UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment
No. 1
to
FORM
S-1/A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CEMTREX,
INC.
(Exact name of Registrant as specified in its
charter)
| Delaware |
|
3829 |
|
30-0399914 |
(State
or other jurisdiction of
incorporation or organization) |
|
(Primary
Standard Industrial Classification Code Number) |
|
(I.R.S.
Employer
Identification No.) |
135
Fell Court
Hauppauge,
NY 11788
Tel.
no. (631) 756-9116
(Address and telephone number of principal executive offices)
The
Corporation Trust Company
Corporation
Trust Center
1209
Orange St.
Wilmington,
DE 19801
(302)
658-7581 (Tel.)
(Name, address and telephone number of agent for service)
Copies
to:
Scott
Doney, Esq.
The Doney Law Firm
4955 S. Durango Rd. Ste. 165
Las
Vegas, NV 89113
(702) 982-5686 |
Anthony
W. Basch, Esq.
J.
Britton Williston, Esq.
Shannon
M. McDonough, Esq.
Kaufman
& Canoles, P.C.
1021
E. Cary St., Suite 1400
Richmond,
Va. 23219
(804)
771-5700 |
Approximate
Date of Commencement of Proposed Sale to the Public: As soon as practicable after the effective date of this registration statement.
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. ☒
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following
box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large
accelerated filer |
|
☐ |
|
Accelerated
filer |
|
☐ |
| Non-accelerated
filer |
|
☒ |
|
Smaller
reporting company |
|
☒ |
| |
|
|
|
Emerging
growth company |
|
☐ |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act ☐
The
registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective
in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date
as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The
information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration
statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities
and it is not soliciting an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted.
SUBJECT
TO COMPLETION, DATED April 23, 2024
PRELIMINARY
PROSPECTUS
Cemtrex,
Inc.
2,884,616
Units, Each Unit Consisting of One Share
of Common Stock or One Pre-Funded Warrant to Purchase One Share of Common Stock, One Series A Warrant to Purchase
One Share of Common Stock and One Series B Warrant to Purchase One Share of Common Stock
5,769,232
Shares of Common Stock Underlying the Series
A and Series B Warrants
We
are offering, on a firm commitment, underwritten basis, 2,884,616 units (the “Units”), each Unit consisting of one share
of our common stock, $0.001 par value per share, one Series A warrant (“Series A Warrant”) to purchase one share of common
stock and one Series B warrant (“Series B Warrant”) to purchase one share of common stock, at an assumed public offering
price of $3.12 per Unit, which was the last reported sale price of our common stock on The Nasdaq Capital Market, or Nasdaq, on April
19, 2024.
The
Units have no stand-alone rights and will not be certificated or issued as stand-alone securities. Each Series A Warrant offered hereby
is immediately exercisable on the date of issuance at an exercise price of $3.12 (assuming an offering price of $3.12 per Unit) per share
of common stock, or pursuant to alternate cashless exercise option, and will expire two-and-a-half years from the closing date of this
public offering. Each Series B Warrant offered hereby is immediately exercisable on the date of issuance at an exercise price of $3.12
(assuming an offering price of $3.12 per Unit) per share of common stock, and will expire five years from the closing date of this public
offering.
Under
the alternate cashless exercise option of the Series A Warrants, beginning on the date of the Warrant Stockholder Approval (described
below), the holder of the Series A Warrant, has the right to receive an aggregate number of shares equal to the product of (x) the aggregate
number of shares of common stock that would be issuable upon a cash exercise of the Series A Warrant and (y) 3.0. In addition, beginning
on the date of the Warrant Stockholder Approval, the Series A Warrants and Series B Warrants will contain a reset of the exercise price
to a price equal to the lesser of (i) the then exercise price and (ii) lowest volume weighted average price (VWAP) during the period
commencing five trading days immediately preceding and the five trading days commencing on the date we effect a reverse stock split in
the future with a proportionate adjustment to the number of shares underlying the Series A Warrants and Series B Warrants. Finally, beginning
on the date of the Warrant Stockholder Approval, with certain exceptions, the Series B Warrants will provide for an adjustment to the
exercise price and number of shares underlying the Series B Warrants upon our issuance of our common stock or common stock equivalents
at a price per share that is less than the exercise price of the Series B Warrant.
The
alternate cashless exercise option included in the Series A Warrants and the other adjustment provisions described in the above
paragraph included in the Series A Warrants and Series B Warrants will be available only upon receipt of such stockholder approval
as may be required by the applicable rules and regulations of the Nasdaq Capital Market to permit the alternate cashless exercise of
the Series A Warrants and the other adjustment provisions described in the above paragraph included in the Series A Warrants and
Series B Warrants (the “Warrant Stockholder Approval”). In the event that we are unable to obtain the Warrant
Stockholder Approval, the Series A Warrants will not be exercisable using the alternate cashless exercise option and the other
adjustment provisions described in the above paragraph included in the Series A Warrants and Series B Warrants will not be
effective, and therefore the Series A Warrants and Series B Warrants may have substantially less value. See the Risk Factor on page
12 relating to the Series A Warrants and Series B Warrants and Warrant Stockholder Approval, and see the section entitled
“Warrant Stockholder Approval” on page 43 for additional details regarding the Warrant Stockholder
Approval.
We
are also offering to each purchaser of Units that would otherwise result in the purchaser’s beneficial ownership exceeding 4.99%
of our outstanding common stock immediately following the consummation of this offering, the opportunity to purchase Units consisting
of one pre-funded warrant (in lieu of one share of common stock, each a “Pre-Funded Warrant”), one Series A Warrant and one
Series B Warrant. Subject to limited exceptions, a holder of Pre-Funded Warrants will not have the right to exercise any portion of its
Pre-Funded Warrants if the holder, together with its affiliates, would beneficially own in excess of 4.99% (or, at the election of the
holder, such limit may be increased to up to 9.99%) of the number of shares of common stock outstanding immediately after giving effect
to such exercise. Each Pre-Funded Warrant will be exercisable for one share of common stock. The purchase price of each Unit including
a Pre-Funded Warrant will be equal to the price per Unit including one share of common stock, minus $0.001, and the remaining exercise
price of each Pre-Funded Warrant will equal $0.001 per share. The Pre-Funded Warrants will be immediately exercisable (subject to the
beneficial ownership cap) and may be exercised at any time until all of the Pre-Funded Warrants are exercised in full. For each Unit
including a Pre-Funded Warrant we sell (without regard to any limitation on exercise set forth therein), the number of Units including
a share of common stock we are offering will be decreased on a one-for-one basis.
This
prospectus also includes the shares of common stock issuable upon exercise of the Series A Warrants, Series B Warrants, and the Pre-Funded
Warrants.
The
common stock and Pre-Funded Warrants can each be purchased in this offering only with the accompanying Series A Warrants and Series B
Warrants that are part of a Unit, but the components of the Units will be immediately separable and will be issued separately in this
offering. See “Description of Capital Stock” in this prospectus for more information.
Our
common stock is listed on The Nasdaq Capital Market, or Nasdaq, under the symbol “CETX.” The last reported sale price of
our common stock on Nasdaq on April 19, 2024 was $3.12 per share. There is no established public trading market for the Series A Warrants,
Series B Warrants, or the Pre-Funded Warrants, and we do not intend to list the Series A Warrants, Series B Warrants, or the Pre-Funded
Warrants on any national securities exchange or trading system. Without an active trading market, the liquidity of the Series A Warrants,
Series B Warrants, and the Pre-Funded Warrants will be limited.
The
final public offering price of the Units will be determined through negotiation between us and the underwriter, based upon a number of
factors, including our history and our prospects, the industry in which we operate, our past and present operating results, the previous
experience of our executive officers and the general condition of the securities markets at the time of this offering.
We
have granted Aegis Capital Corp., as underwriter, an option, exercisable for 45 days from the closing date of this offering, to purchase
up to 432,693 additional shares of common stock and/or Pre-Funded Warrants, representing 15% of the shares of common stock and/or Pre-Funded
Warrants sold in the offering, and/or up to 432,693 Series A Warrants, representing 15% of the Series A Warrants sold in the offering, and/or
up to 432,693 Series B Warrants, representing 15% of the Series B Warrants sold in the offering. The underwriter may exercise the over-allotment
option with respect to shares of common stock only, Pre-Funded Warrants only, Series A Warrants only, Series B Warrants only, or any
combination thereof.
You
should read this prospectus, together with additional information described under the headings “Information Incorporated by Reference”
and “Where You Can Find Additional Information,” carefully before you invest in any of our securities.
Investing
in our securities involves a high degree of risk. See “Risk Factors” beginning on page 12 of this prospectus for a discussion
of risks that should be considered in connection with an investment in our securities.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed
upon the adequacy or the accuracy of this prospectus. Any representation to the contrary is a criminal offense.
| | |
Per Unit | | |
Total | |
| Public offering price | |
$ | 3.12 | | |
$ | 9,000,000 | |
| Underwriting
discounts and commissions (7.0%)(1) | |
$ | 0.22 | | |
$ | 630,000 | |
| Proceeds before expenses | |
$ | 2.90 | | |
$ | 8,370,000 | |
| (1) |
Does
not include a non-accountable expense allowance equal to 0.5% of the public offering price. See “Underwriting” for a
description of compensation payable to the underwriter. |
The
underwriter expects to deliver our securities to purchasers in the offering on
or about May [*], 2024.
Aegis
Capital Corp.
The
date of this prospectus is April 23, 2024
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
We
incorporate by reference important information into this prospectus. You may obtain the information incorporated by reference without
charge by following the instructions under “Where You Can Find More Information.” You should carefully read this prospectus
as well as additional information described under “Incorporation of Certain Information by Reference,” before deciding to
invest in our securities.
We
have not, and the underwriter has not, authorized anyone to provide any information or to make any representations other than
those contained in this prospectus or in any free writing prospectuses prepared by or on behalf of us or to which we have referred you.
We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you.
This prospectus is an offer to sell only the securities offered hereby, and only under circumstances and in jurisdictions where it is
lawful to do so. The information contained in this prospectus or in any applicable free writing prospectus is current only as of its
date, regardless of its time of delivery or any sale of our securities. Our business, financial condition, results of operations and
prospects may have changed since that date.
The
information incorporated by reference or provided in this prospectus contains statistical data and estimates, including those relating
to market size and competitive position of the markets in which we participate, that we obtained from our own internal estimates and
research, as well as from industry and general publications and research, surveys and studies conducted by third parties. Industry publications,
studies and surveys generally state that they have been obtained from sources believed to be reliable. While we believe our internal
company research is reliable and the definitions of our market and industry are appropriate, neither this research nor these definitions
have been verified by any independent source.
For
investors outside the United States: We have not, and the underwriter has not, done anything that would permit this offering or
possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United
States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions
relating to, the offering of the securities and the distribution of this prospectus outside the United States.
This
prospectus and the information incorporated by reference into this prospectus may contain references to our trademarks and to trademarks
belonging to other entities. Solely for convenience, trademarks and trade names referred to in this prospectus and the information incorporated
by reference into this prospectus, including logos, artwork, and other visual displays, may appear without the ® or TM symbols, but
such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights
or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies’
trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other company.
This
prospectus is an offer to sell only the securities offered hereby, and only under circumstances and in jurisdictions where it is lawful
to do so. We are not, and the underwriter is not, making an offer to sell these securities in any state or jurisdiction where
the offer or sale is not permitted.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus, and any documents we incorporate by reference, contain certain forward-looking statements that involve substantial risks
and uncertainties. All statements contained in this prospectus and any documents we incorporate by reference, other than statements of
historical facts, are forward-looking statements including statements regarding our strategy, future operations, future financial position,
future revenue, projected costs, prospects, plans, objectives of management and expected market growth. These statements involve known
and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially
different from any future results, performance or achievements expressed or implied by the forward-looking statements.
The
words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “may”,
“plan”, “predict”, “project”, “target”, “potential”, “will”,
“would”, “could”, “should”, “continue” and similar expressions are intended to identify
forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements
include, among other things, statements about: our business plans, strategies and objectives; our expectations regarding our liquidity
and performance, including our expense levels, sources of capital and ability to maintain our operations; the competitive landscape of
our industry; and general market, economic and political conditions.
These
forward-looking statements are only predictions and we may not actually achieve the plans, intentions or expectations disclosed in our
forward-looking statements, so you should not place undue reliance on our forward-looking statements. Actual results or events could
differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have based these
forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect
our business, financial condition and operating results. We have included important factors in the cautionary statements included in
this prospectus that could cause actual future results or events to differ materially from the forward-looking statements that we make.
Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures
or investments we may make.
You
should read this prospectus with the understanding that our actual future results may be materially different from what we expect. We
do not assume any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise,
except as required by applicable law.
PROSPECTUS
SUMMARY
This
summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information that you
should consider before deciding to invest in our securities. You should read this entire prospectus carefully, including the “Risk
Factors” section in this prospectus and under similar captions in the documents incorporated by reference into this prospectus.
In this prospectus, unless otherwise noted, the terms “the Company,” “Cemtrex” “we,” “us,”
and “our” refer to Cemtrex, Inc.
Business
Overview
Cemtrex
was incorporated in 1998 in the state of Delaware and has evolved through strategic acquisitions and internal growth into a leading multi-industry
company.
During
the first quarter of fiscal year 2023, the Company reorganized its reporting segments to be in line with its current structure, consisting
of (i) Security, (ii) Industrial Services, and (iii) Cemtrex Corporate.
Security
Cemtrex’s
Security segment operates under the brand of its majority owned subsidiary, Vicon Industries, Inc. (“Vicon”), which provides
end-to-end security solutions to meet the toughest corporate, industrial and governmental security challenges. Vicon’s products
include browser-based video monitoring systems and analytics-based recognition systems, cameras, servers, and access control systems
for every aspect of security and surveillance in industrial and commercial facilities, federal prisons, hospitals, universities, schools,
and federal and state government offices. Vicon provides innovative, mission critical security and video surveillance solutions utilizing
Artificial Intelligence (AI) based data algorithms.
Industrial
Services
Cemtrex’s
Industrial Services segment operates under the brand, Advanced Industrial Services (“AIS”), which offers single-source expertise
and services for rigging, millwrighting, in plant maintenance, equipment erection, relocation, and disassembly to diversified customers.
AIS installs high precision equipment in a wide variety of industrial markets like automotive, printing & graphics, industrial automation,
packaging, and chemicals, among others. AIS is a leading provider of reliability-driven maintenance and contracting solutions for machinery,
packaging, printing, chemical, and other manufacturing markets. The focus is on customers seeking to achieve greater asset utilization
and reliability to cut costs and increase production from existing assets, including small projects, sustaining capital, turnarounds,
maintenance, specialty welding services, and high-quality scaffolding.
Cemtrex
Corporate
Cemtrex’s
Corporate segment is the holding company of our other two segments.
Business
Strategy
Our
focus is to utilize our resources and capabilities to build brands and businesses in areas where we see unique opportunities to create
exceptional value for our customers, shareholders, and employees over the long term. We aim to grow in markets where we see significant
long-term opportunity to create an attractive return on shareholder equity. Generally, these markets are high growth markets that are
changing due to innovation, new technologies, or other industry shifts taking place. In these markets we seek to build or acquire businesses
that have attractive gross margins, strong opportunities for customer retention, and are asset light. We take a long-term approach with
our strategies and seek returns over five years or longer time horizons.
We
believe our ability to attract and retain new customers comes from our ongoing commitment to understanding our customers’ business
performance requirements and our expertise in meeting or exceeding these requirements and enhancing their competitive advantage through
cutting edge technology. We work closely with our customers from an operational and senior executive level to achieve a deep understanding
of our customer’s goals, challenges, strategies, operations, and products to ultimately provide the best solutions for them.
We
continue to seek and execute additional strategic acquisitions and focus on expanding our products and services as well as entering new
markets. We believe that the diversity of our products & services and our ability to deliver full solutions to a variety of end markets
provides us with multiple sources of income and growth and a competitive advantage relative to other players in the industry. We constantly
look for opportunities to gain new customers and penetrate geographic locations and end markets or acquire new product or service opportunities
through acquisitions that are operationally and financially beneficial for the Company.
Recent
Developments
Sale
of Former Cemtrex Brands
On
November 22, 2022, the Company entered into two Asset Purchase Agreements and one Simple Agreement for Future Equity (“SAFE”)
with the Company’s CEO, Saagar Govil, to secure the sale of the subsidiaries Cemtrex Advanced Technologies, Inc, which include
the brand SmartDesk, and Cemtrex XR, Inc., which include the brands Cemtrex XR, Virtual Driver Interactive, Bravo Strong, and good tech
(formerly Cemtrex Labs), to Mr. Govil.
On
November 22, 2022, the Company completed the above disposition for the following consideration.
| |
■ |
$75,000
in cash payable at Closing; and |
| |
■ |
5%
royalty of all revenues on the Business to be paid 90 days after the end of each calendar year for the next three years; and should
the total sum of royalties due be less than $820,000 at the end of the three-year period, Purchaser shall be obligated to pay the
difference between $820,000 and the royalties paid. |
| |
● |
Cemtrex
Advanced Technologies, Inc. |
| |
○ |
$10,000
in cash payable at Closing; and |
| |
○ |
5%
royalty of all revenues on the Business to be paid 90 days after the end of each calendar year for the next 5 years; and |
| |
○ |
$1,600,000
in SAFE (common equity) at any subsequent fundraising or exit above $5M with a $10M cap. |
The
Company’s Board of Directors, excluding Saagar Govil who abstained from all voting on these agreements, approved these actions
and agreements.
Acquisition
of Heisey Mechanical
On
July 1, 2023, the Company under AIS, completed the acquisition of a leading service contractor and steel fabricator that specializes
in industrial and water treatment markets, Heisey Mechanical, Ltd. (“Heisey”) based in Columbia, Pennsylvania for $2,400,000
plus adjustments for the outstanding contract assets and liabilities of $393,291. The real estate of the business was purchased at fair
market value on August 30, 2023, for $1,500,000 in a separate transaction.
Heisey
provides the water treatment industry with a variety of fabricated vessels and equipment including ASME pressure vessels, heat exchangers,
mix tanks, reactors, and other specialized fabricated equipment. Additionally, the contracting team assists with installation and service
of fabricated items. The company has over 33,000 square feet of manufacturing floor space in its facility and an experienced staff of
fabricators, welders, and field mechanics.
The
purchase price allocation presented below is still preliminary but has been developed based on an estimate of fair values of Heisey’s
identifiable tangible and intangible assets acquired and liabilities assumed as of July 1, 2023. The final allocation of the purchase
price will be determined within one year from the closing date of the Heisey acquisition.
The
consideration transferred and preliminary allocation of Heisey’s tangible and intangible assets and liabilities, are as follows:
| Consideration Transferred: | |
| |
| Cash | |
$ | 393,291 | |
| Seller’s note | |
| 240,000 | |
| Financed
amount | |
| 2,160,000 | |
| Total
consideration transferred | |
$ | 2,793,291 | |
| | |
| | |
| Purchase Price Allocation: | |
| | |
| Inventory | |
| 300,000 | |
| Contract assets | |
| 667,259 | |
| Machinery and equipment | |
| 1,625,000 | |
| Contract liabilities | |
| (216,469 | ) |
| Accrued expenses | |
| (57,499 | ) |
| Goodwill | |
| 475,000 | |
| Total
consideration transferred | |
$ | 2,793,291 | |
The
unaudited pro forma summary below presents the results of operations as if the Heisey acquisition occurred on October 1, 2021. Unaudited
proforma adjustments for the twelve months ended September 30, 2023, includes $127,800 of depreciation expense from acquired fixed assets,
$127,883 of interest expense on the debt used in the acquisition. Unaudited proforma adjustments for the twelve months ended September
30, 2022, includes $255,600 of depreciation expense from acquired fixed assets, $81,140 of interest expense on the debt used in the acquisition.
The unaudited pro forma summary uses estimates and assumptions based on information available at the time. Management believes the estimates
and assumptions to be reasonable; however, actual results may have differed significantly from this pro forma financial information.
The unaudited pro forma information does not reflect any cost savings, operating synergies or revenue enhancements that might have been
achieved from combining the operations. The unaudited pro forma summary is provided for illustrative purposes only and does not purport
to represent the Company’s actual consolidated results of operations had the acquisition been completed as of the date presented,
nor should it be considered indicative of Cemtrex’s future consolidated results of operations.
| | |
Unaudited | |
| | |
For the year ended | |
| | |
September
30, 2023 | | |
September
30, 2022 | |
| | |
| | |
| |
| Revenues | |
$ | 66,274,838 | | |
$ | 53,970,595 | |
| Net loss | |
| (9,173,748 | ) | |
| (13,038,817 | ) |
Proforma
adjustments for the three months ended December 31, 2022, includes $63,900 of depreciation expense from acquired fixed assets, $33,400
of interest expense on the debt used in the acquisition.
| | |
Unaudited | |
| | |
for the three months ended | |
| | |
December
31, 2022 | |
| | |
| |
| Revenues | |
$ | 13,173,838 | |
| Net loss | |
| (6,440,203 | ) |
On
August 30, 2023, the Company acquired a mortgage in the amount of $1,200,000 from Fulton Bank to finance the purchase of the properties
formerly owned by Heisey Mechanical Ltd. The mortgage carries interest at the Secured Overnight Financing Rate (SOFR) plus 2.8% and matures
on September 30, 2043.
Common
Stock Reverse Stock Split
On
January 25, 2023, the company completed a 35:1 reverse stock split on its common stock. All share and per share data have been retroactively
adjusted for this reverse split.
Nasdaq
Deficiencies and Actions on Company Securities
Series
1 Preferred Stock
On
July 29, 2022, the Company received a notification letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”)
notifying the Company that, because the closing bid price for the Company’s Series 1 preferred stock listed on Nasdaq was below
$1.00 for 30 consecutive trading days, the Company no longer met the minimum bid price requirement for continued listing on The Nasdaq
Capital Market under Nasdaq Marketplace Rule 5550(a)(2), requiring a minimum bid price of $1.00 per share (the “Minimum Bid Price
Requirement”).
On
January 26, 2023, the Company received a notification letter from the Listing Qualifications Department of Nasdaq notifying the Company
that, it had been granted an additional 180 days or until July 24, 2023, to regain compliance with the Minimum Bid Price Requirement
based on the Company meeting the continued listing requirement for market value of publicly held shares and all other applicable requirements
for initial listing on the Capital Market with the exception of the bid price requirement, and the Company’s written notice of
its intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary.
On
July 25, 2023, the Company received a Notice of Staff Determination from the Listing Qualifications Department of Nasdaq notifying the
Company that its Series 1 Preferred Stock had not gained compliance and would be suspended from trading at the opening of business on
August 3, 2023. The Company thereafter requested a hearing.
On
July 25, 2023, the Company received notification that it had been granted a hearing on September 14, 2023.
On
September 8, 2023, the Company received a letter from the Nasdaq Hearings Panel (“Panel”) informing the Company that the
Panel has granted the Company a temporary exception to regain compliance with the Minimum Bid Price Rule.
The
Company had represented that it intends to effect a reverse stock split if necessary to regain compliance no later than January 5, 2024,
and described the actions it intends to take to be able to meet that timeline. Accordingly, the Company has been granted an exception
until January 19, 2024, to effect the reverse stock split and thereafter regain compliance with the Minimum Bid Price Rule.
On
December 29, 2023, the Company had reconvened a special meeting of stockholders of the Series 1 Preferred Stock (the “Special Meeting”)
to gain shareholder approval to effect the reverse stock split. At the time of the reconvened Special Meeting, there were insufficient
votes represented by proxy or virtually in person to constitute a quorum for the transaction of business at the Special Meeting. Pursuant
to the Company’s Bylaws, the meeting will not be further adjourned and thus the resolution did not pass.
On
January 3, 2024, the Company received a letter from The Nasdaq Stock Market LLC’s Hearings Panel notifying the Company that it
has made the following amendments to the exception granted on September 8, 2023.
| ■ | On
January 8, 2024, the Company’s Series 1 Preferred Stock shall close at a minimum bid
price of at least $1 per share and maintain such closing bid price for a minimum of ten consecutive
business days; and |
| ■ | On
January 22, 2024, the Company shall have demonstrated compliance with Listing Rule 5555(a)(1),
by evidencing a closing bid price of $1 or more per share for a minimum of ten consecutive
trading sessions. |
The
Company has bought back 71,951 shares for $69,705 under the Share Repurchase Program approved on August 22, 2023, that
allows the Company to repurchase shares of the Series 1 Preferred Stock through various means, including through privately negotiated
transactions and through an open market program. This action proved ineffective to meet the Minimum Bid Price Requirement.
On
January 18, 2024, the Company received a letter from The Nasdaq Stock Market LLC’s Hearings Panel notifying the Company that it
has determined to delist the Company’s shares of Series 1 Preferred Stock from the Exchange, due to the Company’s inability
to meet the terms of the exception granted by the Panel on September 8, 2023, as amended.
The
Company’s Series 1 Preferred Stock was suspended from the Nasdaq Capital Market on January 22, 2024. The Series 1 Preferred Stock
is now quoted on the OTC Markets under the symbol “CETXP.”
Nasdaq
filed a Form 25 on March 21, 2024. The deregistration of the Company’s Series 1 Preferred Stock under Section 12(b) of the Exchange
Act will be effective for 90 days, or such shorter period as the SEC may determine, after filing of the Form 25.
Common
Stock
On
January 24, 2022, the Company received a notification letter from the Listing Qualifications Department of Nasdaq notifying the Company
that, because the closing bid price for the Company’s common stock listed on Nasdaq was below $1.00 for 30 consecutive trading
days, the Company no longer met the minimum bid price requirement for continued listing on The Nasdaq Capital Market under Nasdaq Marketplace
Rule 5550(a)(2), requiring a minimum bid price of $1.00 per share (the “Minimum Bid Price Requirement”).
On
July 26, 2022, the Company received a notification letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC Nasdaq
notifying the Company that, it had been granted an additional 180 days or until January 23, 2023, to regain compliance with the Minimum
Bid Price Requirement based on the Company meeting the continued listing requirement for market value of publicly held shares and all
other applicable requirements for initial listing on the Capital Market with the exception of the bid price requirement, and the Company’s
written notice of its intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary.
On
January 26, 2023, the Company received a notification letter from the Listing Qualifications Department of Nasdaq notifying the Company
that it has not regained compliance with Listing Rule 5550(a)(2) and accordingly would be delisted from the Capital Market. The Company
then requested and had been granted a hearing to occur on March 16, 2023, appealing this determination to a Hearings Panel (the “Panel”),
pursuant to the procedures set forth in the Nasdaq Listing Rule 5800 Series.
On
February 8, 2023, the Company received a notification letter from the Listing Qualifications Department of Nasdaq notifying the Company
that it has regained compliance with Listing Rule 5550(a)(2) and is in compliance with all applicable listing standards.
The
Company’s common stock is presently listed and traded on The Nasdaq Stock Market, subject to compliance with Nasdaq’s continued
listing requirements.
Settlement
with the Securities and Exchange Commission
On
September 30, 2022, acting pursuant to an offer of settlement submitted by the Company, the U.S. Securities and Exchange Commission (“SEC”)
issued an order pursuant to Section 8A of the Securities Act, directing the Company to cease and desist from committing or causing any
violations and any future violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder
(the “SEC Order”).
The
SEC Order also directed Mr. Saagar Govil to cease and desist from committing or causing any violations and any future violations of Section
17(a)(3) of the Securities Act.
The
SEC found that, as a result of its conduct, which was neither admitted nor denied, the Company violated Section 17(a) of the Securities
Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, which prohibit fraudulent conduct in the offer or sale of securities
and in connection with the purchase or sale of securities.
The
SEC also found that, as a result of his conduct, which was neither admitted nor denied, Mr. Govil violated Section 17(a)(3) of the Securities
Act, which makes it illegal to engage in any transaction, practice, or course of business which operates or would operate as a fraud
or deceit upon the purchaser.
In
addition to the above cease and desists, the Company undertook to not publicly announce that it has partnered with another company or
that another company has become a customer of the Company without providing prior written notice, including a copy of the announcement
text, to the businessperson at the other company responsible for that company’s relationship with the Company.
Also,
the Company received a civil monetary penalty of two million two hundred thousand dollars ($2,200,000) in the aggregate that must be
paid to the SEC. Mr. Govil also received a civil monetary penalty of three hundred and fifty thousand dollars ($350,000) in the aggregate
that must be paid to the SEC. The company and Mr. Govil have remitted the payments as of September 30, 2022. The SEC Order can be accessed
at www.sec.gov.
Going
Concern Considerations
The
Company has incurred substantial losses of $9,196,875 and $13,020,958 for fiscal years 2023 and 2022, respectively, and has losses
on continuing operations for the three months ending December 31, 2023, of $1,314,395 and has current liabilities of $28,696,123
and working capital deficit of $2,284,787, that raise substantial doubt with respect to the Company’s ability to continue
as a going concern.
While
the working capital deficit and current debt indicate a substantial doubt regarding the Company’s ability to continue
as a going concern, the Company has historically, from time to time, satisfied and may continue to satisfy certain short-term liabilities
through the issuance of common stock, thus reducing our cash requirement to meet our operating needs. The Company has approximately
$2.84 million in cash as of December 31, 2023. Additionally, the Company has (i) secured a line of credit for its Vicon brand to fund
operations, which as of December 31, 2023, has available capacity of $1,642,676, (ii) sold unprofitable brands, reducing the cash
required to maintain those brands, (iii) continually reevaluate our pricing model on our Vicon brand to improve margins on those
products, and (iv) has effected a 35:1 reverse stock split on our common stock to remain trading on the Nasdaq Capital Markets,
and improve our ability to potentially raise capital through equity offerings that we may use to satisfy debt. In the event additional
capital is raised through equity offerings and/or debt is satisfied with equity, it may have a dilutive effect on our existing stockholders.
While the Company believes these plans if successful, would be sufficient to meet the capital demands of our current operations
for at least the next twelve months, there is no guarantee that we will succeed. Overall, there is no guarantee that cash flow from our
existing or future operations and any external capital that we may be able to raise will be sufficient to meet our working capital needs.
The Company currently does not have adequate cash or available liquidity/available capacity on our lines of credit to meet our short
or long-term needs. Absent an ability to raise additional outside capital and restructure or refinance all or a portion of our debt,
the Company will be unable to meet its obligations as they become due over the next twelve months beyond the issuance date.
Potential
Impacts of COVID-19 on our Business
The
COVID-19 pandemic impacted our business operations and the results of our operations during fiscal years 2022 and 2021, primarily with
delays in orders by many customers and new product development, including newer versions of surveillance software since our technical
facility in Pune, India had been under lock down on multiple occasions. Overall bookings level in our business were down by more than
20%, compared to fiscal 2021 levels during certain periods. Bookings and revenue have largely recovered in this calendar year compared
to last year. However, due to ongoing delays in certain supply chain areas, the expected launch times of our new products and new versions
has resulted in delays of several months. These supply chain issues have also affected the Company’s ability to obtain inventory
for our current bookings, and the Company has implemented a buildup of inventory levels to remain competitive and keep backlog orders
at a minimum. Additionally, increased costs and the need to increase wages to retain talent may cause our gross margin percentages to
shrink and our operational costs to rise. In response to these increased costs, the Company has implemented an ongoing review of our
pricing to cover these additional costs while remaining competitive.
The
broader implications of COVID-19 on our results from operations going forward remains uncertain. The COVID-19 pandemic and the resulting
supply chain issues and inflation has the potential to cause adverse effects to our customers, suppliers or business partners in locations
that have or will experience more pronounced disruptions, which could result in a reduction to future revenue and manufacturing output
as well as delays in our new product development activities. However, opportunities in the video surveillance field have been growing
for Vicon products.
The
extent of the pandemic’s effect on our operational and financial performance will depend in large part on future developments,
which cannot be reasonably estimated at this time. Future developments include the emergence of new virus variants that are more contagious
or harmful than prior variants, the actions taken to contain or mitigate its impact both within and outside the jurisdictions where we
operate, the impact on governmental programs and budgets, the development of treatments or vaccines, and the resumption of widespread
economic activity. Due to the inherent uncertainty of the unprecedented and rapidly evolving situation, we are unable to predict with
any confidence the likely impact of the COVID-19 pandemic on our future operations.
Risks
Associated with Our Business
Our
business is subject to a number of risks of which you should be aware before making an investment decision. These risks and others are
discussed more fully in the “Risk Factors” section of this prospectus immediately following this prospectus summary and in
Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended September 30, 2023, which is incorporated
by reference in this prospectus. These risks include the following:
| ■ | Our
operations and performance depend significantly on global and regional economic conditions
and adverse economic conditions can materially adversely affect our business, results of
operations and financial condition. |
| ■ | The
report of our independent registered public accounting firm contains an explanatory paragraph
that expresses substantial doubt about our ability to continue as a going concern. |
| ■ | There
is no guarantee that cash flow from operations and/or debt and equity financings will provide
sufficient capital to meet our expansion goals working capital needs or fund our operations. |
| ■ | We
have a history of losses and may experience losses in the future, which could result in the
market price of our common stock declining. |
| ■ | We
have substantial debt which could adversely affect our ability to raise additional capital
to fund operations and prevent us from meeting our obligations under outstanding indebtedness. |
| ■ | Our
ability to secure and maintain sufficient credit arrangements is key to our continued operations
and there is no assurance we will be able to obtain sufficient additional equity or debt
financing in the future. |
| ■ | We
are substantially dependent upon the success and continued market acceptance of our technology,
the absence of which may significantly reduce our sales, profits and cash flow and adversely
impact our financial condition. |
| ■ | We
have taken a multi-operational approach, and some of our business segments have historically
failed to benefit our company to date, and there remains a risk that our remaining segments
may not prove to be successful. We may divest or expand into new areas that are outside of
our current business activities and those activities may not prove to be successful. |
| ■ | Our
future operating results depend in part on continued successful research, development and
marketing of new and improved products and services through our Security segment, and there
can be no assurance that we will successfully introduce new products and services into the
market. |
| ■ | Our
future operating results depends in part on the continued successful operation of our Industrial
Services segment, and there can be no assurance that we will be successful in this business. |
| ■ | Our
products face intense competitive challenges, including rapid technological changes, and
pricing pressure from competitors, which could adversely affect our business. |
| ■ | We
could be subject to additional civil penalties or face criminal penalties and sanctions if
we violate the terms of settlement with the SEC. |
| ■ | We
have grown through acquisitions and are continuously looking to fund other acquisitions;
our failure to raise funds for acquisitions may have the effect of slowing down our growth
and our use of funds for acquisitions subjects us to acquisition-related risks. |
| ■ | The
loss of the services of Saagar Govil for any reason would materially and adversely affect
our business operations and prospects. |
| ■ | Our
management stockholders have significant stockholdings in and influence over our company
which could make it impossible for public stockholders to influence the affairs of our company. |
| ■ | Sales
of substantial amounts of our common stock in the public market could depress the market
price of our common stock. |
| ■ | Our
securities may experience extreme price and volume fluctuations, which could lead to costly
litigation for us and make an investment in us less appealing. |
The
Offering
| Units
to be Offered |
|
2,884,616
Units based on assumed public offering price of $3.12 per Unit on a firm commitment basis. Each Unit will consist of one share of
common stock (or Pre-Funded Warrant to purchase one share of our common stock in lieu thereof), one Series A Warrant to purchase
one share of common stock and one Series B Warrant to purchase one share of common stock. The Units have no stand-alone rights and
will not be certificated or issued as stand-alone securities. The shares of common stock and Pre-Funded Warrants, if any, can each
be purchased in this offering only with the accompanying Series A Warrants and Series B Warrants as part of Units (other than pursuant
to the underwriter’s option to purchase additional shares of Common Stock and/or Pre-Funded Warrants and/or Series A Warrants
and/or Series B Warrants), but the components of the Units will be immediately separable and will be issued separately in this offering. |
| |
|
|
| Prefunded
Warrants to be Offered |
|
We
are also offering to certain purchasers whose purchase of Units in this offering would
otherwise result in the purchaser, together with its affiliates and certain related parties,
beneficially owning more than 4.99% (or, at the election of the purchaser, 9.99%) of our
outstanding common stock immediately following the consummation of this offering, the opportunity
to purchase, if such purchasers so choose, Units including Prefunded Warrants to purchase
shares of common stock, in lieu of Units including shares of common stock that would
otherwise result in any such purchaser’s beneficial ownership exceeding 4.99% (or,
at the election of the purchaser, 9.99%) of our outstanding common stock. The purchase price
of each Unit including a Pre-Funded Warrant will be equal to the price
at which a Unit is sold to the public in this offering, minus $0.001, and the exercise
price of each Pre-Funded Warrant will be $0.001 per share.
Each
Pre-Funded Warrant will be exercisable for one share of our common stock and will be exercisable at any time after its original issuance
until exercised in full, provided that the purchaser will be prohibited from exercising Pre-Funded Warrants for shares of our common
stock if, as a result of such exercise, the purchaser, together with its affiliates and certain related parties, would own more than
4.99% of the total number of shares of our common stock then issued and outstanding. However, any holder may increase such percentage
to any other percentage not in excess of 9.99%, provided that any increase in such percentage shall not be effective until 61 days
after such notice to us.
This
prospectus also relates to the offering of the common stock issuable upon exercise of the Pre-Funded Warrants. See “Description
of Securities We Are Offering—Pre-Funded Warrants” |
| |
|
|
| Series
A Warrants and Series B Warrants to be Offered |
|
2,884,616 Series A Warrants and 2,884,616 Series B Warrants. Each
Unit includes one share of common stock, one Series A Warrant and one Series B Warrant. Each Series A Warrant is exercisable at a price
of $3.12 per share (assuming an offering price of $3.12 per Unit), or pursuant to an alternate cashless exercise option, and each Series
B Warrant is exercisable at a price of $3.12 per share (assuming an offering price of $3.12 per Unit). The Series A Warrants and Series
B Warrants will be immediately exercisable and will expire two-and-a-half years (with respect to the Series A Warrants) or five years
(with respect to the Series B Warrants) from the closing date of this public offering. See “Description of Securities We Are Offering—Series
A Warrants and Series B Warrants.” |
| Over-allotment option |
|
The offering
is being underwritten on a firm commitment basis. We have granted the underwriter a 45-day option to purchase up to 432,693 additional
shares of common stock, representing 15% of the Common Units sold in the offering (at an assumed public offering price of $3.12 per
Common Unit, which is the last reported sales price of our common stock on the Nasdaq Capital Market on April 19, 2024), and/or up
to 432,693 additional Pre-Funded Warrants, representing 15% of the Pre-funded Warrants sold in the offering, and/or up to 432,693 additional
Series A Warrants, representing 15% of the Series A Warrants sold in the offering, and/or up to 432,693 additional Series B Warrants,
representing 15% of the Series B Warrants sold in the offering, on the same terms and conditions set forth above solely to cover
over-allotments. The underwriter may exercise the over-allotment option with respect to shares of common stock only, Pre-Funded Warrants
only, Series A Warrants only, Series B Warrants only, or any combination thereof. |
| |
|
|
| Common Stock Outstanding After This Offering (1) |
|
3,940,252 shares (or 4,372,945 shares
of common stock if the underwriters exercise their option in full)
(assuming we sell only shares of common stock and no Prefunded Warrants and assuming no exercise of the Series A Warrant or Series
B Warrant). |
| |
|
|
| Use of Proceeds |
|
We currently intend to
use the net proceeds from the offering to conduct operations, increase marketing efforts, and investments in our existing business
initiatives and products, as well as general working capital. We may also use a portion of the net proceeds to acquire or invest
in complementary businesses, products and technologies or to fund the development of any such complementary businesses, products
or technologies. We currently have no plans for any such acquisitions or investments. See “Use of Proceeds” |
| |
|
|
| Risk Factors |
|
See “Risk Factors”
beginning on page 12 of this prospectus and other information included and incorporated by reference in this prospectus for
a discussion of the risk factors you should consider carefully when making an investment decision. |
| |
|
|
| Nasdaq/OTC Symbol |
|
Our common stock is listed
on Nasdaq under the symbol “CETX” and our Series 1 Preferred Stock is quoted on the OTC Markets under the
symbol “CETXP.” There is no established public trading market for the Series A Warrants, Series B Warrants,
or Pre-Funded Warrants, and we do not intend to list the Series A Warrants, Series B Warrants, or the Pre-Funded
Warrants on any national securities exchange or trading system. |
| (1) | The
number of shares of our common stock to be outstanding after this offering is based on 1,056,981
shares of our common stock outstanding as of April 19, 2024, and, unless otherwise
indicated, excludes, as of that date: |
| ■ | 28,796
shares of Common Stock issuable upon the exercise of outstanding stock options having a weighted
average exercise price of $50.76 per share; and |
| ■ | 1,991,207
shares of Common Stock reserved for future issuance under the Company’s 2020 Equity
Compensation Plan. |
Except
as otherwise indicated, the information in this prospectus assumes: (i) no sale of the Prefunded Warrants in this offering, which, if
sold, would reduce the number of shares of common stock that we are offering on an one-for-one basis; (ii) no exercise of any Series
A Warrants or Series B Warrants; and (iii) no exercise of the options described above.
RISK
FACTORS
An
investment in our securities involves a high degree of risk. Before deciding whether to purchase our securities, including the securities
offered by this prospectus, you should carefully consider the risks and uncertainties described under “Risk Factors” in our
Annual Report on Form 10-K for the fiscal year ended September 30, 2022, any subsequent Quarterly Report on Form 10-Q and our other filings
with the SEC, all of which are incorporated by reference herein. If any of these risks actually occur, our business, financial condition
and results of operations could be materially and adversely affected and we may not be able to achieve our goals, the value of our securities
could decline and you could lose some or all of your investment. Additional risks not presently known to us or that we currently believe
are immaterial may also significantly impair our business operations. If any of these risks occur, our business, results of operations
or financial condition and prospects could be harmed. 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 Macroeconomics Conditions and International Operations
Our
operations and performance depend significantly on global and regional economic conditions and adverse economic conditions can materially
adversely affect our business, results of operations and financial condition.
Adverse
macroeconomic conditions, including slow growth or recession, high unemployment, inflation, tighter credit, higher interest rates, and
currency fluctuations, can adversely impact consumer confidence and spending and materially adversely affect demand for our products
and services. In addition, consumer confidence and spending can be materially adversely affected in response to changes in fiscal and
monetary policy, financial market volatility, declines in income or asset values, and other economic factors.
In
addition to an adverse impact on demand for our products and services, uncertainty about, or a decline in, global or regional economic
conditions can have a significant impact on our suppliers, contract manufacturers, logistics providers, distributors, and other channel
partners, and developers. Potential outcomes include financial instability; inability to obtain credit to finance business operations;
and insolvency.
Adverse
economic conditions can also lead to increased credit and collectability risk on our trade receivables; the failure of derivative counterparties
and other financial institutions; limitations on our ability to issue new debt; reduced liquidity; and declines in the fair values of
our financial instruments. These and other impacts can materially adversely affect our business, results of operations, financial condition
and stock price.
Our
business can be impacted by political events, trade and other international disputes, war, terrorism, natural disasters, public health
issues, industrial accidents and other business interruptions.
Political
events, trade and other international disputes, war, terrorism, natural disasters, public health issues (such as COVID-19), industrial
accidents and other business interruptions can harm or disrupt international commerce and the global economy and could have a material
adverse effect on us and our customers, suppliers, contract manufacturers, logistics providers, distributors, and other channel partners.
Restrictions
on international trade, such as tariffs and other controls on imports or exports of goods, technology or data, can materially adversely
affect our operations and supply chain and limit our ability to offer and distribute products and services to customers. The impact can
be particularly significant if these restrictive measures apply to countries and regions where we derive a significant portion of our
revenues and/or have significant supply chain operations. Restrictive measures can require us to take various actions, including changing
suppliers and restructuring business relationships. Changing our operations in accordance with new or changed restrictions on international
trade can be expensive, time-consuming and disruptive to our operations. Such restrictions can be announced with little or no advance
notice and we may not be able to effectively mitigate all adverse impacts from such measures. For example, tensions between governments,
including the U.S. and China, have in the past led to tariffs and other restrictions being imposed on our business. If disputes and conflicts
further escalate in the future, actions by governments in response could be significantly more severe and restrictive and could materially
adversely affect our business. Political uncertainty surrounding trade and other international disputes could also have a negative effect
on consumer confidence and spending, which could adversely affect our business.
