   
3rd Quarter
   $ 0.03     $ 0.02  
   
4th Quarter
   $ 0.01     $ 0.005  
2008
  
1st Quarter
   $ 0.014     $ 0.004  
   
2nd Quarter
   $ 0.03     $ 0.006  
   
3rd Quarter
   $ 0.032     $ 0.006  
   
4th Quarter
   $ 0.31     $ 0.015  

As reported by the over-the-counter Pink Sheets, on December 15, 2008 the closing sales price of the Company’s Common Stock was $0.01 per share.
 
The Company has not declared or paid any cash dividends on its common stock nor does it anticipate paying any in the foreseeable future. Furthermore, the Company expects to retain any future earnings to finance its operations and expansion. The payment of cash dividends in the future will be at the discretion of its Board of Directors and will depend upon its earnings levels, capital requirements, any restrictive loan covenants and other factors the Board considers relevant.

The Company has no equity compensation plans.
 
ITEM 6. 
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
The following discussion of our financial condition and plan of operations should be read in conjunction with the consolidated financial statements and the notes to those statements included elsewhere in this prospectus. This discussion includes forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those set forth under "risk factors" and elsewhere in this prospectus, our actual results may differ materially from those anticipated in these forward-looking statements.
 
OVERVIEW
 
Cemtrex is a full-range of emission monitoring and air filtration products company engaged in designing, manufacturing and marketing emissions monitors and air filtration products and providing certain services for green house gases carbon credit generation projects. Our focus has evolved from expansion through acquisition to increasing the market share of products more effectively in the marketplace.

Financial condition
 
The following table sets forth selected historical consolidated financial data from our consolidated financial statements and should be read in conjunction with our consolidated financial statements including the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” which are included below.

 
 

FISCAL YEAR ENDED SEPTEMBER 30, 2008

   
Year Ended September 30,
  
   
2008
    
2007
  
             
Revenues
   $ 6,670,052     $ 5,847,663  
Operating Expenses
   $ 2,384,843     $ 2,009,795  
Net Income (Loss)
   $ 245,400     $ ( 123,565 )
Net Income (Loss) Per Common Share, Basic and Diluted
   $ 0.00     $ ( 0.01 )
Weighted Average Number of Shares
     30,308,147       30,308,147  
                 
   
September 30,
  
   
2008
    
2007
  
                 
Current Assets
   $ 2,238,252     $ 1,180,972  
Total Assets
   $ 2,238,252     $ 1,264,719  
  $ 3,613,501     $ 2,758,046  
Total Stockholders' Deficit
   $ (1,375,249 )   $ (1,493,327 )
 
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
 
The following discussion and analysis is based upon our consolidated financial statements which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses, and assets and liabilities during the periods reported. Estimates are used when accounting for certain items such as revenues, allowances for returns, early payment discounts, customer discounts, doubtful accounts, employee compensation programs, depreciation and amortization periods, taxes, inventory values,  and valuations of investments, goodwill, other intangible assets and long-lived assets. We base our estimates on historical experience, where applicable and other assumptions that we believe are reasonable under the circumstances. Actual results may differ from our estimates under different assumptions or conditions. We believe that the following critical accounting policies affect our more significant judgments and estimates used in preparation of our consolidated financial statements.
 
We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. We base our estimates on the aging of our accounts receivable balances and our historical write-off experience, net of recoveries.
 
We value our inventories at the lower of cost or market. We write down inventory balances for estimated obsolescence or unmarketable inventory equal to the difference between the cost of the inventory and the estimated market value based upon assumptions about future demand and market conditions.
 
Goodwill is reviewed for possible impairment at least annually or more frequently upon the occurrence of an event or when circumstances indicate that the Company’s carrying amount is greater than the fair value. In accordance with SFAS 142, the Company examined goodwill for impairment and determined that the Company’s carrying amount did not exceed the fair value, thus, there was no impairment.
 
Generally, sales are recognized when shipments are made to customers. Rebates, allowances for damaged goods and other advertising and marketing program rebates are accrued pursuant to contractual provisions and included in accrued expenses. Certain amount of our revenues fall under the percentage-of-completion method of accounting used for long-term contracts. Under this method, sales and gross profit are recognized as work is performed based on the relationship between actual costs incurred and total estimated costs at completion. Sales and gross profit are adjusted prospectively for revisions in estimated total contract costs and contract values. Estimated losses are recorded when identified.
 
 
 
 
RESULTS OF OPERATIONS
 
 
 Net Sales: Net sales for 2008 increased by $822,389.00 or 14.%, to $6,670,052., from $5,847,663 for 2007. Sales growth increased during the year of 2008 primarily due to growth in overall sales as Company received new contracts for various product lines.  The overall market demand for our existing business increased during the last year.
   
 
Gross Profit: Gross profit for 2008 increased $736,677 or 38.90%, to $2,630,243 which made up 39.43% of net sales, from $1,893,566 for 2007, which made up 32.38% of net sales. The increased gross margin in 2008 was a direct result of the high gross margin on the ongoing big contracts by Cemtrex and Griffin Filters. The gross margin for 2008 period includes high margin sales of Cemtrex and Griffin Filters, whereas in 2007 the higher gross margin was a result of high margin field services for monitoring systems performed by the Company during that period.
   
 
Operating Expenses: Operating expenses for 2008 increased $375,048, or 18.66%, to $2,384,843 from $2,009,795 in 2007. Operating expenses as a percentage of sales increased in 2008 to 35.75% from 34.36% in 2007. The increase in operating expenses was primarily due to higher expenses as result of larger sales volume in current year as compared to the previous year.
   
Net Income/Loss: The Company had a net income of $118,078 for 2008 as compared to a net loss of ($123,565) for 2007. The net income in 2008 was a result of several factors including: (i) increase in sales, (ii) the new SM4 mercury product line, (ii) streamlining of griffin Filters operation.  The higher net income in 2008 period was due to higher gross margin on the products sold by each company.
 
 
Provision for Income Taxes: No income tax provision due to Net operating loss from prior year 2007.
 
