FORM 10-K/A
Amendment No.1
   
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
 
OF THE SECURITIES ACT OF 1934
   
 
For the fiscal year ended September 30, 2010

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 registrant 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
 (Registrant’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 if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes No x
 
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 ¨
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not 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-K or any amendment to this Form 10-K. ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer ¨
  
Accelerated filer ¨
     
Non-accelerated filer ¨
  
Smaller reporting company x
(Do not check if a smaller reporting company)
  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
 
As of December 23, 2010, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $4,192,523 based on the average bid and asked price of $0.04 on December 23, 2010.
 
As of December 23, 2010, the registrant had 40,111,324 shares of common stock outstanding.
 
Documents incorporated by reference: None.
 
EXPLANATORY NOTE
 
This Amendment No. 1 on Form 10-K/A (the “Amendment”) amends the Annual Report on Form 10-K of CEMTREX,INC. for the fiscal year ended September 30, 2010, originally filed with the Securities and Exchange Commission (“SEC”) on January 14, 2011 (the “Original Filing”). This Form 10-K/A does not attempt to modify or update any other disclosures set forth in the Original Filing.  There are no changes to the body of the Form 10K other than the discussion under “Controls and Procedures.” Additionally, this amended Form 10-K/A, except for the amended information, speaks as of the filing date of the Original Filing and does not update or discuss any other developments affecting us subsequent to the date of the Original Filing.
 
 
 
 
 
Index

 
 
Part I
  
 
Cautionary Statement Regarding Forward-Looking Statements
3
Item 1
Business
3
Item 1A
Risk Factors
11
Item 2
Properties
15
Item 3
Legal Proceedings
16
Item 4
(RESERVED AND REMOVED)
 
     
 
Part II
  
Item 5
Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
16
Item 6
Selected Consolidated Financial Data
17
Item 7
Management’s Discussion and Analysis of Financial Condition and Results of Operations
17
Item 7A
Qualitative and Quantitative Disclosures about Market Risk
21
Item 8
Financial Statements and Supplementary Data
21
Item 9
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
21
Item 9A
Controls and Procedures
21
Item 9B
Other Information
22
     
 
Part III
  
Item 10
Directors, Executive Officers and Corporate Governance
22
Item 11
Executive Compensation
23
Item 12
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
25
Item 13
Certain Relationships and Related Transactions, and Director Independence
26
Item 14
Principal Accounting Fees and Services
27
     
 
Part IV
  
Item 15
Exhibits and Financial Statements Schedules
28
 
 
2
 

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 through its MIP division to measure opacity, mercury, sulfur oxides, hydrocarbons, nitrogen oxides, ammonia, carbon dioxide and oxygen in flue gases discharging the stacks in industries such as:  chemicals,  pulp and paper, steel, power, cement, coal  and  petrochemical.   Cemtrex provides consulting services on projects that create carbon credits, and also markets technologies for controlling greenhouse gases such as Methane from coal mines. The Company sells energy efficiency product called Green DCV, which creates energy efficiency in an existing HVAC system in commercial and industrial facilities by monitoring carbon dioxide levels.  The Company sells air filtration and environmental control products through its subsidiary Griffin Filters Llc and Cemtrex India Pvt. Ltd.

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

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.  Our 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 provides consulting services and technologies for carbon credit projects from abatement of greenhouse gases  and assists project owners in 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. Company also markets MCDR technology for generating carbon credits from control of Methane from coal mines.

 
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The Company has recently developed an energy efficiency product line named Green DCV, which provides energy efficiency in HVAC systems for commercial buildings and industrial installations. Cemtrex’s Green-DCV system uses carbon dioxide (CO2) sensors to monitor CO2 levels inside a building, and then regulate the HVAC air-handling system to save energy and improve air quality. Cemtrex’s Green-DCV can provide significant energy savings in buildings where occupancy fluctuates during a 24-hour period, such as: office buildings, government facilities, shopping malls, movie theaters, restaurants & schools.

The Company through its subsidiary Griffin Filters provides a complete line of air filtration and environmental control equipment to industries such as: chemical, cement, steel, food, construction, mining, & petrochemical. Griffin’s equipment is used to: (i) remove dust, corrosive fumes, mists, hydrocarbons, volatile organic compounds, submicron particles and particulate from industrial exhausts and boilers; (ii) clean noxious and acid gases such as sulfur dioxide, hydrogen chloride, hydrogen sulfide, chlorides,  and  organics from  industrial exhaust stacks prior to discharging to the atmosphere; (iii) control emissions of coal, dust, sawdust, phosphates, flyash, cement, carbon black, soda ash, silica, etc. from construction facilities, mining operations and dryer exhausts. The Company has also set up a subsidiary Cemtrex India Private Ltd., in India to  sell environment control equipment & systems along with emission monitoring products to industrial clients in India and nearby countries.

INDUSTRY BACKGROUND

The market for environmental control systems and emission monitoring 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 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 9th 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 certain 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 by certain scientists 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.

 
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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.

 
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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 requirement, 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.

 
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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’s MIP division 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 MIP division’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.

 
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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 and 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. We believe 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.

Company also  markets an energy efficiency product line named Green DCV,  which provides  energy efficiency in HVAC systems for commercial buildings and industrial installations. Cemtrex’s Green-DCV system uses carbon dioxide (CO2) sensors to monitor CO2 levels inside a building, and then regulate the HVAC air-handling system to save energy and improve air quality. Cemtrex Green-DCV can provide significant   energy savings in buildings where occupancy fluctuates during a 24-hour period, such as: office buildings, government facilities, shopping malls, movie theaters, restaurants & schools.

The Company through its subsidiary, Griffin Filters, provides a complete line of air filtration and environmental control equipment to industries such as: chemical, cement, steel, food, construction, mining, & petrochemical. Griffin’s equipment is used to: (i) remove dust, corrosive fumes, mists, hydrocarbons, volatile organic compounds, submicron particles and particulate from industrial exhausts and boilers; (ii) clean noxious and acid gases such as sulfur dioxide, hydrogen chloride, hydrogen sulfide, chlorides,  and  organics from  industrial exhaust stacks prior to discharging to the atmosphere; (iii) control emissions of coal, dust, sawdust, phosphates, flyash, cement, carbon black, soda ash, silica, etc. from construction facilities, mining operations and dryer exhausts.

SUPPLIERS

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 its design, engineering and specifications. The Company also enters into subcontracts for field installation, which the Company supervises; and the 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 provide  replacement  and spare  parts  and  repair  and  refurbishment services for our emission monitoring systems following the expiration of our 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 our 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.

 
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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 our 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 us 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 our 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 our  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.

 
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TECHNOLOGY

The Company has developed a broad range of emission monitoring technological base.  The Company’s equipment and instruments are used to measure: (i) particulate, carbon dioxide, nitrogen oxides, mercury and sulfur dioxide from coal-fired power plants, (ii) particulate from cement plants, (iii) hydrocarbons, particulate and sulfur dioxide from refineries, (iv) 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.  Company also markets technologies for control of Methane from coal mines and creating energy efficiency in HVAC systems through monitoring of carbon dioxide for commercial buildings and industrial installations.  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.

 
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EMPLOYEES

The Company employs twelve (12) full time and four part time employees, consisting of three executive officers, three managers, four (4) technical engineers, and two 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 $ 2,850.00 expiring on March 30, 2012.  The Company’s Indian subsidiary leases approx. 5000 sq. ft. of office and warehouse space in Mumbai, India from a third party on a month to month basis at a monthly rent of $570.  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 1A.      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-K, 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 a loss  for the fiscal year ending September 30, 2010, and we may not incur profit for the foreseeable future.
 