Many
of our operations and facilities, as well as critical business operations of our suppliers and contract manufacturers, are in locations
that are prone to earthquakes and other natural disasters. In addition, such operations and facilities are subject to the risk of interruption
by fire, power shortages, nuclear power plant accidents and other industrial accidents, terrorist attacks and other hostile acts, ransomware
and other cybersecurity attacks, labor disputes, public health issues, including pandemics such as the COVID-19 pandemic, and other events
beyond our control. Global climate change is resulting in certain types of natural disasters, such as droughts, floods, hurricanes and
wildfires, occurring more frequently or with more intense effects. Such events can make it difficult or impossible for us to manufacture
and deliver products to our customers, create delays and inefficiencies in our supply and manufacturing chain, and result in slowdowns
and outages to our product and service offerings, and negatively impact consumer spending and demand in affected areas. Following an
interruption to our business, we can require substantial recovery time, experience significant expenditures to resume operations, and
lose significant sales.
Our
operations are also subject to the risks of industrial accidents at our suppliers and contract manufacturers. While our suppliers are
required to maintain safe working environments and operations, an industrial accident could occur and could result in serious injuries
or loss of life, disruption to our business, and harm to our reputation. Major public health issues, including pandemics such as the
COVID-19 pandemic, have adversely affected, and could in the future materially adversely affect, us due to their impact on the global
economy and demand for consumer products; the imposition of protective public safety measures, such as stringent employee travel restrictions
and limitations on freight services and the movement of products between regions; and disruptions in our operations, supply chain and
sales and distribution channels, resulting in interruptions to the supply of current products and offering of existing services, and
delays in production ramps of new products and development of new services.
Volatility
in currency exchange rates may adversely affect our financial condition, results of operations and cash flows.
Our
international operations accounted for approximately 9.2% of our net sales in 2023. We are exposed to the effects (both positive and
negative) that fluctuating exchange rates have on translating the financial statements of our international operations, most of which
are denominated in local currencies, into the U.S. dollar. Fluctuations in exchange rates may affect product demand and reported profits
in our international operations. In addition, currency fluctuations may affect the prices we pay suppliers for materials used in our
products, along with other local costs incurred in foreign countries for foreign entities with U.S. dollar functional currency. As a
result, fluctuating exchange rates may adversely impact our results of operations and cash flows.
Our
business and results of operations may be materially adversely affected by compliance with import and export laws.
We
must comply with various laws and regulations relating to the import and export of products, services and technology from the U.S. and
other countries having jurisdiction over our operations, which may affect our transactions with certain customers, business partners
and other persons. In certain circumstances, export control and economic sanctions regulations may prohibit the export of certain products,
services, and technologies and in other circumstances, we may be required to obtain an export license before exporting a controlled item.
The length of time required by the licensing processes can vary, potentially delaying the shipment of products or performance of services
and the recognition of the corresponding revenue. In addition, failure to comply with any of these regulations could result in civil
and criminal, monetary and non-monetary penalties, disruptions to our business, limitations on our ability to import and export products
and services and damage to our reputation. Moreover, any changes in export control or sanctions regulations may further restrict the
export of our products or services, and the possibility of such changes requires constant monitoring to ensure we remain compliant. Any
restrictions on the export of our products or product lines could have a material adverse effect on our competitive position, results
of operations, cash flows or financial condition.
Risks
Related to Covid-19
The
global pandemic may disrupt our business or the business of our customers.
In
December 2019, a novel strain of corona virus, which causes the infectious disease known as COVID-19 was reported. The World Health Organization
declared COVID-19 a Public Health Emergency and Global Pandemic. COVID-19 has severely impacted economies around the world.
The
current COVID-19 pandemic has impacted our business operations and the results of our operations in this fiscal year, primarily with
delays in expected orders by many customers and new product development, including newer versions of surveillance software since our
technical facility in Pune, India has been under lock down on multiple occasions. Bookings and revenue have largely recovered in this
calendar year compared to last year. In addition, due to delays in certain supply chain areas, the expected launch times of our new products
and new versions has resulted in delays of several months.
The
broader implications of COVID-19 on our results from operations going forward remains uncertain. The COVID-19 pandemic has the potential
to cause adverse effects to our customers, suppliers or business partners in locations that have or will experience more pronounced disruptions,
which could result in a reduction to future revenue and manufacturing output as well as delays in our new product development activities.
However, on the other hand, opportunities in the video surveillance field have been growing for Vicon products.
The
extent of the pandemic’s effect on our operational and financial performance will depend in large part on future developments,
which cannot be reasonably estimated at this time. Future developments include the duration, scope and severity of the pandemic, the
emergence of new virus variants that are more contagious or harmful than prior variants, the actions taken to contain or mitigate its
impact both within and outside the jurisdictions where we operate, the impact on governmental programs and budgets, the development of
treatments or vaccines, and the resumption of widespread economic activity. Due to the inherent uncertainty of the unprecedented and
rapidly evolving situation, we are unable to predict with any confidence the likely impact of the COVID-19 pandemic on our future operations.
This could materially impact our results of operations, cash flows, and financial condition.
Risks
Related to our Financial Condition
The
report of our independent registered public accounting firm contains an explanatory paragraph that expresses substantial doubt about
our ability to continue as a going concern.
The
Company has incurred substantial losses of $9,196,875 and $13,020,958 for fiscal years 2023 and 2022, respectively, and has losses
on continuing operations for the three months ending December 31, 2023, of $1,314,395 and has current liabilities of $28,696,123
and working capital deficit of $2,284,787, that raise substantial doubt with respect to the Company’s ability
to continue as a going concern.
While
our working capital deficit and current debt indicate a substantial doubt regarding the Company’s ability to continue as
a going concern, the Company has historically, from time to time, satisfied and may continue to satisfy certain short-term liabilities
through the issuance of common stock, thus reducing our cash requirement to meet our operating needs. The Company has approximately
$2.84 million in cash as of December 31, 2023. Additionally, the Company has (i) secured a line of credit for its Vicon brand to fund
operations, which as of December 31, 2023, has available capacity of $1,642,676, (ii) sold unprofitable brands, reducing the cash
required to maintain those brands, (iii) continually reevaluate our pricing model on our Vicon brand to improve margins on those
products, and (iv) has effected a 35:1 reverse stock split on our common stock to remain trading on the Nasdaq Capital Markets,
and improve our ability to potentially raise capital through equity offerings that we may use to satisfy debt. In the event additional
capital is raised through equity offerings and/or debt is satisfied with equity, it may have a dilutive effect on our existing stockholders.
While the Company believes these plans if successful, would be sufficient to meet the capital demands of our current operations
for at least the next twelve months, there is no guarantee that we will succeed. Overall, there is no guarantee that cash flow
from our existing or future operations and any external capital that we may be able to raise will be sufficient to meet our working capital
needs. The Company currently does not have adequate cash or available liquidity/available capacity on our lines of credit to meet
our short or long-term needs. Absent an ability to raise additional outside capital and restructure or refinance all or a portion of
our debt, the Company will be unable to meet its obligations as they become due over the next twelve months beyond the issuance date.
There
is no guarantee that cash flow from operations and/or debt and equity financings will provide sufficient capital to meet our expansion
goals working capital needs or fund our operations.
Our
current strategic plan includes the expansion of our company both organically and through acquisitions if market conditions and competitive
conditions allow. Due to the long-term nature of investments in acquisitions and other financial needs to support organic growth, including
working capital, we expect our long-term and working capital needs to periodically exceed the short-term fluctuations in cash flow from
operations. We anticipate that we may need to raise additional external capital from the sale of common stock, preferred stock and debt
instruments as market conditions may allow, in addition to cash flow from operations (which may not always be sufficient), to fund our
growth and working capital needs.
In
the event that we need to raise significant amounts of external capital at any time or over an extended period, we face a risk that we
may need to do so under adverse capital market conditions with the result that our existing shareholders, as well as persons who acquire
our common stock, may incur significant and immediate dilution should we raise capital from the sale of our common or preferred stock.
Similarly, we may need to meet our external capital needs from the sale of secured or unsecured debt instruments at interest rates and
with such other debt covenants and conditions as the market then requires. However, there can be no guarantee that we will be able to
raise external capital on terms that are reasonable in light of current market conditions. In the event that we are not able to do so,
those who acquire our common stock may face significant and immediate dilution and other adverse consequences. Further, debt covenants
contained in debt instruments that we issue may limit our financial and operating flexibility with consequent adverse impact on our common
stock market price.
We
have a history of losses and may experience losses in the future, which could result in the market price of our common stock declining.
We
have incurred net losses, including net losses attributable to Cemtrex, Inc. shareholders of $9.2 million in 2023, $13.0 million in 2022,
and $7.8 million in 2021. We had a loss of $1,303,903 for the quarter ended December 31, 2023. We have an accumulated deficit
of $65.3 million as of December 31, 2023. We expect to continue to incur significant product development, sales and marketing
and administrative expenses. As a result, we will need to generate significant revenues to achieve profitability. We cannot be certain
that we will achieve profitability in the future or, if we achieve profitability, to sustain it. If we do not achieve and maintain profitability,
the market price for our common stock may decline, perhaps substantially.
The
Company is exposed to credit risk, market risk, and fluctuations in the value of its investment portfolio.
The
Company may, from time to time invest excess cash that the Company has on hand in large cap securities listed on major exchanges, including
stocks and options. The Company’s investments can be negatively affected by liquidity, credit deterioration, financial results,
market and economic conditions, political risk, sovereign risk, interest rate fluctuations or other factors.
Although
we have not recognized any material losses related to our cash equivalents, short-term investments, or long-term investments, future
declines in the market values of such investments could have an adverse effect on our financial condition and operating results. As a
result, the value and liquidity of the Company’s cash, cash equivalents, and marketable securities may fluctuate substantially.
Therefore, although the Company has not realized any significant losses on its cash, cash equivalents, and marketable securities, future
fluctuations in their value could result in significant losses and could have an adverse impact on the Company’s financial condition
and operating results.
We
have substantial debt which could adversely affect our ability to raise additional capital to fund operations and prevent us from meeting
our obligations under outstanding indebtedness.
As
of December 31, 2023, our total indebtedness was approximately $22.5 million, including notes payable of $16.4 million, mortgage payable
of $3.4 million, vendor financed purchase of $0.5 million, and bank loans of $2.2 million.
As
of September 30, 2023, our total indebtedness was approximately $24.4 million, including notes payable of $18.1 million, mortgage payable
of $3.4 million, vendor financed purchase of $0.7 million, and bank loans of $2.2 million, including $0.9 million of PPP loans that the
Company expects to be forgiven. By comparison, as of September 30, 2022, our total indebtedness was approximately $20.6 million, including
notes payable of $17.7 million, mortgage payable of $2.3 million, and bank loans of $0.6 million, including $0.1 million of PPP loans.
For 2023 and 2022 approximately $14.5 million and $16.9 million, respectively, of such debt is classified as current. This substantial
debt could have important consequences, including the following: (i) a substantial portion of our cash flow from operations may be dedicated
to the payment of principal and interest on indebtedness, thereby reducing the funds available for operations, future business opportunities
and capital expenditures; (ii) our ability to obtain additional financing for working capital, debt service requirements and general
corporate purposes in the future may be limited; (iii) we may face a competitive disadvantage to lesser leveraged competitors; (iv) our
debt service requirements could make it more difficult to satisfy other financial obligations; and (v) we may be vulnerable in a downturn
in general economic conditions or in our business and we may be unable to carry out activities that are important to our growth.
Our
ability to make scheduled payments of the principal of, or to pay interest on, or to refinance our indebtedness depends on and is subject
to our financial and operating performance, which in turn is affected by general and regional economic, financial, competitive, business
and other factors beyond management’s control. If we are unable to generate sufficient cash flow to service our debt or to fund
our other liquidity needs, we will need to restructure or refinance all or a portion of our debt, which could impair our liquidity. Any
refinancing of indebtedness, if available at all, could be at higher interest rates and may require us to comply with more onerous covenants
that could further restrict our business operations. Despite our significant amount of indebtedness, we may need to incur significant
additional amounts of debt, which could further exacerbate the risks associated with our substantial debt.
Our
ability to secure and maintain sufficient credit arrangements is key to our continued operations and there is no assurance we will be
able to obtain sufficient additional equity or debt financing in the future.
There
is no assurance that we will be able to retain or renew our credit agreements and other finance agreements in the future. In the event
our company grows rapidly, the uncertain economic climate continues, or we acquire one or more other companies, additional financing
resources will likely be necessary in the current or future fiscal years. As a smaller public company with a limited ability to attract
and obtain financing, there is no assurance that we will be able to obtain sufficient additional equity or debt financing in the future
on terms that are reasonable in light of current market conditions.
Risks
Related to our Business
We
are substantially dependent upon the success and continued market acceptance of our technology, the absence of which may significantly
reduce our sales, profits and cash flow and adversely impact our financial condition.
Competing
technologies may be offered by both existing competitors or by those that enter the market, and these competing technologies may offer
a better cost-benefit ratio than our products and/or at lower prices with the result that our sales, profits, and cash flow may suffer
significantly over an extended period with serious adverse impact on our financial condition.
We
have taken a multi-operational approach, and some of our business segments have historically failed to benefit our company to date, and
there remains a risk that our remaining segments may not prove to be successful. We may divest or expand into new areas that are outside
of our current business activities and those activities may not prove to be successful.
We
continuously assess the composition of our portfolio businesses to ensure it is aligned with our strategic objectives and positioned
to maximize growth and return in the coming years. Since our business concerns new and developing technologies, and many of these endeavors
fail, some of the businesses in our portfolio may not be successful in generating sufficient revenue to be a viable option for our company.
Currently,
the Company has the following business segments, consisting of (i) Security, (ii) Industrial Services, and (iii) Cemtrex Corporate. Within
these segments there are a number of technologies that we are pursuing, as discussed in this annual report under “Item 1. Business.”
There is a risk that one or more of our technologies will not be successful in generating revenue to sustain the expenditures associated
with its existence. Moreover, having multiple business segments may present challenges, such as fluctuations in our operating results,
using the company’s limited resources on less worthy business pursuits, and distracting management from obtaining its goals with
respect to our overall operations. If we are unable to establish our technologies in the market, and overcome the challenges of doing
so, we could go out of business.
As
we continuously review our portfolio of businesses we may exit or enter into new business activities which may ultimately prove to be
unsuccessful.
Our
future operating results depend in part on continued successful research, development and marketing of new and improved products and
services through our Security segment, and there can be no assurance that we will successfully introduce new products and services into
the market.
The
success of new and improved products and services through our Security segment depends on our research and development efforts and the
initial acceptance of our products and solutions by consumers. Our business is affected by varying degrees of technological change and
corresponding shifts in customer demand, which result in unpredictable product transitions, shortened life cycles and increased importance
of being first to market with new products and services. We may experience difficulties or delays in the research and development, production
and/or marketing of new products and services due to lack of capital, which may negatively impact our operating results and prevent us
from recouping or realizing a return on the investments required to continue to bring new products and services to market.
Our
future operating results depends in part on the continued successful operation of our Industrial Services segment, and there can be no
assurance that we will be successful in this business.
The
success of selling services through our Industrial Services segment depends on our ability to hire and retain talent, our ability to
market these services successfully to clients, the overall demand for these services, and the quality of our workmanship by our customers,
among other factors. Our business is affected by varying degrees of technological change and corresponding shifts in customer demand,
which result in unpredictable product transitions, shortened life cycles and increased importance of being first to market with new products
and services. We may experience difficulties or delays in the delivery of services due to lack of capital or lack of adequate talent,
which may negatively impact our operating results and prevent us from recouping or realizing a return on the investments required to
continue to compete in our markets.
Our
operating results may fluctuate, which could have a negative impact on our ability to grow our client base, establish sustainable revenues
and succeed overall.
Our
results of operations may fluctuate as a result of a number of factors, some of which are beyond our control including but not limited
to:
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■ |
general
economic conditions in the geographies and industries where we sell our services and conduct operations; legislative policies where
we sell our services and conduct operations; |
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the
budgetary constraints of our customers; seasonality; |
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success
of our strategic growth initiatives; |
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■ |
costs
associated with the launching or integration of new or acquired businesses; |
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■ |
timing
of new product introductions by us, our suppliers and our competitors; product and service mix, availability, utilization and pricing; |
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■ |
the
mix, by state and country, of our revenues, personnel and assets; |
| |
■ |
movements
in interest rates or tax rates; |
| |
■ |
changes
in, and application of, accounting rules; |
| |
■ |
changes
in the regulations applicable to us; and |
| |
■ |
litigation
matters. |
As
a result of these factors, we may not succeed in our business, and we could go out of business.
We
operate in a cyclical business, which could result in significant fluctuations in demand for our products.
Cyclical
changes in our customers’ businesses have, in the past, resulted in, and may in the future result in, significant fluctuations
in demand for our products, selling prices, and our profitability. Most of our customers operate in cyclical industries. Their requirements
for our technologies fluctuate significantly as a result of changes in general economic conditions, technological changes, customer demand,
and other factors. During periods of increasing demand, our customers typically seek to increase their inventory of our products to avoid
production bottlenecks. When demand for their products peaks and begins to decline, as has happened in the past, they tend to reduce
or cancel orders for our products while they use up accumulated inventory. Business cycles vary somewhat in different geographical regions
and customer industries. Significant fluctuations in sales of our products affect our unit manufacturing costs and affect our profitability
by making it more difficult for us to predict our production, raw materials, and shipping needs. Changes in demand mix, needed technologies,
and end-use markets may adversely affect our ability to match our products, inventory, and capacity to meet customer demand and could
adversely affect our operating results and financial condition. We are also vulnerable to general economic events or trends beyond our
control, and our sales and profits may suffer in periods of weak demand.
Our
sales and gross margins depend significantly on market demand for our products, as to which there can be no assurance.
The
uncertainty in the United States and in the international economic and political environment could result in a decline in demand for
our products in any industry. Our gross margins are dependent upon our ability to maintain sales volumes at levels that allow us to cover
our fixed costs and variable costs per unit. To the extent that one or more product lines experience a significant and protracted decline
in sales volume, we may experience significant declines in our gross margins that may result in losses. Further, any adverse changes
in tax rates and laws affecting our customers could result in decreases in demand of our products and thus decrease our gross margins.
Any of these factors could negatively impact our business, results of operations and financial condition.
In
these circumstances, we anticipate that we could be required to increase or decrease staffing and more closely manage other expenses
in order to meet the anticipated demand of our existing and future customers. Orders from our customers are subject to cancellation,
and delivery schedules from our customers fluctuate as a result of changes in our customers’ demand, thereby adversely affecting
our results of operations, and may result in higher inventory levels. Higher inventory levels may cause us to need greater external financing,
which adversely affects our financial performance.
Our
products face intense competitive challenges, including rapid technological changes, and pricing pressure from competitors, which could
adversely affect our business.
All
of our product lines are subject to significant competition from existing and future competitors, market conditions and technological
change, or a combination of them, and our sales revenues and gross margins may suffer protracted and serious declines with the result
that we would likely incur protracted losses. Further, the barriers to entry in several of our lines of business are not so significant
that we may be facing competition from others who see significant opportunities to enter the market and undercut our prices with products
that possess superior technological attributes at prices that offer our customers a better value. In this instance, we could incur protracted
and significant losses and persons who acquire our common stock would suffer losses thereby.
From
time to time, we may need to reduce our prices in response to competitive and customer pressures and to maintain our market share. Competition
and customer pressures may also restrict our ability to increase prices in response to commodity and other input cost increases. Our
results of operations will suffer if profit margins decrease, as a result of a reduction in prices, increased input costs or other factors,
and if we are unable to increase sales volumes to offset those profit margin decreases. We may also need to increase spending on marketing,
advertising and new product innovation to protect existing market share or increase market share. The success of our investments is subject
to risks, including uncertainties about trade and consumer acceptance. As a result, our increased expenditures may not maintain or enhance
market share and could result in lower profitability.
Factors
affecting the industries that utilize our products could negatively impact our customers and us.
We
have no real control over factors affecting the industries that utilize our products and to the extent that any one or more of these
industries change dramatically, we may be facing significant financial challenges that are in excess of our existing capabilities. These
factors include:
| |
● |
increased
competition among our customers and their competitors; |
| |
● |
the
inability of our customers to develop and market their products; |
| |
● |
recessionary
periods in our customers’ markets; |
| |
● |
the
potential that our customers’ products become obsolete; |
| |
● |
our
customers’ inability to react to rapidly changing technology; and |
| |
● |
our
customers’ inability to pay for our products, which could, in turn, affect the company’s results of operations. |
If
we are unable to develop new products, our competitors may develop and market products with better features that may reduce demand for
our existing and potential products or otherwise result in our products becoming obsolete and could materially and adversely affect our
ability to sustain profitability.
There
are many larger competitors who compete directly with us and who have significantly greater financial, technological and research resources.
This may serve to severely damage our ability to market and sell our products at price levels that would allow us to achieve and maintain
profit margins and positive cash flow.
We
are a smaller public company, and we face rapid technological change in many of our product markets and we may not be able to introduce
any successful new products or any enhancements to our existing products on a timely basis, or at all. This could result in prolonged
and significant losses. In addition, our introduction of new products could adversely affect sales of certain of our existing products
if these new products directly compete with our existing products. If our competitors develop innovative technologies that are superior
to our products or if we fail to accurately anticipate market trends and respond on a timely basis with our own innovations, we may not
achieve sufficient growth in its revenues to attain profitability or if we do, we may not be able sustain profitability.
The
success of new product introductions is dependent on a number of factors, including, but not limited to, timely and successful development
of new products, including software development, market acceptance of these products and our ability to manage the risks associated with
these introductions. These risks include development and production capabilities, management of inventory levels to support anticipated
demand, the risk that new products may have quality defects in the early stages of introduction, and obsolescence risk of existing products.
Developing
and maintaining a patent portfolio is an expensive and time-consuming process and there is no assurance the Company will successfully
develop patents to protect the intellectual property it is working on.
We
are increasingly dependent on information technology, and if we are unable to protect against service interruptions, data corruption,
cyber-based attacks, or network security breaches our operations could be disrupted and we could incur significant costs and reputational
harm as a result
We
rely on information technology networks and systems, including the Internet, to process, transmit, and store electronic and financial
information; to manage a variety of business processes and activities; and to comply with regulatory, legal, and tax requirements. We
also depend on our information technology infrastructure for digital marketing and sales activities and for electronic communications
among our locations, personnel, customers, and suppliers around the world. Many of the information technology systems used by us globally
have been in place for many years and not all hardware and software is currently supported by vendors. These information technology systems
are susceptible to damage, disruptions, or shutdowns due to failures during the process of upgrading or replacing software, databases
or components thereof, power outages, hardware failures, computer viruses, cyber-attacks, telecommunication failures, user errors, or
catastrophic events. If our information technology systems suffer severe damage, disruption, or shutdown and our business continuity
plans do not effectively resolve the issues in a timely manner, our product sales, financial condition, and results of operations may
be materially affected, and we could experience delays in reporting our financial results.
We
have been, and likely will continue to be, subject to various cyber-attacks. To date, we have seen no material impact on our business
or operations from these attacks or events. Any future significant compromise, breach, or misuse of our data security could result in
significant costs and damage to our reputation. The ever-evolving threats mean us and our third-party service providers must continually
evaluate and adapt our respective systems and processes and overall security environment, as well as those of any companies we acquire.
There is no guarantee that these measures will be adequate to safeguard against all data security compromises, breaches, or misuses.
In addition, as the regulatory environment related to information security, data collection and use, and privacy becomes increasingly
rigorous, compliance with those requirements could also result in additional costs.
Third-party
service providers, such as distributors, subcontractors, vendors, and data processors have access to certain portions of our sensitive
data. In the event that these service providers do not appropriately protect our data, the result could be a security breach or loss
of our data. Any such loss of data by our third-party service providers could have a material adverse impact on our business and results
of operations.
In
addition, if we are unable to prevent security breaches, we may suffer financial and reputational damage or penalties because of the
unauthorized disclosure of confidential information belonging to us or to our customers or suppliers. Furthermore, the disclosure of
non-public sensitive information through external media channels could lead to the loss of intellectual property or damage our reputation
and brand image.
We
are also in the process of converting certain information technology networks and systems and consolidating certain global systems. If
such projects fail, or if unexpected technical difficulties arise, our operations and financial systems could be adversely affected.
Further, we could incur additional costs or require additional technical support to resolve such difficulties.
Our
operating results are sensitive to raw material and resale product availability, quality, and cost
We
seek to have many sources of supply for each of our major requirements in order to avoid significant dependence on any one or a few suppliers.
However, the supply of materials or other items could be disrupted by natural disasters, international trade tariffs, wars, pandemics,
disputes and or other events. Despite market price volatility for certain requirements and materials pricing pressures at some of our
businesses, the raw materials and various purchased components needed for our products have generally been available in sufficient quantities.
In some instances, lead times have extended beyond normal due to logistic delays and labor shortages occurring globally. Some of our
products, however, require the use of raw materials that are available from only a limited number of regions around the world, are available
from only a limited number of suppliers, or may be subject to significant fluctuations in market prices. Our results of operations may
be adversely affected if we have difficulty obtaining these raw materials, our key suppliers experience financial difficulties, the quality
of available raw materials deteriorates, or there are significant price increases for these raw materials. Our inability to recover increased
costs through increased sales prices could have an adverse impact on our results of operations. For periods in which the prices for these
raw materials rise, we may be unable to pass on the increased cost to our customers, which would result in decreased sales margins for
the products in which they are used. For periods in which prices for these raw materials decline, we may be required, as has occurred
in the past, to write down our inventory carrying cost of these raw materials and products. Depending on the extent of the difference
between market price and our carrying cost, the write-down could have a significant adverse effect on our results of operations.
We
resell products manufactured by other component and interconnect product manufacturers. Should these manufacturers experience difficulties
supplying the products that we resell, or such suppliers use other channels to market their products, we could experience lower sales,
which could have an adverse effect on our results of operations.
Risks
Related to Legal Uncertainty
We
could be subject to additional civil penalties or face criminal penalties and sanctions if we violate the terms of settlement with the
SEC.
On
September 30, 2022, acting pursuant to an offer of settlement submitted by the Company, the SEC issued an order pursuant to Section 8A
of the Securities Act, directing the Company to cease and desist from committing or causing any violations and any future violations
of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder (the “SEC Order”).
While
we have already paid the penalties imposed by the order into which we entered pursuant to the SEC Order, it contains ongoing and continuing
requirements that we refrain from violating the Securities Act. Any future violation of applicable securities laws by us or management
could result in harsher sanctions and fines, which would have a material adverse effect on our ability to implement our business plans.
SEC staff can make reasonable requests from us for further evidence of compliance. Such requests for further information, record-keeping
requirements and others generally could divert management’s attention from implementing its business plans and could require additional
material expenditures by us to legal counsel or other advisors and service providers. Further issues could reduce investor and shareholder
confidence in our company and could result in a failure to execute on our business plan, which would negatively impact our business.
A copy of the SEC Order can be found at www.sec.gov.
Our
global operations subject us to many different and complex laws and rules, and we may face difficulty in compliance.
Due
to our global operations, we are subject to many laws governing international relations (including but not limited to the Foreign Corrupt
Practices Act, the U.S. Export Administration Act the EU General Data Protection Regulation, and the U.K. Modern Anti-Slavery Act); which
prohibit improper payments to government officials and restrict where and how we can do business, what information or products we can
supply to certain countries, what personal information we can transfer, and what information we can provide to a non-U.S. government.
Although we have procedures and policies in place that should mitigate the risk of violations of these laws, there is no guarantee that
they will be sufficiently effective. If, and when we acquire new businesses, we may not be able to ensure that the pre-existing controls
and procedures meant to prevent violations of the rules and laws were effective, and we may not be able to implement effective controls
and procedures to prevent violations quickly enough when integrating newly acquired businesses. Acquisitions of new businesses in new
non-U.S. jurisdictions may also subject us to new regulations and laws, and we may face difficulties ensuring compliance with these new
requirements.
Provisions
in the Delaware law and our Bylaws could make it very difficult for an investor to bring any legal actions against our directors or officers
for violations of their fiduciary duties or could require us to pay any amounts incurred by our directors or officers in any such actions.
Members
of our board of directors and our officers will have no liability for breaches of their fiduciary duty of care as a director or officer,
except in limited circumstances, pursuant to provisions in the Delaware law and our Bylaws. Accordingly, you may be unable to prevail
in a legal action against our directors or officers even if they have breached their fiduciary duty of care. In addition, our Bylaws
allow us to indemnify our directors and officers from and against any and all costs, charges and expenses resulting from their acting
in such capacities with us. This means that if you were able to enforce an action against our directors or officers, in all likelihood,
we would be required to pay any expenses they incurred in defending the lawsuit and any judgment or settlement they otherwise would be
required to pay. Accordingly, our indemnification obligations could divert needed financial resources and may adversely affect our business,
financial condition, results of operations and cash flows, and adversely affect prevailing market prices for our common stock.
If
we fail to establish, maintain, and enforce intellectual property rights with respect to our technology, our financial condition, results
of operations and business could be negatively impacted.
Our
ability to establish, maintain and enforce intellectual property rights with respect to our proprietary technologies, patents, patent
applications, software and other rights will be a significant factor in determining our future financial and operating performance. We
seek to protect our intellectual property rights by relying on a combination of patent, trade secret and copyright laws. We also use
confidentiality and other provisions in our agreements that restrict access to and disclosure of our confidential know-how and trade
secrets.
We
have filed patent applications with respect to many aspects of our technologies. However, we cannot provide any assurances that any of
these applications will ultimately result in issued patents or, if patents are issued, that they will provide sufficient protections
for our technology against competitors. Although we have filed various patent applications for some of our core technologies, we currently
hold only six issued patents, with two in the United States and four in Canada, and we may face delays and difficulties in obtaining
our other filed patents, or we may not be able to obtain such patents at all.
Outside
of these patent applications, we seek to protect our technology as trade secrets and technical know-how. However, trade secrets and technical
know-how are difficult to maintain and do not provide the same legal protections provided by patents. In particular, only patents will
allow us to prohibit others from using independently developed technology that are similar. If competitors develop knowledge substantially
equivalent or superior to our trade secrets and technical know-how or gain access to our knowledge through other means such as observation
of our technology that embodies trade secrets at customer sites which we do not control, the value of our trade secrets and technical
know-how would be diminished.
While
we strive to maintain systems and procedures to protect the confidentiality and security of our trade secrets and technical know-how,
these systems and procedures may fail to provide an adequate degree of protection. For example, although we generally enter into agreements
with our employees, consultants, advisors, and strategic partners restricting the disclosure and use of trade secrets, technical know-how
and confidential information, we cannot provide any assurance that these agreements will be sufficient to prevent unauthorized use or
disclosure. In addition, some of the technology deployed at customer sites in the future, which we do not control, may be readily observable
by third parties who are not under contractual obligations of non-disclosure, which may limit or compromise our ability to continue to
protect such technology as a trade secret.
Monitoring
and policing unauthorized use and disclosure of intellectual property is difficult. If we learned that a third party was in fact infringing
or otherwise violating our intellectual property, we may need to enforce our intellectual property rights through litigation. Litigation
relating to our intellectual property may not prove successful and might result in substantial costs and diversion of resources and management
attention.
From
our customers’ standpoint, the strength of the intellectual property under which we control can be a critical determinant of the
value of our products and services. If we are unable to secure, protect and enforce our intellectual property, it may become more difficult
for us to attract new customers. Any such development could have a material adverse effect on our business, prospects, financial condition
and results of operations.
We
may not have sufficient financial resources to defend our intellectual property rights or otherwise successfully defend against claims
that we have infringed on a third party’s intellectual property and, as a result, it may adversely affect our business, financial
condition and results of operations.
Even
if such claims are not valid, they could subject us to significant costs. In addition, it may be necessary in the future to enforce our
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. We may not have sufficient financial resources to defend our intellectual
property rights or otherwise to successfully defend the company against valid or spurious claims that we have infringed upon the intellectual
property rights of others. An adverse outcome in litigation or any similar proceedings could force us 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 we 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 we have 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
and significantly affect our 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 and lead to significant and protracted losses.
Product
liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of our product or any future
products that we may develop.
We
face an inherent risk of product liability exposure related to the sale of our products and the future sale of planned products. We may
be sued if any of our products allegedly causes injury. Any such product liability claims may include allegations of defects in manufacturing,
defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability, and a breach of warranties. We
may also be subject to liability for a misunderstanding of, or inappropriate reliance upon, the information we provide. If we cannot
successfully defend ourselves against claims that our product or planned products caused injuries, we may incur substantial liabilities.
Regardless of merit or eventual outcome, liability claims may result in:
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decreased
demand for our product or any planned products that we may develop; |
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■ |
injury
to our reputation and significant negative media attention; |
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■ |
significant
costs to defend the related litigation and distraction to our management team; |
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substantial
monetary awards to plaintiffs; |
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loss
of revenue; and |
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the
inability to commercialize any future products that we may develop. |
Such
events could subject us to costly litigation, require us to pay substantial amounts of money to injured parties, delay, negatively impact,
or end our opportunity to market those products, or require us to suspend or abandon our commercialization efforts. Even in a circumstance
in which we do not believe that an adverse event is related to our product, the investigation into the circumstance may be time-consuming
or inconclusive. These investigations may interrupt our sales efforts. As a result of these factors, a product liability claim, even
if successfully defended, could harm our business.
We
currently maintain product liability insurance coverage, which may not be adequate to cover all liabilities that we may incur. Insurance
coverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to
satisfy any liability that may arise.
If
we experience material weaknesses in the future or otherwise fail to maintain an effective system of internal control over financial
reporting in the future, we may not be able to accurately or timely report our financial condition or results of operations, which may
adversely affect investor confidence in us and, as a result, the value of our common stock.
As
a public company, we are required to maintain internal control over financial reporting and to report any material weaknesses in such
internal controls. Section 404 of the Sarbanes-Oxley Act requires that we evaluate and determine the effectiveness of our internal control
over financial reporting and provide a management report on internal control over financial reporting. A material weakness is a deficiency,
or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material
misstatement of our financial statements will not be prevented or detected on a timely basis. Ensuring that we have adequate internal
financial and accounting controls and procedures in place so that we can produce accurate financial statements on a timely basis is a
costly and time-consuming effort. Our internal control over financial reporting is designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements in accordance with Generally Accepted Accounting Principles.
We may not be able to complete our evaluation, testing and any required remediation in a timely fashion. During the evaluation and testing
process, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert
that our internal controls are effective. The identification of one or more material weaknesses would preclude a conclusion that we maintain
effective internal control over financial reporting. Accordingly, there could continue to be a reasonable possibility that a material
misstatement of our financial statements would not be prevented or detected on a timely basis.
Our
management, including our principal executive officer and principal accounting officer, conducted an evaluation of 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 (2013). Based on its evaluation, our management concluded
that as of September 30, 2023, that our internal control over financial reporting were effective.
We
are required to disclose changes made in our internal control and procedures on a quarterly basis. However, our independent registered
public accounting firm will not be required to report on the effectiveness of our internal control over financial reporting pursuant
to Section 404 of the Sarbanes-Oxley Act until we are no longer an “smaller reporting company.” At such time, our independent
registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls
are documented, designed or operating. Our remediation efforts may not enable us to avoid a material weakness in the future. If we are
unable to assert that our internal control over financial reporting is effective, or when required in the future, if our independent
registered public accounting firm is unable to express an unqualified opinion as to the effectiveness of our internal control over financial
reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common
stock could be adversely affected, and we could become subject to investigations by the stock exchange on which our securities are listed,
the SEC, or other regulatory authorities, which could require additional financial and management resources.
Risks
Related to Acquisitions
We
have grown through acquisitions and are continuously looking to fund other acquisitions; our failure to raise funds for acquisitions
may have the effect of slowing down our growth and our use of funds for acquisitions subjects us to acquisition-related risks.
We
intend to make acquisitions of complementary (including competitive) businesses, products and technologies. However, any future acquisitions
may result in material transaction costs, increased interest and amortization expenses related to goodwill and other intangible assets,
increased depreciation expense and increased operating expenses, any of which could have an adverse effect on our operating results and
financial position. Acquisitions will require integration of acquired assets and management into our operations to realize economies
of scale and control costs. Acquisitions may involve other risks, including diversion of management attention that would otherwise be
available for ongoing internal development of our business and risks inherent in entering markets in which we have no or limited prior
experience. In connection with future acquisitions, we may make potentially dilutive issuances of equity securities. In addition, consummation
of acquisitions may subject us to unanticipated business uncertainties, contingent liabilities or legal matters relating to those acquired
businesses for which the sellers of the acquired businesses may not fully indemnify us. There can be no assurance that our business will
grow through acquisitions, as anticipated.
We
may fail to successfully integrate our acquisitions or otherwise be unable to benefit from pursuing acquisitions.
We
believe there are meaningful opportunities to grow through acquisitions and joint ventures across all product categories and we expect
to continue a strategy of selectively identifying and acquiring businesses with complementary products. We may be unable to identify,
negotiate, and complete suitable acquisition opportunities on reasonable terms. There can be no assurance that any business acquired
by us will be successfully integrated with our operations or prove to be profitable to us. We may incur future liabilities related to
acquisitions. Should any of the following problems, or others, occur as a result of our acquisition strategy, the impact could be material:
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difficulties
integrating personnel from acquired entities and other corporate cultures into our business; |
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difficulties
integrating information systems; |
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the
potential loss of key employees of acquired companies; |
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the
assumption of liabilities and exposure to undisclosed or unknown liabilities of acquired companies; or |
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the
diversion of management attention from existing operations. |
Risks
Related to Our Management and Control Persons
The
loss of the services of Saagar Govil for any reason would materially and adversely affect our business operations and prospects.
Our
financial success is dependent to a significant degree upon the efforts of Saagar Govil, our Chairman, President and Chief Executive
Officer. Saagar Govil possesses management, financial expertise, engineering, sales and marketing experience concerning our company that
our other officers do not have. We have not entered into an employment arrangement with Mr. Govil, and we have not obtained key man insurance
over him. There can be no assurance that Saagar Govil will continue to provide services to us. A voluntary or involuntary departure by
Saagar Govil could have a materially adverse effect on our business operations if we were not able to attract a qualified replacement
for them in a timely manner.
If
we are unable to attract and retain qualified personnel, especially our design and technical personnel, we may not be able to execute
our business strategy effectively.
Our
future success depends on our ability to retain, attract and motivate qualified personnel, including our management, sales and marketing,
finance, and especially our design and technical personnel. As the source of our technological and product innovations, our design and
technical personnel represent a significant asset. Any inability to retain, attract or motivate such personnel could have a material
adverse effect on our business and results of operations.
Our
management stockholders have significant stockholdings in and influence over our company which could make it impossible for public stockholders
to influence the affairs of our company.
We
are a “controlled company” under Nasdaq Listing Rules. Approximately 90% of our outstanding voting shares, which includes
our common stock, Series C preferred stock and Series 1 preferred stock, are beneficially held by Saagar Govil, our Chairman, President
and Chief Executive Officer. Pursuant to certificate of designation for our Series C preferred, each outstanding share of Series C Preferred
Stock is entitled to the number of votes equal to the result of (i) the total number of shares of Common Stock outstanding at the time
of such vote multiplied by 10.01, and divided by (ii) the total number of shares of Series C Preferred Stock outstanding at the time
of such vote, at each meeting of our shareholders with respect to any and all matters presented to our shareholders for their action
or consideration, including the election of directors. As a result of Saagar Govil’s ownership of our common stock, Series C preferred
stock, and Series 1 preferred stock, he controls, and will control in the future, substantially all matters requiring approval by the
stockholders of our company, including the election of all directors and approval of significant corporate transactions. This could make
it impossible for public stockholders to influence the affairs of our company.
Liability
of directors for breach of duty is limited under Delaware law.
Our
certificate of incorporation limits the liability of directors to the maximum extent permitted by Delaware law. Delaware law provides
that directors of a corporation will not be personally liable for monetary damages for breach of their fiduciary duties as directors,
except for liability for any:
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breach of their duty of loyalty
to us or our stockholders; |
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act or omission not in good
faith or that involves intentional misconduct or a knowing violation of law; |
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unlawful payments of dividends
or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or |
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transaction from which the
directors derived an improper personal benefit. |
These
limitations of liability do not apply to liabilities arising under the federal or state securities laws and do not affect the availability
of equitable remedies such as injunctive relief or rescission.
Our
bylaws provide that we will indemnify for our directors and officers to the fullest extent permitted by law, and may indemnify employees
and other agents. Our bylaws also provide that we are obligated to advance expenses incurred by a director or officer in advance of the
final disposition of any action or proceeding.
The
limitation of liability and indemnification provisions in our certificate of incorporation and bylaws may discourage stockholders from
bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation
against directors and officers, even though an action, if successful, might provide a benefit to us and our stockholders. Our results
of operations and financial condition may be harmed to the extent we pay the costs of settlement and damage awards against directors
and officers pursuant to these indemnification provisions.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us,
we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable.
At
present, there is no pending litigation or proceeding involving any of our directors or officers as to which indemnification is required
or permitted, and we are not aware of any threatened litigation or proceeding that may result in a claim for indemnification.
Risks
Related to Our Securities and the Offering
Sales
of substantial amounts of our securities in the public market could depress the market price of our common stock.
Our
common stock is listed for trading on the Nasdaq Capital Market and our Seies 1 Preferred Stock is quoted on the OTC Markets.
If our stockholders sell substantial amounts of our securities in the public market, including the shares of common stock issuable upon
the exercise of our stock options, those under our 2020 Equity Compensation Plan, and shares issued as consideration in future
acquisitions, or the market perceives that such sales may occur, the market price of our securities could fall and we may be unable to
sell our securities in the future.
Our
securities may experience extreme price and volume fluctuations, which could lead to costly litigation for us and make an investment
in us less appealing.
The
market price of our securities may fluctuate substantially due to a variety of factors, including:
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our
business strategy and plans; |
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changing
factors related to doing business in various jurisdictions within the United States; |
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new
regulatory pronouncements and changes in regulatory guidelines and timing of regulatory approvals; |
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general
and industry-specific economic conditions; |
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additions
to or departures of our key personnel; |
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variations
in our quarterly financial and operating results; |
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changes
in market valuations of other companies that operate in our business segments or in our industry; |
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lack
of trading liquidity; |
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announcements
about our business partners; |
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Intellectual
property disputes; |
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Operating
results below or exceeding expectations or period-to-period fluctuations in our financial results; |
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Whether
we achieve profits or not; |
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changes
in accounting principles; and |
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general
market conditions, economic and other external factors. |
The
market prices of the securities of early-stage companies, particularly companies like ours without consistent product revenues and earnings,
have been highly volatile and are likely to remain highly volatile in the future. This volatility has often been unrelated to the operating
performance of particular companies. In the past, companies that experience volatility in the market price of their securities have often
faced securities class action litigation. Whether or not meritorious, litigation brought against us could result in substantial costs,
divert our management’s attention and resources and harm our financial condition and results of operations.
Our
Series 1 preferred stock and all of our existing and future indebtedness rank senior to our common stock in the event of a liquidation,
winding up or dissolution of our business.
In
the event of our liquidation, winding up or dissolution, our assets would be available to make payments to holders of all existing and
future indebtedness and Series 1 preferred stock before payments to holders of our common stock. In the event of our bankruptcy, liquidation
or winding up, there may not be sufficient assets remaining, after paying amounts to the holders of our indebtedness and Series 1 preferred
stock, to pay anything to common stockholders. As of December 31, 2023, we had total consolidated liabilities of approximately
$38.0 million and 2,408,053 shares issued and 2,343,953 shares of Series 1 preferred stock outstanding. Any liquidation,
winding up or dissolution of our company or of any of our wholly or partially owned subsidiaries would have a material adverse effect
on holders of our common stock.