EFFECTS OF INFLATION
 
The Company’s business and operations have not been materially affected by inflation during the periods for which financial information is presented.
 
LIQUIDITY AND CAPITAL RESOURCES
 
Working capital was ($259,993) at September 30, 2008, compared to ($277,074) at September 30, 2007. This included cash and cash equivalents of $60,610 and $143,830 at September 30, 2008 and 2007, respectively.

Trade receivables increased $747,757, or 95.80%, at September 30, 2008 to $1,528,231 at September 30, 2008 from $780,474 at September 30, 2007. The increase in accounts receivable is attributable to progressive billings of big contracts in Griffin and Cemtrex.

Inventories increased $204,124 or 80.85% to $456,567 at September 30, 2008 from $252,443 at September 30, 2007.  The increase inventory was due to the acquisition of Griffin Filters.
 
Continuing operations used $389,469 of cash for the fiscal year ended September 30, 2008, compared to using $802,925 of cash for the fiscal year ended September 30, 2007. The decrease in cash flows was primarily related to the increase in inventory combined with increase in accounts payable.  Investing activities for continuing operations used $151,939 of cash during 2008, compared to providing $713,923 during 2007. The use of cash by investing activities was primarily attributable to the purchase of griffin Filters in April, 2007. The financing activities in 2008 generated $458,188.
 
We believe that our cash on hand, cash generated by operations, is sufficient to meet the capital demands of our current operations during the 2008 fiscal year. Any major increases in sales, particularly in new products, may require substantial capital investment. Failure to obtain sufficient capital could materially adversely impact our growth potential.
 
 
 
 
Outlook
 
We anticipate that the outlook for our products and services remains quite strong and we are positioned well to take advantage of it.
 
We believe there is currently a gradually increasing public awareness of the issues surrounding air quality and that this trend will continue for the next several years. We also believe there is an increase in public concern regarding the effects of air quality on society and future generations, as well as an increase in interest by standards-making bodies in creating specifications and techniques for detecting, defining and solving air quality problems. As a result, we believe there will be an increase in interest in our mercury monitors, opacity monitors, carbon credits and air filtration products of subsidiary Griffin Filters.
 
This Outlook section, and other portions of this document, include certain “forward-looking statements” within the meaning of that term in Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, including, among others, those statements preceded by, following or including the words “believe,” “expect,” “intend,” “anticipate” or similar expressions. These forward-looking statements are based largely on the current expectations of management and are subject to a number of assumptions, risks and uncertainties. Our actual results could differ materially from these forward-looking statements. Important factors to consider in evaluating such forward-looking statements include those discussed in Item 1A. Risk Factors as well as:
 
 
•
the shortage of reliable market data regarding the emission monitoring & air filtration market,
     
 
•
changes in external competitive market factors or in our internal budgeting process which might impact trends in our results of operations,
     
 
•
anticipated working capital or other cash requirements,
     
 
•
changes in our business strategy or an inability to execute our strategy due to unanticipated changes in the market,
     
 
•
product obsolescence due to the development of new technologies, and
     
 
•
Various competitive factors that may prevent us from competing successfully in the marketplace.
 
In light of these risks and uncertainties, there can be no assurance that the events contemplated by the forward-looking statements contained in this Form 10-KSB will in fact occur.
 
ITEM 7. 
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
The financial statements required to be included in this report appear as indexed in the appendix to this report beginning on page F-1.
 
ITEM 8. 
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

There have been no changes in and/or disagreements with Gruber & Company, LLC, our independent registered public accountants, on accounting and financial disclosure matters.
 
 
 

ITEM 8A. 
CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures.
 
Disclosure controls  are  procedures  that are designed  with the objective of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended (the "Exchange  Act"), such as this annual report, is recorded, processed, summarized and reported within the time  periods specified in the SEC's rules and forms. Disclosure controls are also designed  with  the  objective  of  ensuring  that  such   information  is accumulated and  communicated  to our management,  including the CEO and CFO, as appropriate to allow timely decisions  regarding required  disclosure.  Internal controls  are  procedures  which are  designed  with the  objective of providing reasonable assurance that (1) our transactions are properly authorized, recorded and  reported;  and (2) our  assets  are  safeguarded  against  unauthorized  or improper use, to permit the preparation of our consolidated financial statements in conformity with United States generally accepted accounting principles.

Management’s Report on Internal Control over Financial Reporting  

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)). Our internal control over financial reporting is a process designed under the supervision of our Chief Executive Officer and Vice President of Finance to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Management evaluated the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Management, under the supervision and with the participation of our Chief Executive Officer and Vice President of Finance, assessed the effectiveness of our internal control over financial reporting as of September 30, 2008 and concluded that it is effective as of such date

Any internal control system, no matter how well designed, will have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Auditor Attestation

This  annual  report  does not include an  attestation  report of the  company's registered  public  accounting  firm regarding  internal  control over financial reporting.  Management's  report was not subject to attestation by the company's registered  public  accounting  firm  pursuant  to rules of the  Securities  and Exchange Commission that permit the company to provide only management's report.

Changes in Internal Control Over Financial Reporting
 
There were no changes in our internal controls over financial reporting during the year ended September 30, 2008 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
 
ITEM 8B. 
OTHER INFORMATION
 
Not applicable.
 
PART III
 
ITEM 9. 
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The following persons are our executive officers and directors. Directors are elected to hold offices until the next annual meeting of Shareholders and until their successors are elected or appointed and qualified. Officers are appointed by the board of directors until a successor is elected and qualified or until resignation, removal or death.

 
 

Name and Address
  
Age
  
Positions and Offices
         
Arun Govil
19 Engineers Lane
Farmingdale, New York 11735
  
51
  
President, Chief Executive Officer,
Treasurer, and Chairman of the Board of Directors
         
Renato Dela Rama
19 Engineers Lane
Farmingdale, New York 11735
  
58
  
Vice President of Finance
         
Vandana Govil
19 Engineers Lane
Farmingdale, New York 11735
  
46
  
Secretary and Director
 
 
Arun Govil has been our President since December 2004. Mr. Govil is also President (and owner) of Ducon Technologies Inc., a privately held company engaged in air pollution control systems business since 1996. Prior to 1996 Mr. Govil, Mr. Govil worked at various management and technical   positions in the environmental industry.  Mr. Govil holds a B.E. degree in Chemical Engineering and a M.B.A. in Finance. He is also a licensed Professional Engineer in New York State and New Jersey.