 
11
 
 
We had net loss of $1,028,602 for the year ended September 30, 2010 and a net loss of $155,010 for the fiscal year ended September 30, 2009. We 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.  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 whether we will be able to maintain our profitability.

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.

 
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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.

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.

 
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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, 2011, 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 by selling Company shares. 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 substantially diluted.

o Our stock trades on the Over the Counter Bulletin Board quotation system.

The Company’s Common Stock currently trades on the Over the Counter Bulletin Board electronic quotation system under the symbol “CTEI.OB”. The Over the Counter Bulletin Board 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.
 
 
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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 65% of our outstanding voting equity is beneficially held by Arun Govil the Company’s Chairman, Chief executive officer, President and Treasurer as a result of Mr. Govil’s common stock and Series A preferred stock ownership.  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 makes 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 $ 2,850.00 expiring on March 30, 2012.  The Company’s Indian subsidiary leases approx. 5000 sq. ft. of office and warehouse space in Mumbai, India from a third party on a month to month basis at a monthly rent of $570.  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.

 
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ITEM 3.
LEGAL PROCEEDINGS

 
None.
 
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 Over the Counter Bulletin Board electronic quotation system under the symbol “CTEI.OB”.

As of December 23, 2010, there were approximately 93 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.
 
The Company is authorized to issue 60,000,000 shares of common stock, $0.001 par value per share.   On December 23, 2010, there were 40,111,324 shares of common stock issued and outstanding and 1,000,000 shares of Series A preferred stock issued or outstanding.

The Company's Common Stock trades on the over-the-counter bulletin board trading system.  The price ranges presented below represent the highest and lowest quoted bid prices during the third and fourth calendar quarters for 2008, 2009 and 2010 reported by the exchange. 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
  
   
4th Quarter
   $ 0.13     $ 0.02  
   
3rd Quarter
   $ 0.198     $ 0.10  
   
2nd Quarter
   $ 0.44     $ 0.14  
2010
  
1st Quarter
   $ 0.50     $ 0.24  
   
4nd Quarter
   $ 0.53     $ 0.24  
   
3rd Quarter
   $ 0.64     $ 0.45  
   
2th Quarter
   $ 0.75     $ 0.17  
2009
  
1st Quarter
   $ 0.22     $ 0.008  
   
4nd Quarter
   $ 0.02     $ 0.004  
   
3rd Quarter
   $ 0.031     $ 0.015  
   
2rd Quarter
   $ 0.032     $ 0.006  
2008
  
1th Quarter
   $ 0.014     $ 0.004  

As reported by the over-the-counter Pink Sheets, on December 23, 2010 the closing sales price of the Company’s Common Stock was $0.04 per share.
 
 
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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.
SELECTED FINANCIAL DATA

Not required for Smaller Reporting Companies

ITEM 7.
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, Inc is an environmental & energy efficiency technologies company engaged in  manufacturing and selling  instruments for emission monitoring of particulate, opacity, mercury, sulfur dioxide, nitrogen oxides, etc. and filtration products for the industry.  Company also markets Green DCV, an innovative energy efficiency solution for high-quality green building applications, through optimizing HVAC control systems.  Cemtrex provides technologies and services for abatement of greenhouse gases pursuant to the Kyoto Protocol and assists customers in developing carbon credits projects globally.  The Company's Griffin Filters subsidiary sells air filtration and environmental control products  to power plants, refineries, chemical plants, cement plants and other industries, including federal and state governmental agencies.
 
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, 2010

   
Year Ended September 30,
  
   
2010
    
2009
  
Revenues
   $ 3,304,055     $ 6,967,992  
Operating Expenses
   $ 2,393,496     $ 2,634,071  
Net Income (Loss)
   $ (1,028,602 )   $ 155,010  
Net Income (Loss) Per Common Share,
   $ (0.03 )   $ 0.00  
Basic and Diluted
   $ (0.03 )        
Weighted Average Number of Shares
     39,772,862       36,397,337  
                 
   
September 30,
  
   
2010
    
2009
  
Current Assets
   $ 1,164,757     $ 1,654,119  
Total Assets
   $ 1,231,255     $ 1,743,482  
Total Liabilities
   $ 2,147,651     $ 1,655,196  
Total Stockholders’ Equity(Deficit)
   $ (916,396 )   $ 88,286  

 
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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.
 
 
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RESULTS OF OPERATIONS
 
Net Sales:. Net sales for 2010 decreased by $3,663,937 or 110.89%, to $3,304,055., from $6,967,992 in 2009. Sales decreased during the year of 2010 primarily due to overall slow economic conditions and overall decreased in market demand during the year.
 
Gross Profit: Gross profits  for 2010 decreased $1,508,531 or 108.38%  to $1,391,784, which was 45.65% of net sales, from $6,967,992in 2009, which was  41.63% of  net sales. The decrease in gross margin in 2010 was a direct results of  low margin  contracts executed by Cemtrex and Griffin Filters. In 2009, the higher gross margin was a result of high margin  projects executed  by Cemtrex and Griffin Filters.,
 
Operating Expenses: Operating expenses for 2010 decreased $240,575 or 10.05%, to $2,393,496 from $2,634,071 in 2009. Operating expenses as percentage of sales increased in 2010 to 72.44% to 37.80% in 2009. The increase in  operating expenses percentage was primarily due to lower sales in 2010 as compared to 2009. The 10.05% decrease in operating expenses in 2010 was due to reduced work force  as result of poor market conditions.
 
Net Income/Loss: The Company had a net loss of $1,028,602 as compared to net income of $155,010 in 2009 after provision of income tax of $ 3,445.The net loss in 2010 was a result of several factors including (1)decrease in sales,(2) Uncollectable receivables on a disputed contract of $488, 237 charged to bad debts (3) Low gross margin projects booked and executed due to poor market conditions and overall economy.
 
Provision for Income Taxes: No income tax provision to due Net operating loss in 2010
 
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 ($188,465) at September 30, 2010, compared to $389,443 at September 30, 2009. This included cash and cash equivalents of $41,139 and $356,552 at September 30,2010 and 2009, respectively.
 
Trade receivables decreased  by $216,847 or 29.62% ,at  September 30,2010 to $731,968 from $948,815 as at September 30, 2009.The decrease in accounts receivable is attributable to  change of terms of contract and shipments date and low sales volume. .
 
Inventories increased  $53,526 or 13.80% to $387,628 at September 30,2010 from $ 334,102 as at September 30, 2009.The increase inventory was due to relatively more purchase of inventory and less shipments of  ongoing  jobs and contracts.
 
 Continuing operations used ( $968,932) of cash for the fiscal year ended September 30,2010, compared to using $374,225 of cash for the fiscal year ended September 30,2009. 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 $390 of cash during 2010, compared to providing $10,157 during 2009. The Financing activities in 2010 generated $ 653,909.
 
 
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We believe that our cash on hand, cash generated by operations, is sufficient to meet the capital demands of our current operations during 2011 fiscal year. Any major increases in sales, big contract with high margin especially in new products, may require substantial capital investment. Failure to obtain sufficient capital could materially impact of growth potential.
 
Outlook
 
We anticipate that the outlook for our products and services remains fairly 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. We currently also notice increased nationwide concern on energy efficiency and hence anticipate that there will be greater interest in our Green DCV products.
 
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.
 
 
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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-K will in fact occur.
 
ITEM 7A. 
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The response to this item is included in “Item 1A Risk Factors” .
 