Our
common stockholders may be adversely affected by the issuance of any subsequent series of preferred stock.
Our
certificate of incorporation does not restrict our ability to offer one or more additional new series of preferred stock, any or all
of which may rank equally with or have preferences over our common stock as to dividend payments, voting rights, rights upon liquidation
or other types of rights. We would have no obligation to consider the specific interests of the holders of common stock in creating any
such new series of preferred stock or engaging in any such offering or transaction. Our creation of any new series of preferred stock
or our engaging in any such offering or transaction could have a material adverse effect on holders of our common stock.
The
public trading market for the common stock may be limited in the future.
Our
common stock is listed for trading on the Nasdaq Capital Market under the symbol CETX. The trading volume fluctuates and there have been
time periods during which the common stock trading volume has been limited. Management can make no assurances that trading volume will
not be similarly limited in the future. Without an active trading market, there can be no assurance of any liquidity or resale value
of the common stock, and stockholders may be required to hold their shares of common stock for an indefinite period of time.
We
may not pay cash dividends on our common stock.
Our
board of directors declared a one-time cash dividend on our common stock in April 2017. The terms of our series 1 preferred stock provide
for the payment of semiannual dividends on the last day of March and September in each year, which began in March 2017. No other cash
dividends have been declared or paid by us on our stock during either of the two most recent fiscal years or the period through the date
of this prospectus. Other than with respect to our series 1 preferred stock, our board of directors declares dividends when, in its discretion,
it determines that a dividend payment, as opposed to another use of cash, is in the best interests of the stockholders. Such decisions
are based on the facts and circumstances then existing including, without limitation, our results of operations, financial condition,
contractual restrictions, restrictions imposed by applicable law and other factors our board of directors deems relevant. As a result,
we cannot predict when, or whether, another dividend on our common stock will be declared in the future.
The
offering price of our Units may not be indicative of the value of our assets or the price at which shares can be resold. The offering
price of the Units may not be an indication of our actual value.
The
public offering price per share of our Units was determined based upon negotiations between the Company and the underwriter.
Factors taken into consideration include the trading volume of our Common Stock prior to this offering, the historical prices at which
our shares of Common Stock have recently traded, the history and prospects of our Company, the stage of development of our business,
our business plans for the future and the extent to which they have been implemented, an assessment of our management, general conditions
of the securities markets at the time of the offering, and such other factors as were deemed relevant. No assurance can be given that
our Common Stock can be resold at the public offering price for the Units.
For
these reasons, comparing our operating results on a period-to-period basis may not be meaningful, and you should not rely on past results
as an indication of future performance. In the past, following periods of volatility in the market price of a public company’s
securities, securities class action litigation has often been instituted against the public company. Regardless of its outcome, this
type of litigation could result in substantial costs to us and a likely diversion of our management’s attention. You may not receive
a positive return on your investment when you sell your shares and you may lose the entire amount of your investment.
If
securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price
and trading volume could decline.
The
trading market for our Common Stock will depend in part on the research and reports that securities or industry analysts publish about
us or our business. Securities and industry analysts do not currently, and may never, publish research on our Company. If no securities
or industry analysts commence coverage of our Company, the trading price for our stock would likely be negatively impacted. In the event
securities or industry analysts initiate coverage, if one or more of the analysts who covers us downgrades our stock or publishes inaccurate
or unfavorable research about our business, our stock price may decline. If one or more of these analysts ceases coverage of our Company
or fails to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume
to decline.
If
our shares become subject to the penny stock rules, it would become more difficult to trade our shares.
The
SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally
equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or authorized
for quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions
in such securities is provided by the exchange or system. If the price of our Common Stock is less than $5.00, our Common Stock will
be deemed a penny stock. The penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from
those rules, to deliver a standardized risk disclosure document containing specified information. In addition, the penny stock rules
require that before effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special
written determination that the penny stock is a suitable investment for the purchaser and receive (i) the purchaser’s written acknowledgment
of the receipt of a risk disclosure statement; (ii) a written agreement to transactions involving penny stocks; and (iii) a signed and
dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in
the secondary market for our Common Stock, and therefore shareholders may have difficulty selling their shares.
FINRA
sales practice requirements may limit a stockholder’s ability to buy and sell our securities.
Effective
June 30, 2020, the SEC implemented Regulation Best Interest requiring that “A broker, dealer, or a natural person who is an associated
person of a broker or dealer, when making a recommendation of any securities transaction or investment strategy involving securities
(including account recommendations) to a retail customer, shall act in the best interest of the retail customer at the time the recommendation
is made, without placing the financial or other interest of the broker, dealer, or natural person who is an associated person of a broker
or dealer making the recommendation ahead of the interest of the retail customer.” This is a significantly higher standard for
broker-dealers to recommend securities to retail customers than before under FINRA “suitability rules. FINRA suitability rules
do still apply to institutional investors and require that in recommending an investment to a customer, a broker-dealer must have reasonable
grounds for believing that the investment is suitable for that customer. Prior to recommending securities to their customers, broker-dealers
must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and
other information, and for retail customers determine the investment is in the customer’s “best interest” and meet
other SEC requirements. Both SEC Regulation Best Interest and FINRA’s suitability requirements may make it more difficult for broker-dealers
to recommend that their customers buy speculative, low-priced securities. They may affect investing in our common stock or our preferred
stock, which may have the effect of reducing the level of trading activity in our securities. As a result, fewer broker-dealers may be
willing to make a market in our common stock or our preferred stock, reducing a stockholder’s ability to resell shares of our common
stock or our preferred stock.
Future
sales and issuances of our Common Stock or rights to purchase Common Stock, including pursuant to our equity incentive plans and outstanding
options could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall.
We
expect that significant additional capital may be needed in the future to continue our planned operations, expanded research and development
activities and costs associated with operating a public company. The Company may also require capital to acquire or invest in complementary
businesses, products, or technologies, or to obtain the right to use such complementary technologies. We have no commitments with respect
to any acquisition or investment; however, we seek opportunities and transactions that management believes will be advantageous to the
Company and its operations or prospects. To raise capital, we may sell Common Stock, convertible securities or other equity securities
in one or more transactions at prices and in a manner we determine from time to time. If we sell Common Stock, convertible securities
or other equity securities, investors may be materially diluted by subsequent sales. Such sales may also result in material dilution
to our existing stockholders, and new investors could gain rights, preferences and privileges senior to the holders of our Common Stock,
including the securities sold in this offering. The aggregate number of shares of our Common Stock that may be issued pursuant
to stock awards under our 2020 Equity Compensation Plan as of December 31, 2023, is 1,991,207 shares. Increases
in the number of shares available for future grant or purchase may result in additional dilution, which could cause our stock price to
decline.
The
Company will have broad discretion in the use of the net proceeds from this offering and may fail to apply these proceeds effectively.
The
Company’s management will have broad discretion in the application of the net proceeds of this offering, including using the proceeds
to conduct operations, increase marketing efforts, and investments in our existing business initiatives and products,
as well as general working capital. The Company may also use the net proceeds of this offering to acquire or invest in complementary
businesses, products, or technologies, or to obtain the right to use such complementary technologies. We have no commitments with respect
to any acquisition or investment; however, we seek opportunities and transactions that management believes will be advantageous to the
Company and its operations or prospects. We cannot specify with certainty the actual uses of the net proceeds of this offering. You may
not agree with the manner in which our management chooses to allocate and spend the net proceeds. We may invest the net proceeds from
this offering in a manner that does not produce income or that loses value. The failure by our management to apply these funds effectively
could harm our business, financial condition and results of operations.
Although
our Common Stock is listed on the Nasdaq Capital Market, the exchange may subsequently delist our Common Stock as it has with our Series
1 Preferred Stock if we fail to comply with ongoing listing standards.
We
previously received a deficiency letter from Nasdaq on our Series 1 Preferred Stock. Having failed to meet the ongoing listing requirements,
on January 18, 2024, the Company received a letter from The Nasdaq Stock Market LLC’s Hearings Panel notifying the Company that
it has determined to delist the Company’s shares of Series 1 Preferred Stock from the exchange, due to the Company’s inability
to meet the terms of the exception granted by the Panel on September 8, 2023, as amended. Suspension of trading in the Company’s
Series 1 Preferred Stock was effective at the open of business on January 22, 2024. The Series 1 Preferred Stock is now quoted on the
OTC Markets.
We
have also received a deficiency letter for our Common Stock. On January 24, 2022, the Company received a notification letter from the
Listing Qualifications Department of Nasdaq notifying the Company that, because the closing bid price for the Company’s common
stock listed on Nasdaq was below $1.00 for 30 consecutive trading days, the Company no longer met the minimum bid price requirement for
continued listing on The Nasdaq Capital Market under Nasdaq Marketplace Rule 5550(a)(2), requiring a minimum bid price of $1.00 per share
(the “Minimum Bid Price Requirement”).
On
February 8, 2023, the Company received a notification letter from the Listing Qualifications Department of Nasdaq notifying the Company
that it has regained compliance with Listing Rule 5550(a)(2) and is in compliance with all applicable listing standards. The Company’s
common stock continues to be listed and traded on The Nasdaq Stock Market.
Although
our Common Stock is listed on the Nasdaq Capital Market, the exchange will require us to meet certain financial, public float, bid price
and liquidity standards on an ongoing basis in order to continue the listing of our Common Stock. If we fail to meet these continued
listing requirements, our Common Stock may be subject to delisting. Delisting from the Nasdaq Capital Market could make trading our common
stock more difficult for investors, potentially leading to declines in our share price and liquidity. Without a Nasdaq Capital Market
listing, stockholders may have a difficult time getting a quote for the sale or purchase of our stock, the sale or purchase of our stock
would likely be made more difficult and the trading volume and liquidity of our stock could decline. Delisting from the Nasdaq Capital
Market could also result in negative publicity and could also make it more difficult for us to raise additional capital. The absence
of such a listing may adversely affect the acceptance of our common stock as currency or the value accorded by other parties. Further,
if we are delisted, we would also incur additional costs under state blue sky laws in connection with any sales of our securities. These
requirements could severely limit the market liquidity of our common stock and the ability of our stockholders to sell our common stock
in the secondary market. If our common stock is delisted by Nasdaq, our common stock may be eligible to trade on an over-the-counter
quotation system, such as the OTC Pink, OTCQB and OTCQX markets, where an investor may find it more difficult to sell our stock or obtain
accurate quotations as to the market value of our common stock. In the event our common stock is delisted from the Nasdaq Capital Market,
we may not be able to list our common stock on another national securities exchange or obtain quotation on an over-the counter quotation
system.
Trading
on the OTC Pink Market is volatile and sporadic, which could depress the market price of the Series 1 Preferred Stock and make it difficult
for the holders to resell their Series 1 Preferred Stock.
As
of January 22, 2024, the Series 1 Preferred Stock of the Company is quoted on the OTC Pink Market. Trading in securities quoted on the
OTC Pink Open Market is often thin and characterized by wide fluctuations in trading prices, due to many factors, some of which may have
little to do with our operations or business prospects. This volatility could depress the market price of the Series 1 Preferred Stock
for reasons unrelated to operating performance. Moreover, the OTC Pink Market is not a stock exchange, and trading of securities on the
OTC Pink Market is often more sporadic than the trading of securities listed on Nasdaq. These factors may result in shareholders having
difficulty reselling any Series 1 Preferred Stock.
The
Series A Warrants, Series B Warrants, and Pre-Funded Warrants will not be listed or quoted on any exchange.
There
is no established public trading market for the Series A Warrants Series B Warrants, or Pre-Funded Warrants being offered
in this offering, and we do not expect a market to develop. In addition, we do not intend to apply to list the Series A Warrants,
Series B Warrants, or Pre-Funded Warrants on any national securities exchange or other nationally recognized trading system,
including Nasdaq. Without an active market, the liquidity of the Series A Warrants, Series B Warrants, and Pre-Funded
Warrants will be limited.
Except
as otherwise provided in the Series A Warrants, Series B Warrants, and Pre-Funded Warrants, holders of Series A Warrants, Series B Warrants,
and Pre-Funded Warrants purchased in this offering will have no rights as stockholders until such holders exercise their Series A Warrants,
Series B Warrants, or Pre-Funded Warrants and acquire our common stock.
Except
as otherwise provided in the Series A Warrants, Series B Warrants, and Pre-Funded Warrants, until holders of Warrants or Pre-Funded Warrants
acquire our common stock upon exercise of the Series A Warrants, Series B Warrants, or Pre-Funded Warrants, holders of Series A Warrants,
Series B Warrants, and Pre-Funded Warrants will have no rights with respect to our common stock underlying such Series A Warrants, Series
B Warrants, and Pre-Funded Warrants. Upon exercise
of the Series A Warrants, Series B Warrants, and Pre-Funded Warrants, the holders will be entitled to exercise the
rights of a holder of our common stock only as to matters for which the record date occurs after the exercise date.
Purchasers
who purchase our securities in this offering pursuant to a securities purchase agreement may have rights not available to purchasers
that purchase without the benefit of a securities purchase agreement.
In
addition to rights and remedies available to all purchasers in this offering under federal securities and state law, the purchasers that
enter into a securities purchase agreement will also be able to bring claims of breach of contract against us. The ability to pursue
a claim for breach of contract provides those investors with the means to enforce the covenants uniquely available to them under the
securities purchase agreement including: (i) timely delivery of shares; (ii) agreement to not enter into any financings for 90 days from
closing, subject to certain exceptions; and (iii) indemnification for breach of contract.
This
offering may cause the trading price of our shares of common stock to decrease.
The
price per Unit, together with the number of shares of common stock and warrants we propose to issue and ultimately will
issue if this offering is completed, may result in an immediate decrease in the market price of our shares. This decrease may continue
after the completion of this offering.
Resales
of our shares of common stock in the public market by our stockholders as a result of this offering may cause the market price of our
shares of common stock to fall.
We
are registering 2,884,616 shares of common stock, and/or 2,884,616 shares of common stock, in the aggregate, issuable upon
the exercise of the Prefunded Warrants, as well as the Series A Warrants and the Series B Warrants offered under this prospectus.
Sales of substantial amounts of our shares of common stock in the public market, or the perception that such sales might occur, could
adversely affect the market price of our shares of common stock. The issuance of new shares of common stock could result in resales of
our shares of common stock by our current shareholders concerned about the potential ownership dilution of their holdings. Furthermore,
in the future, we may issue additional shares of common stock or other equity or debt securities exercisable or convertible into shares
of common stock. Any such issuance could result in substantial dilution to our existing shareholders and could cause our stock price
to decline.
You
will experience immediate and substantial dilution as a result of this offering and may experience additional dilution in the future.
If
you purchase Units in this offering, the value of your securities based on our actual book value will immediately be less
than the price you paid. This reduction in the value of your equity is known as dilution. This dilution occurs in large part because
our existing stockholders paid less than the assumed public offering price when they acquired their shares of Common Stock. Based upon
the issuance and sale of 2,884,616 Units by us in this offering at a public offering price of $3.12 per share, you will
incur immediate dilution of in the net tangible book value per share of Common Stock. If outstanding options to purchase our Common Stock
are exercised, investors will experience additional dilution. For more information, see “Dilution.”
Provisions
of the Series A Warrants and Series B Warrants offered pursuant to this prospectus could discourage an acquisition of us by a third-party.
Certain
provisions of the Series A Warrants and Series B Warrants offered pursuant to this prospectus could make it more difficult or expensive
for a third-party to acquire us. The Series A Warrants and Series B Warrants prohibit us from engaging in certain transactions constituting
“fundamental transactions” unless, among other things, the surviving entity assumes our obligations under the Series A Warrants
and Series B Warrants. These and other provisions of the Series A Warrants and Series B Warrants could prevent or deter a third-party
from acquiring us even where the acquisition could be beneficial to you.
The
Series A Warrants and Series B Warrants may have an adverse effect on the market price of our common stock and make it more difficult
to effect a business combination.
To
the extent we issue shares of common stock to effect a future business combination, the potential for the issuance of a substantial number
of additional shares of common stock upon exercise of the Series A Warrants and Series B Warrants could make us a less attractive acquisition
vehicle in the eyes of a target business. Such Series A Warrants and Series B Warrants, when exercised, will increase the number of issued
and outstanding shares of common stock and reduce the value of the shares issued to complete the business combination. Accordingly, the
Series A Warrants and Series B Warrants may make it more difficult to effectuate a business combination or increase the cost of acquiring
a target business. Additionally, the sale, or even the possibility of a sale, of the shares of common stock underlying the Series A Warrants
and Series B Warrants could have an adverse effect on the market price for our securities or on our ability to obtain future financing.
If and to the extent the Series A Warrants and Series B Warrants are exercised, you may experience dilution to your holdings.
We
will likely not receive any additional funds upon the exercise of the Series A Warrants.
If
we receive the Warrant Stockholder Approval, the Series A Warrants may be exercised by way of an alternative cashless exercise, meaning
that the holder may not pay a cash purchase price upon exercise, but instead would receive upon such exercise the net number of shares
of our common stock determined according to the formula set forth in the Series A Warrants. Accordingly, we will likely not receive any
additional funds upon the exercise of the Series A Warrants.
Certain
beneficial provisions in the Series A Warrants and Series B Warrants will not be effective until we are able to receive stockholder approval
of such provisions, and if we are unable to obtain such approval the Warrant will have significantly less value.
Under
Nasdaq listing rules, the alternative cashless exercise option in the Series A Warrants and certain anti-dilution provisions in the Series
B Warrants will not be effective until, and unless, we obtain the approval of our stockholders. While we intend to promptly seek stockholder
approval, there is no guarantee that the Warrant Stockholder Approval will ever be obtained. If we are unable to obtain the Warrant Stockholder
Approval, the foregoing provisions will not become effective and the Series A Warrants and Series B Warrants will have substantially
less value. In addition, we will incur substantial cost, and management will devote substantial time and attention, in attempting to
obtain the Warrant Stockholder Approval.
USE
OF PROCEEDS
We
estimate that the net proceeds from the sale of
the securities we are offering will be approximately $8.25 million (or approximately $9.5 million if the underwriter exercises
in full its over-allotment option), after deducting the estimated underwriting discounts and commissions and estimated offering
costs payable by us.
We
intend to use the net proceeds from this offering to conduct operations, increase marketing efforts, and investments in our existing
business initiatives and products, as well as general working capital. We may also use a portion of the net proceeds of this offering
to acquire or invest in complementary businesses, products, or technologies, or to obtain the right to use such complementary technologies.
We have no commitments with respect to any acquisition or investment and are not currently involved in any negotiations with respect
to any such transactions.
The
following table presents our use of proceeds if 100%, 75%, 50% or 25% of the securities in this offering are sold. This expected use
of the net proceeds from this offering represents our intentions based upon our current plans and business conditions.
| | |
| | |
% of | | |
| | |
% of | | |
| | |
% of | | |
| | |
% of | |
| | |
100% | | |
Total | | |
75% | | |
Total | | |
50% | | |
Total | | |
25% | | |
Total | |
| Gross Proceeds from Offering | |
$ | 9,000,000 | | |
| 100.00 | % | |
$ | 6,750,000 | | |
| 100.00 | % | |
$ | 4,500,000 | | |
| 100.00 | % | |
$ | 2,250,000 | | |
| 100.00 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Use of Proceeds | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Underwriter Fees and Expenses | |
$ | 675,000 | | |
| 7.50 | % | |
$ | 506,250 | | |
| 7.50 | % | |
$ | 337,500 | | |
| 7.50 | % | |
$ | 168,750 | | |
| 7.50 | % |
| Offering Expenses | |
$ | 75,360 | | |
| 0.84 | % | |
$ | 75,360 | | |
| 1.12 | % | |
$ | 75,360 | | |
| 1.67 | % | |
$ | 75,360 | | |
| 3.35 | % |
| Investments | |
$ | 2,000,000 | | |
| 22.22 | % | |
$ | 2,000,000 | | |
| 29.63 | % | |
$ | 2,000,000 | | |
| 44.44 | % | |
$ | 2,000,000 | | |
| 88.89 | % |
| Working capital | |
$ | 6,249,640 | | |
| 69.44 | % | |
$ | 4,168,390 | | |
| 61.75 | % | |
$ | 2,087,140 | | |
| 46.38 | % | |
$ | 5,890 | | |
| 0.26 | % |
| Total Use of Proceeds | |
$ | 9,000,000 | | |
| 100.00 | % | |
$ | 6,750,000 | | |
| 100.00 | % | |
$ | 4,500,000.00 | | |
| 100.00 | % | |
$ | 2,250,000 | | |
| 100.00 | % |
As
of the date of this prospectus, we cannot specify with certainty all of the particular uses for the net proceeds to be received upon
the completion of this offering. The amounts and timing of its actual expenditures will depend on numerous factors, including the status
of its product development efforts, sales and marketing activities, technological advances, amount of cash generated or used by its operations
and competition. Accordingly, our management will have broad discretion in the application of the net proceeds and investors will be
relying on the judgment of its management regarding the application of the proceeds of this offering.
Pending
our use of the net proceeds from this offering, we intend to invest the net proceeds in a variety of capital preservation investments,
including short-term, investment grade, interest bearing instruments and U.S. government securities.
DILUTION
If
you invest in our securities in this offering, your interest will be diluted immediately to the extent of the difference
between the public offering price per share of our common stock underlying the units and the as adjusted net tangible book
value per share of our common stock immediately after this offering.
The
historical net tangible book value (deficit) of our Common Stock as of December 31, 2023, was approximately $2,933,320
or $2.78 per share based upon shares of Common Stock outstanding on such date. Historical net tangible book value (deficit) per
share represents the amount of its total tangible assets reduced by the amount of its total liabilities, divided by the total number
of shares of Common Stock outstanding.
After
giving effect to the issuance of 2,884,616 shares of our common stock underlying the Common Units to be sold in
this offering at the assumed public offering price of $3.12 per share (which is the last reported sales price of our
common stock on the Nasdaq Capital Market on April 19, 2024), attributing no value to the Warrants included in the Common Units, and
after deducting the underwriting discount and estimated offering expenses payable by us, our as adjusted net tangible
book value as of December 31, 2023, would have been $11,182,960 or $2.84 per share. This represents an immediate increase
in net tangible book value of $0.06 per share, to the existing stockholders, and an immediate dilution in net tangible book value
of $0.28 per share to new investors.
The
following table illustrates this per share dilution of shares of Common Stock sold in this offering:
| Assumed public offering price per share | |
$ | 3.12 | |
| Historical net tangible book value (deficit) per share
as of December 31, 2023 | |
$ | 2.78 | |
| Increase in pro forma net tangible book value per share as of
December 31, 2023 attributable to the pro forma transactions described above | |
$ | 0.06 | |
| Pro forma net tangible book value per share as of December
31, 2023 | |
$ | 2.84 | |
| Dilution per share to new investors in this offering | |
$ | 0.28 | |
If
the underwriter exercises its option to purchase an additional 432,693 Common Units in full, our as adjusted net tangible book value
after giving effect to this offering, would have been approximately 2.84 per share, representing an increase in net tangible book value
of approximately $0.06 per share to existing stockholders and immediate dilution in net tangible book value of approximately $0.28 per
share to new investors purchasing shares in this offering.
The
information discussed above is illustrative only and will adjust based on the actual offering price, the actual number of shares we offer
in this offering, and any other terms of this offering determined at pricing.
The
number of shares of Common Stock outstanding is based on 1,056,981 shares of Common Stock issued and outstanding as of December
31, 2023, and excludes the following:
| |
● |
28,796 shares of Common Stock
issuable upon the exercise of outstanding stock options having a weighted average exercise price of $50.67 per share; and |
| |
● |
1,991,207 shares of Common
Stock reserved for future issuance under the Company’s 2020 Equity Compensation Plan. |
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information known to us with respect to the beneficial ownership of our common stock as of April
19, 2024, by:
| ■ | all
persons who are beneficial owners of five percent (5%) or more of our voting stock; |
| ■ | each
of our executive officers; and |
| ■ | 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.
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 April 19, 2024, are deemed outstanding. Such shares, however, are not deemed as of April 19,
2024, outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise stated, the address
for each beneficial owner is at 135 Fell Court, Hauppauge, Ny 11788.
| Name and Address of Beneficial Owner | |
Common Stock | | |
Series 1 Preferred Stock | | |
Series C Preferred Stock | |
| | |
Number of | | |
Percent of | | |
Number of | | |
Percent of | | |
Number of | | |
Percent of | |
| | |
Shares Owned | | |
Class(1) | | |
Shares Owned | | |
Class(1)(2) | | |
Shares Owned | | |
Class(1)(3) | |
| Saagar Govil | |
| 59,012 | | |
| 5.58 | % | |
| 132,298 | | |
| 5.53 | % | |
| 50,000 | | |
| 100 | % |
| Paul J. Wyckoff | |
| - | | |
| * | | |
| - | | |
| * | | |
| - | | |
| * | |
| Brian Kwon | |
| 2,858 | | |
| * | | |
| - | | |
| * | | |
| - | | |
| * | |
| Manpreet Singh | |
| 2,858 | | |
| * | | |
| - | | |
| * | | |
| - | | |
| * | |
| Metodi Filipov | |
| 2,858 | | |
| * | | |
| - | | |
| * | | |
| - | | |
| * | |
| All Directors and Executive Officers as a Group (5 persons) | |
| 67,586 | | |
| 6.39 | % | |
| 132,298 | | |
| 5.53 | % | |
| 50,000 | | |
| 100.00 | % |
| 5% Holders | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| * |
Less
than one percent of outstanding shares. |
| (1) |
As
of April 19, 2024, 1,056,981 shares of Common Stock were issued and outstanding. In addition, there were 50,000 shares
of Series C Preferred Stock outstanding which are entitled to vote 10,675,508 shares in the aggregate, all of which is held
by Saagar Govil and 2,456,827 shares of Series 1 Preferred Stock outstanding which are entitled to vote 4,913,654 shares
in the aggregate. Accordingly, there are a total of 16,646,143 voting shares outstanding. |
| |
|
| (2) |
Pursuant
to the Certificate of Designation of the Series 1 Preferred Stock, each issued and outstanding share is entitled to two votes per
share of Series 1 Preferred Stock at each meeting of our shareholders with respect to any and all matters presented to our shareholders
for their action or consideration, including the election of directors. |
| |
|
| (3) |
Pursuant
to the Certificate of Designation of the Series C Preferred Stock, each issued and outstanding share of Series C Preferred Stock
are entitled to the number of votes per share equal to the result of (i) the total number of shares of Common Stock outstanding at
the time of such vote multiplied by 10.01, and divided by (ii) the total number of shares of Series C Preferred Stock outstanding
at the time of such vote, at each meeting of our shareholders with respect to any and all matters presented to our shareholders for
their action or consideration, including the election of directors. |
UNDERWRITING
Aegis
Capital Corp., (“Aegis” or the “underwriter”), is the underwriter and the book-running manager of this offering.
Under the terms of an underwriting agreement, which is filed as an exhibit to the registration statement, we have agreed to sell to the
underwriter and the underwriter has agreed to purchase, at the public offering price less the underwriting discounts and commissions
set forth on the cover page of this prospectus, the following number of Units:
| Underwriter | |
Number
of
Units including
Common Stock | | |
Number
of
Units including
Pre-Funded Warrant | |
| Aegis Capital Corp. | |
| 432,693 | | |
| 432,693 | |
The
underwriting agreement provides that the underwriter’s obligation to purchase Units depends on the satisfaction of the conditions
contained in the underwriting agreement including:
| ● | the
representations and warranties made by us to the underwriter are true; |
| ● | there
is no material change in our business or the financial markets; and |
| ● | we
deliver customary closing documents to the underwriter. |
The
underwriter has agreed to purchase all of the Units offered by this prospectus (other than those covered by the over-allotment option
described below), if any are purchased under the underwriting agreement.
The
underwriter is offering the Units subject to various conditions and may reject all or part of any order. The underwriter has advised
us that it proposes to offer the units directly to the public at the public offering price per Unit that appears on the cover page of
this prospectus. In addition, the underwriter may offer some of the Units to other securities dealers at such price less a concession
of $[●] per Unit. After the Units are released for sale to the public, the underwriter may change the offering price and
other selling terms at various times.
Over-Allotment
Option
We
have granted to the underwriter an option to purchase up to 432,693 additional shares of Common Stock (representing 15.0% of the Units
sold in the offering), and/or up to an additional 432,693 Series A Warrants to purchase an aggregate of an additional 432,693 shares
of Common Stock, representing 15.0% of the Closing Units sold in the offering from the Company; and 432,693 Series B Warrants to purchase
an aggregate of an additional 432,693 shares of Common Stock, representing 15.0% of the Closing Units sold in the offering from the
Company) at the public offering price less underwriting discounts and commissions. The underwriter may exercise this option in whole
or in part at any time within forty-five (45) days after the date of the offering. The underwriter may exercise the over-allotment option
with respect to shares of Common Stock only, Warrants only, or any combination thereof. The purchase price to be paid per additional
share of Common Stock will be equal to the public offering price of one Unit (less $0.01 allocated to each full Warrant), as applicable,
less the underwriting discount, and the purchase price to be paid per over-allotment Warrant will be $0.01. We will be obligated, pursuant
to the option, to sell these additional shares of Common Stock, or Warrants to the underwriter to the extent the option is exercised.
If any additional shares of Common Stock, or Warrants are purchased, the underwriter will offer the additional shares of Common Stock,
and Warrants on the same terms as those on which the other shares of Common Stock, and Warrants are being offered hereunder. No underwriting
discounts or commissions will be paid on any Warrants purchased pursuant to the underwriter’s over-allotment option. If this over-allotment
option is exercised in full, the total offering price to the public will be approximately $10.35 million, and the total net proceeds,
before expenses and after deducting the underwriting discounts described above, to us will be approximately $9.5 million (based
upon a public offering price of $3.12 per share of Common Stock).
Underwriting
Discounts and Expenses
The
following table shows the per Unit and total underwriting discounts we will pay to Aegis. These amounts are shown assuming both no exercise
and full exercise of the underwriter’s option to purchase additional securities.
| | |
| | |
Total | |
| | |
| | |
No | | |
Full | |
| | |
Per Unit | | |
Exercise | | |
Exercise(2) | |
| Public offering price | |
$ | 3.12 | | |
$ | 3.12 | | |
| | |
| Underwriting discounts to be paid by us (7.0%): | |
$ | 0.22 | | |
$ | 0.22 | | |
| | |
| Non-accountable
expense allowance (0.5%)(1) | |
$ | 0.02 | | |
$ | 0.02 | | |
| | |
| Proceeds, before expenses, to us | |
$ | 2.88 | | |
$ | 2.88 | | |
| | |
| (1) | We
have agreed to pay a non-accountable expense allowance to Aegis equal to 0.5% of the gross
proceeds received in this offering. |
| | |
| (2) | Assumes
exercise for Units only. The underwriter will not receive any discounts or commissions upon
exercise of the underwriter’s option to purchase Warrants. |
We
have also agreed to reimburse the underwriter for certain of its expenses, including “roadshow,” diligence, and reasonable
legal fees and disbursements, in an amount not to exceed $100,000 in the aggregate. We estimate that the total expenses of the offering
payable by us, excluding underwriting discounts, will be approximately $75,360.
Stabilization
In
accordance with Regulation M under the Exchange Act, the underwriter may engage in activities that stabilize, maintain or otherwise affect
the price of our Common Stock, including short sales and purchases to cover positions created by short positions, stabilizing transactions,
syndicate covering transactions, penalty bids and passive market making.
| ● | Short
positions involve sales by the underwriter of shares of Common Stock in excess of the number
of shares the underwriter is obligated to purchase, which creates a syndicate short position.
The short position may be either a covered short position or a naked short position. In a
covered short position, the number of shares involved in the sales made by the underwriter
in excess of the number of shares they are obligated to purchase is not greater than the
number of shares that they may purchase by exercising their option to purchase additional
shares. In a naked short position, the number of shares involved is greater than the number
of shares in their option to purchase additional shares. The underwriter may close out any
short position by either exercising their option to purchase additional shares or purchasing
shares in the open market. |
| ● | Stabilizing
transactions permit bids to purchase the underlying security as long as the stabilizing bids
do not exceed a specific maximum price. |
| ● | Syndicate
covering transactions involve purchases of our shares of Common Stock in the open market
after the distribution has been completed to cover syndicate short positions. In determining
the source of shares to close out the short position, the underwriter will consider, among
other things, the price of shares available for purchase in the open market as compared to
the price at which they may purchase shares through the underwriter’s option to purchase
additional shares. If the underwriter sells more shares than could be covered by the underwriter’s
option to purchase additional shares, thereby creating a naked short position, the position
can only be closed out by buying shares in the open market. A naked short position is more
likely to be created if the underwriter is concerned that there could be downward pressure
on the price of the shares in the open market after pricing that could adversely affect investors
who purchase in the offering. |
| ● | Penalty
bids permit the underwriter to reclaim a selling concession from a syndicate member when
the shares of Common Stock originally sold by the syndicate member is purchased in a stabilizing
or syndicate covering transaction to cover syndicate short positions. |
| ● | In
passive market making, market makers in our Common Stock who are underwriters or prospective
underwriters may, subject to limitations, make bids for or purchase our Common Stock until
the time, if any, at which a stabilizing bid is made. |
These
activities may have the effect of raising or maintaining the market price of our Common Stock or preventing or retarding a decline in
the market price of our Common Stock. As a result of these activities, the price of our Common Stock may be higher than the price that
might otherwise exist in the open market. These transactions may be effected on NASDAQ or otherwise and, if commenced, may be discontinued
at any time.
Neither
we nor the underwriter makes any representation or prediction as to the direction or magnitude of any effect that the transactions described
above may have on the price of our Common Stock. In addition, neither we nor the underwriter makes any representation that Aegis will
engage in these stabilizing transactions or that any transaction, once commenced, will not be discontinued without notice.
Discretionary
Accounts
The
underwriter has informed us that they do not expect to make sales to accounts over which they exercise discretionary authority in excess
of five percent (5%) of the securities being offered in this offering.
Indemnification
We
have agreed to indemnify Aegis, its affiliates, and each person controlling Aegis against any losses, claims, damages, judgments, assessments,
costs, and other liabilities, as the same are incurred (including the reasonable fees and expenses of counsel), relating to or arising
out of the offering, undertaken in good faith.
Lock-Up
Agreements
Pursuant
to certain “lock-up” agreements, our executive officers, directors, employees and holders of at least 5% of our Company’s
Common Stock and securities exercisable for or convertible into Common Stock outstanding immediately upon the closing of this offering,
have agreed, subject to certain exceptions, not to offer, sell, assign, transfer, pledge, contract to sell, or otherwise dispose of or
announce the intention to otherwise dispose of, or enter into any swap, hedge or similar agreement or arrangement that transfers, in
whole or in part, the economic risk of ownership of, directly or indirectly, engage in any short selling of any shares of Common Stock
or securities convertible into or exchangeable or exercisable for any shares of Common Stock (“Lock-Up Securities”), whether
currently owned or subsequently acquired, without the prior written consent of the underwriter, for a period of ninety (90) days after
the closing date of the offering. See “Shares Eligible for Future Sale – Lock-Up Agreements.”
The
underwriter, in its sole discretion, may release the Common Stock and other securities subject to the lock-up agreements described above
in whole or in part at any time. When determining whether or not to release Common Stock and other securities from lock-up agreements,
the underwriter will consider, among other factors, the holder’s reasons for requesting the release, the number of shares of Common
Stock and other securities for which the release is being requested and market conditions at the time.
Company
Standstill
We
have agreed, for a period of ninety (90) days after the closing date of the offering (the “Standstill Period”), that without
the prior written consent of Aegis, we will not (a) offer, sell, issue, or otherwise transfer or dispose of, directly or indirectly,
any equity of our Company or any securities convertible into or exercisable or exchangeable for equity of our Company; (b) file or caused
to be filed any registration statement with the Commission relating to the offering of any equity of our Company or any securities convertible
into or exercisable or exchangeable for equity of our Company; or (c) enter into any agreement or announce the intention to effect any
of the actions described in subsections (a) or (b) hereof (all of such matters, the “Standstill Restrictions”). So long as
none of such equity securities shall be saleable in the public market until the expiration of the Standstill Period, the following matters
shall not be prohibited by the Standstill Restrictions: (i) the adoption of an equity incentive plan and the grant of awards or equity
pursuant to any equity incentive plan, and the filing of a registration statement on Form S-8; and (ii) securities issued pursuant to
acquisitions or strategic transactions approved by a majority of the disinterested directors of our Company, provided that such securities
are issued as “restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit the
filing of any registration statement in connection therewith during the Standstill Period, and provided that any such issuance shall
only be to a person or entity (or to the equityholders of an entity) which is, itself or through its subsidiaries, an operating company
or an owner of an asset in a business synergistic with the business of our Company and shall provide to our Company additional benefits
in addition to the investment of funds, but shall not include a transaction in which our Company is issuing securities primarily for
the purpose of raising capital or to an entity whose primary business is investing in securities. In no event should any equity transaction
during the Standstill Period result in the sale of equity at an offering price to the public less than that of this offering.
Right
of First Refusal
If,
for the period beginning on the Closing and ending fifteen (15) months after the commencement of sales in the offering,
we or any of our subsidiaries (a) decides to finance or refinance any indebtedness, Aegis (or any affiliate designated by Aegis) shall
have the right to act as sole book-runner, sole manager, sole placement agent or sole agent with respect to such financing
or refinancing; or (b) decides to raise funds by means of a public offering (including at-the-market facility) or a private placement
or any other capital raising financing of equity, equity-linked or debt securities, Aegis (or any affiliate designated by Aegis) shall
have the right to act as sole book-running manager, sole underwriter or sole placement agent for such financing. If Aegis or one of its
affiliates decides to accept any such engagement, the agreement governing such engagement will contain, among other things, provisions
for customary fees and terms for transactions of similar size and nature, including indemnification, which are appropriate to such a
transaction.
Notwithstanding
the foregoing, the decision to accept our engagement shall be made by Aegis or one of its affiliates, by a written notice to us, within
ten (10) days of the receipt of our notification of financing needs, including a detailed term sheet. Aegis’s determination of
whether in any case to exercise its right of first refusal will be strictly limited to the terms on such term sheet, and any waiver of
such right of first refusal shall apply only to such specific terms. If Aegis waives its right of first refusal, any deviation from such
terms shall void the waiver and require us to seek a new waiver from the right of first refusal.
Other
Relationships
The
underwriter is a full service financial institution engaged in various activities, which may include sales and trading, commercial and
investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and
other financial and non-financial activities and services. The underwriter may in the future provide various investment banking, commercial
banking and other financial services for us and our affiliates for which they may in the future receive customary fees.
In
the ordinary course of its business activities, the underwriter and its affiliates, officers, directors and employees may purchase, sell
or hold a broad array of investments and actively traded securities, derivatives, loans, commodities, currencies, credit default swaps
and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities
may involve or relate to assets, securities and/or instruments of the issuer (directly, as collateral securing other obligation or otherwise)
publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend
to clients that they should acquire, long and/or short positions in such assets, securities and instruments.
Electronic
Offer, Sale and Distribution of Securities
A
prospectus in electronic format may be made available
on the websites maintained by the underwriter, if any, participating in this offering and the underwriter participating in
this offering may distribute prospectuses electronically. The underwriter may agree to allocate a number of Units for sale to its online
brokerage account holders. Internet distributions will be allocated by the underwriter that will make internet distributions on the same
basis as other allocations. Other than the prospectus in electronic format, the information on these websites is not part
of, nor incorporated by reference into, this prospectus or the registration statement of which this prospectus forms a part, has
not been approved or endorsed by us or the underwriter in its capacity as underwriter, and should not be relied upon by investors.
Offer
Restrictions Outside the United States
Other
than in the United States, no action has been taken by us or the underwriter that would permit a public offering of the securities offered
by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus may not be
offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with
the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result
in compliance with the applicable rules and regulations of that jurisdiction. Persons who come into possession of this prospectus are
advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus.
This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in
any jurisdiction in which such an offer or a solicitation is unlawful.
Transfer
Agent and Registrar
The
transfer agent and registrar for our Common Stock is Clear Trust LLC.
Trading
Market
Our
Common Stock Common Stock is listed on the Nasdaq Capital Market under the symbol “CETX.” We do not intend to apply for listing
of the Pre-funded Warrants or the Warrants on any securities exchange or other nationally recognized trading system.
DESCRIPTION
OF SECURITIES
General
Our
authorized capital stock consists of 50,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of preferred
stock, par value $0.001 per share, of which 1,000,000 shares are designated as series A preferred stock, 100,000 are designated as series
C preferred stock and 3,000,000 shares are designated as series 1 preferred stock. As of April 19, 2024, 1,056,981 shares
of common stock were issued and outstanding, 50,000 shares of Series C preferred stock issued and outstanding and 2,520,927 shares
of series 1 preferred stock were issued and 2,456,827 outstanding.
In
addition, as of April 19, 2024, there were an aggregate of 28,796 shares of our common stock reserved for issuance upon the exercise
of our outstanding stock options at a weighted average exercise price of $50.67 per share.
Common
Stock
Voting
Power; Dividends. Holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote
of stockholders and have the right to vote cumulatively for the election of directors. This means that in the voting at our annual meeting,
each stockholder or his proxy, may multiply the number of his shares by the number of directors to be elected then cast the resulting
total number of votes for a single nominee, or distribute such votes on the ballot among the nominees as desired. Holders of our common
stock are entitled to receive ratably such dividends, if any, as may be declared by our board of directors out of funds legally available
therefor, subject to any preferential dividend rights for our outstanding preferred stock.
Liquidation,
Dissolution and Winding Up. Upon our liquidation, dissolution or winding up, the holders of our common stock are entitled to
receive ratably our net assets available after the payment of all debts and other liabilities and subject to the prior rights of holders
of any of our outstanding preferred stock.
Preemptive
and Other Rights. Holders of our common stock have no preemptive, subscription, redemption or conversion rights. The rights,
preferences and privileges of holders of our common stock are subject to, and may be adversely affected by, the rights of the holders
of shares of any series of our preferred stock that we may designate and issue in the future.
Our
common stockholders may not receive any assets or funds until our creditors have been paid in full and the preferential or participating
rights of our preferred stockholders have been satisfied. If we participate in a corporate merger, consolidation, purchase or acquisition
of property or stock, or other reorganization, any payments or shares of stock allocated to our common stockholders will be distributed
pro-rata to holders of our common stock on a per share basis. If we redeem, repurchase or otherwise acquire for payment any shares of
our common stock, we will treat each share of common stock identically.
We
may issue additional shares of our common stock and our preferred stock, if authorized by the board, without the common stockholders’
approval, unless required by Delaware law or a stock exchange on which our securities are traded. If we receive the appropriate payment,
shares of our common stock that we issue will be fully paid and nonassessable.
Nasdaq
Capital Market. Our shares of common stock are traded on the Nasdaq Capital Market under the symbol CETX.
Transfer
Agent and Registrar. The transfer agent and registrar for our common stock is Clear Trust LLC, Lutz, Florida.
Preferred
Stock
Under
our certificate of incorporation, our board of directors is authorized, without further stockholder action, to issue up to 10,000,000
shares of preferred stock in one or more series, with such powers, designations, preferences and relative, participating, optional and
other rights and such qualifications, limitations and restrictions thereof as shall be set forth in the resolutions providing therefor.
We have no present plans to issue any additional shares of preferred stock.
Series
A Preferred Stock
Pursuant
to the certificate of designation relating to those shares, each issued and outstanding share of series A preferred stock is entitled
to the number of votes equal to the result of (i) the total number of shares of common stock outstanding at the time of such vote multiplied
by 1.01, and divided by (ii) the total number of shares of series A preferred stock outstanding at the time of such vote, at each meeting
of our stockholders with respect to any and all matters presented to our stockholders for their action or consideration, including the
election of directors.
Our
series A preferred stock has equal distribution rights with our common stockholders upon liquidation, dissolution or winding-up of our
company, and otherwise has no pre-emptive, subscription, conversion or redemption rights.