Renato Dela Rama has been our Vice President of Finance since December 2004. Mr. Dela Rama is also the Controller of Ducon Technologies Inc. since 2004. Prior to that, he worked in various accounting and financial management positions. Mr. Dela Rama holds a B.S. degree in accounting.

Vandana Govil has served as secretary and Director of the Company since December 2004. Ms. Govil earned her B.S. in accounting and economics from State University of New York at Old Westbury in 2000.  From 1987 to 1995, Ms. Govil was a realtor.  Arun Govil and Vandana Govil are husband and wife.

Except for Mr. and Mrs. Govil, there are no family relationships among our directors and officers.  None of our directors or officers is a director in any other reporting companies.  None of our directors or officers has been affiliated with any company that has filed for bankruptcy within the last five years.  The Company is not aware of any proceedings to which any of the Company’s officers or directors, or any associate of any such officer or director, is a party adverse to the Company or any of the Company’s subsidiaries or has a material interest adverse to it or any of its subsidiaries.

Each director of the Company serves for a term of one year or until the successor is elected at the Company's annual shareholders' meeting and is qualified, subject to removal by the Company's shareholders.  Each officer serves, at the pleasure of the board of directors, for a term of one year and until the successor is elected at the annual meeting of the board of directors and is qualified.

Audit Committee Financial Expert

The Securities and Exchange Commission has adopted rules implementing Section 407 of the Sarbanes-Oxley Act of 2002 requiring public companies to disclose information about "audit committee financial experts." As of the date of this Annual report, we do not have a standing Audit Committee. The functions of the Audit Committee are currently assumed by our full Board of Directors. Additionally, we do not have a member of our Board of Directors that qualifies as an "audit committee financial expert." For that reason, we do not have an audit committee financial expert.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

To the best of our knowledge, based solely on a review of the copies of such reports furnished to us and written representation that no other reports are required, Section 16(a) filing requirements applicable to our officers, directors, and greater than ten percent beneficial owners were not filed timely during the most recent fiscal year.

The business address for each of our officers and directors is 19 Engineers Lane, Farmingdale, NY 11735.
 
 
 

ITEM 10. 
EXECUTIVE COMPENSATION

BOARD OF DIRECTORS

All of our directors hold office until the next annual meeting of stockholders and the election and qualification of their successors. Our executive officers are elected annually by the board of directors to hold office until the first meeting of the board following the next annual meeting of stockholders and until their successors are chosen and qualified.

DIRECTORS' COMPENSATION

We reimburse our directors for expenses incurred in connection with attending board meetings but we do not pay our directors fees or other cash compensation for services rendered as a director.

EXECUTIVE COMPENSATION

The compensation discussion addresses all compensation awarded to, earned by, or paid to the Cemtrex's named executive officers.  As of December 15, 2008, two of our executive officers are currently earning compensation.   Set forth below is the aggregate compensation for services rendered in all capacities to us during our fiscal years ended September 30, 2006, 2007 and 2008 by our executive officers. Except as indicated below, none of our executive officers were compensated in excess of $100,000.
 
SUMMARY COMPENSATION TABLE

                         
LONG-TERM
  
 
  
 
    
COMPENSATION AWARDS
  
NAME AND PRINCIPAL
      
 ANNUAL COMPENSATION TABLE
    
SECURITIES UNDERLYING
  
POSITION
  
YEAR
  
SALARY
    
BONUS
    
OTHER
    
OPTIONS/SARS
  
Arun Govil
  
2006
   $ 
—
       —       —       —  
Chairman, Chief Executive
  
2007
   $ 125,000     $ 0     $ 0          
Officer and Treasurer and
  
2008
   $ 100,000     $ 0     $ 0          
President
                                    
                                     
Vandana Govil
  
2006
   $ 
—
       —       —       —  
Secretary, Director
  
2007
   $ 125,000     $ 0     $ 0       —  
   
2008
   $ 125,000     $ 0     $ 0       —  
 
OPTIONS/SAR GRANTS IN THE LAST FISCAL YEAR

On April 30, 2007, the Company issued a $1,300,000 Convertible Debenture to Arun Govil the Company’s Chairman, CEO, President and Treasurer in conjunction with the purchase of Griffin Filters, Inc. pursuant to the Agreement and Assignment of Membership Interests between Arun Govil and Cemtrex, Inc. The debenture carries an 8% annual interest rate with interest payable semiannually in arrears on the first business day of January and July each year. The debenture principle is due and payable on April 30, 2011.

The debenture has the right of conversion into 30,000,000 non-assessable shares of common stock of the Company at $0.001 (par value) per share. Conversion is not exercisable prior to December 31, 2007. Commencing December 31, 2007 and continuing to April 30, 2011, the Debenture Holder shall have the right of conversion subject to the terms and conditions of the debenture. In the event the face amount of the debenture is not fully converted on or before April 30, 2011, the conversion rights will lapse.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION/SAR VALUES

None.
 
 
 

ITEM 11.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth certain information known to us with respect to the beneficial ownership of our common stock as of December 15, 2008 by:

o all persons who are beneficial owners of five percent (5%) or more of our common stock;

o each of our directors;

o each of our executive officers; and

o all current directors and executive officers as a group.

Except as otherwise indicated, and subject to applicable community property laws, the persons named in the table below have sole voting and investment power with respect to all shares of common stock held by them.

As of December 15, 2008, 34,327,862 shares of common stock are issued and outstanding.  Applicable percentage ownership in the following table is based on 64,327,862 shares of common stock outstanding as of December 15, 2008 which includes shares underlying a convertible debenture held by Mr. Govil, the President, Chief Executive Officer and Chairman of the Board of the Company. (1)

Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options held by that person that are currently exercisable or exercisable within 60 days of December 15, 2008 are deemed outstanding. Such shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person.