ITEM 8. 
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 9.
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 9A. 
CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures.

Our management evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer (Principal Executive Officer) and Vice President of Finance (Principal Financial Officer), concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective such that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our Chief Executive Officer (Principal Executive Officer) and Vice President of Finance (Principal Financial Officer), as appropriate to allow timely decisions regarding disclosure.  

The evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer (Principal Executive Officer) and Vice President of Finance (Principal Financial Officer), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, our management, including our Chief Executive Officer (Principal Executive Officer) and Vice President of Finance (Principal Financial Officer), concluded that the design and operation of these disclosure controls and procedures were effective at the reasonable assurance level.
 
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, 2010 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.

 
21
 
 
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, 2010 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
 
ITEM  9B.     OTHER INFORMATION
 
Not applicable.
PART III
ITEM 10.       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
  
55
  
President, Chief Executive Officer, Treasurer, and Chairman of the Board of Directors
         
Renato Dela Rama
19 Engineers Lane
Farmingdale, New York 11735
  
62
  
Vice President of Finance and Director
         
Ravi Narayan
19 Engineers Lane
Farmingdale, New York 11735
  
51
  
Vice President of MIP Division and Director
 
Saagar Govil
19 Engineers Lane
Farmingdale, New York 11735
  
24
  
Director
 
 
22
 
 
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 also works as an accountant for 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.

Ravi Narayan has been with the Company since 2002 as general manager of MIP Division. In 2009 he became Vice president of the Company’s MIP Division. From 1993 to 2001 Mr. Narayan worked as a Technical manager at Procal UK Ltd. Mr. Narayan has a BE in Electronic and Instrument Engineering and an MBA in Business administration.

Saagar Govil has been with the Company since July 2008 as General Manager of operations. Saagar Govil has a B.S. in Materials Engineering from Stony Brooke University, N.Y.  Saagar Govil is the son of Arun Govil.

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 11.       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.

 
23
 
 
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 23, 2010, 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, 2008, 2009 and 2010 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
  
       
ANNUAL COMPENSATION TABLE
    
COMPENSATION AWARDS
  
NAME AND PRINCIPAL                         
SECURITIES UNDERLYING
  
POSITION
  
YEAR
  
SALARY
    
BONUS
    
OTHER
    
OPTIONS/SARS
  
                             
Arun Govil
  
2008
   $ 125,000     $ 0     $ 0       —  
Chairman, Chief Executive
  
2009
   $ 150,000     $ 0     $ 0       —  
Officer and Treasurer and
  
2010
   $ 115,482     $ 0     $ 0       —  
President
                                    
                                     
Ravi Naravan
  
2008
   $ —       —       —         —  
Vice President, Director
  
2009
   $ 110,577     $ 0     $ 0       —  
   
2010
   $ 92,456     $ 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 carried 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 was due and payable on April 30, 2011.

The debenture had 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 had the right of conversion subject to the terms and conditions of the debenture. In the event the face amount of the debenture was not fully converted on or before April 30, 2011, the conversion rights will lapse.

 
24
 
 
On September 8, 2009, the Company entered into a letter agreement with Arun Govil, the Chairman, Chief Executive Officer, Treasurer and President of the Company. Pursuant to the letter agreement Arun Govil agreed to cancel the convertible promissory note, held by him, dated April 30, 2007 (the " Note ").  The principal balance of the Note was $1,300,000. Pursuant to the terms of the Note, the outstanding amount was convertible into 30,000,000 shares of our common stock. Pursuant to the letter agreement, in return for cancelling the Note, the Company issued Arun Govil 2,500,000 shares of our common stock and 1,000,000 shares of our Series A Preferred Stock.  Pursuant to the Certificate of Designation of the Preferred Stock, each issued and outstanding Preferred Stock shall be entitled to the number of votes equal to the result of: (i) the number of shares of Common Stock issued and outstanding at the time of such vote multiplied by 1.01; divided by (ii) the total number of Preferred Stock issued and outstanding at the time of such vote, at each meeting of shareholders of the Company with respect to any and all matters presented to the shareholders of the Company for their action or consideration, including the election of directors. In consideration of the issuance of the Common Stock and Preferred Stock described above, Mr. Govil agreed to forfeit 27,500,000 shares of our common stock issuable as per the original terms of the Note.

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

None.

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 23, 2010 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 23, 2010, 40,111,324 shares of common stock are issued and outstanding.  Applicable percentage ownership in the following table is based on 40,111,324 shares of common stock outstanding as of December 23, 2010.(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 23, 2010 are deemed outstanding. Such shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person.
 
 
25
 
 
 
Name and Address of Owner
  
Title
  
Amount Owned
    
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
     25,430,000
(2)(3)
     64.0  
Preferred Stock
  
Arun Govil
19 Engineers Lane
Farmingdale, New York 11735
  
President ,Chief Executive Officer and Chairman of the Board
     1,000,000
(2)
     -  
Common Stock
  
Renato Dela Rama
19 Engineers Lane
Farmingdale, New York 11735
  
Vice President and Director
     400,000       1.0  
Common Stock
  
Ravi Narayan
19 Engineers Lane
Farmingdale, New York 11735
  
Vice President and Director
     800,000       2.0  
Common  Stock
  
 Saagar Govil
19 Engineers Lane
Farmingdale, New York 11735
  
Secretary & Director
     3,000,000       7.6  
Common Stock
  
All directors and executive officers as a group (4 persons)
         29,630,000       74.6  
 
 
(1)
Except as otherwise noted herein, the percentage is determined on the basis of 39,722,862 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)
The Series A Preferred Stock issued by the Company to Arun Govil the Company’s Chairman, CEO, President and Treasurer in conjunction with the settlement of the debenture issued as consideration for the purchase of Griffin Filters, Inc. Pursuant to the Certificate of Designation of the Preferred Stock, each issued and outstanding Preferred Stock shall be entitled to the number of votes equal to the result of: (i) the number of shares of Common Stock issued and outstanding at the time of such vote multiplied by 1.01; divided by (ii) the total number of Preferred Stock issued and outstanding at the time of such vote, at each meeting of shareholders of the Company with respect to any and all matters presented to the shareholders of the Company for their action or consideration, including the election of directors. The shares of Series A Preferred Stock represent 100% of the total Series A Preferred Stock issued and outstanding.
 
 
(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.
 
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

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.

 
On September 8, 2009, the Company entered into a letter agreement with Arun Govil, the Chairman, Chief Executive Officer, Treasurer and President of the Company. Pursuant to the letter agreement Arun Govil agreed to cancel the convertible promissory note, held by him, dated April 30, 2007 (the " Note ").  The principal balance of the Note was $1,300,000. Pursuant to the terms of the Note, the outstanding amount was convertible into 30,000,000 shares of our common stock. Pursuant to the letter agreement, in return for cancelling the Note, the Company issued Arun Govil 2,500,000 shares of our common stock and 1,000,000 shares of our Series A Preferred Stock.  Pursuant to the Certificate of Designation of the Preferred Stock, each issued and outstanding Preferred Stock shall be entitled to the number of votes equal to the result of: (i) the number of shares of Common Stock issued and outstanding at the time of such vote multiplied by 1.01; divided by (ii) the total number of Preferred Stock issued and outstanding at the time of such vote, at each meeting of shareholders of the Company with respect to any and all matters presented to the shareholders of the Company for their action or consideration, including the election of directors. In consideration of the issuance of the Common Stock and Preferred Stock described above, Mr. Govil agreed to forfeit 27,500,000 shares of our common stock issuable as per the original terms of the Note.