Series
C Preferred Stock
On
October 3, 2019, pursuant to Article IV of our Articles of Incorporation, our Board of Directors voted to designate a class of preferred
stock entitled Series C Preferred Stock, consisting of up to one hundred thousand (100,000) shares, par value $0.001. Under the Certificate
of Designation, holders of Series C Preferred Stock are entitled to the number of votes per share equal to the result of (i) the total
number of shares of Common Stock outstanding at the time of such vote multiplied by 10.01, and divided by (ii) the total number of shares
of Series C Preferred Stock outstanding at the time of such vote, at each meeting of our shareholders with respect to any and all matters
presented to our shareholders for their action or consideration, including the election of directors.
Series
1 Preferred
As
of April 19, 2024, 2,520,927 shares of series 1 preferred stock (the “series 1 preferred”), were issued and
2,456,827 outstanding having the following powers, preferences and rights:
Dividends.
Holders of the series 1 preferred are entitled to receive cumulative cash dividends at the rate of 10% of the purchase price
per year, payable semiannually on the last day of March and September in each year. Dividends may also be paid, at our option, in additional
shares of series 1 preferred, valued at their liquidation preference. The series 1 preferred ranks senior to the common stock with respect
to dividends. Dividends will be entitled to be paid prior to any dividend to the holders of our common stock.
Liquidation
Preference. The series 1 preferred has a liquidation preference of $10.00 per share, equal to its purchase price. In the event
of any liquidation, dissolution or winding up of our company, any amounts remaining available for distribution to stockholders after
payment of all liabilities of our company will be distributed first to the holders of series 1 preferred, and then pari passu to the
holders of the series A preferred stock and our common stock. The holders of series 1 preferred have preference over the holders of our
common stock on any liquidation, dissolution or winding up of our company. The holders of series 1 preferred also have preference over
the holders of our series A preferred stock.
Voting
Rights. Except as otherwise provided in the certificate of designation, preferences and rights or as required by law, the series
1 preferred vote together with the shares of our common stock (and not as a separate class) at any annual or special meeting of stockholders.
Except as required by law, each holder of shares of series 1 preferred is entitled to two votes for each share of series 1 preferred
held on the record date as though each share of series 1 preferred were two shares of our common stock. Holders of the series 1 preferred
vote as a class on any amendment altering or changing the powers, preferences or rights of the series 1 preferred so as to affect them
adversely.
No
Conversion. The series 1 preferred are not convertible into or exchangeable for shares of our common stock or any other security.
Rank.
The series 1 preferred ranks with respect to distribution rights upon our liquidation, winding-up or dissolution and dividend
rights, as applicable:
| |
● |
senior
to our series A preferred stock, common stock and any other class of capital stock we issue in the future unless the terms of that
stock provide that it ranks senior to any or all of the series 1 preferred; |
| |
● |
on
a parity with any class of capital stock we issue in the future the terms of which provide that it will rank on a parity with any
or all of the series 1 preferred; |
| |
● |
junior
to each class of capital stock issued in the future the terms of which expressly provide that such capital stock will rank senior
to the series 1 preferred and the common stock; and |
| |
● |
junior
to all of our existing and future indebtedness. |
In
addition, the series 1 preferred, with respect to rights upon our liquidation, winding-up or dissolution, will be structurally subordinated
to existing and future indebtedness of our company and subsidiaries, as well as the capital stock of our subsidiaries held by third parties.
Redemption.
We may mandatorily redeem any or all of the series 1 preferred at any time and from time to time at our option, by giving notice
(by issuing a press release or otherwise making a public announcement, by mailing a notice of redemption or otherwise). If we redeem
fewer than all of the outstanding shares of series 1 preferred, we may select the shares to be redeemed by redeeming shares proportionally,
by lot, or by any other equitable method. The mandatory redemption price for any shares of series 1 preferred is an amount equal to the
$10.00 purchase price per share plus any accrued but unpaid dividends to the date fixed for redemption.
From
and after any applicable redemption date, if funds necessary for the redemption are available and have been irrevocably deposited or
set aside, then:
| |
● |
the
shares will no longer be deemed outstanding; |
| |
● |
the
holders of the shares, as such, will cease to be stockholders; and |
| |
● |
all
rights with respect to the shares of series 1 preferred will terminate except the right of the holders to receive the redemption
price, without interest. |
We
may also repurchase, outside of our mandatory redemption rights, any shares of series 1 preferred in privately-negotiated transactions
or in open market purchases on Nasdaq, subject to applicable regulations regarding issuer repurchases of their capital stock. In such
cases, we would most likely do so at prices lower than the price at which we are entitled to mandatorily redeem the shares.
No
Other Rights. The holders of the series 1 preferred have no preemptive or preferential or other rights to purchase or subscribe
to any stock, obligations, warrants or other securities of ours.
Trading.
The series 1 preferred is quoted on the OTC Markets under the symbol CETXP.
Transfer
Agent and Registrar. Clear Trust, LLC, Florida, is the transfer agent and registrar for our series 1 preferred.
Anti-Takeover
Provisions
The
terms of our shares of series A, none are issued and outstanding at this time, and series C preferred stock, held by Saagar Govil, our
CEO, may also have the effect of discouraging a takeover of our company. Pursuant to the certificate of designation for our Series A
preferred stock, each outstanding share of Series A preferred stock is entitled to the number of votes equal to the result of (i) the
total number of shares of our common stock outstanding at the time of such vote multiplied by 1.01, divided by (ii) the total number
of shares of our series A preferred stock outstanding at the time of such vote, at each meeting of stockholders of our company with respect
to any and all matters presented to our stockholders for their action or consideration, including the election of directors. Pursuant
to the certificate of designation for our Series C preferred stock, each issued and outstanding Series C 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 (The “Common Shares”)
issued and outstanding at the time of such vote multiplied by 10.01; divided by (ii) the total number of Series C 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 C Preferred
Shares shall vote together with the holders of Common Shares as a single class. As a result of Saagar Govil’s ownership of our
Series C preferred stock, our management stockholders control, and will control in the future, substantially all matters requiring approval
by the stockholders of our company, including the election of all directors and approval of significant corporate transactions. Given
this continuing voting interest of our series A preferred stock and series C preferred stock, its holder will be able to exert significant
influence over all corporate activities including the outcome of tender offers, mergers, proxy contests or other purchases of common
stock, which could discourage others from initiating changes of control.
Our
certificate of incorporation, in order to combat “greenmail,” provides in general that any direct or indirect purchase by
us of any of our voting stock or rights to acquire voting stock known to be beneficially owned by any person or group which holds more
than 5% of a class of our voting stock and which has owned the securities being purchased for less than two years must be approved by
the affirmative vote of at least two-thirds of the votes entitled to be cast by the holders of voting stock, subject to certain exceptions.
The prohibition of “greenmail” may tend to discourage or foreclose certain acquisitions of our securities, which might temporarily
increase the price of our securities. Discouraging the acquisition of a large block of our securities by an outside party may also have
a potential negative effect on takeovers. Parties seeking control of our company through large acquisitions of our securities will not
be able to resort to “greenmail” should their bid fail, thus making such a bid less attractive to persons seeking to initiate
a takeover effort.
We
are subject to the provisions of Section 203 of the General Corporation Law of Delaware. Section 203 prohibits certain publicly held
Delaware corporations from engaging in a “business combination” with an “interested stockholder” for a period
of three years after the date of the transaction in which the person became an “interested stockholder,” unless the business
combination is approved in a prescribed manner. A “business combination” includes mergers, asset sales and other transactions
resulting in a financial benefit to the interested stockholder. Subject to certain exceptions, an “interested stockholder”
is a person or entity who, together with affiliates and associates, owns (or within the preceding three years, did own) 15% or more of
the corporation’s voting stock. The statute contains provisions enabling a corporation to avoid the statute’s restrictions
if the stockholders holding a majority of the corporation’s voting stock approve.
Indemnification
of Directors and Officers
Our
certificate of incorporation provides that any person who was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (whether or not by or in the right
of the company) by reason of the fact that he is or was a director, officer, incorporator, employee or agent of the company, or is or
was serving at the request of the company as a director, officer, incorporator, employee or agent of another company, partnership, joint
venture, trust or other enterprise, shall be entitled to be indemnified by the company to the full extent then permitted by law or to
the extent that a court of competent jurisdiction shall deem proper or permissible under the circumstance, whichever is greater, against
expenses (including attorneys’ fees), judgments, fines and amount paid in settlement incurred by such person in connection with
such action, suit or proceeding. Such right of indemnification shall inure whether or not the claim asserted is based on matters which
pre-date the company’s adoption of the indemnification provisions in its certificate of incorporation. Furthermore, such right
of indemnification will continue as to a person who has ceased to be a director, officer, incorporator, employee or agent and will inure
to the benefit of the heirs and personal representatives of such person.
DESCRIPTION
OF SECURITIES WE ARE OFFERING
We
are offering 2,884,616 Units based on assumed public offering price of $3.12 per Unit on a firm commitment basis. Each Unit will consist of
one share of common stock (or Pre-Funded Warrant to purchase one share of our common stock in lieu thereof), one Series A Warrant to
purchase one share of common stock and one Series B Warrant to purchase one share of common stock. The Units have no stand-alone rights
and will not be certificated or issued as stand-alone securities. The shares of common stock and Pre-Funded Warrants, if any, can each
be purchased in this offering only with the accompanying Series A Warrants and Series B Warrants as part of Units (other than pursuant
to the underwriter’s option to purchase additional shares of Common Stock and/or Pre-Funded Warrants and/or Series A Warrants and/or
Series B Warrants), but the components of the Units will be immediately separable and will be issued separately in this offering.
Common
Stock
The
material terms and provisions of our common stock are described under the caption “Description of Securities” in this
prospectus.
Pre-Funded
Warrants
The
following summary of certain terms and provisions of the Pre-Funded Warrants that are being offered hereby is not complete and
is subject to, and qualified in its entirety by the provisions of, the Pre-Funded Warrant. Prospective investors should carefully
review the terms and provisions of the form of Pre-Funded Warrant for a complete description of the terms and conditions of the Pre-Funded
Warrants.
The
term “pre-funded” refers to the fact that the purchase price of our common stock in this offering includes almost the entire
exercise price that will be paid under the Pre-Funded Warrants, except for a nominal remaining exercise price of $0.001. The purpose
of the Pre-Funded Warrants is to enable investors that may have restrictions on their ability to beneficially own more than 4.99% (or,
upon election of the holder, 9.99%) of our outstanding shares of common stock following the consummation of this offering the opportunity
to make an investment in the Company without triggering their ownership restrictions, by receiving Pre-Funded Warrants in lieu of our
common stock which would result in such ownership of more than 4.99% (or 9.99%), and receive the ability to exercise their option to
purchase the shares underlying the Pre-Funded Warrants at such nominal price at a later date.
Duration.
The Pre-Funded Warrants offered hereby will entitle the holders thereof to purchase our shares of common stock at a nominal exercise
price of $0.001 per share, commencing immediately on the date of issuance. There is no expiration date for the Pre-Funded Warrants.
Exercise
Limitation. A holder will not have the right to exercise any portion of the Pre-Funded Warrant if the holder (together with its affiliates)
would beneficially own in excess of 4.99% (or, upon election of the holder, 9.99%) of the number of our shares of common stock outstanding
immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Pre-Funded
Warrants. However, any holder may increase or decrease such percentage (up to 9.99%), provided that any increase will not be effective
until the 61st day after such election. It is the responsibility of the holder to determine whether any exercise would exceed the exercise
limitation.
Exercise
Price. The Pre-Funded Warrants will have an exercise price of $0.001 per share. The exercise price is subject to appropriate adjustment
in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting
our common stock and also upon any distributions of assets, including cash, stock or other property to our shareholders.
Transferability.
Subject to applicable laws, the Pre-Funded Warrants may be offered for sale, sold, transferred or assigned without our consent.
Absence
of Trading Market. There is no established
trading market for the Pre-Funded Warrants and we do not expect a market to develop. In addition, we do not intend to apply
for the listing of the Pre-Funded Warrants on any national securities exchange or other trading market. Without
an active trading market, the liquidity of the Pre-Funded Warrants will be limited.
Fundamental
Transactions. In the event of a fundamental transaction, generally including any reorganization, recapitalization or reclassification
of our common stock, the sale, transfer or other disposition of all or substantially all of our properties or assets, our consolidation,
merger, amalgamation or arrangement with or into another person, the acquisition of more than 50% of our outstanding common stock, or
any person or group becoming the beneficial owner of 50% of the voting power represented by our outstanding common stock, the holder
will have the right to receive, for each share of common stock that would have been issuable upon such exercise immediately prior to
the occurrence of such fundamental transaction, the number of shares of the successor or acquiring corporation or of us if we are the
surviving corporation, and any additional consideration receivable as a result of such fundamental transaction by a holder of the number
of shares for which the Pre-Funded Warrant was exercisable immediately prior to such fundamental transaction. The holders of the Pre-Funded
Warrants may also require us to purchase the Pre-Funded Warrants from the holders by paying to each holder an amount equal to the Black
Scholes value of the remaining unexercised portion of the Pre-Funded Warrants on the date of the fundamental transaction.
No
Rights as a Shareholder.
Except as otherwise provided in the Pre-Funded Warrants or by virtue of such holder’s ownership of our shares
of common stock, the holder of Pre-Funded Warrants does not have the rights or privileges of a holder of our common stock,
including any voting rights, until the holder exercises the Pre-Funded Warrant.
Warrant
Stockholder Approval
Under
Nasdaq listing rules, the alternative cashless exercise option (described below) in the Series A Warrants, certain anti-dilution provisions
in the Series B Warrants (described below), and the reverse stock split provision in both Series A Warrants and Series B Warrants (each
described below) will not be effective until, and unless, we obtain the approval of our stockholders. While we intend to promptly seek
stockholder approval, there is no guarantee that the Warrant Stockholder Approval will ever be obtained. If we are unable to obtain the
Warrant Stockholder Approval, the foregoing provisions will not become effective and the Series A Warrants and Series B Warrants will
have substantially less value. In addition, we will incur substantial costs, and management will devote substantial time and attention,
in attempting to obtain the Warrant Stockholder Approval.
Series
A Warrants and Series B Warrants
The
following summary of certain terms and provisions of the Series A Warrants and Series B Warrants included in the Units and Pre-offered
hereby is not complete and is subject to, and qualified in its entirety by the provisions of the forms of Series A Warrant
and Series B Warrant, which are filed as an exhibit to the registration statement of which this prospectus is a part.
Prospective investors should carefully review the terms and provisions set forth in the forms of Series A Warrant and Series
B Warrant.
Exercisability.
The Series A Warrants and Series B Warrants are exercisable immediately and at any time up to the date that is two-and-a-half years
(with respect to the Series A Warrants) or five years (with respect to the Series B Warrants) after their original issuance. The Series
A Warrants and Series B Warrants will be exercisable, at the option of each holder, in whole or in part by delivering to us a duly
executed exercise notice and, at any time a registration statement registering the issuance of the shares of common stock underlying
the Series A Warrants and Series B Warrants under the Securities Act is effective and available for the issuance of such
shares, by payment in full in immediately available funds for the number of shares of common stock purchased upon such exercise. If
a registration statement registering the issuance of the shares of common stock underlying the Series A Warrants or Series B Warrants
under the Securities Act is not effective, the holder may elect to exercise the Series A Warrants or Series B Warrants through a cashless
exercise, in which case the holder would receive upon such exercise the net number of shares of common stock determined according to
the formula set forth in the warrant. No fractional shares of common stock will be issued in connection with the exercise of Series A
Warrants or Series B Warrants. In lieu of fractional shares, we will pay the holder an amount in cash equal to the fractional amount
multiplied by the exercise price.
On
or after receipt of the Warrant Stockholder Approval, a holder may also effect an “alternative cashless exercise” at any
time while the Series A Warrants are outstanding. In such event, the aggregate number of shares issuable in such alternative cashless
exercise will be equal to the number of Series A Warrants being exercised multiplied by three.
Exercise
Limitation. A holder will not have the right to exercise any portion of the Series A Warrants or Series B Warrants if the holder
(together with its affiliates) would beneficially own in excess of 4.99% of the number of shares of our common stock outstanding immediately
after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Series A Warrants
and Series B Warrants. However, any holder may increase or decrease such percentage to any other percentage not in excess of 9.99%, provided
that any increase in such percentage shall not be effective until 61 days following notice from the holder to us.
Exercise
Price. The exercise price per whole share of common stock purchasable upon exercise of the Series A Warrants is $3.12, and the exercise
price per whole share of common stock purchasable upon exercise of the Series B Warrants is $3.12. The exercise price is subject to appropriate
adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar
events affecting our common stock and also upon any distributions of assets, including cash, stock or other property to our stockholders.
Subsequent
Financing. In addition, conditioned upon the receipt of the Warrant Stockholder Approval, and subject to certain exemptions, if we
sell, enter into an agreement to sell, or grant any option to purchase, or sell, enter into an agreement to sell, or grant any right
to reprice, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any
shares of common stock, at an effective price per share less than the exercise price of the Series B Warrants then in effect, the exercise
price of the Series B Warrants will be reduced to the lower of such price or the lowest volume weighted average price (VWAP) during the
five consecutive trading days immediately following such dilutive issuance or announcement thereof (subject to a floor of $[*] prior
to the Warrant Stockholder Approval), and the number of shares issuable upon exercise will be proportionately adjusted such that the
aggregate exercise price will remain unchanged.
Reverse
Stock Split. Conditioned upon the receipt of the Warrant Stockholder Approval, if at any time on or after the date of issuance there
occurs any share split, share dividend, share combination recapitalization or other similar transaction involving our common stock and
the lowest daily volume weighted average price during the period commencing five consecutive trading days immediately preceding and the
five consecutive trading days commencing on the date of such event is less than the exercise price of the Series A Warrants or Series
B Warrants then in effect, then the exercise price of the Series A Warrants and Series B Warrants will be reduced to the lowest daily
volume weighted average price during such period and the number of shares issuable upon exercise will be proportionately adjusted such
that the aggregate price will remain unchanged.
Transferability.
Subject to applicable laws, the Series A Warrants and Series B Warrants may be offered for sale, sold, transferred or
assigned without our consent.
Fundamental
Transactions. In the event of a fundamental transaction, as described in the Series A Warrants and Series B Warrants and generally
including any reorganization, recapitalization or reclassification of our common stock, the sale, transfer or other disposition of all
or substantially all of our properties or assets, our consolidation or merger with or into another person, the acquisition of more than
50% of our outstanding common stock, or any person or group becoming the beneficial owner of 50% of the voting power represented by our
outstanding common stock, the holders of the Series A Warrants and Series B Warrants will be entitled to receive upon exercise of the
Series A Warrants and Series B Warrants the kind and amount of securities, cash or other property that the holders would have received
had they exercised the Series A Warrants and Series B Warrants immediately prior to such fundamental transaction. The holders of the
Series A Warrants and Series B Warrants may also require us to purchase the Series A Warrants and Series B Warrants from the holders
by paying to each holder an amount equal to the Black Scholes value of the remaining unexercised portion of the Series A Warrants and
Series B Warrants on the date of the fundamental transaction.
Rights
as a Stockholder. Except as otherwise
provided in the Series A Warrants or Series B Warrants or by virtue of such holder’s ownership of shares of our common
stock, the holder of a Series A Warrants or Series B Warrants does not have the rights or privileges of a holder
of our common stock, including any voting rights, until the holder exercises the Series A Warrant or Series B Warrants.
Governing
Law. The Series A Warrants and the Series
B Warrants are governed by New York law.
LEGAL
MATTERS
The
validity of the Common Stock offered by us in this offering will be passed upon for us by The Doney Law Firm, Las Vegas, Nevada. Certain
legal matters in connection with this offering have been passed upon for the underwriter by Kaufman & Canoles, P.C., Richmond, Virginia.
EXPERTS
The
financial statements of Cemtrex, Inc. as of September 30, 2023 and 2022 and for each of the years in the two year period ended September
30, 2023 have been incorporated by reference in this Registration Statement and have been so incorporated in reliance on the report of
Grassi & Co., CPAs, P.C., an independent registered public accounting firm, given on the authority of said firm as experts in auditing
and accounting.
WHERE
YOU CAN FIND MORE INFORMATION
We
file annual, quarterly and current reports, proxy statements and other information with the SEC. We have filed with the SEC a registration
statement on Form S-1 under the Securities Act, with respect to the shares being offered under this prospectus. This prospectus does
not contain all of the information set forth in the registration statement and the exhibits to the registration statement. For further
information with respect to the Company and the securities being offered under this prospectus, please refer to the complete registration
statement and the exhibits and schedules filed as a part of the registration statement.
You
may read and copy the registration statement, as well as our reports, proxy statements and other information, at the SEC’s Public
Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information about the operation
of the Public Reference Room. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC. The SEC’s Internet site can be found at http://www.sec.gov. You
may access our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Exchange Act with the SEC free of charge on the SEC’s website.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
SEC
rules allow us to “incorporate by reference” into this prospectus much of the information we file with the SEC, which means
that we can disclose important information to you by referring you to those publicly available documents. The information that we incorporate
by reference into this prospectus, including the consolidated financial statements, is considered to be part of this prospectus. These
documents may include Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy statements.
You should read the information incorporated by reference because it is an important part of this prospectus.
This
prospectus incorporates by reference the documents listed below, other than those documents or the portions of those documents deemed
to be furnished and not filed in accordance with SEC rules:
| ■ | our
Annual Report on Form 10-K for the fiscal year ended September 30, 2023 filed with the SEC
on December 28, 2023; |
| ■ | our
Quarterly Report on Form 10-Q for the three months ended December 31, 2023 filed with the
SEC on February 14, 2024. |
| ■ | our
Current Reports on Form 8-K (or Form 8-K/A) filed with the SEC on January 22, 2024, January
3, 2024, December
26, 2023, December
6, 2023, September
19, 2023, September
12, 2023 and August
23, 2023, August
4, 2023, July
28, 2023, July
7, 2023 May
26, 2023; March
23, 2023, March
20, 2023, February
9, 2023, January
30 2023, January
23, 2023, January
20, 2023, November
29, 2022, November
10, 2022, October
4, 2022, September
30, 2022, September
20, 2022, August
3, 2022, July
27, 2022, March
22, 2022, February
1, 2022, January
26, 2022 and January
26, 2022; |
| ■ | our
2020 Equity Compensation Plan on Form S-8 filed with the SEC August 17, 2020; |
All
documents we file with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, except as to any portion of any report
or document that is not deemed filed under such provisions, (i) on or after the date of filing of the registration statement containing
this prospectus and prior to the effectiveness of the registration statement and (ii) on or after the date of this prospectus until the
earlier of the date on which all of the securities registered hereunder have been sold or this prospectus has been withdrawn, shall be
deemed incorporated by reference in this prospectus and to be a part of this prospectus from the date of filing of those documents. The
information in documents that we file in the future will update and supersede the information currently included and incorporated by
reference in this prospectus. Nothing in this prospectus shall be deemed to incorporate information furnished but not filed with the
SEC pursuant to Item 2.02, 7.01 or 8.01 of Form 8-K.
These
documents may also be accessed on our website at https://www.Cemtrex.com/. Information contained in, or accessible through, our
website is not a part of this prospectus.
We
will provide without charge to each person, including any beneficial owners, to whom this prospectus is delivered, upon his or her written
or oral request, a copy of any or all reports or documents referred to above which have been or may be incorporated by reference into
this prospectus but not delivered with this prospectus, excluding exhibits to those reports or documents unless they are specifically
incorporated by reference into those documents. You may request a copy of these documents by writing or telephoning us at the following
address:
Saagar
Govil
Chief
Executive Officer
Cemtrex, Inc.
135 Fell Court
Hauppauge,
NY 11788
Tel.
no. (631) 756-9116
CEMTREX,
INC.
PRELIMINARY
PROSPECTUS
April
23, 2024
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
ITEM
13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The
following table sets forth the expenses in connection with this registration statement. All of such expenses are estimates, other than
the filing fees payable to the Securities and Exchange Commission and to FINRA.
| | |
Amount | |
| | |
to be paid | |
| SEC registration fee | |
$ | 4,582.98 | |
| FINRA filing fee | |
$ | 2,052.50 | |
| Accounting fees and expenses | |
$ | 10,275.00 | |
| Legal fees and expenses | |
$ | 42,500.00 | |
| Miscellaneous | |
$ | 15,950.00 | |
| Total | |
$ | 75,360.48 | |
| * |
To
be provided by amendment. |
ITEM
14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The
Company is incorporated under the laws of the State of Delaware. Section 102(b)(7) of the Delaware General Corporation Law permits a
corporation to include in its certificate of incorporation a provision eliminating or limiting the personal liability of a director to
the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that such provision shall
not eliminate or limit the liability of a director: (i) for any breach of the director’s duty of loyalty to the corporation or
its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
(iii) under Section 174 of the Delaware General Corporation Law, which relates to unlawful payment of dividends and unlawful stock purchases
and redemptions; or (iv) for any transaction from which the director derived an improper personal benefit.
Section
145 of the Delaware General Corporation Law provides that a corporation may indemnify any persons who were, are or are threatened to
be made, parties to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of such corporation), by reason of the fact that such person is or was an officer, director,
employee or agent of such corporation, or is or was serving at the request of such corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise. The indemnity may include expenses (including attorneys’
fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action,
suit or proceeding, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation’s
best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his conduct was unlawful.
Section
145 of the Delaware General Corporation Law further authorizes a corporation to purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise, against any liability asserted against him and incurred by
him in any such capacity, arising out of his status as such, whether or not the corporation would otherwise have the power to indemnify
him under Section 145 of the Delaware General Corporation Law.
Our
certificate of incorporation provides that any person who was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (whether or not by or in the right
of the company) by reason of the fact that he is or was a director, officer, incorporator, employee or agent of the company, or is or
was serving at the request of the company as a director, officer, incorporator, employee or agent of another company, partnership, joint
venture, trust or other enterprise, shall be entitled to be indemnified by the company to the full extent then permitted by law or to
the extent that a court of competent jurisdiction shall deem proper or permissible under the circumstance, whichever is greater, against
expenses (including attorneys’ fees), judgments, fines and amount paid in settlement incurred by such person in connection with
such action, suit or proceeding. Such right of indemnification shall inure whether or not the claim asserted is based on matters which
pre-date the company’s adoption of the indemnification provisions in its certificate of incorporation. Furthermore, such right
of indemnification will continue as to a person who has ceased to be a director, officer, incorporator, employee or agent and will inure
to the benefit of the heirs and personal representatives of such person.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or person controlling
us, we have been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy
as expressed in the act and is therefore unenforceable.
ITEM
15. RECENT SALES OF UNREGISTERED SECURITIES.
The
following sets forth information regarding all unregistered securities sold by the registrant in the two years preceding the date of
this registration statement;
For
the fiscal year ended September 30, 2022, 193,971 shares of Series 1 Preferred Stock were issued to pay dividends to holders of Series
1 Preferred Stock.
For
the fiscal year ended September 30, 2022, we issued 5,481,102 shares of common stock to satisfy $4,688,524 of notes payable and accumulated
interest.
For
the fiscal year ended September 30, 2023, 213,894 shares of Series 1 Preferred Stock were issued to pay dividends to holders of Series
1 Preferred Stock.
For
the fiscal year ended September 30, 2023, we issued 241,655 shares of common stock to satisfy $1,917,873 of notes payable and accumulated
interest.
For
the fiscal year ended September 30, 2023, we issued 30,103 shares of common stock in exchange for $215,800 of services to the Company.
On
October 6, 2022, 115,037 shares of Series 1 Preferred Stock were issued to pay dividends to holders of Series 1 Preferred Stock.
During
the three months ended December 31, 2023, 9,853 shares of common stock have been issued in exchange for services valued at $40,000.
These
issuances were made in reliance on an exemption from registration set forth in Section 4(a)(2) of the Securities Act, as transactions
by an issuer not involving a public offering.
ITEM
17. UNDERTAKINGS.
The
undersigned registrant hereby undertakes:
| (1) | To
file, during any period in which offers or sales are being made, a post-effective amendment
to this registration statement: |
| (i) | To
include any prospectus required by section 10(a)(3) of the Securities Act; |
| (ii) | To
reflect in the prospectus any facts or events arising after the effective date of the registration
statement (or the most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change
in the maximum aggregate offering price set forth in the “Calculation of Registration
Fee” table in the effective registration statement. |
| (iii) | To
include any material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such information in the
registration statement; |
| (2) | That,
for the purpose of determining any liability under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof. |
| (3) | To
remove from registration by means of a post-effective amendment any of the securities being
registered which remain unsold at the termination of the offering. |
| (4) | That,
for the purpose of determining liability under the Securities Act of 1933 to any purchaser,
if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b)
as part of a registration statement relating to an offering, other than registration statements
relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be
deemed to be part of and included in the registration statement as of the date it is first
used after effectiveness. Provided, however, that no statement made in a registration statement
or prospectus that is part of the registration statement or made in a document incorporated
or deemed incorporated by reference into the registration statement or prospectus that is
part of the registration statement will, as to a purchaser with a time of contract of sale
prior to such first use, supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or made in any such document
immediately prior to such date of first use. |
| (5) | That,
for the purpose of determining liability of the registrant under the Securities Act to any
purchaser in the initial distribution of the securities, the undersigned registrant undertakes
that in a primary offering of securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to the purchaser,
if the securities are offered or sold to such purchaser by means of any of the following
communications, the undersigned registrant will be a seller to the purchaser and will be
considered to offer or sell such securities to such purchaser: |
| (i) | Any
preliminary prospectus or prospectus of the undersigned registrant relating to the offering
required to be filed pursuant to Rule 424; |
| (ii) | Any
free writing prospectus relating to the offering prepared by or on behalf of the undersigned
registrant or used or referred to by the undersigned registrant; |
| (iii) | The
portion of any other free writing prospectus relating to the offering containing material
information about the undersigned registrant or its securities provided by or on behalf of
the undersigned registrant; and |
| (iv) | Any
other communication that is an offer in the offering made by the undersigned registrant to
the purchaser. |
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final adjudication of such issue.
The
undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements certificates
in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.
The
undersigned registrant hereby undertakes that:
| (1) | For
purposes of determining any liability under the Securities Act, the information omitted from
the form of prospectus filed as part of this registration statement in reliance upon Rule
430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)
(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective. |
| (2) | For
the purpose of determining any liability under the Securities Act, each post-effective amendment
that contains a form of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof. |
ITEM
16. Exhibits.
The
following exhibits are filed as part of this registration statement:
| Exhibit
|
|
|
|
Incorporated
by Reference |
|
Filed
or
Furnished |
|
|
| Number |
|
Exhibit
Description |
|
Form |
|
Filing
Date |
|
Herewith |
| 1.1 |
|
Form of Underwriting
Agreement |
|
|
|
|
|
X |
| 2.1 |
|
Stock
Purchase Agreement, dated December 15, 2015 |
|
Form
8-K/A |
|
9/26/2016 |
|
|
| 3.1 |
|
Certificate
of Incorporation filed with the State of Delaware. |
|
Form
10-12G |
|
5/22/2008 |
|
|
| 3.2 |
|
Bylaws |
|
Form
10-12G |
|
5/22/2008 |
|
|
| 3.3 |
|
Amendment
to Certificate of Incorporation |
|
Form
10-12G |
|
5/22/2008 |
|
|
| 3.4 |
|
Amendment
to Certificate of Incorporation |
|
Form
10-12G |
|
5/22/2008 |
|
|
| 3.5 |
|
Amendment
to Certificate of Incorporation |
|
Form
10-12G |
|
5/22/2008 |
|
|
| 3.6 |
|
Amendment
to Certificate of Incorporation |
|
Form
10-12G |
|
5/22/2008 |
|
|
| 3.7 |
|
Amendment
to Certificate of Incorporation |
|
Form
8-K |
|
8/22/2016 |
|
|
| 3.8 |
|
Certificate
of Designation of the Series A Preferred Shares |
|
Form
8-K |
|
9/10/2009 |
|
|
| 3.9 |
|
Certificate
of Designation of the Series 1 Preferred Shares |
|
Form
8-K |
|
1/24/2017 |
|
|
| 3.10 |
|
Amendment
to Certificate of Incorporation |
|
Form
8-K |
|
9/8/2017 |
|
|
| 3.11 |
|
Certificate
of Correction to the Certificate of Amendment |
|
Form
8-K |
|
6/12/2019 |
|
|
| 3.12 |
|
Amended
Certificate of Designation of the Series 1 Preferred Shares |
|
Form
8-K |
|
4/1/2020 |
|
|
| 3.13 |
|
Amendment
to Certificate of Incorporation |
|
Form
8-K |
|
1/5/2021 |
|
|
| 3.14 |
|
Certificate
of Correction to the Certificate of Amendment |
|
Form
8-K |
|
5/28/2021 |
|
|
| 3.15 |
|
Amendment
to Certificate of Incorporation |
|
Form
8-K |
|
1/12/2023 |
|
|
| 4.1 |
|
Form
of Subscription Rights Certificate |
|
Form
S-1 |
|
8/29/2016 |
|
|
| 4.2 |
|
Form
of Series 1 Preferred Stock Certificate |
|
Form
S-1 |
|
8/29/2016 |
|
|
| 4.3 |
|
Form
of Series 1 Warrant |
|
Form
S-1 |
|
8/29/2016 |
|
|
| 4.4 |
|
Form
of Common Stock Purchase Warrant |
|
Form
8-K |
|
3/22/2019 |
|
|
| 4.5 |
|
Form of Prefunded Warrant |
|
|
|
|
|
X |
| 4.6 |
|
Form of Series A Common Stock Purchase Warrant |
|
|
|
|
|
X |
| 4.7 |
|
Form of Series B Common Stock Purchase Warrant |
|
|
|
|
|
X |
| 5.1 |
|
Opinion of the Doney Law Firm |
|
|
|
|
|
X |
| 10.1 |
|
Amendment
of the Term Loan Agreement between Vicon and NIL Funding, dated March 3, 2023 |
|
Form
10-Q |
|
5/11/2023 |
|
|
| 10.2 |
|
Amendment
to Loan Documents Between Advanced Industrial Services, Inc. and Fulton Bank, N.A. |
|
Form
10-Q |
|
5/11/2023 |
|
|
| 10.3 |
|
Amendment
to Promissory Note Between Cemtrex, Inc. and Streeterville Capital, LL |
|
Form
10-Q |
|
5/11/2023 |
|
|
| 10.4 |
|
Securities
Purchase Agreement dated June 1, 2020 |
|
Form
8-K |
|
6/4/2020 |
|
|
| 10.5 |
|
Securities
Purchase Agreement dated June 9, 2020 |
|
Form
8-K |
|
6/12/2020 |
|
|
| 10.6 |
|
Settlement
Agreement and Release between Cemtrex, Inc. and Aron Govil dated February 26, 2021 |
|
Form
8-K |
|
2/26/2021 |
|
|
| 10.7 |
|
Securities
Purchase Agreement dated February 22, 2022 |
|
Form
8-K |
|
5/16/2022 |
|
|
| 10.8 |
|
Amendment
of the Term Loan Agreement between Vicon and NIL Funding, dated March 30, 2022 |
|
Form
8-K |
|
5/16/2022 |
|
|
| 10.9 |
|
Asset
Purchase agreement between Cemtrex, Inc. and Saagar Govil, dated November 22, 2022 |
|
Form
8-K |
|
11/29/2022 |
|
|
| 10.1 |
|
Asset
Purchase agreement between Cemtrex, Inc. and Saagar Govil, dated November 22, 2022 |
|
Form
8-K |
|
11/29/2022 |
|
|
| 10.11 |
|
Simple
Agreement for Future Equity (SAFE) between Cemtrex, Inc. and Saagar Govil, dated November 18, 2022 |
|
Form
8-K |
|
11/29/2022 |
|
|
| 10.12 |
|
2020
Equity Compensation Plan |
|
Form
S-8 |
|
8/17/2020 |
|
|
| 10.13 |
|
Asset
Purchase Agreement, dated as of June 7, 2023 |
|
Form
8-K |
|
12/6/2023 |
|
|
| 10.14 |
|
Form of Lock-Up Agreement |
|
|
|
|
|
X |
| 14.1 |
|
Corporate
Code of Business Ethics |
|
Form
8-K |
|
7/1/2016 |
|
|
| 21.1 |
|
Subsidiaries
of Registrant |
|
Form
S-1 |
|
12/29/2023 |
|
|
| 23.1 |
|
Consent of Grassi & Co, CPAs, P.C. |
|
|
|
|
|
|
| 23.2 |
|
Consent of The Doney Law Firm (included as Exhibit 5.1) |
|
|
|
|
|
X |
| 24+ |
|
Power of Attorney (included in the signature page of this Registration Statement) |
|
|
|
|
|
X |
| 99.1 |
|
Order
pursuant to Section 8A of the Securities Act – dated September 30, 2022 |
|
Form
8-K |
|
10/4/2022 |
|
|
| 107 |
|
Filing Fee Table |
|
|
|
|
|
X |
+
To be filed by amendment
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized in the hamlet of Hauppauge, New York, on the 23rd day of April 2024.
| |
Cemtrex,
Inc. |
| |
|
|
| |
By: |
/s/
Saagar Govil. |
| |
|
Saagar
Govil |
| |
|
Chairman
of the Board, CEO, |
| |
|
President
& Secretary (Principal Executive Officer) |
| |
|
|
| |
|
/s/
Paul J. Wyckoff. |
| |
|
Paul
J. Wyckoff |
| |
|
Interim
Chief Financial Officer |
| |
|
(Principal
Financial Officer and Principal Accounting Officer) |
KNOW
ALL BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Saagar Govil and Paul Wyckoff, and each
of them, as his true and lawful attorneys-in-fact and agents, each with the full power of substitution, for him and in his name, place
or stead, in any and all capacities, to sign any and all amendments to this registration statement (including post-effective amendments),
and to sign any registration statement for the same offering covered by this registration statement that is to be effective upon filing
pursuant to Rule 462(b) promulgated under the Securities Act of 1933, as amended, and all post-effective amendments thereto, and to file
the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite
and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or their, his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
| April
23, 2024 |
By: |
/s/
Saagar Govil |
| |
|
Saagar
Govil, |
| |
|
Chairman
of the Board, CEO, |
| |
|
President
& Secretary (Principal Executive Officer) |
| |
|
|
| April
23, 2024 |
By: |
/s/
Paul J. Wyckoff |
| |
|
Paul
J. Wyckoff |
| |
|
Interim
Chief Financial Officer |
| |
|
(Principal
Financial Officer and Principal Accounting Officer) |
| |
|
|
| April
23, 2024 |
By: |
/s/
Manpreet Singh |
| |
|
Manpreet
Singh, |
| |
|
Director |
| |
|
|
| April
23, 2024 |
By: |
/s/
Brian Kwon |
| |
|
Brian
Kwon, |
| |
|
Director |
| |
|
|
| April
23, 2024 |
By: |
/s/
Metodi Filipov |
| |
|
Metodi
Filipov, Director |
Exhibit
1.1
Underwriting
Agreement
[●],
2024
Aegis
Capital Corp.
1345
Avenue of the Americas, 27th Floor
New York, NY 10105
Ladies
and Gentlemen:
Cemtrex
Inc., a Delaware corporation (the “Company”), agrees, subject to the terms and conditions in this agreement
(this “Agreement”), to issue and sell to Aegis Capital Corp. (the “Underwriter”)
an aggregate of [●] of the Company’s units (each, a “Closing Unit”), with each Closing Unit consisting
of either: (A) one (1) share of Common Stock, $0.001 par value per share (the “Closing Shares”) of the Company
(the “Common Stock”) and one (1) Series A warrant to purchase one (1) share of Common Stock at a per Share
exercise price of $[●] (representing [●]% of the per Closing Common Unit (as defined below) offering price attributed to
the value of the shares of Common Stock included in the Closing Common Unit; and one (1) Series B warrant to purchase one (1) share of
Common Stock at a per Share exercise price of $[●] (representing [●]% of the per Closing Common Unit (as defined below) offering
price attributed to the value of the shares of Common Stock included in the Closing Common Unit (each, a “Closing Common
Unit”); or (B) one pre-funded warrant (each, a “Pre-funded Warrant”) to purchase one (1) share
of Common Stock at an exercise price of $0.001 and one (1) Series A warrant to purchase one (1) share of Common Stock at a per-Share
exercise price of $[●] (representing [●]% of the per Closing Common Unit (as defined below) offering price attributed to
the value of the shares of Common Stock included in the Closing Common Unit; and one (1) Series B warrant to purchase one (1) share of
Common Stock at a per-Share exercise price of $[●] (representing [●]% of the per Closing Common Unit (as defined below) offering
price attributed to the value of the shares of Common Stock included in the Closing Common Unit (each, a “Closing Pre-funded
Unit”). The shares of Common Stock referred to in this Section are hereinafter referred to as the “Closing
Shares”; the Warrants referred to in this Section are hereinafter referred to as the “Closing Warrants”;
and the Pre-funded Warrants referred to in this Section are hereinafter referred to as the “Closing Pre-funded Warrants.”
No Closing Common Units will be certificated, and the Closing Shares and the Closing Warrants comprising the Closing Common Units will
be separated immediately upon issuance. No Closing Pre-funded Units will be certificated, and the Closing Pre-funded Warrants and the
Closing Warrants comprising the Closing Pre-funded Units will be separated immediately upon issuance. At the option of the Underwriter,
the Company agrees, subject to the terms and conditions herein, to issue and sell additional Option Securities (as defined in Section
4.2 hereof). The Closing Units and the Option Securities are herein referred to collectively as the “Securities”.
The number of Closing Units and Option Securities to be purchased by the Underwriter is set forth opposite its name in Schedule 4.1.2
hereto. Aegis Capital Corp. has agreed to act as the Underwriter in connection with the offering and sale of the Securities.
1.1. “Affiliate”
has the meaning set forth in Rule 405 under the Securities Act.
1.2. “Applicable
Time” means Eastern Time on the date hereof.
1.3. “Bona
Fide Electronic Road Show” means a “bona fide electronic road show” (as defined in Rule 433(h)(5) under the
Securities Act) that the Company has made available without restriction by “graphic means” (as defined in Rule 405 under
the Securities Act) to any person.
1.4. “Business
Day” means a day on which the Nasdaq Capital Market is open for trading and on which banks in New York are open for business
and not permitted by law or executive order to be closed.
1.5. “Commission”
means the United States Securities and Exchange Commission.
1.6. “Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
1.7. “Exempt
Issuance” means securities issued (i) under the Company’s current or future equity incentive plans or issued to employees,
directors or officers as compensation or consideration in the ordinary course of business, including any issuance of options (and the
underlying shares of Common Stock) in exchange for options issued under the Company’s equity incentive plans, (ii) issued pursuant
to agreements, options, restricted share units or convertible securities existing as of the date hereof provided the terms are not modified,
(iii) issued pursuant to acquisitions or strategic transactions (whether by merger, consolidation, purchase of equity, purchase of assets,
reorganization or otherwise) approved by a majority of the disinterested directors of the Company, provided that such securities are
issued as “restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit the filing
of any registration statement in connection therewith during the Standstill Period, and provided that any such issuance shall only be
to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an
asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to
the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of
raising capital or to an entity whose primary business is investing in securities.
1.8. “Final
Prospectus” means the prospectus in the form first filed with the Commission pursuant to and within the time limits described
in Rule 424(b) under the Securities Act.
1.9. “Free
Writing Prospectus” has the meaning set forth in Rule 405 under the Securities Act.
1.10. “Indebtedness”
means (a) any liabilities for borrowed money or amounts owed in excess of $50,000 in aggregate (other than trade accounts payable incurred
in the ordinary course of business), (b) all guaranties, endorsements and other contingent obligations in respect of indebtedness of
others, whether or not the same are or should be reflected in the Company’s consolidated balance sheet (or the notes thereto),
except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of
business; and (c) the present value of any lease payments in excess of $50,000 in aggregate due under leases required to be capitalized
in accordance with GAAP.
1.11. “Investment
Company Act” means the Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder.