Title of Class
  
Name and Address of Owner
  
Title
  
Amount Owned Before Offering
  
Percentage of Issued Common Stock (1)
  
Common Stock
  
Arun Govil
19 Engineers Lane
Farmingdale, New York 11735
  
President ,Chief Executive Officer and Chairman of the Board
  
55,430,000
 (2)(3) 
86.2
 % 
Common Stock
  
Renato Dela Rama
19 Engineers Lane
Farmingdale, New York 11735
  
Vice President
  
0
  
0
  
Common Stock
  
Vandana Govil
19 Engineers Lane
Farmingdale, New York 11735
  
Secretary, Director
  
55,430,000
(2)(3)(4) 
86.2
 % 
Common Stock
  
All directors and executive officers as a group (3 persons)
      
55,430,000
  
86.2
 % 
 
(1)
Except as otherwise noted herein, the percentage is determined on the basis of 64,327,862 shares of our common stock outstanding plus securities deemed outstanding pursuant to Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Under Rule 13d-3, a person is deemed to be a beneficial owner of any security owned by certain family members and any security of which that person has the right to acquire beneficial ownership within 60 days, including, without limitation, shares of our common stock subject to currently exercisable options.
 
 
 
 
(2)
Includes the shares underlying the Convertible Debenture issued by the Company to Arun Govil the Company’s Chairman, CEO, President and Treasurer in conjunction with the purchase of Griffin Filters, Inc. The debenture has the right of conversion into 30,000,000 non-assessable shares of common stock of the Company at $0.001 (par value) per share. The Debenture Holder has the right of conversion, subject to the terms and conditions of the debenture, commencing December 31, 2007 and continuing to April 30, 2011, thus Arun Govil has the right to convert the 30,000,000 non-assessable shares of common stock of the Company within 60 days. In the event the face amount of the debenture is not fully converted on or before April 30, 2011, the conversion rights will lapse.
 
(3)
Includes the shares owned by Ducon Technologies Inc. is owned by Arun Govil the Chairman, Chief Executive Officer, Treasurer and President of the Company.
 
(4)
Vanana Govil is the spouse of Arun Govil, the President, Chief Executive Officer and Chairman of the Board of the Company and his shares are attributed to Ms. Govil.
 
ITEM 12. 
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

On December 30, 2004, the Company purchased certain assets from Ducon Technologies, Inc., which related to a business engaged in designing, assembling, selling and maintaining emission monitors to utilities and industries.  Ducon Technologies Inc. is owned by Arun Govil, the Chairman, Chief Executive Officer, Treasurer and President of the Company.  In consideration for the asset purchase, the Company issued to Ducon Technologies, Inc. 1,950,000 shares of its common stock.  The shares were issued under Section 4(2) of the Securities Act of 1933, as amended, and/or Regulation D promulgated by the Securities and Exchange Commission.

On April 30, 2007, the Company purchased all of the issued and outstanding membership interests of Griffin Filters LLC, (“Griffin”) a company established since 1971 and engaged in the design, engineering & supplying of industrial air filtration equipment from its President.  Arun Govil, the Chairman, Chief Executive Officer, Treasurer and President of the Company, was the owner of 100% of the issued and outstanding membership interests of Griffin.  The Company purchased 100% ownership in Griffin for a purchase price of $ 2,750,000.00. The Company completed the Griffin purchase by (i) paying cash of $700,000.00, (ii) issuing 20,000,000 shares of common stock valued at $750,000.00 and (iii) issuing a four year convertible debenture in the amount of $1,300,000.00, paying interest of 8.0% per year and convertible into 30,000,000 shares of common stock. Griffin had sales and net income of $3,297,409 and $145, 981 respectively for fiscal year ended September 30, 2006. Griffin is now a wholly-owned subsidiary of the Company.
 
Ducon Technologies, Inc. is owned by by Arun Govil the Chairman, Chief Executive Officer, Treasurer and President of the Company.
 
Renato Dela Rama the Vice President of Finance of the Company is also the Controller of Ducon Technologies Inc.
 
Mrs. Vandana Govil, a director and the Secretary of the Company is the wife of Arun Gonvil the Chairman, Chief Executive Officer, Treasurer and President of the Company.
 
 
(a)
Financial Statements
 
Report of Independent Registered Public Accounting Firm – September 2008
  
Audited Consolidated Balance Sheets as of September 30, 2007 and September 30, 2008
  
Audited Consolidated Statements of Operations for the Year Ended September, 2008 and 2007
  
Audited Consolidated Statements of Stockholders’ Equity (Deficit) for the Years Ended September 30, 2008, and 2007
  
Audited Consolidated Statements of Cash Flows for the Year Ended September 30, 2008 and 2007
  
Notes to Audited Consolidated Financial Statements
  
 
(b)
Exhibit Index
 
Exhibit Number
  
Description of Exhibit
3.1
3.2
3.3
3.4
3.5
3.6
  
Certificate of Incorporation of the Company*
By Laws of the Company*
Certificate of Amendment of Certificate of Incorporation dated September 29, 2006*
Certificate of Amendment of Certificate of Incorporation dated March 30, 2007*
Certificate of Amendment of Certificate of Incorporation dated May 16, 2007*
Certificate of Amendment of Certificate of Incorporation dated August 21, 2007*
10.1
10.2
  
Cemtrex Lease Agreement-Ducon Technologies, Inc.*
Lease Agreement between Daniel L. Canino and Griffin Filters, LLC*
10.3
10.4
10.5
  
Asset Purchase Agreement between Ducon Technologies, Inc. and Cemtrex Inc.*
Agreement and Assignment of Membership Interests between Arun Govil and Cemtrex, Inc.*
8.0% Convertible Subordinated Debenture*
21.1
23.1
  
Subsidiaries*
Consent of Independent Registered Public Accounting Firm.
31.1
31.2
32.1
32.2
  
Certification by CEO pursuant to Sections 302 of the Sarbanes-Oxley Act of 2002 **
Certification by Vice President of Finance pursuant to Sections 302 of the Sarbanes-Oxley Act of 2002**
Certification of CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
Certification Vice President of Finance pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
______
   
* Incorporated by reference from Form 10-12G filed on May 22, 2008
 ** Filed Herewith

ITEM 14. 
PRINCIPAL ACCOUNTING FEES AND SERVICES
 
The Company’s Board of Directors does not have an Audit Committee.