 
26
 
 
Ducon Technologies, Inc. is owned 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 an accountant with Ducon Technologies Inc.
 
Saagar Govil, Vice President, is the son of  Arun Govil the Chairman, Chief Executive Officer, Treasurer and President of the Company.
 
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, 2010 and September 30, 2009 by Gruber & Company, LLP, our independent auditors for the fiscal years ended September 30, 2010 and 2009:
 
 
 2009
  
2010
  
         
Audit Fees
31,000
   $ 33,000  
Audit-Related Fees
       $ 1,546.20  
Tax Fees
     $    
Other Fees
     $    
Totals
31,000
   $ 34,546.20  

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 2010 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, LLP 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.

 
 
27
 
 
PART IV

 
ITEM 15.       EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 
 
(a)
Financial Statements
 
29
   
Audited Consolidated Balance Sheets as of September 30, 2010 and September 30, 2009
30
   
Audited Consolidated Statements of Operations for the Year Ended September 30, 2010 and 2009
31
   
Audited Consolidated Statements of Stockholders’ Equity (Deficit) for the Years Ended September 30, 2010, and 2009
32
   
Audited Consolidated Statements of Cash Flows for the Year Ended September 30, 2010 and 2009
33
   
Notes to Audited Consolidated Financial Statements
34
 
 
28
 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
THE BOARD OF CEMTREX, INC.
 
We have audited the accompanying consolidated balance sheet of Cemtrex, Inc. and Subsidiary as of September 30, 2010 and 2009, and the related consolidated statements of operations, stockholders equity and cash flows for the periods 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 consolidated financial position of Cemtrex, Inc. and Subsidiary at September 30, 2010 and 2009, and the results of its’ consolidated operations and its’ consolidated stockholders equity and consolidated cash flows for the periods 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
 
Saint Louis, Missouri
 
January 6, 2011

 
29
 
  
Cemtrex, Inc. and Subsidiary
Consolidated Balance Sheets
 
   
September 30,
  
   
2010
    
2009
  
Assets
            
Current Assets
            
Cash & Equivalents
   $ 41,139     $ 356,552  
Accounts Receivable
     731,968       948,815  
Inventory
     387,628       334,102  
Prepaid Expenses & Other Assets
     4,022       14,650  
Total Current Assets
     1,164,757       1,654,119  
                 
Property & Equipment, Net
     62,273       85,138  
Other
     4,225       4,225  
                 
Total Assets
   $ 1,231,255     $ 1,743,482  
                 
Liabilities & Stockholders' Equity (Deficit)
                
Current Liabilities
                
Accounts Payable
   $ 911,840     $ 876,799  
Accrued Expenses
     191,382       387,877  
Note Payable - Bank
     250,000          
Notes Payable-Shareholder
     -       -  
Total Current Liabilities
     1,353,222       1,264,676  
                 
Non-Current Liabilities
                
Notes Payable-Shareholder
     738,491       390,520  
Convertible Debenture
     55,938       -  
Total Non-Current Liabilities
     794,429       390,520  
                 
Total Liabilities
   $ 2,147,651     $ 1,655,196  
                 
Commitments & Contingencies
     -       -  
                 
Stockholders' Equity (Deficit)
                
Preferred Stock Series A, $0.001 par value, 10,000,000 shares authorized,
                
1,000,000 shares issued and outstanding, respectively
   $ 1,000     $ 1,000  
Common Stock, $0.001 par value, 60,000,000 shares authorized,
                
39,822,862 and 39,722,862 shares issued and outstanding, respectively
     39,823       39,723  
Additional Paid-in Capital
     66,506       42,606  
Retained Earnings (Accumulated Deficit)
     (1,023,725 )     4,957  
Total Stockholders' Equity (Deficit)
     (916,396 )     88,286  
                 
Total Liabilities & Stockholders' Equity (Deficit)
   $ 1,231,255     $ 1,743,482  
 
The accompanying notes are an integral part of these financial statements

 
 
30
 
 
Cemtrex, Inc. and Subsidiary
Consolidated Statements of Operations
 
   
For the Twelve Months Ended
  
   
September 30,
  
   
2010
    
2009
  
             
Revenues
   $ 3,304,055     $ 6,967,992  
                 
Cost of Goods Sold
     1,912,271       4,067,677  
                 
Gross Profit
     1,391,784       2,900,315  
                 
Operating Expenses
                
Research and Development
     -       5,535  
General and Administrative
     2,393,496       2,628,536  
Total Operating Expenses
     2,393,496       2,634,071  
                 
Operating Income (Loss)
     (1,001,712 )     266,244  
                 
Other Income (Expense)
                
Other Income
     -       -  
Interest Expense
     (26,970 )     (107,789 )
Total Other  Income (Expense)
     (26,970 )     (107,789 )
                 
Net Income (Loss) Before Income Taxes
     (1,028,682 )     158,455  
                 
Provision for Income Taxes
     -       (3,445 )
                 
Net Income (Loss)
   $ (1,028,602 )   $ 155,010  
                 
Income (Loss) Per Share-Basic
   $ (0.03 )   $ 0.00  
Income (Loss) Per Share-Diluted
   $ (0.03 )   $ 0.00  
                 
Weighted Average Number of Shares-Basic
     39,772,862       36,397,337  
Weighted Average Number of Shares-Diluted
     39,772,862       37,397,337  
 
The accompanying notes are an integral part of these financial statements

 
 
31
 
 
Cemtrex, Inc. and Subsidiary
Consolidated Statements of Cash Flows
 
   
For the Twelve Months Ended
  
   
September 30,
  
   
2010
    
2009
  
Cash Flows from Operating Activities
            
Net Income (Loss)
   $ (1,028,682 )   $ 155,010  
                 
Adjustments to reconcile net loss to net cash used in operating activities:
                
Depreciation & Amortization
     23,255       33,296  
Common stock issued for services
     24,000          
Changes in operating assets and liabilities:
                
Accounts Receivable
     216,847       579,416  
Inventory
     (53,526 )     122,465  
Prepaid Expenses & Other Assets
     10,628       (6,550 )
Other Assets
     -       -  
Accounts Payable
     35,041       8,970  
Accrued Expenses
     (196,495 )     (518,382 )
                 
Net Cash Used in Operating Activities
     (968,932 )     374,225  
                 
Cash Flows from Investing Activities
                
Purchase of Property and Equipment
     (390 )     (10,157 )
                 
Net Cash Used in Investing Activities
     (390 )     (10,157 )
                 
Cash Flows from Financing Activities
                
Proceeds from bank loan
     250,000          
Net Loans from Shareholders
     347,971       (76,651 )
Proceeds from convertible debenture
     55,938          
Common Stock Issued for Cash
     -       8,525  
                 
Net Cash Provided by Financing Activities
     653,909       (68,126 )
                 
Net Increase (Decrease) in Cash
     (315,413 )     295,942  
                 
Cash Beginning of Period
     356,552       60,610  
                 
Cash End of Period
   $ 41,139     $ 356,552  
                 
Supplemental Disclosure of Cash Flow Information:
                
Cash Paid during the period for interest
   $ -     $ -  
Cash Paid during the period for income taxes
     -       -  
                 
Supplemental Disclosure of Non-Cash Items:
                
Shares Issued for Conversion of Convertible Debt
   $ -     $ 1,300,000  
Equipment Sold in Exchange for Reduction in Accounts Payable
     -       72,242  
 