1.12. “Issuer
Free Writing Prospectus” means an “issuer free writing prospectus” (as defined in Rule 433(h)(1) under the
Securities Act).
1.13. “Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
1.14. “Preliminary
Prospectus” means any preliminary prospectus included in the Registration Statement prior to the time at which the Commission
declared the Registration Statement effective.
1.15. “Pricing
Disclosure Package” means the Preliminary Prospectus collectively with this Agreement (including documents attached hereto
or incorporated by reference herein) and the documents and pricing information set forth in Schedule 1.20 hereto.
1.16. “Prospectus
Delivery Period” means such period of time after the first date of the public offering of the Units as in the opinion of
counsel for the Underwriter a prospectus relating to the Units is required by law to be delivered (or required to be delivered but for
Rule 172 under the Securities Act) in connection with sales of the Units by the Underwriter or dealer.
1.17. “Registration
Statement” means (a) the registration statement on Form S-1 (File No. 333-276556), including a prospectus, registering
the offer and sale of the Closing Units under the Securities Act as amended at the time the Commission declared it effective, including
each of the exhibits, financial statements and schedules thereto, (b) any Rule 430A Information, and (c) any Rule 462(b) Registration
Statement, including in each case any documents incorporated by reference therein.
1.18. “Rule
430A Information” means the information deemed, pursuant to Rule 430A under the Securities Act, to be part of the Registration
Statement at the time the Commission declared the Registration Statement effective.
1.19. “Rule
462(b) Registration Statement” means an abbreviated registration statement to register the offer and sale of additional
Units pursuant to Rule 462(b) under the Securities Act.
1.20. “Sarbanes-Oxley
Act” means the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated thereunder.
1.21. “Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
1.22. “Standstill
Period” has the meaning set forth in Section 5.11.1 hereof.
1.23. “Testing-the-Waters
Communication” means any oral or Written Communication with potential investors undertaken in reliance on Section 5(d)
of the Securities Act and Rule 163B thereunder.
1.24. “U.S.
Company Counsel” means The Doney Law Firm, with office at 4955 S. Durango Rd. Ste. 165 Las Vegas, NV 89113.
1.25. “Written
Communication” has the meaning set forth in Rule 405 under the Securities Act.
1.26. “Written
Testing-the-Waters Communications” means any Testing-the-Waters Communication that is a Written Communication.
| 2. | Representations
and Warranties of the Company. The Company hereby represents and warrants to, and
agrees with, the Underwriter that the following matters are true and accurate and do not
contain any untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading. Any certificate
signed by an officer of the Company and delivered to the Underwriter or to counsel for the
Underwriter shall be deemed to be a representation and warranty by the Company to the Underwriter
as to the matters set forth therein. |
2.1. Registration
Statement. The Company has prepared and filed the Registration Statement with the Commission under the Securities Act. The Commission
has declared the Registration Statement effective under the Securities Act and the Company has not as of the date of this Agreement filed
a post-effective amendment to the Registration Statement. The Commission has not issued any order suspending the effectiveness of the
Registration Statement or any order preventing or suspending the use of the Registration Statement, the Final Prospectus, any Preliminary
Prospectus, any Issuer Free Writing Prospectus or any Testing-the-Waters Communication, and no proceedings for such purpose or pursuant
to Section 8A of the Securities Act have been initiated, are pending before or, to the Company’s knowledge, threatened by the Commission.
2.1.1. The
Registration Statement, at the time it became effective, did not contain, and any post-effective amendment thereto, as of the effective
date of such amendment, will not contain, any untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; provided that the Company makes no representation or warranty
with respect to any statements or omissions made in reliance upon and in conformity with information relating to the Underwriter furnished
to the Company in writing by the Underwriter expressly for use in the Registration Statement (including any post-effective amendment
thereto), the Pricing Disclosure Package, the Final Prospectus (including any amendments or supplements thereto), any Preliminary Prospectus,
any Issuer Free Writing Prospectus or any Testing-the-Waters Communication, it being understood and agreed that the only such information
furnished by the Underwriter consists of the information described in Section 9.3 hereof (collectively, the “Underwriter
Information”).
2.1.2. Each
of the Registration Statement and any post-effective amendment thereto, at the time it became effective and at the date hereof, complied
and will comply in all material respects with the Securities Act.
2.2. Pricing
Disclosure Package. The Pricing Disclosure Package, as of the Applicable Time, did not, and as of the Closing Date (as defined
below) and as of any Additional Closing Date (as defined below), as the case may be, will not, contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided that the Company makes no representation or warranty with respect to any statements or
omissions made in reliance upon and in conformity with the Underwriter Information.
2.3. Final
Prospectus.
2.3.1. Each
of the Final Prospectus and any amendments or supplements thereto, as of its date, as of the time it is filed with the Commission pursuant
to Rule 424(b) under the Securities Act, as of the Closing Date and as of any Additional Closing Date, as the case may be, will not contain
any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided that the Company makes no representation or warranty
with respect to any statements or omissions made in reliance upon and in conformity with the Underwriter Information.
2.3.2. Each
of the Final Prospectus and any amendments or supplements thereto, at the time it is filed with the Commission pursuant to Rule 424(b)
under the Securities Act, as of the Closing Date and as of any Additional Closing Date, as the case may be, will comply in all material
respects with the Securities Act.
2.4. Preliminary
Prospectuses.
2.4.1. Each
Preliminary Prospectus, when considered together with any amendments or supplements thereto, as of the time it was filed with the Commission
pursuant to Rule 424(a) under the Securities Act, if any, did not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;
provided that the Company makes no representation or warranty with respect to any statements or omissions made in reliance upon
and in conformity with the Underwriter Information.
2.4.2. Each
Preliminary Prospectus, when considered together with any amendments or supplements thereto, at the time it was filed with the Commission
pursuant to Rule 424(a) under the Securities Act, if any, complied in all material respects with the Securities Act.
2.5. Issuer
Free Writing Prospectuses.
2.5.1. Each
Issuer Free Writing Prospectus, when considered together with the Preliminary Prospectus accompanying, or delivered prior to the delivery
of, such Issuer Free Writing Prospectus, did not, as of the date of such Issuer Free Writing Prospectus, and will not, as of the Closing
Date and as of any Additional Closing Date, as the case may be, contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;
provided that the Company makes no representation or warranty with respect to any statements or omissions made in reliance upon
and in conformity with the Underwriter Information.
2.5.2. Each
Issuer Free Writing Prospectus, at the time of filing with the Commission, complied or will comply in all material respects with the
Securities Act.
2.5.3. The
Company has filed, or will file, with the Commission, within the time period specified in Rule 433(d) under the Securities Act, any Free
Writing Prospectus it is required to file pursuant to Rule 433(d) under the Securities Act. The Company has made available any Bona Fide
Electronic Road Show used by it in compliance with Rule 433(d)(8)(ii) under the Securities Act such that no filing of any “road
show” (as defined in Rule 433(h) under the Securities Act) (“Road Show”) is required in connection with
the offering of the Units.
2.5.4. Except
for the Issuer Free Writing Prospectuses, if any, set forth in Schedule 2.5.4 hereto and electronic road shows, if any, each furnished
to the Underwriter before first use, the Company has not used, authorized the use of, referred to or participated in the planning for
use of, and will not, without the prior consent of the Underwriter, use, authorize the use of, refer to or participate in the planning
for use of, any Free Writing Prospectus.
2.6. Testing-the-Waters
Communications. The Company has not (x) alone engaged in any Testing-the-Waters Communication other than Testing-the-Waters Communications
with the consent of the Underwriter or any underwriter that the Company has previously identified to the Underwriter with entities that
are qualified institutional buyers within the meaning of Rule 144A under the Act or institutions that are accredited investors within
the meaning of Rule 501 under the Act, and (y) authorized anyone other than the Underwriter to engage in Testing-the-Waters Communications.
2.7. No
Other Disclosure Materials. Other than the Registration Statement, the Pricing Disclosure Package, the Final Prospectus and the
Road Show, the Company (including its agents and representatives, other than the Underwriter or any underwriter that the Company has
previously identified to the Underwriter, as to which no representation or warranty is given) has not, directly or indirectly, distributed,
prepared, used, authorized, approved or referred to, and will not distribute, prepare, use, authorize, approve or refer to, any offering
material in connection with the offering and sale of the Units.
2.8. Ineligible
Issuer. At the time of filing of the registration statement on Form S-1 (File No. 333-276556) registering the offer and sale
of the Securities submitted to the Commission on January 17, 2024 and any amendment thereto and at the date hereof, the Company was not
and is not an “ineligible issuer” (as defined in Rule 405 under the Securities Act).
2.9. Smaller
Reporting Company. From the time of initial filing of the Registration Statement with the Commission (or, if earlier, the first
date on which the Company engaged directly or through any person authorized to act on its behalf in any Testing-the-Waters Communication)
through the date hereof, the Company has been and is a “smaller reporting company,” as defined in Rule 12b-2 under the Exchange
Act.
2.10. Due
Authorization. The Company has full right, power and authority to execute and deliver this Agreement and to perform its obligations
hereunder; and all action required to be taken for the due and proper authorization, execution and delivery by it of this Agreement and
the consummation by it of the transactions contemplated hereby has been duly and validly taken.
2.11. Underwriting
Agreement. This Agreement has been duly authorized, executed and delivered by the Company and, assuming the due authorization,
execution and delivery by the other parties hereto, constitutes the legal, valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except as (i) the enforcement may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors generally or by general
equitable principles (whether considered in a proceeding at law or in equity) relating to enforceability and (ii) rights to indemnification
and contribution hereunder may be limited by applicable law and public policy considerations.
2.12. No
Material Adverse Change. Except as otherwise disclosed in the Registration Statement, the Pricing Disclosure Package and the
Final Prospectus (in each case exclusive of any amendment or supplement thereto), since the date of the most recent financial statements
included or incorporated by reference in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus: (i) there
has been no material adverse change, or any development that could result in a material adverse change, in or affecting the condition
(financial or otherwise), earnings, business, properties, management, financial position, stockholders’ equity, or results of operations,
whether or not arising from transactions in the ordinary course of business, of the Company and its subsidiaries, considered as a whole;
(ii) there has been no change in the share capital (other than (A) the issuance of Shares upon the exercise or settlement (including
any “net” or “cashless” exercises or settlements) of stock options, restricted stock units or warrants described
as outstanding, (B) the grant of options and awards under existing equity incentive plans, or (C) the repurchase of shares of Common
Stock by the Company, which were issued pursuant to the early exercise of stock options by option holders and are subject to repurchase
by the Company, in each case, as described in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus), or
material change in the short-term debt or long-term debt of the Company or any of its subsidiaries, considered as a whole; and (iii)
the Company and its subsidiaries, considered as a whole, have not incurred any material liability or obligation, indirect, direct or
contingent (whether or not in the ordinary course of business); nor entered into any transaction or agreement (whether or not in the
ordinary course of business) that is material to the Company and its subsidiaries, considered as a whole; and (iv) there has been no
dividend or distribution of any kind declared, set aside for payment, paid or made by the Company or, except for reoccurring dividends
on the Company’s Series 1 Preferred Stock, dividends paid to the Company or other subsidiaries of the Company, any of its subsidiaries
on any class of capital stock or repurchase or redemption by the Company or any of its subsidiaries of any class of capital stock.
2.13. Organization
and Good Standing of the Company and its Subsidiaries. The Company and each of its subsidiaries have been duly incorporated and
are validly existing and in good standing under the laws of their respective jurisdictions of organization, are duly qualified to do
business and are in good standing in each jurisdiction in which their respective ownership or lease of property or the conduct of their
respective businesses requires such qualification, and have all power and authority (corporate and other) necessary to own, lease or
hold their respective properties and to conduct the businesses in which they are engaged as described in the Registration Statement,
the Pricing Disclosure Package and the Final Prospectus, except where the failure to be in good standing, to be so qualified or to have
such power or authority could not, individually or in the aggregate, have a material adverse effect on the condition (financial or otherwise),
earnings, business, properties, management, financial position, stockholders’ equity, or results of operations of the Company and
its subsidiaries, considered as a whole, or adversely affect the performance by the Company of its obligations under this Agreement (a
“Material Adverse Effect”).
2.14. Capitalization.
The capitalization of the Company is as set forth in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus
under the heading “Capitalization”. All of the outstanding capital stock of the Company has been duly authorized and validly
issued and is fully paid and non-assessable. The Securities have been duly authorized and, when issued and paid for as contemplated herein,
will be validly issued, fully paid and non-assessable; the holders thereof are not and will not be subject to personal liability by reason
of being such holders; the Securities are not and will not be subject to the preemptive rights of any holders of any security of the
Company or similar contractual rights granted by the Company; and all corporate action required to be taken for the authorization, issuance
and sale of the Securities has been duly and validly taken. None of the outstanding shares of Common Stock of the Company were issued
in violation of any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase securities of the
Company. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus, there are no authorized
or outstanding options, warrants, preemptive rights, rights of first refusal or other rights to acquire, or instruments convertible into
or exchangeable or exercisable for, any Shares of, or other equity interest in, the Company or any of its subsidiaries. All of the outstanding
shares of, or other equity interest in, each of the Company’s subsidiaries (i) have been duly authorized and validly issued, (ii)
are fully paid and non-assessable and (iii) are owned by the Company, directly or through the Company’s subsidiaries, free and
clear of any security interest, mortgage, pledge, lien, encumbrance, charge, claim or restriction on voting or transfer (collectively,
“Liens”).
2.15. Common
Stock Incentive Plans. With respect to the Common Stock options (the “Stock Options”) granted pursuant
to the Common Stock-based compensation plans of the Company and its subsidiaries (the “Company Common Stock Incentive Plans”),
(i) each Stock Option intended to qualify as an “incentive stock option” under Section 422 of the Internal Revenue Code of
1986, as amended (the “Code”), so qualifies, (ii) each grant of a Stock Option was duly authorized by all necessary
corporate action, including, as applicable, approval by the board of directors of the Company (or a duly constituted and authorized committee
thereof) and any required stockholders approval by the necessary number of votes or written consents, and the award agreement governing
such grant (if any), to the Company’s knowledge, was duly executed and delivered by each party thereto, (iii) each such grant was
made in all material respects in accordance with the terms of the Company Common Stock Incentive Plans, and (iv) each such grant was
properly accounted for in accordance with United States generally accepted accounting principles applied on a consistent basis during
the periods involved (“GAAP”) in the financial statements (including the related notes) of the Company.
2.16. No
Violation or Default. Neither the Company nor any of its subsidiaries is: (i) in violation of its charter, by-laws or similar
organizational documents; (ii) in default, and no event has occurred that, with notice or lapse of time or both, would constitute such
a default, in the due performance or observance of any term, covenant, condition or other obligation contained in any indenture, mortgage,
deed of trust, loan agreement, contract, undertaking or other agreement or instrument to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries is bound or to which any property, right or asset of the Company or any
of its subsidiaries is subject; or (iii) in violation of any law or statute applicable to the Company or any of its subsidiaries or any
judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority having jurisdiction over the Company
or any of its subsidiaries, or any of their respective properties or assets, except, in the case of clauses (ii) and (iii) above, for
any such default or violation that would not, individually or in the aggregate, have a Material Adverse Effect.
2.17. No
Conflicts. None of (i) the execution, delivery and performance of this Agreement by the Company, (ii) the issuance, sale and
delivery of the Closing Units or the Option Securities, (iii) the application of the proceeds of the offering as described under “Use
of Proceeds” in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus, or (iv) the consummation of
the transactions contemplated herein will: (x) result in any violation of the terms or provisions of the charter, by-laws or similar
organizational documents of the Company or any of its subsidiaries; (y) conflict with, result in a breach or violation of, or require
the approval of stockholders, members or partners or any approval or consent of any persons under, any of the terms or provisions of,
constitute a default under, result in the termination, modification, or acceleration of, or result in the creation or imposition of any
lien, charge or encumbrance upon any property, right or asset of the Company or any of its subsidiaries pursuant to, any indenture, mortgage,
deed of trust, loan agreement, note agreement, contract, undertaking or other agreement, obligation, condition, covenant or instrument
to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any
property, right or asset of the Company or any of its subsidiaries is subject; or (z) result in the violation of any law, statute, judgment,
order, rule, decree or regulation applicable to the Company or any of its subsidiaries of any court, arbitrator, governmental or regulatory
authority, agency or body having jurisdiction over the Company or any of its subsidiaries or any of their respective properties or assets.
2.18. No
Consents Required. No consent, approval, authorization, order, filing, registration, license or qualification of or with any
court, arbitrator, or governmental or regulatory authority, agency, or body is required for (i) the execution, delivery and performance
by the Company of this Agreement; (ii) the issuance, sale and delivery of the Securities ; or (iii) the consummation of the transactions
contemplated herein, except for such consents, approvals, authorizations, orders, filings, registrations or qualifications as (x) have
already been obtained or made and are still in full force and effect, (y) may be required by FINRA and the Nasdaq Capital Market, and
(z) may be required under applicable state securities laws in connection with the purchase, distribution and resale of the Securities
by the Underwriter.
2.19. Independent
Accountants. Grassi & Co., CPAs, P.C., 50 Jericho Quadrangle, Ste. 200, Jericho, NY 11753, which expressed its opinion with
respect to the financial statements (which term as used in this Agreement includes the related notes thereto) and supporting schedules
included in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus, is an independent registered public
accounting firm with respect to the Company and its subsidiaries within the meaning of the rules and regulations of the Commission and
the Public Company Accounting Oversight Board and as required by the Securities Act.
2.20. Financial
Statements and Other Financial Data. The financial statements (including the related notes thereto), together with the supporting
schedules, included in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus comply in all material respects
with the applicable requirements of the Securities Act and present fairly the consolidated financial position of the entities to which
they relate as of and at the dates indicated and the results of their operations and cash flows for the periods specified. Such financial
statements, notes and schedules have been prepared in conformity with GAAP applied on a consistent basis throughout the periods involved,
except as may be expressly stated in the notes thereto and except, in the case of unaudited interim financial statements, subject to
normal year end audit adjustments and the exclusion of certain footnotes as permitted by the applicable rules of the Commission. The
financial data set forth in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus under the captions “Capitalization”
present fairly the information set forth therein on a basis consistent with that of the audited financial statements included in the
Registration Statement, the Pricing Disclosure Package and the Final Prospectus.
2.21. Statistical
and Market-Related Data. The statistical and market-related data included in the Registration Statement, the Pricing Disclosure
Package and the Final Prospectus are based on or derived from sources that the Company reasonably and in good faith believes to be accurate
and reliable in all material respects.
2.22. Forward-Looking
Statements. No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act) included in the Registration Statement, the Pricing Disclosure Package or the Final Prospectus has been made or reaffirmed without
a reasonable basis or has been disclosed other than in good faith.
2.23. Legal
Proceedings. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus, (i)
there are no legal, governmental or regulatory investigations, actions, demands, claims, suits, arbitrations, inquiries or proceedings
(collectively, “Actions”) pending to which the Company or any of its subsidiaries is or may be a party or to
which any property, right or asset of the Company or any of its subsidiaries is or may be the subject that, individually or in the aggregate,
if determined adversely to the Company or any of its subsidiaries, could have a Material Adverse Effect; and (ii) to the knowledge of
the Company, no such Actions are threatened or contemplated by any governmental or regulatory authority or by others.
2.24. Labor
Disputes. No labor disturbance by or dispute with the employees of the Company or any of its subsidiaries exists or, to the knowledge
of the Company, is threatened or contemplated that could, individually or in the aggregate, have a Material Adverse Effect.
2.25. Intellectual
Property Rights. (i) The Company and its subsidiaries own or have the right to use all patents, patent applications, trademarks,
service marks, trade names, and other source indicators and registrations and applications for registration thereof, domain name registrations,
copyrights and registrations and applications for registration thereof, technology and know-how, trade secrets, and all other intellectual
property and related proprietary rights (collectively, “Intellectual Property Rights”) necessary to conduct
their respective businesses; (ii) other than as disclosed in the Prospectus, neither the Company nor any of its subsidiaries has received
any notice of infringement, misappropriation or other conflict with (and neither the Company nor any of its subsidiaries is otherwise
aware of any infringement, misappropriation or other conflict with) the Intellectual Property Rights of any other person, except for
such infringement, misappropriation or other conflict as could not have a Material Adverse Effect; and (iii) to the knowledge of the
Company, the Intellectual Property Rights of the Company and its subsidiaries are not being infringed, misappropriated or otherwise violated
by any person.
2.26. Licenses
and Permits. (i) The Company and its subsidiaries possess such valid and current certificates, authorizations, approvals, licenses
and permits (collectively, “Authorizations”) issued by, and have made all declarations, amendments, supplements
and filings with, the appropriate state, federal or foreign regulatory agencies or bodies necessary to own, lease and operate their respective
properties and to conduct their respective businesses as set forth in the Registration Statement, the Pricing Disclosure Package and
the Final Prospectus; (ii) all such Authorizations are valid and in full force and effect and the Company and its subsidiaries are in
compliance with the terms and conditions of all such Authorizations; and (iii) neither the Company nor any of its subsidiaries has received
notice of any revocation, termination or modification of, or non-compliance with, any such Authorization or has any reason to believe
that any such Authorization will not be renewed in the ordinary course, except where, in the case of clauses (i), (ii) and (iii), the
failure to possess, make or obtain such Authorizations (by possession, declaration or filing) could not, individually or in the aggregate,
have a Material Adverse Effect.
2.27. Title
to Property. The Company and its subsidiaries have good and marketable title to, or have valid and enforceable rights to lease
or otherwise use, all items of real property and personal property (other than with respect to Intellectual Property Rights, which is
addressed exclusively in Section 2.27) that are material to the respective businesses of the Company and its subsidiaries, in each
case, free and clear of all liens, encumbrances, claims, and defects and imperfections of title, except such liens, encumbrances, claims,
defects and imperfections as (i) are disclosed in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus,
or (ii) do not materially affect the value of such property and do not materially interfere with the use made or proposed to be made
of such property by the Company and its subsidiaries. The Company and its subsidiaries have good and marketable title to, or have valid
and enforceable rights to lease or otherwise use, all items of real and personal property that are material to the respective businesses
of the Company and its subsidiaries, in each case, free and clear of all liens, encumbrances, claims and defects and imperfections of
title, except such liens, encumbrances, claims, defects and imperfections as (i) are disclosed in the Registration Statement, the Pricing
Disclosure Package and the Final Prospectus, or (ii) do not materially affect the value of such property and do not materially interfere
with the use made or proposed to be made of such property by the Company and its subsidiaries. All items of real and personal property
held under lease by the Company and its subsidiaries are held under valid, subsisting and enforceable leases, with such exceptions as
do not materially interfere with the use made or proposed to be made of such property by the Company and its subsidiaries.
2.28. Taxes.
The Company and each of its subsidiaries have filed all federal, state, local and foreign tax returns required to be filed through the
date hereof or have timely requested extensions thereof and have paid all taxes required to be paid thereon (except as currently being
contested in good faith and for which reserves required by GAAP have been created in the financial statements of the Company). The charges,
accruals and reserves in respect of any income and other tax liability in the financial statements of the Company referred to in Section
2.22 are adequate, in accordance with GAAP principles, to meet any assessments for any taxes of the Company accruing through the
end of the last period specified in such financial statements.
2.29. Solvency.
Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the Company
of the proceeds from the sale of the Closing Units hereunder, (i) the fair saleable value of the Company’s assets exceeds the amount
that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent
liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business as
now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of
the business conducted by the Company, consolidated and projected capital requirements and capital availability thereof, and (iii) the
current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after
taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when
such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be payable on or in respect of its debt). The Company has no knowledge of any
facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization
laws of any jurisdiction within one year from the Closing Date. The Registration Statement sets forth as of the date hereof all outstanding
secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. Neither
the Company nor any Subsidiary is in default with respect to any Indebtedness.
2.30. Investment
Company Act. Neither the Company nor any of its subsidiaries is or, after giving effect to the offer and sale of the Securities
and the application of the proceeds therefrom as described under “Use of Proceeds” in the Registration Statement, the Pricing
Disclosure Package and the Final Prospectus, will be required to register as an “investment company” (as defined in the Investment
Company Act).
2.31. Insurance.
The Company and its subsidiaries are insured by recognized, financially sound institutions in such amounts, with such amounts, with such
deductibles and covering such losses and risks as the Company reasonably believes to be adequate for the conduct of their respective
businesses and the value of their respective properties and as is prudent and customary for companies engaged in similar businesses in
similar industries. All insurance policies and fidelity or surety bonds insuring the Company and its subsidiaries or their respective
businesses, assets, employees, officers and directors are in full force and effect; the Company and its subsidiaries are in compliance
with the terms of such policies in all material respects; neither the Company nor any of its subsidiaries has received notice from any
insurer or agent of such insurer that capital improvements or other expenditures are required to be made in order to continue such insurance;
and neither the Company nor any of its subsidiaries has been refused any insurance coverage sought or applied for. There are no claims
by the Company or any of its subsidiaries under any such policy as to which any insurer is denying liability or defending under a reservation
of rights clause; and neither the Company nor any of its subsidiaries has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that could not have a Material Adverse Effect.
2.32. No
Stabilization or Manipulation. None of the Company, nor its Affiliates, or, to the knowledge of the Company, any person acting
on its or any of their behalf (other than the Underwriter, as to which no representation or warranty is given) has taken, directly or
indirectly, any action designed to or that has constituted or that could reasonably be expected to cause or result in the stabilization
or manipulation of the price of any securities of the Company. The Company acknowledges that the Underwriter may engage in passive market
making transactions in the Common Stock on the Nasdaq Capital Market (the “Exchange”) in accordance with Regulation
M under the Exchange Act (“Regulation M”).
2.33. Compliance
with the Sarbanes-Oxley Act. The Company and, to the knowledge of the Company, its officers and directors, in their capacities
as such, are and have been in compliance with all applicable provisions of the Sarbanes-Oxley Act.
2.34. Accounting
Controls. The Company and its subsidiaries maintain systems of “internal control over financial reporting” (as defined
in Rule 13a-15(f) of the Exchange Act) that comply with the requirements of the Exchange Act and have been designed by, or under the
supervision of, their principal executive and principal financial officers, or persons performing similar functions, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with GAAP. The Company and its subsidiaries maintain internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability
for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
Other than as disclosed in the Registration Statement, the Company maintains a system of internal control over financial reporting and
the Company is not aware of any other material weaknesses in its internal control over financial reporting (whether or not remediated).
Other than as disclosed in the Registration Statement, since the date of the most recent balance sheet included in the Registration Statement,
the Pricing Disclosure Package and the Final Prospectus, (x) the Company’s auditors and the board of directors of the Company have
not been advised of (A) any new significant deficiencies or material weaknesses in the design or operation of the internal control over
financial reporting of the Company and its subsidiaries which could adversely affect the Company’s ability to record, process,
summarize, and report financial data; or (B) any fraud, whether or not material, that involves management or other employees who have
a role in the internal control over financial reporting of the Company or its subsidiaries; and (y) there have been no significant changes
in the internal control over financial reporting of the Company or its subsidiaries or in other factors that could significantly affect,
such internal control over financial reporting, including any corrective actions with regard to significant deficiencies or material
weaknesses, since the respective dates as of which information is given in the Registration Statement, the Pricing Disclosure Package
and the Final Prospectus.
2.35. Disclosure
Controls and Procedures. The Company and its subsidiaries have established and maintain disclosure controls and procedures (as
such term is defined in Rule 13a-15(e) under the Exchange Act) that are designed to comply with the requirements of the Exchange Act;
such disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company and its subsidiaries
in the reports they file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified
in the Commission’s rules and forms, including controls and procedures designed to ensure that such information is accumulated
and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure; and such disclosure
controls and procedures are effective to perform the functions for which they were established.
2.36. Compliance
with Environmental Laws. The Company and each of its subsidiaries (i) are, and at all times prior hereto were, in compliance
with all Environmental Laws (as defined below) applicable to such entity, which compliance includes, without limitation, obtaining, maintaining
and complying with all permits and authorizations and approvals required by Environmental Laws to conduct their respective businesses;
and (ii) have not received notice or otherwise have knowledge of any actual or alleged violation of Environmental Laws, or of any actual
or potential liability for or other obligation concerning the presence, disposal or release of hazardous or toxic substances or wastes,
pollutants or contaminants, and, except as described in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus,
(x) there are no proceedings that are pending, or known to be contemplated, against the Company or any of its subsidiaries under Environmental
Laws, other than such proceedings regarding which would not, individually or in the aggregate, have a Material Adverse Effect; (y) to
the knowledge of the Company, none of the Company or any of its subsidiaries is aware of any issues regarding compliance with Environmental
Laws, including any pending or proposed Environmental Laws, or liabilities or other obligations under Environmental Laws or concerning
hazardous or toxic substances or wastes, pollutants or contaminants, that could reasonably be expected to have a material effect on the
capital expenditures, earnings or competitive position of the Company and its subsidiaries; and (z) none of the Company or any of its
subsidiaries anticipates material capital expenditures relating to Environmental Laws. As used herein, the term “Environmental
Laws” means any laws, regulations, ordinances, rules, orders, judgments, decrees, permits or other legal requirements of
any governmental authority, including, without limitation, any international, foreign, national, state, provincial, regional, or local
authority, relating to pollution, the protection of human health or safety, the environment, or natural resources, or to the use, handling,
storage, manufacturing, transportation, treatment, discharge, disposal or release of hazardous or toxic substances or wastes, pollutants
or contaminants.
2.37. ERISA.
Each “employee benefit plan” (within the meaning of Section 3(3) of the Employee Retirement Security Act of 1974, as amended
(“ERISA”)) for which the Company or any member of its “Controlled Group” (defined as any organization
which is a member of a controlled group of corporations within the meaning of Section 414 of the Code) would have any liability (each,
a “Plan”) complies in form with the requirements of all applicable statutes, rules and regulations including
ERISA and the Code, and has been maintained and administered in substantial compliance with its terms and with the requirements of all
applicable statutes, rules and regulations including ERISA and the Code; (ii) with respect to each Plan subject to Title IV of ERISA
or Section 302 of ERISA or Section 412 and 430 of the Code (A) no “reportable event” (within the meaning of Section 4043(c)
of ERISA) has occurred or is reasonably expected to occur, (B) no failure to satisfy the minimum funding standard (within the meaning
of Section 302 of ERISA or Section 412 and 430 of the Code), whether or not waived, has occurred or is reasonably expected to occur,
(C) the fair market value of the assets under each Plan (excluding for these purposes accrued but unpaid contributions) exceeds the present
value of all benefits accrued under such Plan (determined based on those assumptions used to fund such Plan) and (D) neither the Company
or any member of its Controlled Group has incurred, or reasonably expects to incur, any liability under Title IV of ERISA (other than
contributions to the Plan or premiums to the Pension Benefit Guaranty Corporation in the ordinary course and without default) in respect
of a Plan (including a “multiemployer plan”, within the meaning of Section 4001(a)(3) of ERISA); (iii) each Plan that is
intended to be qualified under Section 401(a) of the Code is so qualified and nothing has occurred, whether by action or by failure to
act, which would cause the loss of such qualification; and (iv) no prohibited transaction, within the meaning of Section 406 of ERISA
or Section 4975 of the Code, has occurred with respect to any Plan excluding transactions to which a statutory or administrative prohibited
transaction exemption applies.
2.38. Related
Party Transactions. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus,
no relationship, direct or indirect, exists between or among the Company or any of its subsidiaries, on the one hand, and the directors,
officers, stockholders, other Affiliates, customers or suppliers of the Company or any of its subsidiaries, on the other hand, that would
be required by the Securities Act to be described in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus.
2.39. No
Unlawful Contributions or Other Payments. Neither the Company nor any of its subsidiaries, nor any director, officer of the Company,
nor, to the knowledge of the Company, any agent, employee, Affiliate or other person associated with or acting on behalf of the Company
or any of its subsidiaries has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government or regulatory
official or employee; (iii) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment; or (iv) violated or
is in violation of any provision of (y) the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder
(the “FCPA”), or (z) any non-U.S. anti-bribery or anti-corruption statute or regulation. The Company and its
subsidiaries have instituted and maintain and enforce policies and procedures designed to promote and ensure compliance with all applicable
anti-bribery and anti-corruption laws.
2.40. Compliance
with Anti-Money Laundering Laws. The operations of the Company and its subsidiaries are and have been conducted at all times
in compliance with all applicable financial recordkeeping and reporting requirements, including those of the Currency and Foreign Transactions
Reporting Act of 1970, as amended, the applicable anti-money laundering statutes of all jurisdictions where the Company or any of its
subsidiaries conduct business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines issued,
administered or enforced by any governmental agency (collectively, the “Anti-Money Laundering Laws”); and no
action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or
any of its subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the knowledge of the Company, threatened.
2.41. Compliance
with OFAC. Neither the Company nor any of its subsidiaries nor any director, officer of the Company, nor, to the knowledge of
the Company, any agent, employee or Affiliate of the Company or any of its subsidiaries is an individual or entity (an “OFAC
Person”), or is owned or controlled by an OFAC Person, that is currently the subject or target of any sanctions administered
or enforced by the U.S. government (including, without limitation, the Office of Foreign Assets Control of the U.S. Treasury Department
(“OFAC”) or the U.S. Department of State and including, without limitation, the designation as a “specially
designated national” or “blocked person”), the United Nations Security Council, the European Union, His Majesty’s
Treasury, or other relevant sanctions authority (collectively, “Sanctions”), nor is the Company or any of its
subsidiaries located, organized or resident in a country or territory that is the subject or the target of Sanctions, including, without
limitation, Crimea, Cuba, Iran, North Korea, Sudan and Syria (each, a “Sanctioned Country”); and the Company
will not directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any
subsidiary, joint venture partner or other OFAC Person (i) to fund or facilitate any activities of or business with any OFAC Person that,
at the time of such funding or facilitation, is the subject or the target of Sanctions, (ii) to fund or facilitate any activities or
business in any Sanctioned Country or (iii) in any other manner that will result in a violation by any OFAC Person (including any OFAC
Person participating in the transaction, whether as underwriter, advisor, investor or otherwise) of Sanctions. Since the Company’s
inception, the Company and its subsidiaries have not knowingly engaged in and are not now knowingly engaged in any dealings or transactions
with any OFAC Person that at the time of the dealing or transaction is or was the subject or the target of Sanctions or with any Sanctioned
Country.
2.42. No
Registration Rights. Except as described in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus,
there are no contracts, agreements or understandings between the Company or any of its subsidiaries, on the one hand, and any person,
on the other hand, granting such person any rights to require the Company or any of its subsidiaries to file a registration statement
under the Securities Act with respect to any securities of the Company or any of its subsidiaries owned or to be owned by such person
or to require the Company or any of its subsidiaries to include such securities in any securities to be registered pursuant to any registration
statement to be filed by the Company or any of its subsidiaries under the Securities Act.
2.43.
Subsidiaries. The subsidiaries of the Company shall be referred to hereinafter each as a “Subsidiary”
and collectively as “Subsidiaries.” The description of the corporate structure of the Company and each of the
agreements among the Subsidiaries as set forth in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus
under the caption “Corporate History and Structure” filed as Exhibit 21.1 to the Registration Statement is true and accurate
in all material respects and nothing has been omitted from such description which would make it misleading. The Subsidiaries of the Company
listed in Schedule 2.46 hereto are the only “significant subsidiaries” (as defined under Rule 1.02(w) of Regulation
S-X under the Securities Act) of the Company (the “Significant Subsidiaries”).
2.44. No
Restrictions on Subsidiaries. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Final
Prospectus, no Subsidiary of the Company is currently prohibited, directly or indirectly, from paying any dividends to the Company, from
making any other distribution on such Subsidiary’s share capital or similar ownership interest, from repaying to the Company any
loans or advances to such Subsidiary from the Company or from transferring any of such Subsidiary’s properties or assets to the
Company or any other Subsidiary of the Company.
2.45. Exchange
Listing. The Common Stock is listed on the Exchange, and the Company has taken no action designed to, or likely to have the effect
of, delisting the Common Stock from the Exchange, nor has the Company received any notification that the Exchange is contemplating terminating
such listing, except as described in the Registration Statement, the Disclosure Package and the Prospectus.
2.46. Exchange
Act Registration. The Common Stock is registered pursuant to Section 12(b) under the Exchange Act. The Company has taken no action
designed to, or likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act, nor has the Company
received any notification that the Commission is contemplating terminating such registration.
2.47. Prior
Securities Transactions. No securities of the Company have been sold by the Company or by or on behalf of, or for the benefit
of, any person or persons controlling, controlled by or under common control with the Company, except as disclosed in the Registration
Statement, the Disclosure Package and the Prospectus.
2.48. Application
of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents) or the laws of its state
of incorporation that is or could become applicable as a result of the Underwriter and the Company fulfilling their obligations or exercising
their rights hereunder (including documents incorporated herein by reference or attached hereto).
2.49. D&O
Questionnaires. To the Company’s knowledge, all information contained in the questionnaires (the “Questionnaires”)
completed by each of the Company’s directors, officers and beneficial holders of 5% or more of the Company’s Common Stock
immediately prior to the Offering as supplemented by all information concerning the Company’s directors, officers and principal
stockholders as described in the Registration Statement, the Disclosure Package and the Prospectus, provided to the Underwriter is true
and correct in all material respects and the Company has not become aware of any information which would cause the information disclosed
in the Questionnaires to become inaccurate and incorrect in any material respect.
2.50. No
Integrated Offering. Neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly
or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause
this offering of the Closing Units to be integrated with prior offerings by the Company for purposes of any applicable stockholder approval
provisions of any Trading Market on which any of the securities of the Company are listed or designated.
2.51. Litigation;
Governmental Proceedings. There is no material action, suit, proceeding, inquiry, arbitration, investigation, litigation or governmental
proceeding pending or, to the Company’s knowledge, threatened against, or involving the Company, any of its Subsidiaries or, to
the Company’s knowledge, any executive officer or director which has not been disclosed in the Registration Statement, the Disclosure
Package and the Prospectus which is required to be disclosed.
2.52. FINRA
Matters.
2.52.1. No
Broker’s Fees. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus,
neither the Company nor any of its subsidiaries is a party to any contract, agreement or understanding with any person (other than this
Agreement) that would give rise to a valid claim against any of them or the Underwriter for a brokerage commission, finder’s fee
or like payment in connection with the offering and sale of the Securities.
2.52.2. Payments
Within Six (6) Months. Except as described in the Registration Statement, the Disclosure Package and the Prospectus, the Company
has not made any direct or indirect payments (in cash, securities or otherwise) to: (i) any person, as a finder’s fee, consulting
fee or otherwise, in consideration of such person raising capital for the Company or introducing to the Company persons who raised or
provided capital to the Company; (ii) any FINRA member; or (iii) any person or entity that has any direct or indirect affiliation or
association with any FINRA member, within the six (6) months prior to the initial filing of the Registration Statement, other than the
payment to the Underwriter as provided hereunder in connection with the Offering.
2.52.3. Use
of Proceeds. None of the net proceeds of the Offering will be paid by the Company to any participating FINRA member or its affiliates,
except as specifically authorized herein.
2.52.4. FINRA
Affiliation. There is no (i) officer or director of the Company, (ii) to the Company’s knowledge, any beneficial owner
of 10% or more of any class of the Company’s securities or (iii) to the Company’s knowledge, any beneficial owner of the
Company’s unregistered equity securities which were acquired during the 180-day period immediately preceding the filing of the
Registration Statement that is an affiliate or associated person of a FINRA member participating in the Offering (as determined in accordance
with the rules and regulations of FINRA).
2.52.5. Information.
All information provided by the Company in its FINRA questionnaire to underwriter’s counsel specifically for use by underwriter’s
counsel in connection with its Public Offering System filings (and related disclosure) with FINRA is true, correct and complete in all
material respects.
| 3. | Representations
and Warranties of the Underwriter. The Underwriter represents and warrants to, and
agrees with, the Company: |
3.1. No
Testing-the-Waters Communications. The Underwriter has not (i) alone engaged in any Testing-the-Waters Communication and (ii)
authorized anyone to engage in Testing-the-Waters Communications. The Underwriter has not distributed, or authorized anyone else to distribute,
any Written Testing-the-Waters Communications.
4.1. Agreements
to Sell and Purchase. On the basis of the representations, warranties and covenants herein and subject to the conditions herein
and any adjustments made in accordance with Section 4.4 hereof,
4.1.1. The
Company agrees to issue and sell the Closing Units to the Underwriter; and
4.1.2. The
Underwriter agrees to purchase from the Company the number of Closing Units set forth opposite the Underwriter’s name in Schedule
4.1.2 hereto, subject to such adjustments as the Underwriter in its sole discretion shall make to eliminate any sales or purchases
of fractional Shares.
4.1.3. The
Closing Units are to be offered initially to the public at the offering price set forth on the cover page of the Final Prospectus (the
“Public Offering Price”). The purchase price per Closing Unit to be paid by the Underwriter to the Company
shall be $[●] per Unit (the “Purchase Price”), which represents the Public Offering Price less an underwriting
discount of 7.0% and a non-accountable expense allowance of 0.5%.
4.1.4. Payment
for the Closing Units (the “Closing Units Payment”) shall be made by wire transfer in immediately available
funds to the accounts specified by the Company to the Underwriter at the offices of Kaufman & Canoles, P.C. at 10:00 a.m., ET, on
[●], 2024 or at such other place on the same or such other date and time, not later than the fifth (5th) Business Day thereafter,
as the Underwriter and the Company may agree upon in writing (the “Closing Date”). The Closing Units Payment
shall be made against delivery of the Closing Units to be purchased on the Closing Date to the Underwriter with any transfer taxes, stamp
duties and other similar taxes payable in connection with the sale of the Closing Units duly paid by the Company.
4.2. Over-Allotment
Option.
4.2.1. On
the basis of the representations, warranties and covenants herein and subject to the conditions herein, the Underwriter is hereby granted
an option (the “Over-Allotment Option”) to purchase, in the aggregate, up to [●] additional shares of
Common Stock, representing 15.0% of the Closing Units and/or Pre-funded Warrants sold in the offering from the Company (the “Option
Shares”) and/or up to [●] Series A Warrants to purchase an aggregate of an additional [●] shares of Common
Stock, representing 15.0% of the Closing Units sold in the offering from the Company; and [●] Series B Warrants to purchase an
aggregate of an additional [●] shares of Common Stock, representing 15.0% of the Closing Units sold in the offering from the Company
(the “Option Warrants”). The purchase price to be paid per Option Share shall be equal to the price per Closing
Unit set forth in Section 4.1 hereof (less $0.01 attributable to each whole Option Warrant included in the Closing Unit) and the
purchase price to be paid per Option Warrant shall be equal to $0.01 per Option Warrant. The Over-allotment Option is, at the Underwriter’s
sole discretion, for Option Shares and Option Warrants together, solely Option Shares, solely Option Warrants, or any combination thereof
(each, an “Option Security” and collectively, the “Option Securities”). The Closing
Units and the Option Securities are collectively referred to as the “Securities”. The Securities and the shares
of Common Stock issuable upon exercise of the Pre-funded Warrants and the Warrants (the “Underlying Shares”),
are collectively referred to as the “Public Securities.” The Public Securities shall be issued directly by
the Company and shall have the rights and privileges described in the Registration Statement, the Pricing Disclosure Package and the
Prospectus. The Closing Warrants and the Option Warrants, if any, shall be issued pursuant to, and shall have the rights and privileges
set forth in, the form of Warrant, and the Closing Pre-funded Warrants shall be issued pursuant to, and shall have the rights and privileges
set forth in, the form of Pre-funded Warrant. The offering and sale of the Public Securities is herein referred to as the “Offering”.