The following table sets forth the aggregate fees billed to us for the years ended September 30, 2008 and September 30, 2007 by Gruber & Company, LLP, our independent auditors for the fiscal years ended September 30, 2008 and 2007:

   
2007
    
2008
  
             
Audit Fees
   $ 9,500     $ 29,500  
Audit-Related Fees
           $    
Tax Fees
           $    
Other Fees
           $    
Totals
   $ 9,500     $ 29,500  
 
 
 

Audit fees represent amounts billed for professional services rendered for the audit of our annual financial statements.  Audit-Related Fees include amounts billed for professional services rendered in connection with our SEC filings and discussions with the SEC that occurred during fiscal 2008 for us to become a fully reporting public company.  Our Board of Directors is of the opinion that the Audit-Related Fees charged by Gruber & Company, LLC were consistent with Gruber & Company, LLC maintaining its independence from us.

The Board of Directors has considered whether provision of the non-audit services described above is compatible with maintaining the independent accountant’s independence and has determined that such services did not adversely affect Gruber & Company, LLC independence.
 
SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
CEMTREX, INC.
  
 
(Registrant)
  

Dated: January 13, 2009
  
By
/s/ Arun Govil
     
Arun Govil, Chairman of the Board, Chief Executive Officer and President (Principal Executive Officer)
       
Dated: January 13, 2009
  
By
/s/ Renato Dela Rama
     
Renato Dela Rama, Vice President of Finance  (Principal Financial Officer)
       
Dated: January 13, 2009
  
By
/s/ Vandana Govil
     
Vandana Govil, Secretary and Director
 
 
 
 
GRUBER & COMPANY LLC

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Cemtrex Inc. and Subsidiary:

We have audited the accompanying balance sheet of Cemtrex Inc. and Subsidiary as of September 30, 2008 and 2007 and the related statements of operations, stockholders equity and cash flows for the years then ended.  These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform our audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company  as at September 30, 2008 and 2007  and the results of its’ operations and its’ stockholders equity and cash flows for the years then ended  in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in the notes to the financial statements, the Company has a negative equity and negative working capital. ..These items among others, raises substantial doubt about its ability to continue as a going concern.. These financial statements do not include any adjustments that might result from the outcome of this uncertainty

Gruber & Company LLC
/s/
Dated December 29, 2008

 
 
 
 
Cemtrex, Inc. and Subsidiary
Consolidated Balance Sheets
 
   
September 30,
  
   
2008
    
2007
  
 
        
(Restated)
  
Assets
            
Current Assets
            
Cash & Equivalents
   $ 60,610     $ 143,830  
Accounts Receivable
     1,528,231       780,474  
Inventory
     456,567       252,443  
Prepaid Expenses & Other Assets
     8,100       4,225  
Total Current Assets
     2,053,508       1,180,972  
                 
Property & Equipment, Net
     180,519       61,723  
Other
     4,225       22,024  
                 
Total Assets
   $ 2,238,252     $ 1,264,719  
                 
Liabilities & Stockholders' Equity (Deficit)
                
Current Liabilities
                
Accounts Payable
   $ 940,071     $ 914,907  
Accrued Expenses
     906,259       448,640  
Customer Deposits
     -       85,516  
Notes Payable-Shareholder
     467,171       8,983  
Total Current Liabilities
     2,313,501       1,458,046  
                 
Convertible Debenture
     1,300,000       1,300,000  
Total Liabilities
     3,613,501       2,758,046  
                 
Commitments & Contingencies
     -       -  
                 
Stockholders' Equity (Deficit)
                
Preferred Stock, $0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding
   $ -     $ -  
Common Stock, $0.001 par value, 60,000,000 shares authorized; 34,327,862 and 26,880,213 shares issued and outstanding, respectively.
     34,328       34,328  
Additional Paid-in Capital
     (1,259,524 )     (1,259,524 )
Accumulated Deficit
     (150,053 )     (268,131 )
Total Stockholders' Equity (Deficit)
     (1,375,249 )     (1,493,327 )
                 
Total Liabilities & Stockholders' Equity (Deficit)
   $ 2,238,252     $ 1,264,719  

The accompanying notes are an integral part of these financial statements

 
 
 
 
Cemtrex, Inc. and Subsidiary
Consolidated Statements of Operations
 
   
For the Year Ended September 30,
  
   
2008
    
2007
  
         
(restated)
  
             
Revenues
   $ 6,670,052     $ 5,847,663  
                 
Cost of Goods Sold
     4,039,810       3,954,097  
                 
Gross Profit
     2,630,243       1,893,566  
                 
Operating Expenses
     2,384,843       2,009,795  
                 
Operating Income (Loss)
     245,400       (116,229 )
                 
Other Income (Expense)
                
 Other Income
     36       36,446  
 Interest Expense
     (127,358 )     (43,782 )
 Total Other  Income (Expense)
     (127,322 )     ( 7,336 )
                 
Net Income (Loss) Before Income Taxes
     118,078       (123,565 )
                 
Provision for Income Taxes
     (46,050 )     -  
Extraordinary Item: Carryback Provision
     46,050          
Net Income (Loss)
   $ 118,078     $ (123,565 )
                 
Income (Loss) Per Share-Basic
   $ (0.00 )   $ (0.00 )
                 
Weighted Average Number of Shares
     30,308,147       30,308,147  

The accompanying notes are an integral part of these financial statements

 
Page 2 of 11
 
 
Cemtrex, Inc. and Subsidiary
Consolidated Statements of Stockholders' Equity (Deficit)

   
Preferred Stock
    
Common Stock
                    
   
Number of
Shares
    
Par Value
($0.001)
Amount
    
Number of
Shares
    
Par Value
($0.001)
Amount
    
Additional
Paid-In-
Capital
    
Accumulated
Deficit
    
Total
Stockholders'
Equity
(Deficit)
  