The accompanying notes are an integral part of these financial statements
 
 
32
 
 
Cemtrex, Inc. and Subsidiary
Consolidated Statements of Stockholders' Equity (Deficit)
 
   
Preferred Stock-Series A
    
Common Stock
                    
   
Number of
Shares
    
Par Value
($0.001) Amount
    
Number of
Shares
    
Par Value
($0.001) Amount
    
Additional Paid-In
Capital
    
Retained
Earnings
(Accumulated
Deficit)
    
Total
Stockholders'
Equity (Deficit)
  
Balance at September 30, 2008
     -     $ -       34,327,862     $ 34,328     $ (1,259,524 )   $ (150,053 )   $ (1,375,249 )
Shares Issued for Conversion of Convertible Debt
     1,000,000       1,000       2,500,000       2,500       1,296,500       -       1,300,000  
Shares Issued for Cash
     -       -       2,895,000       2,895       5,630       -       8,525  
Net Income
     -       -       -       -       -       155,010       155,010  
Balance at September 30, 2009
     1,000,000     $ 1,000       39,722,862     $ 39,723     $ 42,606     $ 4,957     $ 88,286  
Shares Issued for Services
                     100,000     $ 100     $ 23,900             $ 24,000  
Net loss
                                           $ (1,028,682 )   $ (1,028,682 )
Balance at September 30, 2010
     1,000,000       1,000       39,822,862       39,823       66,506       (1,023,725 )     (916,396 )
 
The accompanying notes are an integral part of these financial statements
 
 
33
 
 
Cemtrex Inc. and Subsidiaries
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
Note 1 – Organization, Business & Operations
 
Cemtrex, Inc. and its wholly-owned subsidiary Griffin Filters, LLC (collectively the “Company”), 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. 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 in a variety of industries. The Company has also set up a subsidiary Cemtrex India Pvt. Ltd., located in Mumbai, India to sell emission monitors and related industrial equipment.
 
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. acquired Griffin Filters, LLC (see Note 5 – Business Combination and Related Party Transactions).
 
   Note 2 - Going Concern and Management's Plans
 
The accompanying consolidated financial statements have been prepared in conformity with generally accepted   accounting principles which contemplate continuation of the company as a going concern. However, as of September 30, 2010, the Company has an accumulated deficit of $1,023,725 and has incurred a loss for the year ended September 30, 2010  totaling $1,028,682. The Company’s current business plan requires additional funding beyond its anticipated cash flows from operations. These and other factors raise substantial doubt about the Company's ability to continue as a going concern.
 
The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital and achieve profitable operations. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is 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.
 
 Accounting Method
 
The Company’s financial statements are prepared using the accrual method of accounting. The Company has elected a September 30 year-end.
 
Cash and cash equivalents
 
The Company considers all liquid investments with a maturity of three months or less from the date of purchase that are readily convertible into cash to be cash equivalents.
 
Concentrations of Credit Risk - Cash
 
The Company maintains its cash with various financial institutions, which may exceed federally insured limits throughout the period.
 
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.

 
34
 

Cemtrex Inc. and Subsidiaries
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
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 asset
 
The Company reviews its long-lived assets and identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. When such factors and circumstances exist, management compares the projected undiscounted future cash flows associated with the future use and disposal of the related asset or group of assets to their respective carrying values. Impairment, if any, is measured as the excess of the carrying value over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. During fiscal years ended September 30, 2010 and 2009, the Company recorded $0 impairment loss on long-lived assets.
 
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.
 
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, 2010 and 2009, the Company has reserved $100,000 and $200,000 respectively for doubtful accounts.
 
Advertising
 
The Company expenses advertising costs as incurred. The Company incurred $25,450 and $47,352 in advertising costs for the years ended September 30, 2010 and 2009, respectively.
 
Income Taxes
 
The Company accounts for income taxes under the provisions of FASB ASC 740, “Income Taxes”, formerly referenced as SFAS No. 109, “Accounting for Income Taxes”. Under the provisions of FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between their financial statement carrying values and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
 
Significant judgment is required in determining any valuation allowance recorded against deferred tax assets. In assessing the need for a valuation allowance, the Company considers all available evidence including past operating results, estimates of future taxable income, and the feasibility of tax planning strategies. In the event that the Company changes its determination as to the amount of deferred tax assets that can be realized, the Company will adjust its valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made.

 
35
 

Cemtrex Inc. and Subsidiaries
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
   
September 30,
  
   
2010
    
2009
  
Current Taxes
            
U.S. Federal
   $ -     $ 53,875  
                 
U.S. State and Local
     -       11,092  
Current Taxes
     -       64,967  
                 
Deferred Tax Asset
     (421,760 )     (61,522 )
Deferred Tax Valuation Allowance
     421,760       -  
    $ -     $ 3,445  
 
   
September 30,
  
   
2009
    
2008
  
             
Statutory Federal Tax (Benefit) Rate
     34.0 %     34.0 %
Statutory State Tax (Benefit) Rate
     7.0 %     7.0 %
Effective Tax (Benefit) Rate
     41.0 %     41.0 %
                 
Valuation Allowance
     41.0 %     -38.8 %
                 
Effective Income Tax
     -       2.2 %
 
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 expenses as incurred. Such costs are required to be expensed until the point that technological feasibility is established. The Company incurred $0 and $5,535 research and development costs for the years ended September 30, 2010 and 2009, respectively which were expensed.
 
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
 
The Company records compensation expense associated with stock options and other forms of employee and non-employee equity compensation in accordance with FASB ASC 718, “Compensation – Stock Compensation”, formerly referenced as SFAS 123R, “Share-Based Payment”. The Company estimates the fair value of stock options granted using the Black-Scholes-Merton option-pricing formula and a single option approach. This fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period.

 
36
 

Cemtrex Inc. and Subsidiaries
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
During fiscal years ended September 30, 2010 and 2009, the Company incurred $0 in stock-based compensation expense.
 
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 February 2010, FASB issued ASU 2010-9 Subsequent Events (Topic 855) Amendments to Certain Recognition and Disclosure Requirements ("ASU 2010-9"). ASU 2010-9 amends disclosure requirements within Subtopic 855-10. An entity that is an SEC filer is not required to disclose the date through which subsequent events have been evaluated. This change alleviates potential conflicts between Subtopic 855-10 and the SEC's requirements. ASU 2010-9 is effective for interim and annual periods ending after June 15, 2010. The Company does not expect the adoption of ASU 2010-09 to have a material impact on its consolidated results of operations or financial position.
 
 
·
In January 2010, FASB issued ASU 2010-6 Improving Disclosures about Fair Measurements ("ASU 2010-6"). ASU 2010-6 provides amendments to subtopic 820-10 that require separate disclosure of significant transfers in and out of Level 1 and Level 2 fair value measurements and the presentation of separate information regarding purchases, sales, issuances and settlements for Level 3 fair value measurements. Additionally, ASU 2010-6 provides amendments to subtopic 820-10 that clarify existing disclosures about the level of disaggregation and inputs and valuation techniques. ASU 2010-6 is effective for financial statements issued for interim and annual periods ending after December 15, 2010. The Company does not expect the adoption of ASU 2010-06 to have a material impact on its consolidated results of operations or financial position.
 