4.2.2. upon
an exercise of the Over-Allotment Option and subject to the terms and conditions herein, the Company agrees to issue and sell the Option
Securities to the Underwriter;
4.2.3. The
Underwriter may exercise the Over-Allotment Option at any time in whole, or from time to time in part, on or before the forty-fifth (45th)
day following the date of the Final Prospectus, by written notice from the Underwriter to the Company (the “Over-Allotment
Exercise Notice”). The Underwriter must give the Over-Allotment Exercise Notice to the Company at least two (2) Business
Days prior to the Closing Date or the applicable Additional Closing Date, as the case may be. The Underwriter may cancel any exercise
of the Over-Allotment Option at any time prior to the Closing Date or the applicable Additional Closing Date, as the case may be, by
giving written notice of such cancellation to the Company.
4.2.4. The
Over-Allotment Exercise Notice shall set forth each of the following:
4.2.4.1 the
aggregate number of Option Securities as to which the Over-Allotment Option is being exercised.
4.2.4.2 the
Over-Allotment Option Purchase Price.
4.2.4.3 the
names and denominations in which the Option Securities are to be registered.
4.2.4.4 the
applicable Additional Closing Date, which may be the same date and time as the Closing Date but shall not be earlier than the Closing
Date nor later than the tenth (10th) full Business Day after the date of the Over-Allotment Exercise Notice.
4.2.5. Payment
for the Option Securities (the “Option Securities Payment”) shall be made by wire transfer in immediately available
funds to the accounts specified by the Company to the Underwriter at the offices of Kaufman & Canoles, P.C. at 10:00 a.m. ET on the
date specified in the corresponding Over-Allotment Exercise Notice, or at such other place on the same or such other date and time, not
later than the fifth Business Day thereafter, as the Underwriter and the Company may agree upon in writing (an “Additional
Closing Date”). The Option Securities Payment shall be made against delivery to the Underwriter for the respective accounts
of the Underwriter of the Option Securities to be purchased on any Additional Closing Date, with any transfer taxes, stamp duties and
other similar taxes payable in connection with the sale of the Option Securities duly paid by the Company. Delivery of the Option Securities
shall be made through the facilities of DTC unless the Underwriter shall otherwise instruct.
4.3. Public
Offering. The Company understands that the Underwriter intends to make a public offering of the Units as soon after the effectiveness
of this Agreement as in the judgment of the Underwriter is advisable, and initially to offer the Units on the terms set forth in the
Final Prospectus. The Company acknowledges and agrees that the Underwriter may offer and sell Units to or through any Affiliate of the
Underwriter.
| 5. | Covenants
of the Company. The Company hereby covenants and agrees with the Underwriter as follows: |
5.1. Filings
with the Commission. The Company will:
5.1.1. prepare
and file the Final Prospectus (in a form approved by the Underwriter and containing the Rule 430A Information) with the Commission in
accordance with and within the time periods specified by Rules 424(b) and 430A under the Securities Act.
5.1.2. file
any Issuer Free Writing Prospectus with the Commission to the extent required by Rule 433 under the Securities Act.
5.1.3. file
with the Commission such reports as may be required by Rule 463 under the Securities Act.
5.2. Notice
to the Underwriter. The Company will advise the Underwriter promptly, and confirm such advice in writing:
5.2.1. when
the Registration Statement has become effective.
5.2.2. when
the Final Prospectus has been filed with the Commission.
5.2.3. when
any amendment to the Registration Statement has been filed or becomes effective.
5.2.4. when
any Rule 462(b) Registration Statement has been filed with the Commission.
5.2.5. when
any supplement to the Final Prospectus, any Issuer Free Writing Prospectus, any Written Testing-the-Waters Communication or any amendment
to the Final Prospectus has been filed or distributed.
5.2.6. of
(x) any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Final Prospectus,
(y) the receipt of any comments from the Commission relating to the Registration Statement or (z) any other request by the Commission
for any additional information, including, but not limited to, any request for information concerning any Testing-the-Waters Communication.
5.2.7. of
(x) the issuance by the Commission of any order suspending the effectiveness of the Registration Statement or preventing or suspending
the use of the Registration Statement, the Pricing Disclosure Package, the Final Prospectus, any Preliminary Prospectus, any Issuer Free
Writing Prospectus or any Written Testing-the-Waters Communication or (y) the initiation or, to the knowledge of the Company, threatening
of any proceeding for that purpose or pursuant to Section 8A of the Securities Act.
5.2.8. of
the occurrence of any event or development within the Prospectus Delivery Period as a result of which, the Final Prospectus, the Pricing
Disclosure Package, any Issuer Free Writing Prospectus or any Written Testing-the-Waters Communication as then amended or supplemented
would include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances existing when the Final Prospectus, the Pricing Disclosure Package, any such Issuer Free Writing Prospectus
or any such Written Testing-the-Waters Communication is delivered to a purchaser, not misleading.
5.2.9. of
the issuance by any governmental or regulatory authority or any order preventing or suspending the use of any of the Registration Statement,
the Pricing Disclosure Package, the Final Prospectus, any Preliminary Prospectus, any Issuer Free Writing Prospectus or any Testing-the-Waters
Communication or the initiation or threatening for that purpose.
5.2.10. of
the receipt by the Company of any notice with respect to any suspension of the qualification of the Units for offer and sale in any jurisdiction
or the initiation or, to the knowledge of the Company, threatening of any proceeding for such purpose.
5.3. Ongoing
Compliance.
5.3.1. If
during the Prospectus Delivery Period:
5.3.1.1 any
event or development shall occur or condition shall exist as a result of which the Final Prospectus as then amended or supplemented would
include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein,
in the light of the circumstances existing when the Final Prospectus is delivered to a purchaser, not misleading, the Company will, as
soon as reasonably possible, notify the Underwriter thereof and forthwith prepare and, subject to Section 5.4 hereof, file
with the Commission and furnish, at its own expense, to the Underwriter and to such dealers as the Underwriter may designate such amendments
or supplements to the Final Prospectus as may be necessary so that the statements in the Final Prospectus as so amended or supplemented
will not, in the light of the circumstances existing when the Final Prospectus is delivered to a purchaser, be misleading; or
5.3.1.2 it
is necessary to amend or supplement the Final Prospectus to comply with applicable law, the Company will, as soon as reasonably possible,
notify the Underwriter thereof and forthwith prepare and, subject to Section 5.4 hereof, file with the Commission and furnish,
at its own expense, to the Underwriter and to such dealers as the Underwriter may designate such amendments or supplements to the Final
Prospectus as may be necessary so that the Final Prospectus will comply with applicable law; and
5.3.2. if
at any time prior to the Closing Date or any Additional Closing Date, as the case may be:
5.3.2.1 any
event or development shall occur or condition shall exist as a result of which the Pricing Disclosure Package as then amended or supplemented
would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein,
in the light of the circumstances existing when the Pricing Disclosure Package is delivered to a purchaser, not misleading, the Company
will immediately notify the Underwriter thereof and forthwith prepare and, subject to Section 5.4 hereof, file with the Commission
(to the extent required) and furnish, at its own expense, to the Underwriter and to such dealers as the Underwriter may designate such
amendments or supplements to the Pricing Disclosure Package as may be necessary so that the statements in the Pricing Disclosure Package
as so amended or supplemented will not, in the light of the circumstances existing when the Pricing Disclosure Package is delivered to
a purchaser, be misleading; or
5.3.2.2 it
is necessary to amend or supplement the Pricing Disclosure Package to comply with applicable law, the Company will immediately notify
the Underwriter thereof and forthwith prepare and, subject to Section 5.4 hereof, file with the Commission (to the extent
required) and furnish, at its own expense, to the Underwriter and to such dealers as the Underwriter may designate such amendments or
supplements to the Pricing Disclosure Package as may be necessary so that the Pricing Disclosure Package will comply with applicable
law.
5.4. Amendments,
Supplements and Issuer Free Writing Prospectuses. Before (i) using, authorizing, approving, referring to, distributing or filing
any Issuer Free Writing Prospectus, (ii) filing (x) any Rule 462(b) Registration Statement or (y) any amendment or supplement to the
Registration Statement or the Final Prospectus, or (iii) distributing any amendment or supplement to the Pricing Disclosure Package or
the Final Prospectus, the Company will furnish to the Underwriter and counsel for the Underwriter a copy of the proposed Issuer Free
Writing Prospectus, Rule 462(b) Registration Statement or other amendment or supplement for review and will not use, authorize, refer
to, distribute or file any such Issuer Free Writing Prospectus or Rule 462(b) Registration Statement, or file or distribute any such
proposed amendment or supplement (A) to which the Underwriter objects in a timely manner and (B) which is not in compliance with the
Securities Act. The Company will, pursuant to reasonable procedures developed in good faith, retain copies of each Issuer Free Writing
Prospectus that is not filed with the Commission in accordance with Rule 433 under the Securities Act.
5.5. Delivery
of Copies. The Company will, upon request of the Underwriter, deliver, without charge, (i) to the Underwriter, three signed copies
of the Registration Statement as originally filed and each amendment thereto, in each case, including all exhibits and consents filed
therewith; and (ii) to each Underwriter (A) a conformed copy of the Registration Statement as originally filed and each amendment thereto
(without exhibits and consents) and (B) during the Prospectus Delivery Period, as many copies of the Final Prospectus (including all
amendments and supplements thereto and each Issuer Free Writing Prospectus) as the Underwriter may reasonably request.
5.6. Blue
Sky Compliance. The Company will use its best efforts, with the Underwriter’s cooperation, if necessary, to qualify or
register (or to obtain exemptions from qualifying or registering) the Units for offer and sale under the securities or Blue Sky laws
of such jurisdictions as the Underwriter shall reasonably request and will use its reasonable best efforts, with the Underwriter’s
cooperation, if necessary, to continue such qualifications, registrations and exemptions in effect so long as required for the distribution
of the Units; provided that the Company shall not be required to (i) qualify as a foreign corporation or other entity or as a
dealer in securities in any such jurisdiction where it would not otherwise be required to so qualify, (ii) file any general consent to
service of process in any such jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it is not otherwise so subject.
5.7. Earning
Statement. The Company will make generally available to its security holders and the Underwriter as soon as practicable an earning
statement that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 under the Securities Act covering a period
of at least 12 months beginning after the “effective date” (as defined in Rule 158 under the Securities Act) of the Registration
Statement; provided that the Company will be deemed to have furnished such statement to its security holders and the Underwriter
to the extent it is filed on the Commission’s Electronic Data Gathering, Analysis and Retrieval system (“EDGAR”).
5.8. Stockholder
Approval. The Company shall hold a special meeting of stockholders (which may also be at the annual meeting of stockholders)
at the earliest practicable date after the date hereof, but in no event later than twenty (20) days after the Closing Date for the purpose
of obtaining Stockholder Approval (as defined below), if required to effect the purpose thereof, with the recommendation of the Board
that such proposal be approved, and the Company shall solicit proxies from its stockholders in connection therewith in the same manner
as all other management proposals in such proxy statement and all management-appointed proxyholders shall vote their proxies in favor
of such proposal. The Company shall use its reasonable best efforts to obtain such Stockholder Approval, and officers, directors and
stockholders subject to Lock-Up Agreement pursuant to Section 8.9 shall cast their proxies in favor of such proposal. If the Company
does not obtain Stockholder Approval at the first meeting, the Company shall call a meeting every twenty (20) days thereafter to seek
Stockholder Approval until the earlier of the date Stockholder Approval is obtained or the Warrants are no longer outstanding. “Stockholder
Approval” has the meaning set forth in the Warrants.
5.9. Use
of Proceeds. The Company shall apply the net proceeds from the sale of the Closing Units and the Option Securities in the manner
described under the caption “Use of Proceeds” in the Registration Statement, the Pricing Disclosure Package and the Final
Prospectus.
5.10. Clear
Market.
5.10.1. For
a period of ninety (90) days after the Closing Date (the “Standstill Period”), the Company will not (x) offer,
pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, or file with the Commission a registration statement
under the Securities Act relating to, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for
shares of Common Stock, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing, or (y) enter into
any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the shares of Common
Stock or any such other securities, whether any such transaction described in clause (x) or (y) above is to be settled by delivery of
shares of Common Stock or such other securities, in cash or otherwise, without the prior written consent of the Underwriter.
5.10.2. The
restrictions contained in Section 5.11.1 hereof shall not apply to: (A) the Units, (B) any shares of Common Stock issued under Company
Common Stock Incentive Plans or warrants issued by the Company, in each case, described as outstanding in the Registration Statement,
the Pricing Disclosure Package and the Final Prospectus, (C) any options and other awards granted under a Company Common Stock Incentive
Plan as described in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus, provided that such securities
are issued as “restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit any
registration statement in connection therewith to be filed publicly or declared effective during the Standstill Period (D) the amendment
of a Company Common Stock Incentive Plan as described in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus,
(E) the filing by the Company of any registration statement on Form S-8 or a successor form thereto relating to a Company Common Stock
Incentive Plan described in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus and (F) shares of Common
Stock or other securities issued pursuant to acquisitions or strategic transactions (whether by merger, consolidation, purchase of equity,
purchase of assets, reorganization or otherwise) approved by a majority of the disinterested directors of the Company, provided that
such securities are issued as “restricted securities” (as defined in Rule 144) and carry no registration rights that require
or permit the filing of any registration statement in connection therewith during the Standstill Period, and provided that any such issuance
shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or
an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits
in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for
the purpose of raising capital or to an entity whose primary business is investing in securities; provided, however, that
any such shares of Common Stock or other securities issued or granted pursuant to clauses (B), (C) and (F) during the Standstill Period
shall not be saleable in the public market until the expiration of the Standstill Period.
5.10.3. If
the Underwriter, in its sole discretion, agrees to release or waive the restrictions set forth in any Lock-Up Agreement as described
in Section 8.9 and provides the Company with notice of the impending release or waiver substantially in the form of Exhibit
5.11.3.1 hereto at least three (3) Business Days before the effective date of the release or waiver, then the Company agrees
to announce the impending release or waiver by a press release substantially in the form of Exhibit 5.11.3.2 hereto
through a major news service at least two (2) Business Days before the effective date of the release or waiver.
5.10.4. Notwithstanding
the foregoing, this Section 5.11 shall not apply to an Exempt Issuance.
5.11. No
Stabilization or Manipulation. None of the Company, its Affiliates or any person acting on its or any of their behalf (other
than the Underwriter, as to which no covenant is given) will take, directly or indirectly, any action designed to or that constitutes
or that could reasonably be expected to cause or result in the stabilization or manipulation of the price of any securities of the Company.
The Company acknowledges that the Underwriter may engage in passive market making transactions in the Common Stock on the Exchange in
accordance with Regulation M.
5.12. Investment
Company Act. The Company shall not invest, or otherwise use the proceeds received by the Company from the sale of the Closing
Units or the Option Securities in such a manner as would require the Company or any of its subsidiaries to register as an “investment
company” (as defined in the Investment Company Act) under the Investment Company Act.
5.13. Transfer
Agent. For the period of two years from the date of this Agreement, the Company shall engage and maintain, at its expense, a
registrar and transfer agent for the Common Stock.
5.14. Reports.
For the period of two years from the date of this Agreement, the Company will furnish to the Underwriter, as soon as they are available,
copies of all reports or other communications (financial or other) furnished to holders of the Common Stock, and copies of any reports
and financial statements furnished to or filed with the Commission or any national securities exchange or automatic quotation system;
provided that the Company will be deemed to have furnished such reports and financial statements to the Underwriter to the extent
they are filed on the Commission’s Electronic Data Gathering, Analysis and Retrieval system.
5.15. Right
of First Refusal. The Company agrees that, if, for the period ending fifteen (15) months after the Closing Date, the Company
or any of its subsidiaries: (a) decides to finance or refinance any indebtedness, the Underwriter (or any affiliate designated by the
Underwriter) shall have the right to act as sole book-runner, sole manager, sole placement agent or sole agent with respect to such financing
or refinancing; or (b) decides to raise funds by means of a public offering (including at-the-market facility) or a private placement
or any other capital raising financing of equity, equity-linked or debt securities, the Underwriter (or any affiliate designated by the
Underwriter) shall have the right to act as sole book-running manager, sole underwriter or sole placement agent for such financing. If
the Underwriter or one of its affiliates decides to accept any such engagement, the agreement governing such engagement (each, a “Subsequent
Transaction Agreement”) will contain, among other things, provisions for customary fees for transactions of similar size
and nature, but in no event will the fees be less than those outlined herein, and the provisions of this Agreement, including indemnification,
that are appropriate to such a transaction. Notwithstanding the foregoing, the decision to accept the Company’s engagement under
this Section 5.16 shall be made by the Underwriter or one of its affiliates, by a written notice to the Company, within ten (10)
days of the receipt of the Company’s notification of its financing needs, including a detailed term sheet. The Underwriter’s
determination of whether in any case to exercise its right of first refusal will be strictly limited to the terms on such term sheet,
and any waiver of such right of first refusal shall apply only to such specific terms. If the Underwriter waives its right of first refusal,
any deviation from such terms (including without limitation after the launch of a subsequent transaction) shall void the waiver and require
the Company to seek a new waiver from the right of first refusal on the terms set forth in this Section 5.16.
| 6. | Covenants
of the Underwriter. The Underwriter hereby covenants and agrees with the Company
as follows: |
6.1. Underwriter
Free Writing Prospectus. The Underwriter has not used, authorized the use of, referred to or participated in the planning for
use of, and will not use, authorize the use of, refer to or participate in the planning for use of, any Free Writing Prospectus (which
term includes use of any written information furnished to the Commission by the Company and not incorporated by reference into the Registration
Statement and any press release issued by the Company) other than (i) a Free Writing Prospectus that contains no “issuer information”
filed or required to be filed pursuant to Rule 433(d) under the Securities Act (“Issuer Information”) that
was not included in the Preliminary Prospectus or a previously filed Issuer Free Writing Prospectus, (ii) any Issuer Free Writing Prospectus
listed in Schedule 2.5.4 hereto or prepared pursuant to Section 2.5.4 or Section 5.4 hereof (including any electronic
road show), or (iii) any Free Writing Prospectus prepared by the Underwriter and approved by the Company in advance in writing.
6.2. Section
8A Proceedings. The Underwriter is not subject to any pending proceeding under Section 8A of the Securities Act with respect
to the offering of the Units and will promptly notify the Company if any such proceeding against it is initiated during the Prospectus
Delivery Period.
7.1. Company
Expenses. The Company hereby agrees to pay on the Closing Date all expenses incident to the performance of the obligations of
the Company under this Agreement including, but not limited to: (a) all filing fees and expenses relating to the registration of the
Units with the Commission; (b) all filing fees and expenses associated with the review of the offering of the Units by FINRA; (c) all
fees and expenses relating to the listing of the Shares and the Series A tradable Warrants and the Series B tradable Warrants on the
Exchange (to the extent relevant) or on such other stock exchanges as the Company and the Underwriter together determine; (d) all fees,
expenses and disbursements relating to the registration or qualification of the Units under the “blue sky” securities laws
of such states and other jurisdictions as the Underwriter may reasonably designate (including, without limitation, all filing and registration
fees, and the reasonable fees and disbursements of the Company’s “blue sky” counsel, which will be Underwriter’s
counsel) unless such filings are not required in connection with the Company’s proposed Exchange listing; (e) all fees, expenses
and disbursements relating to the registration, qualification or exemption of the Securities under the securities laws of such foreign
jurisdictions as the Underwriter may reasonably designate; (f) the costs of all mailing and printing of the underwriting documents, the
Registration Statement, Pricing Disclosure Package, the Final Prospectus, any Preliminary Prospectus, any Issuer Free Writing Prospectus
or any Testing-the-Waters Communication and all amendments, supplements and exhibits thereto as the Underwriter may reasonably deem necessary;
(g) the costs of preparing, printing and delivering certificates representing the Shares; (h) fees and expenses of the transfer agent
for the Shares; (i) transfer and/or stamp taxes, if any, payable upon the transfer of securities from the Company to the Underwriter;
(j) the fees and expenses of the Company’s accountants; and (k) reasonable legal fees and disbursements for the Underwriter’s
counsel. The total amount payable by the Company pursuant to (k) to the Underwriter shall not exceed $100,000. The Underwriter may deduct
from the net proceeds of the Offering payable to the Company on the Closing Date the expenses set forth herein to be paid by the Company
to the Underwriter. Except as provided for in this Agreement, the Underwriter shall bear the costs and expenses incurred by them in connection
with the sale of the Units and the transactions contemplated thereby.
7.2. Non-accountable
Expenses. On the Closing Date, the Company shall pay to the Underwriter, by deduction from the net proceeds of the Offering a
non-accountable expense allowance equal to zero point five percent (0.5%) of the gross proceeds received by the Company from the sale
of the Closing Units), provided, however, that in the event that the Offering is terminated, the Company agrees to reimburse the Underwriter
pursuant to Section 12 hereof.
7.3. Underwriter
Expenses. Except to the extent otherwise provided in this Section 7 or Section 9 hereof, the Underwriter will pay all
of its own costs and expenses, including the fees and expenses of their counsel, any stock transfer taxes on resale of any of the Shares
held by them, and any advertising expenses connected with any offers they may make.
7.4. Company
Reimbursement. The provisions of this Section 7 shall not affect any agreement that the Company may make for the sharing
of such costs and expenses.
| 8. | Conditions
of the Obligations of the Underwriter. The obligations of the Underwriter to purchase
the Closing Units as provided herein on the Closing Date or the Option Securities as provided
herein on any Additional Closing Date, as the case may be, shall be subject to the timely
performance by the Company of its covenants and other obligations hereunder, and to each
of the following additional conditions: |
8.1. Registration
Compliance; No Stop Order.
8.1.1. The
Registration Statement and any post-effective amendment thereto shall have become effective, no stop order suspending the effectiveness
of the Registration Statement or any post-effective amendment thereto shall be in effect, and no proceeding for such purpose or pursuant
to Section 8A of the Securities Act shall be pending before or threatened by the Commission.
8.1.2. The
Company shall have filed the Final Prospectus and each Issuer Free Writing Prospectus with the Commission in accordance with and within
the time periods prescribed by Section 5.1 hereof.
8.1.3. The
Company shall have (A) disclosed to the Underwriter all requests by the Commission for additional information relating to the offer and
sale of the Units and (B) complied with such requests to the reasonable satisfaction of the Underwriter.
8.2. Representations
and Warranties. The representations and warranties of the Company contained herein shall be true and correct on the date hereof
and on and as of the Closing Date or any Additional Closing Date, as the case may be, and the statements of the Company and its officers
made in any certificates delivered pursuant to this Agreement shall be true and correct on and as of the Closing Date or any Additional
Closing Date, as the case may be.
8.3. Auditor
Comfort Letters. On the date of this Agreement and on the Closing Date or any Additional Closing Date, as the case may be, Grassi
& Co., CPAs, P.C. shall have furnished to the Underwriter, at the request of the Company, letters, dated the respective dates of
delivery thereof and addressed to the Underwriter, in form and substance reasonably satisfactory to the Underwriter, containing statements
and information of the type customarily included in accountants’ “comfort letters” to underwriter with respect to the
financial statements and certain financial information contained in each of the Registration Statement, the Pricing Disclosure Package
and the Final Prospectus; provided that the letter delivered on the Closing Date or any Additional Closing Date, as the case may
be, shall use a “cut-off” date no more than two business days prior to the Closing Date or such Additional Closing Date,
as the case may be.
8.4. No
Material Adverse Change. No event or condition of a type described in Section 2.14 hereof shall have occurred or shall exist,
which event or condition is not described in each of the Pricing Disclosure Package and the Final Prospectus (in each case, exclusive
of any amendment or supplement thereto), the effect of which in the judgment of the Underwriter makes it impracticable or inadvisable
to proceed with the offering, sale or delivery of the Units on the Closing Date or any Additional Closing Date, as the case may be, in
the manner and on the terms contemplated by this Agreement, the Pricing Disclosure Package and the Final Prospectus (in each case, exclusive
of any amendment or supplement thereto).
8.5. Opinion
and Negative Assurance Letter of Counsel to the Company. U.S. Company Counsel shall each have furnished to the Underwriter, at
the request of the Company, its (i) written opinion, addressed to the Underwriter and dated the Closing Date or any Additional Closing
Date, as the case may be, and (ii) negative assurance letter, addressed to the Underwriter and dated the Closing Date or any Additional
Closing Date, as the case may be, in each case, in a form reasonably satisfactory to the Underwriter.
8.6. Officer’s
Certificate. The Underwriter shall have received as of the Closing Date or any Additional Closing Date on the date of this Agreement,
a certificate from the Company’s CFO in form and substance reasonably satisfactory to the Underwriter, containing statements and
information confirming that the financial statements and certain financial information contained in the Registration Statement is consistent
with the Company’s records and does not contain any material misstatements or omissions and shall have received as of the Closing
Date or any Additional Closing Date, as the case may be, a certificate of an executive officer of the Company who has specific knowledge
of the Company’s financial matters and is satisfactory to the Underwriter, (i) confirming that such officer has carefully reviewed
the Registration Statement, the Pricing Disclosure Package, the Final Prospectus, each Issuer Free Writing Prospectus and each Written
Testing-the-Waters Communication and, to the knowledge of such officer, the representations set forth in Sections 2.1.2, 2.2,
2.3.1, 2.4.1, 2.5.1, 2.6 and 2.8, hereof are true and correct on and as of the Closing Date or any Additional
Closing Date, as the case may be; (ii) to the effect set forth in clause (i) of Section 2.12 and Section 8.1 hereof; and (iii)
confirming that all of the other representations and warranties of the Company in this Agreement are true and correct on and as of the
Closing Date or any Additional Closing Date, as the case may be, and that the Company has complied with all agreements and covenants
and satisfied all other conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date or any Additional
Closing Date, as the case may be.
8.7. No
Legal Impediment to Issuance and Sale. No action shall have been taken and no statute, rule, regulation or order shall have been
enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority that would, as of the Closing Date or
any Additional Closing Date, as the case may be, prevent the issuance, sale or delivery of the Closing Units or the Option Securities
by the Company; and no injunction or order of any federal, state or foreign court shall have been issued that would, as of the Closing
Date or any Additional Closing Date, as the case may be, prevent the issuance, sale or delivery of the Closing Units or the Option Securities.
8.8. Good
Standing. The Underwriter shall have received on and as of the Closing Date and any Additional Closing Date, as the case may
be, satisfactory evidence of the good standing of the Company in its jurisdiction of incorporation, in writing from the appropriate governmental
authorities of such jurisdiction.
8.9. Lock-Up
Agreements. The Lock-Up Agreements substantially in the form of Exhibit 8.9 hereto executed by the officers,
directors and certain stockholders of the Company relating to sales and certain other dispositions of shares of Common Stock or certain
other securities, delivered to the Underwriter on or before the date hereof, shall be in full force and effect on the Closing Date or
any Additional Closing Date, as the case may be.
8.10. Exchange
Listing. On the Closing Date or any Additional Closing Date, as the case may be, the Shares and the Series A tradable Warrants
and the Series B tradable Warrants shall have been approved for listing on the Exchange, subject to notice of issuance.
8.11. Additional
Documents. On or prior to the Closing Date or any Additional Closing Date, as the case may be, the Underwriter and its counsel
shall have received such information, certificates and other additional documents from the Company as they may reasonably require for
the purpose of enabling them to pass upon the issuance and sale of the Units as contemplated herein or in order to evidence the accuracy
of any of the representations and warranties, or the satisfaction of any of the covenants, closing conditions or other obligations, contained
in this Agreement.
All
opinions, letters, certificates and other documents delivered pursuant to this Agreement will be deemed to be in compliance with the
provisions hereof only if they are reasonably satisfactory in form and substance to counsel for the Underwriter.
If
any condition specified in this Section 8 is not satisfied when and as required to be satisfied, this Agreement and all obligations
of the Underwriter hereunder may be terminated by the Underwriter by notice to the Company at any time on or prior to the Closing Date
or any Additional Closing Date, as the case may be, which termination shall be without liability on the part of any party to any other
party, except that the Company shall continue to be liable for the payment of expenses under Section 7 and Section 12 hereof
and except that the provisions of Section 9 and Section 10 hereof shall at all times be effective and shall survive any such
termination.
9.1. Indemnification
of the Underwriter by the Company. The Company agrees to indemnify and hold harmless the Underwriter, its Affiliates, directors,
officers, employees and agents and each person, if any, who controls the Underwriter within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities (including, without limitation,
all reasonable legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such
fees and expenses are incurred), joint or several, that arise out of or are based upon (i) any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement (or any amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary in order to make the statements therein not misleading, or (ii)
any untrue statement or alleged untrue statement of a material fact contained in any Pricing Disclosure Package (including any Pricing
Disclosure Package that has subsequently been amended), the Final Prospectus (or any amendment or supplement thereto), any Preliminary
Prospectus, any Issuer Information, any Issuer Free Writing Prospectus, any Written Testing-the-Waters Communication or any Road Show,
or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case, except insofar as such losses, claims, damages or liabilities
arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in
conformity with the Underwriter Information. The indemnity agreement set forth in this Section 9.1 shall be in addition to any liabilities
that the Company may otherwise have.
9.2. Indemnification
of the Company by the Underwriter. The Underwriter agrees to indemnify and hold harmless the Company, its directors, each officer
who signed the Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities (including, without limitation,
all reasonable legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such
fees and expenses are incurred), joint or several, to the same extent as the indemnity set forth in Section 9.1 hereof; provided,
however, that the Underwriter shall be liable only to the extent that any untrue statement or omission or alleged untrue statement or
omission was made in the Registration Statement (or any amendment or supplement thereto), any Pricing Disclosure Package (including any
Pricing Disclosure Package that has subsequently been amended), the Final Prospectus (or any amendment or supplement thereto), any Preliminary
Prospectus, any Issuer Information, any Issuer Free Writing Prospectus, any Written Testing-the-Waters Communication or any Road Show
in reliance upon, and in conformity with, the Underwriter Information relating to the Underwriter. The indemnity agreement set forth
in this Section 9 shall be in addition to any liabilities that the Underwriter may otherwise have.
9.3. Notifications
and Other Indemnification Procedures. If any suit, action, proceeding (including any governmental or regulatory investigation),
claim or demand shall be brought or asserted against any person in respect of which indemnification may be sought pursuant to any of
the preceding subsections of this Section 9, such person (the “Indemnified Person”) shall promptly notify
the person against whom such indemnification may be sought (the “Indemnifying Person”) in writing; provided
that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have under any of the preceding
subsections of this Section 9 except to the extent that it has been materially prejudiced by such failure; and provided,
further, that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have to an Indemnified
Person otherwise than under any of the preceding subsections of this Section 9. If any such proceeding shall be brought or asserted
against an Indemnified Person and it shall have notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel
reasonably satisfactory to the Indemnified Person (who shall not, without the consent of the Indemnified Person, be counsel to the Indemnifying
Person) to represent the Indemnified Person in such proceeding and shall pay the reasonable and documented fees and expenses of such
counsel related to such proceeding, as incurred. In any such proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person
and the Indemnified Person shall have mutually agreed to the contrary; (ii) the Indemnifying Person has failed within a reasonable time
to retain counsel reasonably satisfactory to the Indemnified Person; (iii) the Indemnified Person shall have reasonably concluded that
there may be legal defenses available to it that are different from or in addition to those available to the Indemnifying Person; or
(iv) the named parties in any such proceeding (including any impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interest between
them. It is understood and agreed that the Indemnifying Person shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all
Indemnified Persons, and that all such fees and expenses shall be paid or reimbursed as they are incurred. Any such separate firm for
(i) the Underwriter, its Affiliates, directors, officers, employees and agents and each person, if any, who controls the Underwriter
within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall be designated in writing by the Underwriter;
and (ii) the Company, its directors, its officers who signed the Registration Statement and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall be designated in writing by the Company.
9.4. Settlements.
The Indemnifying Person under this Section 9 shall not be liable for any settlement of any proceeding effected without its written
consent, which consent may not be unreasonably withheld, but if settled with such consent or if there be a final judgment for the plaintiff,
the Indemnifying Person agrees to indemnify the Indemnified Person from and against any loss, claim, damage, liability or expense by
reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified Person shall have requested
an Indemnifying Person to reimburse the Indemnified Person for any reasonably incurred and documented fees and expenses of counsel as
contemplated by this Section 9, the Indemnifying Person agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than forty-five (45) days after receipt by such Indemnifying
Person of the aforesaid request, (ii) such Indemnifying Person shall not have reimbursed the Indemnified Person in accordance with such
request, or shall not have disputed in good faith the Indemnified Person’s entitlement to such reimbursement, prior to the date
of such settlement and (iii) such Indemnified Person shall have given the Indemnifying Person at least forty-five (45) days’ prior
notice of its intention to settle. No Indemnifying Person shall, without the prior written consent of the Indemnified Person effect any
settlement, compromise or consent to the entry of judgment in any pending or threatened action, suit or proceeding in respect of which
any Indemnified Person is or could have been a party and indemnity was or could have been sought hereunder by such Indemnified Person,
unless such settlement, compromise or consent (x) includes an unconditional release of such Indemnified Person, in form and substance
reasonably satisfactory to such Indemnified Person, from and against all liability on claims that are the subject matter of such action,
suit or proceeding and (y) does not include any statements as to or any findings of fault, culpability or failure to act by or on behalf
of any Indemnified Person.
10.1. To
the extent the indemnification provided for in Section 9 hereof is unavailable to or insufficient to hold harmless an Indemnified
Person in respect of any losses, claims, damages, liabilities or expenses referred to therein, then each Indemnifying Person, in lieu
of indemnifying such Indemnified Person thereunder, shall contribute to the aggregate amount paid or payable by such Indemnified Person,
as incurred, as a result of any losses, claims, damages, liabilities or expenses referred to therein (i) in such proportion as is appropriate
to reflect the relative benefits received by the Company, on the one hand, and the Underwriter, on the other hand, from the offering
of the Units pursuant to this Agreement or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault
of the Company, on the one hand, and the Underwriter, on the other hand, in connection with the statements or omissions that resulted
in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits
received by the Company, on the one hand, and the Underwriter, on the other hand, in connection with the offering of the Units pursuant
to this Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the offering of the Units pursuant
to this Agreement (before deducting expenses) received by the Company, on the one hand, and the total underwriting discounts and commissions
received by the Underwriter, on the other hand, in each case as set forth in the table on the cover of the Final Prospectus bear to the
aggregate initial offering price of the Units. The relative fault of the Company, on the one hand, and the Underwriter, on the other
hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact relates to information supplied by the Company, on the one hand, or the Underwriter, on
the other hand, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement
or omission.
10.2. The
amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed
to include, subject to the limitations set forth in Section 9 hereof, all reasonable legal or other fees or expenses incurred by
such party in connection with investigating or defending any action or claim. The provisions set forth in Section 9 hereof with
respect to notice of commencement of any action shall apply if a claim for contribution is to be made under this Section 10; provided,
however, that no additional notice shall be required with respect to any action for which notice has been given under Section 9
hereof for purposes of indemnification.
10.3. The
Company and the Underwriter agree that it would not be just and equitable if contribution pursuant to this Section 10 was determined
by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in
this Section 10.
10.4. Notwithstanding
the provisions of this Section 10, the Underwriter shall not be required to contribute any amount in excess of the amount by which
the total discounts and commissions received by the Underwriter in connection with the Units distributed by it exceeds the amount of
any damages the Underwriter has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11 of the Securities Act) shall
be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
10.5. For
purposes of this Section 10, each director, officer, employee and agent of the Underwriter and each person, if any, who controls
the Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Underwriter, and each director and officer of the Company who signed the Registration Statement, and each person,
if any, who controls the Company with the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, shall have the
same rights to contribution as the Company.
10.6. The
remedies provided for in Section 9 and Section 10 hereof are not exclusive and shall not limit any rights or remedies which
may otherwise be available to any Indemnified Person at law or in equity.
11.1. Prior
to the delivery of and payment for the Units on the Closing Date or any Additional Closing Date, as the case may be, this Agreement may
be terminated by the Underwriter in the absolute discretion of the Underwriter by notice given to the Company if after the execution
and delivery of this Agreement: (i) trading or quotation of any securities issued or guaranteed by the Company shall have been suspended
or materially limited on any securities exchange, quotation system or in the over-the-counter market; (ii) trading in securities generally
on any of the New York Stock Exchange, the Nasdaq Stock Exchange or the over-the-counter market shall have been suspended or materially
limited; (iii) a general banking moratorium on commercial banking activities shall have been declared by federal or New York state authorities;
(iv) there shall have occurred a material disruption in commercial banking or securities settlement, payment or clearance services in
the United States; (v) there shall have occurred any outbreak or escalation of national or international hostilities or any crisis or
calamity, or any change in the United States or international financial markets, or any substantial change or development involving a
prospective substantial change in general economic, financial or political conditions in the United States or internationally, as in
the judgment of the Underwriter is material and adverse and makes it impracticable or inadvisable to proceed with the offering, sale
or delivery of the Units on the Closing Date or any Additional Closing Date, as the case may be, in the manner and on the terms described
in the Pricing Disclosure Package or to enforce contracts for the sale of securities; or (vi) the Company or any of its subsidiaries
shall have sustained a loss by strike, fire, flood, earthquake, accident or other calamity of such character as in the judgment of the
Underwriter may interfere materially with the conduct of the business and operations of the Company and its subsidiaries, considered
as one entity, regardless of whether or not such loss shall have been insured.
11.2. Any
termination pursuant to this Section 11 shall be without liability on the part of: (x) the Company to the Underwriter, except that
the Company shall continue to be liable for the payment of expenses under Section 7; (y) the Underwriter to the Company; or (z)
any party hereto to any other party except that the provisions of Section 9, Section 10 and this Section 11 hereof shall
at all times be effective and shall survive any such termination.
| 12. | Reimbursement
of the Underwriter’s Expenses. If (a) the Company fails to deliver the Units
to the Underwriter for any reason at the Closing Date or any Additional Closing Date, as
the case may be, in accordance with this Agreement or (b) the Underwriter declines to purchase
the Units for any reason permitted under this Agreement, then the Company agrees to reimburse
the Underwriter for all reasonable out-of-pocket costs and expenses (including the reasonable
and documented fees and expenses of counsel to the Underwriter) incurred by the Underwriter
in connection with this Agreement and the applicable offering contemplated hereby. |
| 13. | Representations
and Indemnities to Survive Delivery. The respective indemnities, rights of contribution,
agreements, representations, warranties and other statements of the Company and the Underwriter
set forth in or made pursuant to this Agreement or made by or on behalf of the Company or
the Underwriter pursuant to this Agreement or any certificate delivered pursuant hereto shall
remain in full force and effect, regardless of any investigation made by or on behalf of
the Underwriter, the Company or any of their respective officers or directors or any controlling
person, as the case may be, and shall survive delivery of and payment for the Units sold
hereunder and any termination of this Agreement. |
| 14. | Notices.
All notices, requests, consents, claims, demands, waivers and other communications under
this Agreement shall be in writing and shall be deemed to have been duly given (i) when delivered
by hand (with written confirmation of receipt), (ii) when received by the addressee if sent
by a nationally recognized overnight courier (receipt requested), (iii) on the date sent
by facsimile (with confirmation of transmission) or email of a PDF document if sent during
normal business hours of the recipient, and on the next Business Day if sent after normal
business hours of the recipient, or (iv) on the third day after the date mailed, by certified
or registered mail (in each case, return receipt requested, postage pre-paid). Such communications
must be sent to the respective parties at the following addresses (or at such other address
for a party as shall be specified in a notice given in accordance with this Section 15): |
| If
to the Underwriter: |
|
Aegis
Capital Corp.
1345
Avenue of the Americas, 27th Floor New York, NY 10105
Email:
reide@aegiscap.com
Attention:
Robert Eide |
| |
|
| with
a copy to: |
|
Kaufman
& Canoles, P.C.
Two
James Center, 14th Floor, 1021 E. Cary St., Richmond, VA 23219
Email:
awbasch@kaufcan.com
Attention:
Anthony Basch |
| |
|
| If
to the Company: |
|
Cemtrex
Inc.
135
Fell Court
Hauppauge, NY 11788
Email:
sgovil@cemtrex.com
Attention:
Saagar Govil |
| with
copy to: |
|
The
Doney Law Firm
4955
S. Durango Rd. Ste. 165
Las Vegas, NV 89113
Email:
Scott@DoneyLawFirm.com
Attention:
Scott Doney |
Any
party hereto may change the address or facsimile number for receipt of communications by giving written notice to the others in accordance
with this Section 15.
| 15. | Successors.
This Agreement shall inure solely to the benefit of and be binding upon the Underwriter,
the Company and the other indemnified parties referred to in Section 9 and Section 10
hereof, and in each case their respective successors. Nothing in this Agreement is intended,
or shall be construed, to give any other person or entity any legal or equitable right, benefit,
remedy or claim under, or in respect of or by virtue of, this Agreement or any provision
contained herein. The term “successors,” as used herein, shall not include any
purchaser of the Units from the Underwriter merely by reason of such purchase. |
| 16. | Partial
Unenforceability. The invalidity or unenforceability of any Section, paragraph or
provision of this Agreement shall not affect the validity or enforceability of any other
Section, paragraph or provision hereof. If any Section, paragraph or provision of this Agreement
is for any reason determined to be invalid or unenforceable, there shall be deemed to be
made such minor changes (and only such minor changes) as are necessary to make it valid and
enforceable. |
| 17. | Governing
Law. This Agreement and any claim, controversy or dispute arising under or related
to this Agreement, whether sounding in contract, tort or statute, shall be governed by and
construed in accordance with the internal laws of the State of New York applicable to agreements
made and to be performed in such state (including its statute of limitations), without giving
effect to the conflict of laws provisions thereof to the extent such principles or rules
would require or permit the application of the laws of any jurisdiction other than those
of the State of New York. The Company has irrevocably appointed The Corporation Trust Company,
as its agent to receive service of process or other legal summons for purposes of any such
suit, action or proceeding that may be instituted in any state or federal court in the Borough
of Manhattan in the City of New York, United States of America. |
| 18. | Consent
to Jurisdiction. No legal suit, action or proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby (each, a “Related Proceeding”)
may be commenced, prosecuted or continued in any court other than the courts of the State
of New York located in the City and County of New York or in the United States District Court
for the Southern District of New York, which courts (collectively, the “Specified
Courts”) shall have jurisdiction over the adjudication of any Related Proceeding,
and the parties to this Agreement hereby irrevocably consent to the exclusive jurisdiction
the Specified Courts and personal service of process with respect thereto. The parties to
this Agreement hereby irrevocably waive any objection to the laying of venue of any Related
Proceeding in the Specified Courts and irrevocably waive and agree not to plead or claim
in any Specified Court that any Related Proceeding brought in any Specified Court has been
brought in an inconvenient forum. |
| 19. | Equitable
Remedies. Each party to this Agreement acknowledges and agrees that (a) a breach
or threatened breach by the Company of any of its obligations under Section 5.11 or
Section 5.16 would give rise to irreparable harm to the Underwriter for which monetary
damages would not be an adequate remedy and (b) if a breach or a threatened breach by the
Company of any such obligations occurs, the Underwriter will, in addition to any and all
other rights and remedies that may be available to such party at law, at equity, or otherwise
in respect of such breach, be entitled to equitable relief, including a temporary restraining
order, an injunction, specific performance of the terms of Section 5.11 or Section 5.16
and any other relief that may be available from a court of competent jurisdiction, without
any requirement to (i) post a bond or other security, or (ii) prove actual damages or that
monetary damages will not afford an adequate remedy. Each party to this Agreement agrees
that such party shall not oppose or otherwise challenge the existence of irreparable harm,
the appropriateness of equitable relief or the entry by a court of competent jurisdiction
of an order granting equitable relief, in either case, consistent with the terms of this
Section 20. |
| 20. | Waiver
of Jury Trial. The parties to this Agreement hereby irrevocably waive, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any Related Proceeding. |
| 21. | No
Fiduciary Relationship. The Company acknowledges and agrees that: (i) the purchase
and sale of the Units pursuant to this Agreement, including the determination of the offering
price of the Units and any related discounts and commissions, is an arm’s-length commercial
transaction between the Company, on the one hand, and the Underwriter, on the other hand;
(ii) in connection with each transaction contemplated hereby and the process leading to such
transaction the Underwriter is and has been acting solely as a principal and is not the agent
or fiduciary of the Company or its Affiliates, stockholders, members, partners, creditors
or employees or any other party; (iii) the Underwriter has not assumed and will not assume
an advisory or fiduciary responsibility in favor of the Company with respect to any of the
transactions contemplated hereby or the process leading thereto (irrespective of whether
the Underwriter has advised or is currently advising the Company on other matters) or any
other obligation to the Company except the obligations expressly set forth in this Agreement;
(iv) the Underwriter and its respective Affiliates may be engaged in a broad range of transactions
that involve interests that differ from those of the Company, and the Underwriter has no
obligation to disclose any of such interests by virtue of any fiduciary or advisory relationship;
and (v) the Underwriter has not provided any legal, accounting, regulatory or tax advice
in any jurisdiction with respect to the offering contemplated hereby, and the Company has
consulted its own legal, accounting, regulatory and tax advisors to the extent they deemed
appropriate. The Company waives and releases, to the full extent permitted by applicable
law, any claims it may have against the Underwriter arising from an alleged breach of fiduciary
duty in connection with the offering of the Units or any matters leading up to the offering
of the Units. |
| 22. | Compliance
with the USA Patriot Act. In accordance with the requirements of the USA Patriot
Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), the Underwriter is
required to obtain, verify and record information that identifies their respective clients,
including the Company, which information may include the name and address of its clients,
as well as other information that will allow the Underwriter to properly identify their respective
clients. |
| 23. | Entire
Agreement. This Agreement, together with any contemporaneous written agreements and
any prior written agreements (to the extent not superseded by this Agreement) that relate
to the offering of the Units, represents the entire agreement among the Company and the Underwriter
with respect to the preparation of the Registration Statement, the Pricing Disclosure Package,
the Final Prospectus, each Preliminary Prospectus, each Issuer Free Writing Prospectus, each
Testing-the-Waters Communication and each Road Show, the purchase and sale of the Units and
the conduct of the offering contemplated hereby. |
| 24. | Amendments
or Waivers. No amendment or waiver of any provision of this Agreement, nor any consent
or approval to any departure therefrom, shall in any event be effective unless the same shall
be in writing and signed by all the parties hereto. No waiver by any party shall operate
or be construed as a waiver in respect of any failure, breach or default not expressly identified
by such written waiver, whether of a similar or different character, and whether occurring
before or after the waiver. No failure to exercise, or delay in exercising, any right, remedy,
power or privilege arising from this Agreement shall operate or be construed as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise of any other right, remedy, power or privilege. |
| 25. | Section
Headings. The headings herein are included for convenience of reference only and
are not intended to be part of, or to affect the meaning or interpretation of, this Agreement. |
| 26. | Counterparts.