Balance at September 30, 2006
     -     $ -       26,880,213     $ 26,280     $ (1,679,976 )   $ (319,456 )   $ (1,973,152 )
Common Stock Issued to Investors for Cash
     -       -       7,447,649       7,448       371,052       -       378,500  
Net Income (Loss)
     -       -       -       -       -       (123,565 )     (123,565 )
Balance at September 30, 2007
     -     $ -       34,327,862       34,328       (1,259,524 )     (268,131 )     (1,493,327 )
Common Stock Issued to Investors for Cash
     -       -                               -          
Net Income (Loss)
     -       -       -       -       -       118,078       118,078  
Balance at September 30, 2008
     -     $ -       34,327,862       34,328     $ (1,259,524 )   $ (150,053 ))     (1,375,249 )

The accompanying notes are an integral part of these financial statements

 
Page 3 of 11
 

Cemtrex, Inc. and Subsidiary
Consolidated Statements of Cash Flows
 
   
For the Year Ended September 30,
  
   
2008
    
2007
  
 
        
(restated)
  
 Cash Flows from Operating Activities
                
 Net Income (Loss)
   $ 118,078     $ (123,565 )
                 
Adjustments to reconcile net loss to net cash used in operating activities:
                
Depreciation & Amortization
     33,143       12,708  
                 
Changes in operating assets and liabilities:
                
Accounts Receivable
     (747,757 )     (200,713 )
Inventory
     (204,124 )     (52,498 )
Prepaid Expenses & Other Assets
     ( 3,875 )     10,999  
Other Assets
     17,799       (22,024 )
Accounts Payable
     25,164       643,862  
Accrued Expenses
     457,619       448,640  
Customer Deposits
     (85,516 )     85,516  
                 
Net Cash Used in Operating Activities
     (389,469 )     802,925  
                 
Cash Flows from Investing Activities
                
Sale (Purchase) of Property and Equipment
     (151,939 )     (13,923 )
Cash Paid for Purchase of Griffin Filters
     -       (700,000 )
                 
Net Cash Used in Investing Activities
     (151,939 )     (713,923 )
                 
Cash Flows from Financing Activities
                
Net Loans from Shareholders
     458,188       (354,017 )
Common Stock Issued for Cash
     -       378,500  
                 
Net Cash Provided by Financing Activities
     458,188       24,483  
                 
Net Increase (Decrease) in Cash
     (83,220 )     113,485  
                 
Cash Beginning of Period
     143,830       30,345  
                 
Cash End of Year
   $ 60,610     $ 143,830  
                 
Supplemental Disclosure of Cash Flow Information:
                
Cash Paid during the period for interest
   $ -     $ -  
Cash Paid during the period for income taxes
     -       -  

The accompanying notes are an integral part of these financial statements

 
Page 4 of 11
 
 
CEMTREX, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
 
Note 1 – Organization, Business & Operations
 
Cemtrex, Inc. and its Subsidiary,  is engaged in manufacturing and selling the most advanced instruments for emission monitoring of particulate, opacity, mercury, sulfur dioxide, nitrogen oxides, etc. Cemtrex also provides turnkey services for carbon creation projects from abatement of greenhouse gases pursuant to Kyoto protocol and assists project owners in selling of carbon credits globally. The Company's products are sold to power plants, refineries, chemical plants, cement plants & other industries including federal and state Governmental agencies. Through its wholly-owned subsidiary Griffin Filters, the Company designs, manufactures and sells air filtration equipment and systems to control particulate emissions from a variety of industries.
 
Cemtrex, Inc. was incorporated as Diversified American Holding, Inc. on April 27, 1998. On December 16, 2004 the Company changed its name to Cemtrex, Inc. On April 30, 2007, Cemtrex, Inc. purchased, though a business combination, Griffin Filters, LLC (see Note 6 Business Combination and Related party Transactions).
 
Note 2 - Going Concern and Management's Plans
 
The Company's primary source of operating funds since inception has been provided through note and equity financing. The company intends to raise additional capital through private debt and equity investors. At September 30, 2008, the Company had a stockholders' deficit of $1,375,249 and a working capital deficit of $259,993.
 
Management has taken steps to improve the Company's liquidity by raising funds and seeking revenue sources through the development of products through which the Company may generate revenue. There can be no assurance that the Company will be successful in these endeavors and therefore may have to consider other alternatives.
 
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. However, the above matters raise substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
 
Note 3 - Summary of Significant Accounting Policies
 
Principles of Consolidation
 
The accompanying consolidated financial statements include the accounts of Cemtrex, Inc. and its wholly subsidiary Griffin Filters, LLC (collectively the “Company”). All significant inter-company accounts and transactions have been eliminated in consolidation.
 
The acquisition of Griffin Filters, LLC by Cemtrex, Inc. was treated as a business combination due to the fact that the acquired entity and purchased entity were owned by the same individual. Therefore, these consolidated financial statements have been retrospectively adjusted for all periods presented.
 
Use of Estimates
 
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
 
Cash and Cash Equivalents
 
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

 
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CEMTREX, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
Concentrations of Credit Risk - Cash
 
The Company maintains its cash with various financial institutions, which may exceed federally insured limits throughout the period.
 
Marketable Securities Available for Sale
 
The Company evaluates its investment policies and the appropriate classification of securities at the time of purchase consistent with Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain investments in Debt and Equity Securities," at each balance sheet date and determined that all of its investment securities are to be classified as available-for-sale. Available-for-sale securities are carried at fair value, with the unrealized gains and losses, net of tax, reported in stockholders' deficiency under the caption "Accumulated Other Comprehensive Loss". Realized gains and losses and declines in value judged to be other than-temporary on available-for-sale securities are included in net gain on sale of marketable securities. The cost of securities sold is based on the specific identification method.
 
Inventories
 
Inventories are comprised of replacement parts, system components and finished systems, which are stated at lower of cost or market. Cost is determined on a first-in, first-out (FIFO) basis.
 