 
·
In January 2010, FASB issued ASU 2010-2 Accounting and Reporting for Decreases in Ownership of a Subsidiary- a Scope Clarification ("ASU 2010-2"). ASU 2010-2 addresses implementation issues related to the changes in ownership provisions in the Consolidation—Overall Subtopic (Subtopic 810-10) of the FASB Accounting Standards Codification, originally issued as FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements. Subtopic 810-10 establishes the accounting and reporting guidance for noncontrolling interests and changes in ownership interests of a subsidiary. An entity is required to deconsolidate a subsidiary when the entity ceases to have a controlling financial interest in the subsidiary. Upon deconsolidation of a subsidiary, an entity recognizes a gain or loss on the transaction and measures any retained investment in the subsidiary at fair value. The gain or loss includes any gain or loss associated with the difference between the fair value of the retained investment in the subsidiary and its carrying amount at the date the subsidiary is deconsolidated. In contrast, an entity is required to account for a decrease in ownership interest of a subsidiary that does not result in a change of control of the subsidiary as an equity transaction. ASU 2010-2 is effective for the Company starting July 1, 2010. The Company does not expect the adoption of ASU 2010-2 to have a material impact on the Company's consolidated results of operations or financial position.
 
 
37
 

Cemtrex Inc. and Subsidiaries
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
·
In December 2009, FASB issued ASU 2009-17 Consolidations (Topic 810) Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities ("ASU 2009-17"). ASU 2009-17 amends the FASB ASC for the issuance of FASB Statement No. 167, Amendments to FASB Interpretation No. 46(R). The amendments in ASU 2009-17 replace the quantitative-based risks and rewards calculation for determining which enterprise, if any, has a controlling financial interest in a variable interest entity with an approach focused on identifying which enterprise has the power to direct the activities of a variable interest entity that most significantly impact the entity's economic performance and (1) the obligation to absorb losses of the entity or (2) the right to receive benefits from the entity. ASU 2009-17 also requires additional disclosures about an enterprise's involvement in variable interest entities. ASU 2009-17 is effective as of the beginning of each reporting entity's first annual reporting period that begins after November 15, 2009. The Company does not expect the adoption of ASU 2009-17 to have a material impact on its consolidated results of operations or financial position.
 
 
·
In December 2009, FASB issued ASU 2009-16 Transfers and Servicing (Topic 860) Accounting for Transfers of Financial Assets ("ASU 2009-16"). ASU 2009-16 amends the FASB Accounting Standards Codification for the issuance of FASB Statement No. 166, Accounting for Transfers of Financial Assets—an amendment of FASB Statement No. 140. The amendments in ASU 2009-16 improve financial reporting by eliminating the exceptions for qualifying special-purpose entities from the consolidation guidance and the exception that permitted sale accounting for certain mortgage securitizations when a transferor has not surrendered control over the transferred financial assets. In addition, the amendments require enhanced disclosures about the risks that a transferor continues to be exposed to because of its continuing involvement in transferred financial assets. ASU 2009-16 is effective as of the beginning of each reporting entity's first annual reporting period that begins after November 15, 2009.  The Company does not expect the adoption of ASU 2009-16 to have a material impact on its consolidated results of operations or financial position.
 
 
·
In August 2009, FASB issued ASU 2009-5 Fair Value Measurements and Disclosures (Topic 820) Measuring Liabilities at Fair Value ("ASU 2009-5"). ASU 2009-5 provides amendments to Subtopic 820-10, Fair Value Measurements and Disclosures-Overall, for the fair value measurement of liabilities. ASU 2009-5 clarifies that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value. ASU 2009-5 will be effective for the Company for interim and annual periods ending after September 30, 2009. The Company does not expect the adoption of ASU 2009-5 to have a material impact on the Company's consolidated results of operations or financial position.
 
 
·
In August 2009, FASB issued ASU 2009-4 Accounting for Redeemable Equity Instruments—an Amendment to Section 480-10-S99 ("ASU 2009-4"). ASU 2009-4 represents a Securities and Exchange Commission ("SEC") update to Section 480-10-S99, Distinguishing Liabilities from Equity. The Company does not expect the adoption of guidance within ASU 2009-4 to have an impact on the Company's consolidated results of operations or financial position.
 
 
·
In June 2009, FASB issued SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles—A Replacement of FASB Statement No. 162, (now codified within ASC 105, Generally Accepted Accounting Principles ("ASC 105")). ASC 105 establishes the Codification as the single source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. All guidance contained in the Codification carries an equal level of authority. Following this statement, FASB will not issue new standards in the form of statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standards Updates, which will serve only to: (1) update the Codification; (2) provide background information about the guidance; and (3) provide the bases for conclusions on the change(s) in the Codification. ASC 105 will be effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Codification supersedes all existing non-SEC accounting and reporting standards. The adoption of ASC 105 will not have an impact on the Company's consolidated results of operations or financial position.
 
 
38
 

Cemtrex Inc. and Subsidiaries
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
·
In May 2009, FASB issued SFAS No. 165, Subsequent Events, (now codified within ASC 855, Subsequent Events ("ASC 855")). ASC 855 establishes the general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. ASC 855 will be effective for the Company on April 1, 2009. The Company does not expect the adoption of ASC 855 will have a material impact on the Company's consolidated results of operations or financial position.
 
 
·
In April 2009, FASB issued Staff Position ("FSP") No. 115-2 and FSP 124-2, Recognition and Presentation of Other-Than-Temporary Impairments (now codified within ASC 320, Investments—Debt and Equity Securities ("ASC 320")). ASC 320 provides greater clarity about the credit and noncredit component of an other-than-temporary impairment event and more effectively communicates when an other-than-temporary impairment event has occurred. ASC 320 amends the other-than-temporary impairment model for debt securities. The impairment model for equity securities was not affected. Under ASC 320, an other-than-temporary impairment must be recognized through earnings if an investor has the intent to sell the debt security or if it is more likely than not that the investor will be required to sell the debt security before recovery of its amortized cost basis. This standard will be effective for interim periods ending after June 15, 2009. The adoption of ASC 320 will not have a material impact on the Company's consolidated results of operations or financial position.
 
 
·
 In April 2009, FASB issued FSP 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (now codified within ASC 820, Fair Value Measurements and Disclosures). ASC 820 provides guidelines for making fair value measurements more consistent and provides additional authoritative guidance in determining whether a market is active or inactive and whether a transaction is distressed. ASC
 
 
·
FASB ASC Topic 855, “Subsequent Events”. In May 2009, the FASB issued FASB ASC Topic 855, which establishes general standards of accounting and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, this Statement sets forth : (i) the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, (iii) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. This FASB ASC Topic should be applied to the accounting and disclosure of subsequent events. This FASB ASC Topic does not apply to subsequent events or transactions that are within the scope of other applicable accounting standards that provide different guidance on the accounting treatment for subsequent events or transactions. This FASB ASC Topic was effective for interim and annual periods ending after June 15, 2009, which was June 30, 2009 for the Corporation. The adoption of this Topic did not have a material impact on the Company’s financial statements and disclosures.
 
 
·
FASB ASC Topic 105, “The FASB Accounting Standard Codification and the Hierarchy of Generally Accepted Accounting Principles”. In June 2009, the FASB issued FASB ASC Topic 105, which became the source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date of this FASB ASC Topic, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other non-SEC accounting literature not included in the Codification will become non-authoritative. This FASB ASC Topic identify the sources of accounting principles and the framework for selecting the principles used in preparing the financial statements of nongovernmental entities that are presented in conformity with GAAP. Also, arranged these sources of GAAP in a hierarchy for users to apply accordingly. In other words, the GAAP hierarchy will be modified to include only two levels of GAAP: authoritative and non-authoritative. This FASB ASC Topic is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The adoption of this topic did not have a material impact on the Company’s disclosure of the financial statements
 
 
39
 

Cemtrex Inc. and Subsidiaries
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
·
FASB ASC Topic 320, “Recognition and Presentation of Other-Than-Temporary Impairments”. In April 2009, the FASB issued FASB ASC Topic 320 amends the other-than-temporary impairment guidance in GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. This FASB ASC Topic does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. The FASB ASC Topic shall be effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. Earlier adoption for periods ending before March 15, 2009, is not permitted. This FASB ASC Topic does not require disclosures for earlier periods presented for comparative purposes at initial adoption. In periods after initial adoption, this FASB ASC Topic requires comparative disclosures only for periods ending after initial adoption. The adoption of this Topic did not have a material impact on the Company’s financial statements and disclosures.
 