This Agreement may be executed in counterparts, each of which will be deemed an original,
but all of which together will be deemed to be one and the same agreement. Counterparts may
be delivered via facsimile, email (including PDF or any electronic signature complying with
the U.S. federal ESIGN Act of 2000) or other transmission method, and any counterpart so
delivered will be deemed to have been duly and validly delivered and be valid and effective
for all purposes. |
| 27. | Recognition
of the U.S. Special Resolution Regimes. |
27.1. In
the event that the Underwriter is a Covered Entity (as defined below) becomes subject to a proceeding under a U.S. Special Resolution
Regime, the transfer from the Underwriter of this Agreement, and any interest and obligation in or under this Agreement, will be effective
to the same extent as the transfer would be effective under the U.S. Special Resolution Regime (as defined below) if this Agreement,
and any such interest and obligation, were governed by the laws of the United States or a state of the United States.
27.2. In
the event that the Underwriter is a Covered Entity or a BHC Act Affiliate (as defined below) of the Underwriter becomes subject to a
proceeding under a U.S. Special Resolution Regime, Default Rights (as defined below) under this Agreement that may be exercised against
the Underwriter is permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special
Resolution Regime if this Agreement were governed by the laws of the United States or a state of the United States.
27.3. As
used in this section:
27.3.1. “BHC
Act Affiliate” has the meaning assigned to the term “affiliate” in, and shall be interpreted in accordance
with, 12 U.S.C. § 1841(k).
27.3.2. “Covered
Entity” means any of the following:
27.3.2.1 a
“covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);
27.3.2.2 a
“covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or
27.3.2.3 a
“covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
27.3.3. “Default
Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81,
47.2 or 382.1, as applicable.
27.3.4. “U.S.
Special Resolution Regime” means each of (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder
and (ii) Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder.
[CETX
Underwriting Agreement Signature Page Follows]
[CETX
Underwriting Agreement Signature Page]
If
the foregoing is in accordance with your understanding, please indicate your acceptance of this Agreement by signing in the space provided
below.
| |
Very
truly yours,
CEMTREX
INC. |
| |
|
|
| |
By: |
|
| |
Name: |
Saagar
Govil |
| |
Title: |
Chief
Executive Officer |
Confirmed
and accepted as of the date first above written:
AEGIS
CAPITAL CORP.
| By: |
|
|
| Name: |
Robert
Eide |
|
| Title: |
Chief
Executive Officer |
|
SCHEDULE
1.20
Pricing
Disclosure Package
| Number of Closing Shares: | |
| [●] | |
| Number of Units containing Firm Shares (“Common Units”) | |
| [●] | |
| Number of Units containing Pre-funded Warrants (“Pre-funded Units”) | |
| [●] | |
| Number of Option Shares: | |
| [●] | |
| Number of Option Common Warrants: | |
| [●] | |
| Number of Option Series A Common Warrants: | |
| [●] | |
| Public Offering Price per Common Unit: | |
$ | [●] | |
| Public Offering Price per Pre-Funded Unit: | |
$ | [●] | |
| Exercise Price per Pre-funded Warrant: | |
$ | 0.001 | |
| Exercise price per Common Warrant: | |
$ | [●] | |
| Exercise price per Series A Common Warrant: | |
$ | [●] | |
| Underwriting Discount per Common Unit and per Pre-Funded Unit: | |
$ | [●] | |
| Non-accountable expense allowance per Common Unit and per Pre-Funded Unit: | |
$ | [●] | |
| Purchase Price per Option Share: | |
$ | [●] | |
| Purchase Price per Option Pre-funded Warrant: | |
$ | [●] | |
| Purchase Price per full Option Common Warrant: | |
$ | 0.01 | |
SCHEDULE
2.5.4
Free
Writing Prospectuses
SCHEDULE
2.46
Significant
Subsidiaries
| Significant
Subsidiaries |
|
Place
of Incorporation |
| [●] |
|
[●] |
SCHEDULE
4.1.2
Closing
Securities
| Underwriter |
|
Number
of Closing Units to Be Purchased |
|
Number
of Option Securities to Be Purchased if the Maximum Over-Allotment Option Is Exercised |
| Aegis
Capital Corp. |
|
[●] |
|
[●] |
| Total: |
|
[●] |
|
[●] |
EXHIBIT
5.11.3.1
Form
of Lock-Up Waiver
[●],
202[●]
[Waiver
Recipient Name and Address]
Re:
Lock-Up Agreement Waiver
Ladies
and Gentlemen:
[Pursuant
to Section 8.9 of the Underwriting Agreement, dated [●], 2024 (the “Underwriting Agreement”), among
Cemtrex Inc., a Delaware corporation (the “Company”), and Aegis Capital Corp. (the “Underwriter”),
and the Lock-Up Agreement, dated [●], 2024 (the “Lock-Up Agreement”), between you and the Underwriter
relating to the Company’s shares of Common Stock, $0.001 par value per share (the “Share”), the Underwriter
hereby gives its consent to allow you to sell up to [●] Share [solely from and including [DATE] to and including [DATE]].]
[Pursuant
to Section 5.11 of the Underwriting Agreement, the Underwriter hereby gives its consent to allow the Company to issue and sell up
to [●] Shares pursuant to an offering of the Shares to commence prior to the expiration of the Lock-Up Period as defined in the
Underwriting Agreement[, provided that such offering closes on or prior to [●]].]
| |
AEGIS CAPITAL CORP. |
| |
|
|
| |
By: |
|
| |
Name: |
Robert
Eide |
| |
Title: |
Chief
Executive Officer |
EXHIBIT
5.11.3.2
Form
of Lock-Up Waiver Press Release
Cemtrex
Inc.
[Date]
Cemtrex
Inc., a Delaware corporation (the “Company”) announced today that Aegis Capital Corp., acting as the Underwriter in the Company’s
recent public offering of the Company’s Units consisting of one (1) share of Common Stock; and one (1) Series A warrant to purchase
one (1) share of Common Stock at a per-Share exercise price of $[●] (representing [●]% of the per Closing Common Unit (as
defined below) offering price attributed to the value of the shares of Common Stock included in the Closing Common Unit; and one (1)
Series B warrant to purchase one (1) share of Common Stock at a per-Share exercise price of $[●] (representing [●]% of the
per Closing Common Unit (as defined below) offering price attributed to the value of the shares of Common Stock included in the Closing
Common Unit, is [waiving] [releasing] a lock-up restriction with respect to the Company’s shares of Common Stock held by [certain
officers or directors] [an officer or director] of the Company. The [waiver] [release] will take effect on [Date], and the Shares may
be sold on or after such date.
This
press release is not an offer or sale of the securities in the United States or in any other jurisdiction where such offer or sale is
prohibited, and such securities may not be offered or sold in the United States absent registration or an exemption from registration
under the Securities Act of 1933, as amended.
EXHIBIT
8.9
Form
of Lock-Up Agreement
Exhibit
4.5
PRE-FUNDED
WARRANT TO PURCHASE COMMON STOCK
CEMTREX
INC.
| Warrant
Shares: [●] |
Initial
Exercise Date: [●], 2024 |
| |
Issue
Date: [●], 2024 |
THIS
PRE-FUNDED WARRANT TO PURCHASE COMMON STOCK (the “Warrant”) certifies that, for value received, [●]
or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time until this Warrant is exercised in full (the “Termination Date”)
but not thereafter, to subscribe for and purchase from Cemtrex Inc., a Delaware corporation (the “Company”),
up to [●] shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase
price of one (1) share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2.2.
| 1. | Definitions.
In addition to the terms defined elsewhere in this Warrant or in the Underwriting Agreement
dated [●], 2024, the following terms have the meanings indicated in this Section 1: |
1.1.
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
1.2. “Bid
Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common
Stock is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding
date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day
from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock
is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market
(or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of Common
Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser
selected in good faith by the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company,
the fees and expenses of which shall be paid by the Company.
1.3. “Board
of Directors” means the board of directors of the Company.
1.4. “Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized
or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee”
or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority
so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York generally
are open for use by customers on such day.
1.5. “Commission”
means the United States Securities and Exchange Commission.
1.6. “Common
Stock” means the common stock of the Company, $0.001 par value per share, and any other class of securities into which
such securities may hereafter be reclassified or changed.
1.7. “Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is
at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
1.8. “Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
1.9. “Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
1.10. “Registration
Statement” means the Company’s registration statement on Form S-1 (File No. 333-276556).
1.11. “Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
1.12. “Subsidiary”
means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed
or acquired after the date hereof.
1.13. “Trading
Day” means a day on which the Common Stock is traded on a Trading Market.
1.14. “Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the
date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York
Stock Exchange, OTCQB or OTCQX (or any successors to any of the foregoing).
1.15. “Transfer
Agent” means Clear Trust LLC, the current transfer agent of the Company, with a mailing address of 16540 Pointe Village
Drive Suite 210, Lutz, Florida 33558 and an email address of [●], and any successor transfer agent of the Company.
1.16. “Underwriting
Agreement” means the underwriting agreement, dated as of [●], 2024, between the Company and Aegis Capital Corp.,
as amended, modified or supplemented from time to time in accordance with its terms.
1.17. “VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average
price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not
then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market (or
a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of Common Stock
so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected
in good faith by the holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the
fees and expenses of which shall be paid by the Company.
1.18. “Warrants”
means this Warrant and other Common Stock purchase warrants issued by the Company pursuant to the Registration Statement.
2.1.
Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any
time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed
PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise substantially in the form attached hereto as Exhibit 2.1
(the “Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading
Days comprising the Standard Settlement Period (as defined in Section 2.4.1 herein) following the date of exercise as aforesaid,
the Holder shall deliver the aggregate Exercise Price for the Warrant Shares specified in the applicable Notice of Exercise by wire transfer
or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2.3 below is
specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee
(or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary,
the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant
Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the
Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company.
Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall
have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number
of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the
date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Trading Day of receipt of such
notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this
paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder
at any given time may be less than the amount stated on the face hereof.
2.2.
Exercise Price. The aggregate exercise price of this Warrant, except for a nominal exercise price of $0.001 per Warrant
Share, was pre-funded to the Company on or prior to the Initial Exercise Date and, consequently, no additional consideration (other than
the nominal exercise price of $0.001 per Warrant Share) shall be required to be paid by the Holder to any Person to effect any exercise
of this Warrant. The Holder shall not be entitled to the return or refund of all, or any portion, of such pre-paid aggregate exercise
price under any circumstance or for any reason whatsoever, including in the event this Warrant shall not have been exercised prior to
the Termination Date. The remaining unpaid exercise price per share of Common Stock under this Warrant shall be $0.001, subject to adjustment
hereunder (the “Exercise Price”).
2.3.
Cashless Exercise. This Warrant may also be exercised, in whole or in part, at such time by means of a “cashless
exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing
[(A-B) (X)] by (A), where:
| (A)
= | as
applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable
Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant
to Section 2.1 hereof on a day that is not a Trading Day or (2) both executed and delivered
pursuant to Section 2.1 hereof on a Trading Day prior to the opening of “regular
trading hours” (as defined in Rule 600(b) of Regulation NMS promulgated under the federal
securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP
on the Trading Day immediately preceding the date of the applicable Notice of Exercise or
(z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg
L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise
if such Notice of Exercise is executed during “regular trading hours” on a Trading
Day and is delivered within two (2) hours thereafter (including until two (2) hours after
the close of “regular trading hours” on a Trading Day) pursuant to Section 2.1
hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of
such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and
delivered pursuant to Section 2.1 hereof after the close of “regular trading hours”
on such Trading Day; |
| (B)
= | the
Exercise Price of this Warrant, as adjusted hereunder; and |
| (X)
= | the
number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance
with the terms of this Warrant if such exercise were by means of a cash exercise rather than
a cashless exercise. |
If
Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the
Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised, and the holding period
of the Warrant Shares being issued may be tacked on to the holding period of this Warrant. Assuming (i) the Holder is not an Affiliate
of the Company, and (ii) all of the applicable conditions of Rule 144 promulgated under the Securities Act with respect to Holder and
the Warrant Shares are met in the case of such a cashless exercise, the Company agrees that the Company will cause the removal of the
legend from such Warrant Shares (including by delivering an opinion of the Company’s counsel to the Company’s transfer agent
at its own expense to ensure the foregoing), and the Company agrees that the Holder is under no obligation to sell the Warrant Shares
issuable upon the exercise of the Warrant prior to removing the legend. The Company agrees not to take any position contrary to this
Section 2.3.
2.4.
Mechanics of Exercise.
2.4.1.
Delivery of Warrant Shares upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted
by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository
Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant
in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale
of the Warrant Shares by Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations
pursuant to Rule 144 (assuming cashless exercise of the Warrants), and otherwise by physical delivery of a certificate, for the number
of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise
by the date that is the earliest of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, (ii) one (1)
Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard
Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”).
Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of
the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares,
provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received within the earlier
of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice
of Exercise. Notwithstanding anything herein to the contrary, upon delivery of the Notice of Exercise, the Holder shall be deemed for
purposes of Regulation SHO under the Exchange Act to have become the holder of the Warrant Shares irrespective of the date of delivery
of the Warrant Shares. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise
by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each
$1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise),
$10 per Trading Day (increasing to $20 per Trading Day on the third (3rd) Trading Day after the Warrant Share Delivery Date) for each
Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company
agrees to maintain a Transfer Agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable.
As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of
Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of
the Notice of Exercise. Notwithstanding the foregoing, with respect to any Notice(s) of Exercise delivered on or prior to 12:00 p.m.
(New York City time) on the Initial Exercise Date, which may be delivered at any time after the time of execution of the Underwriting
Agreement, the Company agrees to deliver the Warrant Shares subject to such notice(s) by 4:00 p.m. (New York City time) on the Initial
Exercise Date and the Initial Exercise Date shall be the Warrant Share Delivery Date for purposes hereunder, provided that payment of
the aggregate Exercise Price (other than in the case of a cashless exercise) is received by such Warrant Share Delivery Date.
2.4.2.
Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request
of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new
Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant
shall in all other respects be identical with this Warrant.
2.4.3.
Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant
to Section 2.4.1 by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
2.4.4.
Compensation for Buy-In on Failure to Timely Deliver Warrant Shares upon Exercise. In addition to any other rights available
to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions
of Section 2.4.1 above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is
required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases,
shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving
upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by
which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased
exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder
in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed,
and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such
exercise was not honored and return any amount received by the Company in respect of the Exercise Price for those Warrant Shares (in
which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been
issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with
an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the
Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit
a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree
of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock
upon exercise of the Warrant as required pursuant to the terms hereof.
2.4.5. No
Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of
this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company
shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price or round up to the next whole share.
2.4.6.
Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer
tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the
Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder;
provided, however, that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder,
this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto as Exhibit 2.4.6 duly
executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer
tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and
all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day
electronic delivery of the Warrant Shares.
2.4.7.
Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise
of this Warrant, pursuant to the terms hereof.
2.5.
Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not
have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect
to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates,
and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution
Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of
the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties
shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is
being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, unexercised
portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion
of the unexercised or unconverted portion of any other securities of the Company (including, without limitation, any other Common Stock
Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the
Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2.5,
beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance
with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith.
To the extent that the limitation contained in this Section 2.5 applies, the determination of whether this Warrant is exercisable
(in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this
Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be
the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together
with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial
Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition,
a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act
and the rules and regulations promulgated thereunder. For purposes of this Section 2.5, in determining the number of outstanding
shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s
most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company
or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding.
Upon the written or oral request of a Holder, the Company shall within one (1) Trading Day confirm orally and in writing to the Holder
the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined
after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates
or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial
Ownership Limitation” shall be 4.99% (or, upon election by a Holder prior to the issuance of any Warrants, 9.99%) of the
number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon
exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions
of this Section 2.5, provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of Common
Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the
Holder and the provisions of this Section 2.5 shall continue to apply. Any increase in the Beneficial Ownership Limitation will
not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall
be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2.5 to correct this
paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained
or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this
paragraph shall apply to a successor holder of this Warrant.
3.1.
Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or
otherwise makes a distribution or distributions on shares of Common Stock or any other equity or equity equivalent securities payable
in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise
of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way
of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares
of Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of
which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before
such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the
number of Shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this
Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3.1 shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after
the effective date in the case of a subdivision, combination or re-classification.
3.2.
3.3.
Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3.1 above, if at any time the Company
grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to
all (or substantially all) of the record holders of any class of shares of Common Stock (the “Purchase Rights”),
then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the
Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant
(without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately
before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights
(provided, however, that, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder
exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent
(or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to
such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding
the Beneficial Ownership Limitation).
3.4.
Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend
or other distribution of its assets (or rights to acquire its assets) to all (or substantially all) holders of shares of Common Stock,
by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property
or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction)
(a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall
be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had
held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise
hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for
such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined
for the participation in such Distribution (provided, however, that, to the extent that the Holder’s right to participate in any
such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to
participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution
to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever,
as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation). To the extent that this Warrant has
not been partially or completely exercised at the time of such Distribution, such portion of the Distribution shall be held in abeyance
for the benefit of the Holder until the Holder has exercised this Warrant.
3.5. Fundamental
Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related
transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company or any Subsidiary, directly
or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of
its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer
(whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange
their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock
or 50% or more of the voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one or more related
transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly
or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including,
without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons
whereby such other Person or group acquires 50% or more of the outstanding shares of Common Stock or 50% or more of the voting power
of the common equity of the Company (each a “Fundamental Transaction”), then, upon any subsequent exercise
of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in
Section 2.5 on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or
of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2.5 on the exercise of
this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to
such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such
Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice
as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as
to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding
anything to the contrary, in the event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at
the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction
(or, if later, the date of the public announcement of the applicable Fundamental Transaction), purchase this Warrant from the Holder
by paying to the Holder an amount of cash equal to the Black Scholes Value (as defined below) of the remaining unexercised portion of
this Warrant on the date of the consummation of such Fundamental Transaction; provided, however, that, if the Fundamental Transaction
is not within the Company’s control, including not approved by the Company’s Board of Directors, the Holder shall only be
entitled to receive from the Company or any Successor Entity the same type or form of consideration (and in the same proportion), at
the Black Scholes Value of the unexercised portion of this Warrant, that is being offered and paid to the holders of Common Stock of
the Company in connection with the Fundamental Transaction, whether that consideration be in the form of cash, stock or any combination
thereof, or whether the holders of Common Stock are given the choice to receive from among alternative forms of consideration in connection
with the Fundamental Transaction; provided, further, that if holders of Common Stock of the Company are not offered or paid any consideration
in such Fundamental Transaction, such holders of Common Stock will be deemed to have received common stock/shares of the Successor Entity
(which Entity may be the Company following such Fundamental Transaction) in such Fundamental Transaction. “Black Scholes
Value” means the value of this Warrant based on the Black-Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation of the applicable contemplated
Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for
a period equal to the time between the date of the public announcement of the applicable contemplated Fundamental Transaction and the
Termination Date, (B) an expected volatility equal to the 100 day volatility as obtained from the HVT function on Bloomberg (determined
utilizing a 365 day annualization factor) as of the Trading Day immediately following the public announcement of the applicable contemplated
Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the sum of the price per share being offered
in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (D) a remaining
option time equal to the time between the date of the public announcement of the applicable contemplated Fundamental Transaction and
the Termination Date and (E) a zero cost of borrow. The payment of the Black Scholes Value will be made by wire transfer of immediately
available funds (or such other consideration) within the later of (i) five (5) Business Days after the Holder’s election and (ii)
the date of consummation of the Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in
which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations
of the Company under this Warrant in accordance with the provisions of this Section 3.7 pursuant to written agreements in form and
substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction
and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced
by a written instrument substantially similar in form and substance to this Warrant that is exercisable for a corresponding number of
shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable
upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction,
and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative
value of the shares of Common Stock prior to such Fundamental Transaction and the value of such shares of capital stock, such number
of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately
prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder.
Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall be added to the term “Company” under
this Warrant (so that from and after the occurrence or consummation of such Fundamental Transaction, each and every provision of this
Warrant referring to the “Company” shall refer instead to each of the Company and the Successor Entity or Successor Entities,
jointly and severally), and the Successor Entity or Successor Entities, jointly and severally with the Company, may exercise every right
and power of the Company prior thereto and the Successor Entity or Successor Entities shall assume all of the obligations of the Company
prior thereto under this Warrant with the same effect as if the Company and such Successor Entity or Successor Entities, jointly and
severally, had been named as the Company herein. For the avoidance of doubt, the Holder shall be entitled to the benefits of the provisions
of this Section 3.7 regardless of (i) whether the Company has sufficient authorized shares of Common Stock for the issuance of Warrant
Shares and/or (ii) whether a Fundamental Transaction occurs prior to the Initial Exercise Date.
3.6.
Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a
share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding
as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
3.7. Notice
to Holder.
3.7.1.
Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3,
the Company shall promptly deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting
adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
3.7.2.
Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever
form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock,
(C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares
of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which the Company (or any of its Subsidiaries) is a party, any
sale or transfer of all or substantially all of its assets, or any compulsory share exchange whereby the Common Stock is converted into
other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding
up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by email to the Holder at its last email
address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective
date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to
be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected
that holders of the Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver
such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified
in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding
the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the
effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
4.1.
Transferability. Subject to compliance with any applicable securities laws, this Warrant and all rights hereunder (including,
without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office
of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto
as Exhibit 2.4.6 duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable
upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant
or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument
of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant
shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender
this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant
to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the Company assigning this
Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant
Shares without having a new Warrant issued.
4.2.
New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office
of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed
by the Holder or its agent or attorney. Subject to compliance with Section 4.1, as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be
divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance
date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
4.3.
Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose
(the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and
treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to
the Holder, and for all other purposes, absent actual notice to the contrary.
5.1. No
Rights as Stockholder until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends
or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2.4.1, except as expressly
set forth in Section 3. Without limiting any rights of a Holder to receive Warrant Shares on a “cashless exercise” pursuant
to Section 2.3 or to receive cash payments pursuant to Section 2.4.1 and Section 2.4.4 herein, in
no event shall the Company be required to net cash settle an exercise of this Warrant.
5.2. Loss,
Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case
of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include
the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make
and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
5.3.
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right
required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding
Business Day.
5.4.
Authorized Shares.
5.4.1. Reservation
of Authorized and Unissued Shares. The Company covenants that, during the period the Warrant is outstanding, it will reserve
from its authorized and unissued Common Stock a sufficient number of shares of Common Stock to provide for the issuance of the Warrant
Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall
constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of
the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant
Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading
Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise
of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment
for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable (which means that no
further sums are required to be paid by the holders thereof in connection with the issue thereof) and free from all taxes, liens and
charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously
with such issue).
5.4.2. Noncircumvention.
Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may
be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality
of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof,
as may be, necessary to enable the Company to perform its obligations under this Warrant.
5.4.3. Authorizations,
Exemptions and Consents. Before taking any action that would result in an adjustment in the number of Warrant Shares for
which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof,
or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.
5.5. Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by
and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts
of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions
contemplated by this Warrant (whether brought against a party hereto or their respective affiliates, directors, officers, shareholders,
partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York.
Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York,
Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is
not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient
venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any
other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant,
the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’
fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. Notwithstanding
the foregoing, nothing in this paragraph shall limit or restrict the federal district court in which a Holder may bring a claim under
the federal securities laws.
5.6. Restrictions.
The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does not
utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
5.7. Nonwaiver
and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that the right
to exercise this Warrant terminates on the Termination Date. No provision of this Warrant shall be construed as a waiver by the Holder
of any rights which the Holder may have under the federal securities laws and the rules and regulations of the Commission thereunder.
Without limiting any other provision of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this
Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient
to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings,
incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
5.8.
Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without
limitation, any Notice of Exercise, shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight
courier service, addressed to the Company, at 135 Fell Court, Hauppauge, NY 11788, Attention: Saagar Govil, Chief Executive Officer,
email address: sgovil@cemtrex.com, or such other email address or address as the Company may specify for such purposes by notice to the
Holders. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered
personally, by e-mail, or sent by a nationally recognized overnight courier service addressed to each Holder at the e-mail address or
address of such Holder appearing on the books of the Company. Any notice or other communication or deliveries hereunder shall be deemed
given and effective on the earliest of (i) the time of transmission, if such notice or communication is delivered via e-mail at the e-mail
address set forth in this Section 5.8 prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the time
of transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section 5.8 on
a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following
the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom
such notice is required to be given. To the extent that any notice provided hereunder constitutes, or contains, material, non-public
information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant
to a Current Report on Form 8-K.
5.9. Limitation
of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase
Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for
the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors
of the Company.
5.10.
Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to
assert the defense in any action for specific performance that a remedy at law would be adequate.
5.11.
Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby
shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted
assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant
and shall be enforceable by the Holder or holder of Warrant Shares.
5.12.
Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company,
on the one hand, and the Holder, on the other hand.
5.13.
Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining
provisions of this Warrant.
5.14.
Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.
********************
[CETX
Investor Pre-Funded Registered Warrant Signature Page Follows]
[CETX
Investor Pre-Funded Registered Warrant Signature Page]
IN
WITNESS WHEREOF, the Company has caused this Pre-Funded Registered Warrant to be executed by its officer thereunto duly authorized as
of the date first above indicated.
| |
CEMTREX INC. |
| |
|
|
| |
By: |
|
| |
Name: |
Saagar
Govil |
| |
Its: |
Chief
Executive Officer |
Exhibit
2.1
NOTICE
OF EXERCISE
To: CEMTREX
INC.
(1) The
undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised
in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment
shall take the form of (check applicable box):
| |
[ ] |
in lawful money of the United States. |
| |
[ ] |
if permitted the cancellation of such number of Warrant Shares
as is necessary, in accordance with the formula set forth in subsection 2.3, to exercise this Warrant with respect to the maximum
number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2.3. |
(3) Please
issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The
Warrant Shares shall be delivered to the following DWAC Account Number:
_______________________________
_______________________________
_______________________________
[SIGNATURE
OF HOLDER]
| Name
of Investing Entity: |
|
| Signature
of Authorized Signatory of Investing Entity: |
|
| Name
of Authorized Signatory: |
|
| Title
of Authorized Signatory: |
|
| Date:
|
|
Exhibit
2.4.6
ASSIGNMENT
FORM
(To
assign the foregoing Warrant, execute this form and supply required information. Do not use this form to exercise the Warrant to purchase
shares of Common Stock.)
FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
| Name: |
|
| Address: |
|
| Phone
Number: |
|
| Email
Address: |
|
| Date: |
|
| Holder’s
Signature: |
|
| Holder’s
Address: |
|
Exhibit
4.6
SERIES A WARRANT TO PURCHASE COMMON STOCK
CEMTREX
INC.
| Warrant
Shares: [●] |
Initial
Exercise Date: [●], 2024 |
CUSIP:
[●]
ISIN:
[●] |
Issuance
Date: [●], 2024 |
THIS
SERIES A WARRANT TO PURCHASE COMMON STOCK (the “Warrant”) certifies that, for value received, [●]
or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the Initial Exercise Date and on or prior to 5:00 p.m. (New York City time)
on [●], 2026 (the “Termination Date”) but not thereafter, to subscribe for and purchase from Cemtrex
Inc., a Delaware corporation (the “Company”), up to [●] shares (as subject to adjustment hereunder, the
“Warrant Shares”) of Common Stock. The purchase price of one (1) share of Common Stock under this Warrant shall
be equal to the Exercise Price, as defined in Section 2.2.
| 1. | Definitions.
In addition to the terms defined elsewhere in this Warrant or in the Underwriting Agreement
dated [●], 2024, the following terms have the meanings indicated in this Section 1: |
1.1.
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
1.2.
“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a)
if the Common Stock is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the
nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based
on a Trading Day from 9:30 a.m. (New York City time) to 4:00 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market,
the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable,
(c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported
on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price
per share of Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an
independent appraiser selected in good faith by the Holders of a majority in interest of the Warrants then outstanding and reasonably
acceptable to the Company, the fees and expenses of which shall be paid by the Company.
1.3.
“Board of Directors” means the board of directors of the Company.
1.4.
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City
of New York are authorized or required by law to remain closed; provided, however, for clarification, commercial banks
shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”,
“non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the
direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial
banks in The City of New York generally are open for use by customers on such day.
1.5.
“Commission” means the United States Securities and Exchange Commission.
1.6.
“Common Stock” means the common stock of the Company, $0.001 par value per share, and any other class of securities
into which such securities may hereafter be reclassified or changed.
1.7.
“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the
holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant
or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof
to receive, Common Stock.
1.8.
“Exercise Date” means the date that some or all of this Warrant is exercised pursuant to the provisions of
this Warrant.
1.9.
“Issuance Date” means the date that this Warrant, among other securities, has been issued pursuant to the Underwriting
Agreement.
1.10.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
1.11.
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any
kind.
1.12.
“Registration Statement” means the Company’s registration statement on Form S-1 (File No. 333-276556).
1.13.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
1.14.
“Stockholder Approval” means such approval as may be required by the applicable rules and regulations of the
Nasdaq Capital Market (or any successor entity) from the stockholders of the Company, or board of directors in lieu thereof, with respect
to issuance of all of the Warrants and the Warrant Shares upon the exercise thereof, including without limitation:
1.14.1.
to give full effect to alternative cashless exercises pursuant to Section 2.3 hereof.
1.14.2.
to consent to any adjustment to the exercise price or number of shares of Common Stock underlying the Warrants in the event of a Share
Combination Event pursuant to Section 3.7.
1.14.3.
to consent to the voluntary adjustment, from time to time, of the exercise price of any and all currently outstanding warrants pursuant
to Section 3.8.
1.15.
“Subsidiary” means any subsidiary of the Company and shall, where applicable, also include any direct or indirect
subsidiary of the Company formed or acquired after the date hereof.
1.16.
“Trading Day” means a day on which the Common Stock is traded on a Trading Market.
1.17.
“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select
Market, the New York Stock Exchange, OTCQB or OTCQX (or any successors to any of the foregoing).
1.18.
“Transfer Agent” means Clear Trust LLC, the current transfer agent of the Company, with a mailing address of
16540 Pointe Village Drive Suite 210, Lutz, Florida 33558 and an email address of [●], and any successor transfer agent of the
Company.
1.19.
“Underwriting Agreement” means the underwriting agreement, dated as of [●], 2024, between the Company
and Aegis Capital Corp., as amended, modified or supplemented from time to time in accordance with its terms.
1.20.
“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if
the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date
(or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P.
(based on a Trading Day from 9:30 a.m. (New York City time) to 4:00 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading
Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable,
(c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported
on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price
per share of Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an
independent appraiser selected in good faith by the holders of a majority in interest of the Warrants then outstanding and reasonably
acceptable to the Company, the fees and expenses of which shall be paid by the Company.
1.21.
“Warrants” means this Warrant and Series B Warrant to be issued by the Company pursuant to the Registration
Statement.
2.1. Exercise
of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or
times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed PDF
copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise substantially in the form attached hereto as Exhibit 2.1
(the “Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading
Days comprising the Standard Settlement Period (as defined in Section 2.4.1 herein) following the date of exercise as aforesaid, the
Holder shall deliver the aggregate Exercise Price for the Warrant Shares specified in the applicable Notice of Exercise by wire
transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2.3
below is specified in the applicable Notice of Exercise. For the avoidance of doubt, any reference to cashless exercise herein shall
include a reference to alternative cashless exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion
guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the
contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of
the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this
Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered
to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares
available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount
equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of
Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within
one (1) Trading Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree
that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number
of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face
hereof.
2.2.
Exercise Price. The exercise price per Warrant Share shall be $[●], subject to adjustment hereunder (the “Exercise
Price”).
2.3.
Cashless Exercise. If at the time of exercise hereof there is no effective registration statement registering, or the prospectus
contained therein is not available for the issuance of the Warrant Shares to the Holder or the resale of the Warrant Shares by the Holder,
then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the
Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
| (A)
= | as
applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable
Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant
to Section 2.1 hereof on a day that is not a Trading Day or (2) both executed and delivered
pursuant to Section 2.1 hereof on a Trading Day prior to the opening of “regular trading
hours” (as defined in Rule 600(b) of Regulation NMS promulgated under the federal securities
laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading
Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price
of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. as of the
time of the Holder’s execution of the applicable Notice of Exercise if such Notice
of Exercise is executed during “regular trading hours” on a Trading Day and is
delivered within two (2) hours thereafter (including until two (2) hours after the close
of “regular trading hours” on a Trading Day) pursuant to Section 2.1 hereof or
(iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice
of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant
to Section 2.1 hereof after the close of “regular trading hours” on such Trading
Day; |
| (B)
= | the
Exercise Price of this Warrant, as adjusted hereunder; and |
| (X)
= | the
number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance
with the terms of this Warrant if such exercise were by means of a cash exercise rather than
a cashless exercise. |
If
Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the
Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised, and the holding period
of the Warrant Shares being issued may be tacked on to the holding period of this Warrant. Assuming (i) the Holder is not an Affiliate
of the Company, and (ii) all of the applicable conditions of Rule 144 promulgated under the Securities Act with respect to Holder and
the Warrant Shares are met in the case of such a cashless exercise, the Company agrees that the Company will cause the removal of the
legend from such Warrant Shares (including by delivering an opinion of the Company’s counsel to the Company’s transfer agent
at its own expense to ensure the foregoing), and the Company agrees that the Holder is under no obligation to sell the Warrant Shares
issuable upon the exercise of the Warrant prior to removing the legend. The Company agrees not to take any position contrary to this
Section 2.3.
Whether
or not an effective registration statement is available, the Holder may also effect an “alternative cashless exercise” following
the Stockholder Approval Date. In such event, the aggregate number of Warrant Shares issuable in such alternative cashless exercise pursuant
to any given Notice of Exercise electing to effect an alternative cashless exercise shall equal the product of (i) the aggregate number
of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise
were by means of a cash exercise rather than a cashless exercise, multiplied by (ii) 3.0. Notwithstanding anything herein to the contrary,
on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2.3 (including
an alternative cashless exercise pursuant to this paragraph following the Stockholder Approval Date).
2.4.
Mechanics of Exercise.
2.4.1.
Delivery of Warrant Shares upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted
by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository
Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant
in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale
of the Warrant Shares by Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations
pursuant to Rule 144 (assuming cashless exercise of the Warrants), and otherwise by physical delivery of a certificate or by electronic
delivery (at the election of the Holder), for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise
to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading Days after the
delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company
and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise
(such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be
deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been
exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than
in the case of a cashless exercise) is received within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising
the Standard Settlement Period following delivery of the Notice of Exercise. Notwithstanding anything herein to the contrary, upon delivery
of the Notice of Exercise, the Holder shall be deemed for purposes of Regulation SHO under the Exchange Act to have become the holder
of the Warrant Shares irrespective of the date of delivery of the Warrant Shares. If the Company fails for any reason to deliver to the
Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in
cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the
Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the third (3rd)
Trading Day after the Warrant Share Delivery Date) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares
are delivered or Holder rescinds such exercise. The Company agrees to maintain a Transfer Agent that is a participant in the FAST program
so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means
the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to
the Common Stock as in effect on the date of delivery of the Notice of Exercise. Notwithstanding the foregoing, with respect to any Notice(s)
of Exercise delivered on or prior to 12:00 p.m. (New York City time) on the Initial Exercise Date, which may be delivered at any time
after the time of execution of the Underwriting Agreement, the Company agrees to deliver the Warrant Shares subject to such notice(s)
by 4:00 p.m. (New York City time) on the Initial Exercise Date and the Initial Exercise Date shall be the Warrant Share Delivery Date
for purposes hereunder, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received
by such Warrant Share Delivery Date.
2.4.2.
Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request
of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new
Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant
shall in all other respects be identical with this Warrant.
2.4.3.
Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant
to Section 2.4.1 by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
2.4.4.
Compensation for Buy-In on Failure to Timely Deliver Warrant Shares upon Exercise. In addition to any other rights available
to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions
of Section 2.4.1 above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required
by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares
of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon
such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which
(x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds
(y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection
with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B)
at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise
was not honored and return any amount received by the Company in respect of the Exercise Price for those Warrant Shares (in which case
such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had
the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having
a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate
sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall
be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder
in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s
right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise
of the Warrant as required pursuant to the terms hereof.
2.4.5.
No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise
of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company
shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price or round up to the next whole share.
2.4.6.
Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer
tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the
Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder;
provided, however, that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder,
this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto as Exhibit 2.4.6 duly executed
by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax
incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all
fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day
electronic delivery of the Warrant Shares.
2.4.7.
Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise
of this Warrant, pursuant to the terms hereof.
2.5.
Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not
have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to
such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates,
and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution
Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of
the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties
shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is
being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, unexercised
portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion
of the unexercised or unconverted portion of any other securities of the Company (including, without limitation, any other Common Stock
Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the
Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2.5,
beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance
with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith.
To the extent that the limitation contained in this Section 2.5 applies, the determination of whether this Warrant is exercisable (in
relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant
is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s
determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates
and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation,
and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to
any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. For purposes of this Section 2.5, in determining the number of outstanding shares of Common Stock, a Holder may
rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report
filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice
by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request
of a Holder, the Company shall within one (1) Trading Day confirm orally and in writing to the Holder the number of shares of Common
Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the
conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since
the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation”
shall be 4.99% (or, upon election by a Holder prior to the issuance of any Warrants, 9.99%) of the number of shares of Common Stock outstanding
immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon notice
to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2.5, provided that the Beneficial
Ownership Limitation in no event exceeds 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to
the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2.5 shall
continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such
notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in
strict conformity with the terms of this Section 2.5 to correct this paragraph (or any portion hereof) which may be defective or inconsistent
with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly
give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
3.1.
Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or
otherwise makes a distribution or distributions on shares of Common Stock or any other equity or equity equivalent securities payable
in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise
of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way
of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares
of Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of
which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before
such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the
number of Shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this
Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3.1 shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after
the effective date in the case of a subdivision, combination or re-classification.
3.2.
Subsequent Rights Offerings. In addition to any other adjustments pursuant to Section 3 above, if at any time the Company
grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to
all (or substantially all) of the record holders of any class of shares of Common Stock (the “Purchase Rights”),
then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the
Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant
(without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately
before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights
(provided, however, that, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder
exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent
(or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to
such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding
the Beneficial Ownership Limitation).
3.3.
Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend
or other distribution of its assets (or rights to acquire its assets) to all (or substantially all) holders of shares of Common Stock,
by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property
or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction)
(a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall
be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had
held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise
hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for
such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined
for the participation in such Distribution (provided, however, that, to the extent that the Holder’s right to participate in any
such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to
participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution
to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever,
as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation). To the extent that this Warrant has
not been partially or completely exercised at the time of such Distribution, such portion of the Distribution shall be held in abeyance
for the benefit of the Holder until the Holder has exercised this Warrant.
3.4.
Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in
one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company or
any Subsidiary, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all
or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender
offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted
to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of
the outstanding Common Stock or 50% or more of the voting power of the common equity of the Company, (iv) the Company, directly or indirectly,
in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property,
or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other
business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with
another Person or group of Persons whereby such other Person or group acquires 50% or more of the outstanding shares of Common Stock
or 50% or more of the voting power of the common equity of the Company (each a “Fundamental Transaction”),
then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have
been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without
regard to any limitation in Section 2.5 on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring
corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2.5 on the exercise of this
Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such
Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary,
in the event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at the Holder’s option,
exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction (or, if later, the
date of the public announcement of the applicable Fundamental Transaction), purchase this Warrant from the Holder by paying to the Holder
an amount of cash equal to the Black Scholes Value (as defined below) of the remaining unexercised portion of this Warrant on the date
of the consummation of such Fundamental Transaction; provided, however, that, if the Fundamental Transaction is not within the Company’s
control, including not approved by the Company’s Board of Directors, the Holder shall only be entitled to receive from the Company
or any Successor Entity the same type or form of consideration (and in the same proportion), at the Black Scholes Value of the unexercised
portion of this Warrant, that is being offered and paid to the holders of Common Stock of the Company in connection with the Fundamental
Transaction, whether that consideration be in the form of cash, stock or any combination thereof, or whether the holders of Common Stock
are given the choice to receive from among alternative forms of consideration in connection with the Fundamental Transaction; provided,
further, that if holders of Common Stock of the Company are not offered or paid any consideration in such Fundamental Transaction, such
holders of Common Stock will be deemed to have received common stock/shares of the Successor Entity (which Entity may be the Company
following such Fundamental Transaction) in such Fundamental Transaction. “Black Scholes Value” means the value
of this Warrant based on the Black-Scholes Option Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”)
determined as of the day of consummation of the applicable contemplated Fundamental Transaction for pricing purposes and reflecting (A)
a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement
of the applicable contemplated Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the 100 day volatility
as obtained from the HVT function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately
following the public announcement of the applicable contemplated Fundamental Transaction, (C) the underlying price per share used in
such calculation shall be the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration,
if any, being offered in such Fundamental Transaction, (D) a remaining option time equal to the time between the date of the public announcement
of the applicable contemplated Fundamental Transaction and the Termination Date and (E) a zero cost of borrow. The payment of the Black
Scholes Value will be made by wire transfer of immediately available funds (or such other consideration) within the later of (i) five
(5) Business Days after the Holder’s election and (ii) the date of consummation of the Fundamental Transaction. The Company shall
cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”)
to assume in writing all of the obligations of the Company under this Warrant in accordance with the provisions of this Section 3.4 pursuant
to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay)
prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security
of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant that is exercisable
for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common
Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior
to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock
(but taking into account the relative value of the shares of Common Stock prior to such Fundamental Transaction and the value of such
shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic
value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in
form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall be added to the
term “Company” under this Warrant (so that from and after the occurrence or consummation of such Fundamental Transaction,
each and every provision of this Warrant referring to the “Company” shall refer instead to each of the Company and the Successor
Entity or Successor Entities, jointly and severally), and the Successor Entity or Successor Entities, jointly and severally with the
Company, may exercise every right and power of the Company prior thereto and the Successor Entity or Successor Entities shall assume
all of the obligations of the Company prior thereto under this Warrant with the same effect as if the Company and such Successor Entity
or Successor Entities, jointly and severally, had been named as the Company herein. For the avoidance of doubt, the Holder shall be entitled
to the benefits of the provisions of this Section 3.4 regardless of (i) whether the Company has sufficient authorized shares of Common
Stock for the issuance of Warrant Shares and/or (ii) whether a Fundamental Transaction occurs prior to the Initial Exercise Date.