Property and Equipment
 
Property and equipment are stated at cost and are depreciated using the straight-line method over their estimated useful lives, generally five to seven years. Leasehold improvements are amortized over the shorter of the useful life or the remaining lease term. Upon retirement or other disposition of these assets, the cost and related accumulated depreciation are removed from the accounts and the resulting gains or losses are reflected in operations. Expenditures for maintenance and repairs are charged to operations as incurred. Renewals and betterments are capitalized.
 
Impairment of long-lived assets
 
Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," and the accounting and reporting provisions of APB Opinion No. 30, "Reporting the Results of Operations for a Disposal of a Segment of a Business." The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with SFAS 144. SFAS 144 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal.
 
Basic and Diluted Net Income per Share
 
Basic earnings per share is calculated using the weighted-average number of common shares outstanding during the period without consideration of the dilutive effect of stock warrants and convertible notes. Diluted earnings per share is calculated using the weighted-average number of common shares outstanding during the period after consideration of the dilutive effect of stock warrants and convertible notes.

 
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CEMTREX, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
Revenue recognition
 
Sales of products and related costs of products sold are recognized when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred, (iii) the price is fixed or determinable and (iv) collectability is reasonably assured. These terms are typically met upon shipment of finished goods to the customer.
 
Allowance for doubtful accounts
 
We provide an allowance for estimated uncollectible accounts receivable balances based on historical experience and the aging of the related accounts receivable. As of September 30, 2008 and September 30, 2007 the Company has reserved $200,000 for doubtful accounts.
 
Advertising
 
The Company expenses advertising costs as incurred. There were no advertising costs for the periods ended September 30, 2008 and 2007, respectively.
 
Income Taxes
 
The Company accounts for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes.” Deferred taxes are provided on the liability method whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
 
Guarantee Expense
 
In accordance with FASB Interpretation No. 45 ("Fin 45"), the Company recognizes, at the inception of a guarantee, the cost of the fair value of the obligation undertaken in issuing the guarantee.
 
Research and development costs
 
Expenditures for research & development are expensed as incurred. Such costs are required to be expensed until the point that technological feasibility is established. The Company incurred no research and development costs for the periods ended September 30, 2008 and September 30, 2007.
 
Fair Value of Financial Instruments
 
The reported amounts of the Company's financial instruments, including accounts payable and accrued liabilities, approximate their fair value due to their short maturities. The carrying amounts of debt approximate fair value since the debt agreements provide for interest rates that approximate market.
 
Stock-based compensation
 
In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123(R), Share-Based Payment. This pronouncement amends SFAS No. 123, Accounting for Stock-Based Compensation , and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees . SFAS No. 123(R) requires that companies account for awards of equity instruments issued to employees under the fair value method of accounting and recognize such amounts in their statements of operations. Under SFAS No. 123(R), we are required to measure compensation cost for all stock-based awards at fair value on the date of grant and recognize compensation expense in our consolidated statements of operations over the service period that the awards are expected to vest.
 
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of SFAS 123(R) and the Emerging Issues Task Force consensus in Issue No. 96-18 ("EITF 96-18"), "Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring or in Conjunction with Selling, Goods or Services". Common stock issued to non-employees in exchange for services is accounted for based on the fair value of the services received.

 
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CEMTREX, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
Reclassifications
 
Certain items in the prior year financial statements have been reclassified for comparative purposes to conform to the presentation in the current period’s presentation. These reclassifications have no effect on the previously reported income (loss).
 
Recently Issued Accounting Pronouncements
 
In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (FAS 141(R)). This statement provides greater consistency in the accounting and financial reporting of business combinations. It requires the acquiring entity in a business combination to recognize all assets acquired and liabilities assumed in the transaction, establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed, and requires the acquirer to disclose the nature and financial effect of the business combination. FAS 141(R) is effective for fiscal years beginning after December 15, 2008. We will adopt FAS 141(R) no later than the first quarter of fiscal 2010 and are currently assessing the impact the adoption will have on our financial position and results of operations.
 
In December 2007, the FASB issued SFAS No. 160. Noncontrolling Interests in Consolidated Financial Statements (FAS 160). This Statement amends Accounting Research Bulletin No. 51, Consolidated Financial Statements, to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. FAS 160 is effective for fiscal years beginning after December 15, 2008. We will adopt FAS 160 no later than the first quarter of fiscal 2010 and are currently assessing the impact the adoption will have on our financial position and results of operations.
 
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities , which permits entities to choose to measure at fair value eligible financial instruments and certain other items that are not currently required to be measured at fair value. This statement requires that unrealized gains and losses on items for which the fair value option has been elected be reported in earnings at each subsequent reporting date. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. We will adopt SFAS No. 159 no later than the first quarter of fiscal 2009. We are currently assessing the impact the adoption of SFAS No. 159 will have on our financial position and results of operations.
 
In September 2006, the FASB issued SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132(R) . SFAS No. 158 requires company plan sponsors to display the net over or under-funded position of a defined benefit postretirement plan as an asset or liability, with any unrecognized prior service costs, transition obligations or actuarial gains/losses reported as a component of other comprehensive income in shareholders’ equity. SFAS No. 158 is effective for fiscal years ending after December 15, 2006. We adopted the recognition provisions of SFAS No. 158 as of the end of fiscal 2007. The adoption of SFAS No. 158 did not have an effect on the Company’s financial position or results of operations.
 
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements . SFAS No. 157 establishes a framework for measuring fair value in generally accepted accounting principles, clarifies the definition of fair value and expands disclosures about fair value measurements. SFAS No. 157 does not require any new fair value measurements. However, the application of SFAS No. 157 may change current practice for some entities. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. We will adopt SFAS No. 157 in the first quarter of fiscal 2009. We are currently assessing the impact that the adoption of SFAS No. 157 will have on our financial position and results of operations.

 
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CEMTREX, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
In July 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109 (FIN 48). This interpretation clarifies the application of SFAS No. 109, Accounting for Income Taxes , by defining a criterion that an individual tax position must meet for any part of the benefit of that position to be recognized in an enterprise’s financial statements and also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006, but earlier adoption is permitted. The Company is in the process of evaluating the impact of the application of the Interpretation to its financial statements.
 