 
·
FASB ASC Topic 860, “Accounting for Transfer of Financial Asset”., In June 2009, the FASB issued additional guidance under FASB ASC Topic 860, “Accounting for Transfer and Servicing of Financial Assets and Extinguishment of Liabilities", which improves the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement, if any, in transferred financial assets. The Board undertook this project to address (i) practices that have developed since the issuance of FASB ASC Topic 860, that are not consistent with the original intent and key requirements of that statement and (ii) concerns of financial statement users that many of the financial assets (and related obligations) that have been derecognized should continue to be reported in the financial statements of transferors. This additional guidance requires that a transferor recognize and initially measure at fair value all assets obtained (including a transferor’s beneficial interest) and liabilities incurred as a result of a transfer of financial assets accounted for as a sale. Enhanced disclosures are required to provide financial statement users with greater transparency about transfers of financial assets and a transferor’s continuing involvement with transferred financial assets. This additional guidance must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. Earlier application is prohibited. This additional guidance must be applied to transfers occurring on or after the effective date.  The adoption of this Topic did not have a material impact on the Company’s financial statements and disclosures.
 
 
·
FASB ASC Topic 810, “Variables Interest Entities”. In June 2009, the FASB issued FASB ASC Topic 810, which requires an enterprise to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in a variable interest entity. This analysis identifies the primary beneficiary of a variable interest entity as the enterprise that has both of the following characteristics: (i)The power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance and (ii)The obligation to absorb losses of the entity that could potentially be significant to the variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity. Additionally, an enterprise is required to assess whether it has an implicit financial responsibility to ensure that a variable interest entity operates as designed when determining whether it has the power to direct the activities of the variable interest entity that most significantly impact the entity’s economic performance. This FASB Topic requires ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity and eliminate the quantitative approach previously required for determining the primary beneficiary of a variable interest entity, which was based on determining which enterprise absorbs the majority of the entity’s expected losses, receives a majority of the entity’s expected residual returns, or both. This FASB ASC Topic shall be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited.  The adoption of this Topic did not have a material impact on the Company’s financial statements and disclosures.
 
 
40
 

Cemtrex Inc. and Subsidiaries
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
·
FASB ASC Topic 820, “Fair Value measurement and Disclosures”, an Accounting Standard Update. In September 2009, the FASB issued this Update to amendments to Subtopic 82010, “Fair Value Measurements and Disclosures”. Overall, for the fair value measurement of investments in certain entities that calculates net asset value per share (or its equivalent). The amendments in this Update permit, as a practical expedient, a reporting entity to measure the fair value of an investment that is within the scope of the amendments in this Update on the basis of the net asset value per share of the investment (or its equivalent) if the net asset value of the investment (or its equivalent) is calculated in a manner consistent with the measurement principles of Topic 946 as of the reporting entity’s measurement date, including measurement of all or substantially all of the underlying investments of the investee in accordance with Topic 820. The amendments in this Update also require disclosures by major category of investment about the attributes of investments within the scope of the amendments in this Update, such as the nature of any restrictions on the investor’s ability to redeem its investments at the measurement date, any unfunded commitments (for example, a contractual commitment by the investor to invest a specified amount of additional capital at a future date to fund investments that will be made by the investee), and the investment strategies of the investees. The major category of investment is required to be determined on the basis of the nature and risks of the investment in a manner consistent with the guidance for major security types in GAAP on investments in debt and equity securities in paragraph 320-10-50-lB. The disclosures are required for all investments within the scope of the amendments in this Update regardless of whether the fair value of the investment is measured using the practical expedient. The amendments in this Update apply to all reporting entities that hold an investment that is required or permitted to be measured or disclosed at fair value on a recurring or non recurring basis and, as of the reporting entity’s measurement date, if the investment meets certain criteria The amendments in this Update are effective for the interim and annual periods ending after December 15, 2009. Early application is permitted in financial statements for earlier interim and annual periods that have not been issued.  The adoption of this Topic did not have a material impact on the Company’s financial statements and disclosures.
 
 
·
FASB ASC Topic 740, “Income Taxes”, an Accounting Standard Update. In September 2009, the FASB issued this Update to address the need for additional implementation guidance on accounting for uncertainty in income taxes. The guidance answers the following questions: (i) Is the income tax paid by the entity attributable to the entity or its owners? (ii) What constitutes a tax position for a pass-through entity or a tax-exempt not-for-profit entity? (iii) How should accounting for uncertainty in income taxes be applied when a group of related entities comprise both taxable and nontaxable entities? In addition, this Updated decided to eliminate the disclosures required by paragraph 740-10-50-15(a) through (b) for nonpublic entities. The implementation guidance will apply to financial statements of nongovernmental entities that are presented in conformity with GAAP. The disclosure amendments will apply only to nonpublic entities as defined in Section 740-10-20. For entities that are currently applying the standards for accounting for uncertainty in income taxes, the guidance and disclosure amendments are effective for financial statements issued for interim and annual periods ending after September 15, 2009.  The adoption of this Topic did not have a material impact on the Company’s financial statements and disclosures.
 
Note 4 - Inventory
 
The Company values its inventory under the FIFO method of costing under the lower of cost or market pricing model. 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.

 
41
 

Cemtrex Inc. and Subsidiaries
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
Note 5 - Property and Equipment
 
At September 30, 2010 and September 30, 2009, property and equipment are comprised of the following:
 
   
September 30,
  
   
2009
    
2008
  
             
Furniture and Office Equipment
   $ 83,687     $ 83,687  
Computer Software
     14,080       13,691  
Machinery and Equipment
     68,942       68,942  
                 
Less: Accumulated Depreciation
     (104,437 )     (81,182 )
                 
Net Property & Equipment
   $ 62,273     $ 85,138  
                 
Depreciation Expense
   $ 23,255     $ 33,296  
 
Depreciation for the twelve months ended September 30, 2010 and 2009 was $23,255 and $33,296, 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; (ii) issuing 20,000,000 shares of common stock valued at $750,000; and (iii) issuing a four year convertible debenture in the amount of $1,300,000 (see Note 7). 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  
 
These consolidated financial statements have been retrospectively adjusted for all periods presented.
 
In addition, the Company had the following related party transactions:
 
 
·
The Company sold to Ducon Technologies India product totaling $450,000. Ducon is an enterprise owned by the majority stockholder of the Company.
 
 
·
The Company leases space from Ducon Technologies, a related party, on a month to month basis.
 
 
42
 

Cemtrex Inc. and Subsidiaries
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
Note 7 – Note Payable Shareholder
 
Notes  Payable to shareholders and related parties total  $862,847.  Of this total $738,491 is due October 1, 2011 and accrues interest at 5% per annum.
 
Note 8 – Convertible Debenture
 
On September 8th, 2009, Cemtrex, Inc. entered into a letter agreement with Arun Govil, the Chairman, Chief Executive Officer, Treasurer and President of the Company. Pursuant to the letter agreement Arun Govil agreed to cancel the convertible promissory note, held by him, dated April 30, 2007.  The principal balance of the Note was $1,300,000. Pursuant to the terms of the Note, the Outstanding Amount was convertible into 30,000,000 shares of the Company’s common stock. Pursuant to the letter agreement, in return for cancelling the Note, the Company issued Arun Govil 2,500,000 shares of common stock of the Company, par value $0.001 and 1,000,000 shares of Series A Preferred Stock of the Company, par value $0.001 per share. Mr. Govil agreed to forfeit 27,500,000 shares of common stock issuable as per the original terms of the Note.
 
Note 9 – Bank Line of Credit
 
On Feb 1, 2010, Cemtrex entered into a $250,000 Commercial line of Credit with JP Morgan Chase Bank. The note carries a variable interest rate at 3.75% over the LIBOR rate, with an interest rate of 4.00625% at September 30, 2010.  Accrued interest and fees are payable monthly, with the entire principle balance due at maturity on February 1, 2011.
 
Note 10 – Convertible Note, net of Discount and Derivative Liability
 
On Feb 12, 2010, Cemtrex issued a $50,000 convertible debenture to an unrelated third party, Asher Enterprises Inc., that bears interest at 8% per year and matures on December 12, 2010 at which time it is convertible into Cemtrex common shares at a conversion price equaling 65% of the average trading price during the past ten days from the maturity date.
 
Per EITF 00-19, paragraph 4, this convertible note does not meet the definition of a “conventional convertible debt instrument” since the debt is not convertible into a fixed number of shares.  The debt can be converted into common stock at a conversion price that is a percentage of the market price; therefore, the number of shares that could be required to be delivered upon “net-share settlement” is essentially indeterminate.  Therefore, the convertible debenture is considered “non-conventional,” which means that the conversion feature must be bifurcated from the debt and shown as a separate derivative liability. The Company recognized a derivative liability of $32,655 on February 12, 2010, with an offset to debt discount in the same amount.
 
Note 11– Stockholders’ Equity
 
Series A Preferred Stock
 
The Company is authorized to issue 10,000,000 shares of Series A Preferred Stock, $0.001 par value. As of September 30, 2010 and September 30, 2009, there were 1,000,000 shares issued and outstanding, respectively.
 
Each issued and outstanding Series A Preferred Share shall be entitled to the number of votes equal to the result of: (i) the number of shares of common stock of the Company issued and outstanding at the time of such vote multiplied by 1.01; divided by (ii) the total number of Series A Preferred Shares issued and outstanding at the time of such vote, at each meeting of shareholders of the Company with respect to any and all matters presented to the shareholders of the Company for their action or consideration, including the election of directors. Holders of Series A Preferred Shares shall vote together with the holders of Common Shares as a single class.

 
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Cemtrex Inc. and Subsidiaries
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
On September 8th , 2009, the Company issued 1,000,000 Series A Preferred Shares to Arun Govil, the Chairman, Chief Executive Officer, Treasurer and President of the Company, in conjunction with the of the conversion of a convertible note (see Note 7).
 
Common Stock
 
The Company is authorized to issue 60,000,000 shares of common stock, $0.001 par value. As of September 30, 2010 and 2009, there were 39,822,862 and 39,722,862 shares issued and outstanding, respectively.
 
On September 8th , 2009, the Company issued 2,500,000 common shares to Arun Govil, the Chairman, Chief Executive Officer, Treasurer and President of the Company, in conjunction with the of the conversion of a convertible note (see Note 7).  In addition, the Company issued 2,895,000 common shares for cash totaling $8,525.
 
During March, 2010 the Company issued 100,000 common shares for services totaling $24,000.
 
Note 12 – 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 31, 2012. Effective May 1,2010 , with the same lease contract but  less area of  footage, the new monthly rent is now $2,850.00.
 
Legal Proceedings
 
The Company is not currently involved in any lawsuits or litigation.
 
A Demand for Arbitration was filed on December 19, 2009 by Sindicatum Carbon Technology Limited, a U.K. company before the JAMS arbitration and mediation society in New York City.  In the JAMS claim, SCT alleged breaches of contract by the Company.  The Company filed counter claims against SCT for breaches of contract. A parallel action was filed by SCT before the Court of Arbitration and Mediation in the Chamber of Commerce and Industry of Geneva (the “Geneva Claim”).  In early December, 2010, SCT and the Company agreed to settle all matters in dispute between them without the payment or money or other consideration by either side.  The JAMS Claim and the Geneva Claim were each discontinued, with prejudice.    As of September 30, 2010 the Company charged off as a bad debt the balance of $488,237 which was recorded as due from SCT relating to this contract.
 
Note 13 – Other Related Party Transactions
 
The Company has an account receivable at September 30, 2010 in the amount of $200,000 due from a related corporation  incurred in the ordinary course of business.  Total sales to this related corporation total $200,000 for the year ended September 30, 2010.
 
Note 14 - Subsequent Events
 
The Company has evaluated all subsequent events through January 11, 2010, the date this Annual Report on Form 10-K was ready to be filed with the SEC. There were no recognized or unrecognized events requiring disclosure as significant subsequent events.

 
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(b)
Exhibit Index
 
Exhibit Number
  
Description of Exhibit
3.1
  
Certificate of Incorporation of the Company*
3.2
  
By Laws of the Company*
3.3
  
Certificate of Amendment of Certificate of Incorporation dated September 29, 2006*
3.4
  
Certificate of Amendment of Certificate of Incorporation dated March 30, 2007*
3.5
  
Certificate of Amendment of Certificate of Incorporation dated May 16, 2007*
3.6
  
Certificate of Amendment of Certificate of Incorporation dated August 21, 2007*
3.7
  
Certificate of Designation of the Series A Preferred Stock dated September 8, 2009**
10.1
  
Cemtrex Lease Agreement-Ducon Technologies, Inc.*
10.2
  
Lease Agreement between Daniel L. Canino and Griffin Filters, LLC*
10.3
  
Asset Purchase Agreement between Ducon Technologies, Inc. and Cemtrex Inc.*
10.4
  
Agreement and Assignment of Membership Interests between Arun Govil and Cemtrex, Inc.*
10.5
  
8.0% Convertible Subordinated Debenture*
10.6
  
Letter Agreement by and between the Company and Arun Govil, the Chairman, Chief Executive Officer, Treasurer and President of the Company dated September 8, 2009**
21.1
  
Subsidiaries*
23.1
  
Consent of Independent Registered Public Accounting Firm***
31.1
  
Certification by CEO pursuant to Sections 302 of the Sarbanes-Oxley Act of 2002 ***
31.2
  
Certification by Vice President of Finance pursuant to Sections 302 of the Sarbanes-Oxley Act of 2002***
32.1
  
Certification of CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002***
32.2
  
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
** Incorporated by reference from Form 8-K filed on September 10, 2009
*** Filed Herewith

 
 
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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: August 31, 2011
  
By
/s/ Arun Govil
     
Arun Govil, Chairman of the Board, Chief Executive Officer and President (Principal Executive Officer)
     
Dated: August 31, 2011
  
By
/s/ Renato Dela Rama
     
Renato Dela Rama, Vice President of Finance  (Principal Financial Officer)
       
Dated: August 31, 2011
  
By
/s/ Ravi Narayan
     
Ravi Narayan, Vice President of MIP Division and Director
       
Dated: August 31, 2011
  
By
/s/ Saagar Govil
     
Saagar Govil, Secretary and Director
 
 
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