Note 4 - Inventory
 
The Company values its inventory under the FIFO method of costing under the lower of cost or market pricing module. The Company reviews its product for old and or obsolete items and adjusts accordingly. The Company’s inventory consists of finished and raw material product.
 
Note 5 - Property and Equipment
 
At September 30, 2008 and September 30, 2007, property and equipment are comprised of the following:
 
   
September 30,
  
   
2008
    
2007
  
             
Furniture and Office Equipment
   $ 96,513     $ 96,513  
Computer Software
     4,550       4,550  
Machinery and Equipment
     151,939          
Less: Accumulated Depreciation
     (72,483 )     (39,340 )
                 
Net Property & Equipment
   $ 180,519     $ 60,508  
 
Depreciation for the periods ended September 30, 2008 and 2007 was $33,143 and $12,708, respectively.
 
Note 6 – Business Combination and Related Party Transactions
 
On April 30, 2007, the Company purchased, though a business combination, all of the issued and outstanding membership interests of Griffin Filters LLC, (“Griffin”) a company established since 1971 and engaged in the design, engineering & supplying of industrial air filtration equipment from its President. Aron Govil, the Chairman, Chief Executive Officer, Treasurer and President of the Company, was the owner of 100% of the issued and outstanding membership interests of Griffin. The Company purchased 100% ownership in Griffin for a purchase price of $ 2,750,000.00. The Company completed the Griffin purchase by (i) paying cash of $700,000.00, (ii) issuing 20,000,000 shares of common stock valued at $750,000.00 and (iii) issuing a four year convertible debenture in the amount of $1,300,000.00, paying interest of 8.0% per year and convertible into 30,000,000 shares of common stock. Griffin had sales and net income of $3,297,409 and $145, 981 respectively for fiscal year ended September 30, 2006. Griffin is now a wholly-owned subsidiary of the Company.
 
The Company recorded the combination of Griffin Filters, LLC as a “As is Pooling” because of the related party interest as follows:
 
Accounts Receivable
   $ 530,506  
Inventory
     49,668  
Property & Equipment, Net
     67,018  
Other Assets
     4,225  
Accounts Payable
     (600,348 )
Additional Paid-in-Capital
     2,698,931  
Total
   $ 2,750,000  

 
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CEMTREX, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
These consolidated financial statements have been retrospectively adjusted for all periods presented.
 
In addition the Company had the following related party transactions.
 
A)
Note payable to a shareholder at September 30, 2008 for $467,171. Includable in Accrued Expenses is Accrued Interest of $170,691.
 
B)
The Company, included in accounts receivable is an amount due from Ducon Technologies, for $225,263 representing also the sales for the year. Ducon is a enterprise owned by the majority stockholder of the Company.
 
C)
The Company leases space from Ducon Technologies a related party on a month to month basis.
 
Note 7 – Customer Deposits
 
The Company accounts for payments received prior to shipment as a liability and recognizes revenue when the products are shipped.
 
Note 8 – Note Payable Shareholder
 
A Note Payable to a shareholder is due upon demand  and accrues interest at 5%. Total interest accrued at September 30, 2008 is  $23,358 and is included in accrued expenses.
 
Note 9 – Convertible Debenture-Related Party
 
On April 30, 2007, the Company issued a $1,300,000 Convertible Debenture to an Officer of the Company in conjunction with the Purchase of Griffin Filters, Inc. The debenture caries an 8% annual interest rate with interest payable semiannually in arrears on the first business day of January and July each year. The debenture principle is due and payable on April 30, 2011. Total interest accrued is  $147,333 at September 30, 2008 and is included in accrued expenses.
 
The debenture has the right of conversion into non-assessable shares of common stock of the Company at $0.001 (par value) per share. Conversion is not exercisable prior to December 31, 2007. Commencing December 31, 2007 and continuing to April 30, 2011, the Debenture Holder shall have the right of conversion subject o the terms and conditions of the debenture. In the event the face amount of the debenture is not fully converted on or before April 30, 2011, the conversion rights will lapse.
 
Note 10 – Stockholders’ Equity
 
Preferred Stock
 
The Company is authorized to issue 10,000,000 shares of preferred stock, $0.001 par value. As of September 30, 2008 and 2007, there were no shares issued and outstanding.
 
Common Stock
 
The Company is authorized to issue 60,000,000 shares of common stock, $0.001 par value. As of September 30, 2008 and September 30, 2007, there were 34,327,862 shares issued and outstanding.
 
2008
 
There were no common stock transactions during the year ended September 30, 2008..

 
Page 10 of 11
 
 
CEMTREX, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
2007
 
For the year ended September 30, 2007, the Company issued 7,447,649 shares of Common Stock to investors for cash totaling $378,500.
 
In addition, the Company issued 20,000,000 shares of Common Stock to an Officer in conjunction with the acquisition of Griffin Filters totaling $750,000. ..
 
Note 11 – Commitments & Contingencies
 
Lease Obligations
 
The Company leases its principal office at Farmingdale, New York, 4000 square feet of office and warehouse/shop space in a single story commercial structure on a month to month lease from Ducon Technologies Inc., at a monthly rental of 2,157.
 
The Company’s subsidiary Griffin Filters LLC leases approx. 10,000 sq. ft. of office and warehouse space in Liverpool, New York from a third party in a five year lease at a monthly rent of $4,225 expiring on March 30, 2012.
 
Legal Proceedings
 
The Company is not currently involved in any lawsuits or litigation.
 
Note 12 - Subsequent Events
 
In October to December 2008, the company paid $622,877 of the related party note described in note 8 plus the accrued interest to September 30, 2008.
 
Note 13 - Restatement
 
The 2007 financial statements have been restated to reflect the combination with Griffin Filters, LLC (see Note 6), as a “As is Pooling”. This was required as both entities were under common ownership.
 
Note 14- Income Taxes
 
      In 2008 the Company has a provision for income taxes equal to 39% which has been reduced in full by net operating loss carry forwards resulting in a zero tax provision.

 
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