3.5.
Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share,
as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a
given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
3.6.
Notice to Holder.
3.6.1.
Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the
Company shall promptly deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting
adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
3.6.2.
Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever
form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock,
(C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares
of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which the Company (or any of its Subsidiaries) is a party, any
sale or transfer of all or substantially all of its assets, or any compulsory share exchange whereby the Common Stock is converted into
other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding
up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by email to the Holder at its last email
address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective
date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to
be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected
that holders of the Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver
such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified
in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding
the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the
effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
3.7.
Share Combination Event Adjustment. In addition to the adjustments set forth in Section 3.1 above, if at any time and from
time to time on or after the Issuance Date there occurs any share split, share dividend, share combination recapitalization or other
similar transaction involving the Common Stock (each, a “Share Combination Event”, and such date thereof, the
“Share Combination Event Date”) and the lowest VWAP during the period commencing Five (5) consecutive Trading
Days immediately preceding and the Five (5) consecutive Trading Days commencing on the Share Combination Event Date (the “Event
Market Price”) (provided if the Share Combination Event is effective after close of Trading on the primary Trading Market,
then commencing on the next Trading Day which period shall be the “Share Combination Adjustment Period”) is
less than the Exercise Price then in effect (after giving effect to the adjustment in clause 3.1 above), then at the close of trading
on the primary Trading Market on the last day of the Share Combination Adjustment Period, the Exercise Price then in effect on such Fifth
(5th) Trading Day shall be reduced (but in no event increased) to the Event Market Price and the number of Warrant Shares issuable hereunder
shall be increased such that the aggregate Exercise Price of this Warrant on the Issuance Date for the Warrant Shares then outstanding
shall remain unchanged. For the avoidance of doubt, if the adjustment in the immediately preceding sentence would otherwise result in
an increase in the Exercise Price hereunder, no adjustment shall be made, and if this Warrant is exercised, on any given Exercise Date
during the Share Combination Adjustment Period, solely with respect to such portion of this Warrant exercised on such applicable Exercise
Date, such applicable Share Combination Adjustment Period shall be deemed to have ended on, and included, the Trading Day immediately
prior to such Exercise Date and the Event Market Price on such applicable Exercise Date will be the lowest VWAP of the Common Stock immediately
during such the Share Combination Adjustment Period prior to such Exercise Date and ending on, and including the Trading Day immediately
prior to such Exercise Date.
3.8.
Voluntary Adjustment by Company. Subject to the rules and regulations of the Trading Market and the consent of the Holder,
the Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of
time deemed appropriate by the Board of Directors.
3.9.
Stockholder Approval. The Company shall obtain a written consent resolution of the majority of the voting power of the
Company, at the earliest practicable date after the date hereof, but in no event later than twenty (20) days after the Closing Date for
the purpose of obtaining Stockholder Approval, if required, to effect the purpose thereof, with the recommendation of the Board that
such proposal be approved and within such twenty-day time period shall file with the Commission, and deliver to shareholders of the Company,
a written information statement containing the information specified in Schedule 14C detailing such Stockholder Approval. The Company
shall use its reasonable best efforts to obtain such Stockholder Approval, and officers, directors, and shareholders subject to the Lock-Up
Agreement shall vote in favor of such proposal.
4.1.
Transferability. Subject to compliance with any applicable securities laws, this Warrant and all rights hereunder (including,
without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office
of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto
as Exhibit 2.4.6 duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon
the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant
or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument
of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant
shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender
this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant
to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the Company assigning this
Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant
Shares without having a new Warrant issued.
4.2.
New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office
of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed
by the Holder or its agent or attorney. Subject to compliance with Section 4.1, as to any transfer which may be involved in such division
or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of
this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
4.3.
Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose
(the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and
treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to
the Holder, and for all other purposes, absent actual notice to the contrary.
5.1.
No Rights as Stockholder until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting
rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2.4.1, except
as expressly set forth in Section 3. Without limiting any rights of a Holder to receive Warrant Shares on a “cashless exercise”
pursuant to Section 2.3 or to receive cash payments pursuant to Section 2.4.1 and Section 2.4.4 herein, in no event shall the Company
be required to net cash settle an exercise of this Warrant.
5.2.
Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares,
and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant,
shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the
Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant
or stock certificate.
5.3.
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right
required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding
Business Day.
5.4.
Authorized Shares.
5.4.1.
Reservation of Authorized and Unissued Shares. The Company covenants that, during the period the Warrant is outstanding,
it will reserve from its authorized and unissued Common Stock a sufficient number of shares of Common Stock to provide for the issuance
of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of
this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon
the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure
that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements
of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon
the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant
and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable (which means
that no further sums are required to be paid by the holders thereof in connection with the issue thereof) and free from all taxes, liens
and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously
with such issue).
5.4.2.
Noncircumvention. Except and to the extent as waived or consented to by the Holder, the Company shall not by any action,
including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking
of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment.
Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount
payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of
this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.
5.4.3.
Authorizations, Exemptions and Consents. Before taking any action that would result in an adjustment in the number of Warrant
Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions
thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.
5.5.
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall
be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles
of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of
the transactions contemplated by this Warrant (whether brought against a party hereto or their respective affiliates, directors, officers,
shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City
of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City
of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient
venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any
other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant,
the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’
fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. Notwithstanding
the foregoing, nothing in this paragraph shall limit or restrict the federal district court in which a Holder may bring a claim under
the federal securities laws.
5.6.
Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered,
and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
5.7.
Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder
shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact
that the right to exercise this Warrant terminates on the Termination Date. No provision of this Warrant shall be construed as a waiver
by the Holder of any rights which the Holder may have under the federal securities laws and the rules and regulations of the Commission
thereunder. Without limiting any other provision of this Warrant, if the Company willfully and knowingly fails to comply with any provision
of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient
to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings,
incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
5.8.
Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without
limitation, any Notice of Exercise, shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight
courier service, addressed to the Company, at 135 Fell Court, Hauppauge, NY 11788, Attention: Saagar Govil, Chief Executive Officer,
email address: sgovil@cemtrex.com, or such other email address or address as the Company may specify for such purposes by notice to the
Holders. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered
personally, by e-mail, or sent by a nationally recognized overnight courier service addressed to each Holder at the e-mail address or
address of such Holder appearing on the books of the Company. Any notice or other communication or deliveries hereunder shall be deemed
given and effective on the earliest of (i) the time of transmission, if such notice or communication is delivered via e-mail at the e-mail
address set forth in this Section 5.8 prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the time of
transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section 5.8 on a day that
is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date
of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice
is required to be given. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information
regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current
Report on Form 8-K.
5.9.
Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant
to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of
the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.
5.10.
Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to
assert the defense in any action for specific performance that a remedy at law would be adequate.
5.11.
Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby
shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted
assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant
and shall be enforceable by the Holder or holder of Warrant Shares.
5.12.
Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company,
on the one hand, and the Holder, on the other hand.
5.13.
Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining
provisions of this Warrant.
5.14.
Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.
********************
[CETX
Investor Registered Warrant Signature Page Follows]
[CETX
Investor Registered Warrant Signature Page]
IN
WITNESS WHEREOF, the Company has caused this Registered Warrant to be executed by its officer thereunto duly authorized as of the date
first above indicated.
| |
CEMTREX
INC. |
| |
|
|
| |
By: |
|
| |
Name: |
Saagar
Govil |
| |
Its: |
Chief
Executive Officer |
Exhibit
2.1
NOTICE
OF EXERCISE
To:
CEMTREX INC.
(1)
The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only
if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2)
Payment shall take the form of (check applicable box):
| |
[ ] |
in lawful money of the United
States. |
| |
|
|
| |
[ ] |
if permitted the cancellation of such number
of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2.3, to exercise this Warrant with respect
to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2.3. |
| |
|
|
| |
[ ] |
if permitted the cancellation of such number
of Warrant Shares as is necessary, in accordance with the provisions of subsection 2.3, to exercise this Warrant pursuant to the “alternative
cashless exercise” procedure set forth in subsection 2.3. |
(3)
Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The
Warrant Shares shall be delivered to the following DWAC Account Number:
_______________________________
_______________________________
_______________________________
[SIGNATURE
OF HOLDER]
| Name
of Investing Entity: |
|
| Signature
of Authorized Signatory of Investing Entity: |
|
| Name
of Authorized Signatory: |
|
| Title
of Authorized Signatory: |
|
| Date:
|
|
Exhibit
2.4.6
ASSIGNMENT
FORM
(To
assign the foregoing Warrant, execute this form and supply required information. Do not use this form to exercise the Warrant to purchase
shares of Common Stock.)
FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to:
| Name: |
|
| Address: |
|
| Phone
Number: |
|
| Email
Address: |
|
| Date: |
|
| Holder’s
Signature: |
|
| Holder’s
Address: |
|
Exhibit 4.7
SERIES
B WARRANT TO PURCHASE COMMON STOCK
CEMTREX
INC.
| Warrant
Shares: [●] |
Initial
Exercise Date: [●], 2024 |
CUSIP:
[●]
ISIN:
[●] |
Issuance
Date: [●], 2024 |
THIS
SERIES B WARRANT TO PURCHASE COMMON STOCK (the “Warrant”) certifies that, for value received, [●]
or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the Initial Exercise Date and on or prior to 5:00 p.m. (New York City time)
on [●], 2029 (the “Termination Date”) but not thereafter, to subscribe for and purchase from Cemtrex
Inc., a Delaware corporation (the “Company”), up to [●] shares (as subject to adjustment hereunder, the
“Warrant Shares”) of Common Stock. The purchase price of one (1) share of Common Stock under this Warrant shall
be equal to the Exercise Price, as defined in Section 2.2.
| 1. | Definitions.
In addition to the terms defined elsewhere in this Warrant or in the Underwriting Agreement dated [●],
2024, the following terms have the meanings indicated in this Section 1: |
1.1.
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
1.2.
“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a)
if the Common Stock is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the
nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based
on a Trading Day from 9:30 a.m. (New York City time) to 4:00 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market,
the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable,
(c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported
on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price
per share of Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an
independent appraiser selected in good faith by the Holders of a majority in interest of the Warrants then outstanding and reasonably
acceptable to the Company, the fees and expenses of which shall be paid by the Company.
1.3.
“Board of Directors” means the board of directors of the Company.
1.4.
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City
of New York are authorized or required by law to remain closed; provided, however, for clarification, commercial banks
shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”,
“non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the
direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial
banks in The City of New York generally are open for use by customers on such day.
1.5.
“Commission” means the United States Securities and Exchange Commission.
1.6.
“Common Stock” means the common stock of the Company, $0.001 par value per share, and any other class of securities
into which such securities may hereafter be reclassified or changed.
1.7.
“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the
holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant
or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof
to receive, Common Stock.
1.8.
“Exercise Date” means the date that some or all of this Warrant is exercised pursuant to the provisions of
this Warrant.
1.9.
“Issuance Date” means the date that this Warrant, among other securities, has been issued pursuant to the Underwriting
Agreement.
1.10.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
1.11.
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any
kind.
1.12.
“Registration Statement” means the Company’s registration statement on Form S-1 (File No. 333-276556).
1.13.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
1.14.
“Stockholder Approval” means such approval as may be required by the applicable rules and regulations of the
Nasdaq Capital Market (or any successor entity) from the stockholders of the Company, or board of directors in lieu thereof, with respect
to issuance of all of the Warrants and the Warrant Shares upon the exercise thereof, including without limitation:
1.14.1.
to render inapplicable the Floor Price in Section 3.2 hereof, thereby giving full effect to the adjustment in the exercise price and/or
number of shares of Common Stock underlying the Warrants following any Dilutive Issuance (as defined below).
1.14.2.
to consent to any adjustment to the exercise price or number of shares of Common Stock underlying the Warrants in the event of a Share
Combination Event pursuant to Section 3.8.
1.14.3.
to consent to the voluntary adjustment, from time to time, of the exercise price of any and all currently outstanding warrants pursuant
to Section 3.9.
1.15.
“Subsidiary” means any subsidiary of the Company and shall, where applicable, also include any direct or indirect
subsidiary of the Company formed or acquired after the date hereof.
1.16.
“Trading Day” means a day on which the Common Stock is traded on a Trading Market.
1.17.
“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select
Market, the New York Stock Exchange, OTCQB or OTCQX (or any successors to any of the foregoing).
1.18.
“Transfer Agent” means Clear Trust LLC, the current transfer agent of the Company, with a mailing address of
16540 Pointe Village Drive Suite 210, Lutz, Florida 33558 and an email address of , and any successor transfer agent of the Company.
1.19.
“Underwriting Agreement” means the underwriting agreement, dated as of [●], 2024, between the Company
and Aegis Capital Corp., as amended, modified or supplemented from time to time in accordance with its terms.
1.20.
“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if
the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date
(or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P.
(based on a Trading Day from 9:30 a.m. (New York City time) to 4:00 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading
Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable,
(c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported
on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price
per share of Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an
independent appraiser selected in good faith by the holders of a majority in interest of the Warrants then outstanding and reasonably
acceptable to the Company, the fees and expenses of which shall be paid by the Company.
1.21.
“Warrants” means this Warrant and the Series A Warrant to be issued by the Company pursuant to the Registration
Statement.
2.1.
Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any
time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed
PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise substantially in the form attached hereto as Exhibit 2.1
(the “Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading
Days comprising the Standard Settlement Period (as defined in Section 2.4.1 herein) following the date of exercise as aforesaid, the
Holder shall deliver the aggregate Exercise Price for the Warrant Shares specified in the applicable Notice of Exercise by wire transfer
or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2.3 below is specified
in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other
type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder
shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available
hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation
within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this
Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering
the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased.
The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The
Company shall deliver any objection to any Notice of Exercise within one (1) Trading Day of receipt of such notice. The Holder and
any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the
purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time
may be less than the amount stated on the face hereof.
2.2.
Exercise Price. The exercise price per Warrant Share shall be $[●], subject to adjustment hereunder (the “Exercise
Price”).
2.3.
Cashless Exercise. If at the time of exercise hereof there is no effective registration statement registering, or the prospectus
contained therein is not available for the issuance of the Warrant Shares to the Holder or the resale of the Warrant Shares by the Holder,
then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the
Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
| (A) = | as
applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable
Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant
to Section 2.1 hereof on a day that is not a Trading Day or (2) both executed and delivered
pursuant to Section 2.1 hereof on a Trading Day prior to the opening of “regular trading
hours” (as defined in Rule 600(b) of Regulation NMS promulgated under the federal securities
laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading
Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price
of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. as of the
time of the Holder’s execution of the applicable Notice of Exercise if such Notice
of Exercise is executed during “regular trading hours” on a Trading Day and is
delivered within two (2) hours thereafter (including until two (2) hours after the close
of “regular trading hours” on a Trading Day) pursuant to Section 2.1 hereof or
(iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice
of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant
to Section 2.1 hereof after the close of “regular trading hours” on such Trading
Day; |
| (B) = | the
Exercise Price of this Warrant, as adjusted hereunder; and |
| (X) = | the
number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance
with the terms of this Warrant if such exercise were by means of a cash exercise rather than
a cashless exercise. |
If
Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the
Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised, and the holding period
of the Warrant Shares being issued may be tacked on to the holding period of this Warrant. Assuming (i) the Holder is not an Affiliate
of the Company, and (ii) all of the applicable conditions of Rule 144 promulgated under the Securities Act with respect to Holder and
the Warrant Shares are met in the case of such a cashless exercise, the Company agrees that the Company will cause the removal of the
legend from such Warrant Shares (including by delivering an opinion of the Company’s counsel to the Company’s transfer agent
at its own expense to ensure the foregoing), and the Company agrees that the Holder is under no obligation to sell the Warrant Shares
issuable upon the exercise of the Warrant prior to removing the legend. The Company agrees not to take any position contrary to this
Section 2.3.
Notwithstanding
anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant
to this Section 2.3.
2.4.
Mechanics of Exercise.
2.4.1.
Delivery of Warrant Shares upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted
by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository
Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant
in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale
of the Warrant Shares by Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations
pursuant to Rule 144 (assuming cashless exercise of the Warrants), and otherwise by physical delivery of a certificate or by electronic
delivery (at the election of the Holder), for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise
to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading Days after the
delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company
and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise
(such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be
deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been
exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than
in the case of a cashless exercise) is received within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising
the Standard Settlement Period following delivery of the Notice of Exercise. Notwithstanding anything herein to the contrary, upon delivery
of the Notice of Exercise, the Holder shall be deemed for purposes of Regulation SHO under the Exchange Act to have become the holder
of the Warrant Shares irrespective of the date of delivery of the Warrant Shares. If the Company fails for any reason to deliver to the
Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in
cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the
Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the third (3rd)
Trading Day after the Warrant Share Delivery Date) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares
are delivered or Holder rescinds such exercise. The Company agrees to maintain a Transfer Agent that is a participant in the FAST program
so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means
the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to
the Common Stock as in effect on the date of delivery of the Notice of Exercise. Notwithstanding the foregoing, with respect to any Notice(s)
of Exercise delivered on or prior to 12:00 p.m. (New York City time) on the Initial Exercise Date, which may be delivered at any time
after the time of execution of the Underwriting Agreement, the Company agrees to deliver the Warrant Shares subject to such notice(s)
by 4:00 p.m. (New York City time) on the Initial Exercise Date and the Initial Exercise Date shall be the Warrant Share Delivery Date
for purposes hereunder, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received
by such Warrant Share Delivery Date.
2.4.2.
Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request
of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new
Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant
shall in all other respects be identical with this Warrant.
2.4.3.
Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant
to Section 2.4.1 by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
2.4.4.
Compensation for Buy-In on Failure to Timely Deliver Warrant Shares upon Exercise. In addition to any other rights available
to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions
of Section 2.4.1 above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required
by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares
of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon
such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which
(x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds
(y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection
with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B)
at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise
was not honored and return any amount received by the Company in respect of the Exercise Price for those Warrant Shares (in which case
such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had
the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having
a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate
sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall
be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder
in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s
right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise
of the Warrant as required pursuant to the terms hereof.
2.4.5.
No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise
of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company
shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price or round up to the next whole share.
2.4.6.
Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer
tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the
Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder;
provided, however, that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder,
this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto as Exhibit 2.4.6 duly executed
by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax
incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all
fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day
electronic delivery of the Warrant Shares.
2.4.7.
Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise
of this Warrant, pursuant to the terms hereof.
2.5.
Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not
have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to
such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates,
and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution
Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of
the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties
shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is
being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, unexercised
portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion
of the unexercised or unconverted portion of any other securities of the Company (including, without limitation, any other Common Stock
Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the
Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2.5,
beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance
with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith.
To the extent that the limitation contained in this Section 2.5 applies, the determination of whether this Warrant is exercisable (in
relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant
is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s
determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates
and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation,
and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to
any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. For purposes of this Section 2.5, in determining the number of outstanding shares of Common Stock, a Holder may
rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report
filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice
by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request
of a Holder, the Company shall within one (1) Trading Day confirm orally and in writing to the Holder the number of shares of Common
Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the
conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since
the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation”
shall be 4.99% (or, upon election by a Holder prior to the issuance of any Warrants, 9.99%) of the number of shares of Common Stock outstanding
immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon notice
to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2.5, provided that the Beneficial
Ownership Limitation in no event exceeds 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to
the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2.5 shall
continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such
notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in
strict conformity with the terms of this Section 2.5 to correct this paragraph (or any portion hereof) which may be defective or inconsistent
with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly
give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
3.1.
Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or
otherwise makes a distribution or distributions on shares of Common Stock or any other equity or equity equivalent securities payable
in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise
of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way
of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares
of Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of
which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before
such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the
number of Shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this
Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3.1 shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after
the effective date in the case of a subdivision, combination or re-classification.
3.2.
Subsequent Equity Sales. If, at any time while this Warrant is outstanding (such period, the “Adjustment Period”),
the Company issues, sells, enters into an agreement to sell, or grants any option to purchase, or sells, enters into an agreement to
sell, or grants any right to reprice, or otherwise disposes of or issues (or announces any offer, sale, grant or any option to purchase
or other disposition), or, in accordance with this Section 3.2, is deemed to have issued or sold, any shares of Common Stock or Common
Stock Equivalents for a consideration per share (the “New Issuance Price”) less than a price equal to the Exercise
Price in effect immediately prior to such issue or sale or deemed issuance or sale (such Exercise Price then in effect is referred to
as the “Applicable Price”) (the foregoing a “Dilutive Issuance”), then simultaneously
with the consummation (or, if earlier, the announcement) of such Dilutive Issuance, the Exercise Price then in effect shall be reduced
to an amount (the “New Exercise Price”) equal to the lower of (a) the New Issuance Price or (b) the lowest
VWAP during the Five (5) consecutive Trading Days immediately following the Dilutive Issuance (such lower price, the “Base
Share Price”) and the number of Warrant Shares issuable hereunder shall be proportionately increased such that the aggregate
Exercise Price of this Warrant on the Issuance Date for the Warrant Shares then outstanding shall remain unchanged; provided that the
Base Share Price shall not be less than $[●] (subject to adjustment for reverse and forward stock splits, recapitalizations and
similar transactions following the date of the Underwriting Agreement) (the “Floor Price”). Notwithstanding
the foregoing, if one or more Dilutive Issuances occurred prior to the Stockholder Approval being obtained and the reduction of the Exercise
Price was limited by the Floor Price, once the Stockholder Approval is obtained, the Exercise Price will automatically be reduced to
equal the lowest Base Share Price with respect to any Dilutive Issuance that occurred prior to the Shareholder Approval being obtained.
If the Company enters into a Variable Rate Transaction, the Company shall be deemed to have issued shares of Common Stock or Common Stock
Equivalents at the lowest possible price, conversion price or exercise price at which such securities may be issued, converted or exercised.
Notwithstanding the foregoing, no adjustments shall be made, paid or issued under this Section 3.2 in respect of an Exempt Issuance.
For the avoidance of doubt, in the event the Exercise Price has been adjusted pursuant to this Section 3.2 and the Dilutive Issuance
that triggered such adjustment does not occur, is not consummated, is unwound or is cancelled after the facts for any reason whatsoever,
in no event shall the Exercise Price be readjusted to the Exercise Price that would have been in effect if such Dilutive Issuance had
not occurred or been consummated. For all purposes of the foregoing, the following shall be applicable:
3.2.1.
Issuance of Options. If, during the Adjustment Period, the Company in any manner grants or sells any Options and the lowest
price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise or
exchange of any convertible securities (“Convertible Securities”) issuable upon exercise of any such Option
(such shares of Common Stock issuable upon such exercise of any Option or upon conversion, exercise or exchange of any Convertible Securities,
the “Convertible Securities Shares”) is less than the Applicable Price, then such shares of Common Stock shall
be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such
price per share. For purposes of this Section 3.2.1, the “lowest price per share for which one share of Common Stock is issuable
upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of
any such Option” shall be equal to (A) the sum of (1) the lowest amount of consideration (if any) received or receivable by the
Company with respect to any one Convertible Securities Share upon the granting or sale of such Option, upon exercise of such Option and
upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option and (2) the lowest exercise price
set forth in such Option for which one Convertible Securities Share is issuable upon the exercise of any such Option or upon conversion,
exercise or exchange of any Convertible Securities issuable upon exercise of any such Option, minus (B) the sum of all amounts paid or
payable to the holder of such Option (or any other Person), with respect to any one Convertible Securities Share, upon the granting or
sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon
exercise of such Option plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such
Option (or any other Person), with respect to any one Convertible Securities Share. Except as contemplated below, no further adjustment
of the Exercise Price shall be made upon the actual issuance of such Convertible Securities Share or of such Convertible Securities upon
the exercise of such Options or upon the actual issuance of such Convertible Securities Share upon conversion, exercise or exchange of
such Convertible Securities.
3.2.2.
Issuance of Convertible Securities. If, during the Adjustment Period, the Company in any manner issues or sells any Convertible
Securities and the lowest price per share for which one Convertible Securities Share is issuable upon the conversion, exercise or exchange
thereof is less than the Applicable Price, then such Convertible Securities Share shall be deemed to be outstanding and to have been
issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes
of this Section 3.2.2, the “lowest price per share for which one Convertible Securities Share is issuable upon the conversion,
exercise or exchange thereof” shall be equal to (A) the sum of (1) the lowest amount of consideration (if any) received or receivable
by the Company with respect to one Convertible Securities Share upon the issuance or sale of the Convertible Security and upon conversion,
exercise or exchange of such Convertible Security and (2) the lowest conversion price set forth in such Convertible Security for which
one Convertible Securities Share is issuable upon conversion, exercise or exchange thereof, minus (B) the sum of all amounts paid or
payable to the holder of such Convertible Security (or any other Person), with respect to any one Convertible Securities Share, upon
the issuance or sale of such Convertible Security plus the value of any other consideration received or receivable by, or benefit conferred
on, the holder of such Convertible Security (or any other Person), with respect to any one Convertible Securities Share. Except as contemplated
below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such Convertible Securities Share upon conversion,
exercise or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise
of any Options for which adjustment of the Exercise Price has been or is to be made pursuant to other provisions of this Section 3.2,
except as contemplated below, no further adjustment of the Exercise Price shall be made by reason of such issue or sale.
3.2.3.
Change in Option Price or Rate of Conversion. If, during the Adjustment Period, the purchase or exercise price provided
for in any Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common
Stock increases or decreases at any time (other than proportional changes in conversion or exercise prices, as applicable, in connection
with an event referred to in Section 3.1), the Exercise Price in effect at the time of such increase or decrease shall be adjusted to
the Exercise Price which would have been in effect at such time had such Options or Convertible Securities provided for such increased
or decreased purchase price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially
granted, issued or sold. For purposes of this Section 3.2.3, if the terms of any Option or Convertible Security that was outstanding
as of the date of issuance of this Warrant are increased or decreased in the manner described in the immediately preceding sentence,
then such Option or Convertible Security and the Convertible Securities Share deemed issuable upon exercise, conversion or exchange thereof
shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 3.2 shall be
made if such adjustment would result in an increase of the Exercise Price then in effect.
3.2.4.
Calculation of Consideration Received. If any Option or Convertible Security is issued in connection with the issuance
or sale or deemed issuance or sale of any other securities of the Company (the “Primary Security”, and such
Option or Convertible Security, the “Secondary Securities” and together with the Primary Security, each a “Unit”),
together comprising one integrated transaction, the aggregate consideration per share with respect to such Primary Security shall be
deemed to be the lowest of (x) the purchase price of such Unit, (y) if such Primary Security is an Option and/or Convertible Security,
the lowest price per share for which one share of Common Stock is at any time issuable upon the exercise or conversion of the Primary
Security in accordance with Section 3.2.1 or 3.2.2 above and (z) the lowest VWAP of the shares of Common Stock on any Trading Day during
the Five (5) consecutive Trading Days immediately following the public announcement of such Dilutive Issuance (for the avoidance of doubt,
if such public announcement is released prior to the opening of the Principal Market on a Trading Day, such Trading Day shall be the
first Trading Day in such Five (5) Trading Day period and if this Warrant is exercised on any given Exercise Date during any such period,
the Holder may elect to earlier end such period (including, solely with respect to such portion of this Warrant exercised on such applicable
Exercise Date)). If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or
sold for cash, the consideration received therefor will be deemed to be the net amount of cash received by the Company therefor. If any
shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such
consideration received by the Company will be the fair value of such consideration, except where such consideration consists of publicly
traded securities, in which case the amount of consideration received by the Company for such securities will be the arithmetic average
of the VWAPs of such security for each of the five (5) Trading Days immediately preceding the date of receipt. If any shares of Common
Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which
the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair market value of such portion
of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible
Securities (as the case may be). The fair market value of any consideration other than cash or publicly traded securities will be determined
jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an
event requiring valuation (the “Valuation Event”), the fair market value of such consideration will be determined
within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly
selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties absent manifest
error and the fees and expenses of such appraiser shall be borne by the Company.
3.2.5.
Record Date. If, during the Adjustment Period, the Company takes a record of stockholders for the purpose of entitling
them (A) to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to
subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date
of the issue or sale of shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making
of such other distribution or the date of the granting of such right of subscription or purchase (as the case may be).
3.3.
Subsequent Rights Offerings. In addition to any other adjustments pursuant to Section 3, if at any time the Company grants,
issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to all (or
substantially all) of the record holders of any class of shares of Common Stock (the “Purchase Rights”), then
the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder
could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without
regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the
date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as
of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided,
however, that, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding
the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial
ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall
be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial
Ownership Limitation).
3.4.
Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend
or other distribution of its assets (or rights to acquire its assets) to all (or substantially all) holders of shares of Common Stock,
by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property
or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction)
(a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall
be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had
held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise
hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for
such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined
for the participation in such Distribution (provided, however, that, to the extent that the Holder’s right to participate in any
such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to
participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution
to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever,
as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation). To the extent that this Warrant has
not been partially or completely exercised at the time of such Distribution, such portion of the Distribution shall be held in abeyance
for the benefit of the Holder until the Holder has exercised this Warrant.
3.5.
Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in
one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company or
any Subsidiary, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all
or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender
offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted
to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of
the outstanding Common Stock or 50% or more of the voting power of the common equity of the Company, (iv) the Company, directly or indirectly,
in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property,
or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other
business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with
another Person or group of Persons whereby such other Person or group acquires 50% or more of the outstanding shares of Common Stock
or 50% or more of the voting power of the common equity of the Company (each a “Fundamental Transaction”),
then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have
been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without
regard to any limitation in Section 2.5 on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring
corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2.5 on the exercise of this
Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such
Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary,
in the event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at the Holder’s option,
exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction (or, if later, the
date of the public announcement of the applicable Fundamental Transaction), purchase this Warrant from the Holder by paying to the Holder
an amount of cash equal to the Black Scholes Value (as defined below) of the remaining unexercised portion of this Warrant on the date
of the consummation of such Fundamental Transaction; provided, however, that, if the Fundamental Transaction is not within the Company’s
control, including not approved by the Company’s Board of Directors, the Holder shall only be entitled to receive from the Company
or any Successor Entity the same type or form of consideration (and in the same proportion), at the Black Scholes Value of the unexercised
portion of this Warrant, that is being offered and paid to the holders of Common Stock of the Company in connection with the Fundamental
Transaction, whether that consideration be in the form of cash, stock or any combination thereof, or whether the holders of Common Stock
are given the choice to receive from among alternative forms of consideration in connection with the Fundamental Transaction; provided,
further, that if holders of Common Stock of the Company are not offered or paid any consideration in such Fundamental Transaction, such
holders of Common Stock will be deemed to have received common stock/shares of the Successor Entity (which Entity may be the Company
following such Fundamental Transaction) in such Fundamental Transaction. “Black Scholes Value” means the value
of this Warrant based on the Black-Scholes Option Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”)
determined as of the day of consummation of the applicable contemplated Fundamental Transaction for pricing purposes and reflecting (A)
a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement
of the applicable contemplated Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the 100 day volatility
as obtained from the HVT function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately
following the public announcement of the applicable contemplated Fundamental Transaction, (C) the underlying price per share used in
such calculation shall be the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration,
if any, being offered in such Fundamental Transaction, (D) a remaining option time equal to the time between the date of the public announcement
of the applicable contemplated Fundamental Transaction and the Termination Date and (E) a zero cost of borrow. The payment of the Black
Scholes Value will be made by wire transfer of immediately available funds (or such other consideration) within the later of (i) five
(5) Business Days after the Holder’s election and (ii) the date of consummation of the Fundamental Transaction. The Company shall
cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”)
to assume in writing all of the obligations of the Company under this Warrant in accordance with the provisions of this Section 3.5 pursuant
to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay)
prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security
of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant that is exercisable
for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common
Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior
to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock
(but taking into account the relative value of the shares of Common Stock prior to such Fundamental Transaction and the value of such
shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic
value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in
form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall be added to the
term “Company” under this Warrant (so that from and after the occurrence or consummation of such Fundamental Transaction,
each and every provision of this Warrant referring to the “Company” shall refer instead to each of the Company and the Successor
Entity or Successor Entities, jointly and severally), and the Successor Entity or Successor Entities, jointly and severally with the
Company, may exercise every right and power of the Company prior thereto and the Successor Entity or Successor Entities shall assume
all of the obligations of the Company prior thereto under this Warrant with the same effect as if the Company and such Successor Entity
or Successor Entities, jointly and severally, had been named as the Company herein. For the avoidance of doubt, the Holder shall be entitled
to the benefits of the provisions of this Section 3.5 regardless of (i) whether the Company has sufficient authorized shares of Common
Stock for the issuance of Warrant Shares and/or (ii) whether a Fundamental Transaction occurs prior to the Initial Exercise Date.
3.6.
Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share,
as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a
given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
3.7.
Notice to Holder.
3.7.1.
Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the
Company shall promptly deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting
adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
3.7.2.
Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever
form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock,
(C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares
of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which the Company (or any of its Subsidiaries) is a party, any
sale or transfer of all or substantially all of its assets, or any compulsory share exchange whereby the Common Stock is converted into
other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding
up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by email to the Holder at its last email
address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective
date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to
be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected
that holders of the Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver
such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified
in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding
the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the
effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
3.8.
Share Combination Event Adjustment. In addition to the adjustments set forth in Section 3.1 above, if at any time and from
time to time on or after the Issuance Date there occurs any share split, share dividend, share combination recapitalization or other
similar transaction involving the Common Stock (each, a “Share Combination Event”, and such date thereof, the
“Share Combination Event Date”) and the lowest VWAP during the period commencing Five (5) consecutive Trading
Days immediately preceding and the Five (5) consecutive Trading Days commencing on the Share Combination Event Date (the “Event
Market Price”) (provided if the Share Combination Event is effective after close of Trading on the primary Trading Market,
then commencing on the next Trading Day which period shall be the “Share Combination Adjustment Period”) is
less than the Exercise Price then in effect (after giving effect to the adjustment in clause 3.1 above), then at the close of trading
on the primary Trading Market on the last day of the Share Combination Adjustment Period, the Exercise Price then in effect on such Fifth
(5th) Trading Day shall be reduced (but in no event increased) to the Event Market Price and the number of Warrant Shares issuable hereunder
shall be increased such that the aggregate Exercise Price of this Warrant on the Issuance Date for the Warrant Shares then outstanding
shall remain unchanged. For the avoidance of doubt, if the adjustment in the immediately preceding sentence would otherwise result in
an increase in the Exercise Price hereunder, no adjustment shall be made, and if this Warrant is exercised, on any given Exercise Date
during the Share Combination Adjustment Period, solely with respect to such portion of this Warrant exercised on such applicable Exercise
Date, such applicable Share Combination Adjustment Period shall be deemed to have ended on, and included, the Trading Day immediately
prior to such Exercise Date and the Event Market Price on such applicable Exercise Date will be the lowest VWAP of the Common Stock immediately
during such the Share Combination Adjustment Period prior to such Exercise Date and ending on, and including the Trading Day immediately
prior to such Exercise Date.
3.9.
Voluntary Adjustment by Company. Subject to the rules and regulations of the Trading Market and the consent of the Holder,
the Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of
time deemed appropriate by the Board of Directors.
3.10.
Stockholder Approval. The Company shall obtain a written consent resolution of the majority of the voting power of the
Company, at the earliest practicable date after the date hereof, but in no event later than twenty (20) days after the Closing Date for
the purpose of obtaining Stockholder Approval, if required, to effect the purpose thereof, with the recommendation of the Board that
such proposal be approved and within such twenty-day time period shall file with the Commission, and deliver to shareholders of the Company,
a written information statement containing the information specified in Schedule 14C detailing such Stockholder Approval. The Company
shall use its reasonable best efforts to obtain such Stockholder Approval, and officers, directors, and shareholders subject to the Lock-Up
Agreement shall vote in favor of such proposal. .
3.11.
[Reserved]
4.1.
Transferability. Subject to compliance with any applicable securities laws, this Warrant and all rights hereunder (including,
without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office
of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto
as Exhibit 2.4.6 duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon
the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant
or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument
of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant
shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender
this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant
to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the Company assigning this
Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant
Shares without having a new Warrant issued.
4.2.
New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office
of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed
by the Holder or its agent or attorney. Subject to compliance with Section 4.1, as to any transfer which may be involved in such division
or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of
this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
4.3.
Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose
(the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and
treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to
the Holder, and for all other purposes, absent actual notice to the contrary.
5.1.
No Rights as Stockholder until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting
rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2.4.1, except
as expressly set forth in Section 3. Without limiting any rights of a Holder to receive Warrant Shares on a “cashless exercise”
pursuant to Section 2.3 or to receive cash payments pursuant to Section 2.4.1 and Section 2.4.4 herein, in no event shall the Company
be required to net cash settle an exercise of this Warrant.
5.2.
Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares,
and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant,
shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the
Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant
or stock certificate.
5.3.
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right
required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding
Business Day.
5.4.
Authorized Shares.
5.4.1.
Reservation of Authorized and Unissued Shares. The Company covenants that, during the period the Warrant is outstanding,
it will reserve from its authorized and unissued Common Stock a sufficient number of shares of Common Stock to provide for the issuance
of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of
this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon
the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure
that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements
of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon
the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant
and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable (which means
that no further sums are required to be paid by the holders thereof in connection with the issue thereof) and free from all taxes, liens
and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously
with such issue).
5.4.2.
Noncircumvention. Except and to the extent as waived or consented to by the Holder, the Company shall not by any action,
including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking
of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment.
Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount
payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of
this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.
5.4.3.
Authorizations, Exemptions and Consents. Before taking any action that would result in an adjustment in the number of Warrant
Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions
thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.
5.5.
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall
be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles
of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of
the transactions contemplated by this Warrant (whether brought against a party hereto or their respective affiliates, directors, officers,
shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City
of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City
of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient
venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any
other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant,
the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’
fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. Notwithstanding
the foregoing, nothing in this paragraph shall limit or restrict the federal district court in which a Holder may bring a claim under
the federal securities laws.
5.6.
Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered,
and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
5.7.
Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder
shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact
that the right to exercise this Warrant terminates on the Termination Date. No provision of this Warrant shall be construed as a waiver
by the Holder of any rights which the Holder may have under the federal securities laws and the rules and regulations of the Commission
thereunder. Without limiting any other provision of this Warrant, if the Company willfully and knowingly fails to comply with any provision
of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient
to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings,
incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
5.8.
Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without
limitation, any Notice of Exercise, shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight
courier service, addressed to the Company, at 135 Fell Court, Hauppauge, NY 11788, Attention: Saagar Govil, Chief Executive Officer,
email address: sgovil@cemtrex.com, or such other email address or address as the Company may specify for such purposes by notice to the
Holders. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered
personally, by e-mail, or sent by a nationally recognized overnight courier service addressed to each Holder at the e-mail address or
address of such Holder appearing on the books of the Company. Any notice or other communication or deliveries hereunder shall be deemed
given and effective on the earliest of (i) the time of transmission, if such notice or communication is delivered via e-mail at the e-mail
address set forth in this Section 5.8 prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the time of
transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section 5.8 on a day that
is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date
of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice
is required to be given. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information
regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current
Report on Form 8-K.
5.9.
Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant
to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of
the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.
5.10.
Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to
assert the defense in any action for specific performance that a remedy at law would be adequate.
5.11.
Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby
shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted
assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant
and shall be enforceable by the Holder or holder of Warrant Shares.
5.12.
Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company,
on the one hand, and the Holder, on the other hand.
5.13.
Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining
provisions of this Warrant.
5.14.
Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.
********************
[CETX
Investor Registered Warrant Signature Page Follows]
[CETX
Investor Registered Warrant Signature Page]
IN
WITNESS WHEREOF, the Company has caused this Registered Warrant to be executed by its officer thereunto duly authorized as of the date
first above indicated.
| |
CEMTREX INC. |
| |
|
|
| |
By: |
|
| |
Name: |
Saagar Govil |
| |
Its: |
Chief Executive Officer |
Exhibit
2.1
NOTICE
OF EXERCISE
To: CEMTREX
INC.
(1)
The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only
if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2)
Payment shall take the form of (check applicable box):
| |
[ ] |
in lawful money of the United
States. |
| |
|
|
| |
[ ] |
if permitted the cancellation
of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2.3, to exercise this Warrant
with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection
2.3. |
(3)
Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The
Warrant Shares shall be delivered to the following DWAC Account Number:
_______________________________
_______________________________
_______________________________
[SIGNATURE
OF HOLDER]
| Name
of Investing Entity: |
|
| Signature
of Authorized Signatory of Investing Entity: |
|
| Name
of Authorized Signatory: |
|
| Title
of Authorized Signatory: |
|
| Date:
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Exhibit
2.4.6
ASSIGNMENT
FORM
(To
assign the foregoing Warrant, execute this form and supply required information. Do not use this form to exercise the Warrant to purchase
shares of Common Stock.)
FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to:
| Name: |
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| Address: |
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| Phone Number: |
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| Email Address: |
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| Date: |
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| Holder’s Signature: |
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| Holder’s Address: |
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EXHIBIT
5.1
April
23, 2024
Cemtrex
Inc.
135
Fell Ct.
Hauppauge,
NY 11788
| Re: |
Cemtrex Inc. Registration Statement on Form S-1 |
Ladies
and Gentlemen:
We
have acted as counsel to Cemtrex Inc., a Delaware corporation (the “Company”), in connection with the filing by the
Company of a Registration Statement on Form S-1 (File No. 333-276556) initially filed with the Securities and Exchange Commission (the
“SEC”) on January 17, 2024 and amended on April 23, 2024 (as so amended, the “Registration Statement”)
under the Securities Act of 1933, as amended (the “Securities Act”). The Registration Statement relates to proposed
issuance and sale by the Company of (i) 2,884,616 units (the “Closing Units”), with each Closing Unit consisting of
either (A) one share of the Company’s common stock, $0.001 par value (“Common Stock”) (collectively, the “Closing
Shares”) and one Series A warrant (“Series A Warrant”) to purchase one share of Common Stock and one Series
B warrant to purchase one share of Common Stock (“Series B Warrant” and, together with the Series A Warrant, the “Warrants”),
or (B) one pre-funded warrant (each, a “Pre-funded Warrant”) to purchase one share of Common Stock at an exercise
price of $0.001 until such time as the Pre-Funded Warrant is exercised in full subject to adjustment as provided in the Pre-funded Warrant
and one Series A Warrant to purchase one share of Common Stock and one Series B Warrant to purchase one share of Common Stock. The Units,
the Shares, the Warrants, the shares underlying the Warrants (the “Warrant Shares”), the Pre-Funded Warrants and shares underlying
the Pre-Funded Warrants (the “Pre-Funded Warrant Shares”) are referred to herein, collectively, as the “Securities.”
The proposed maximum aggregate offering price of the Securities is $31,050,000. The Securities are to be sold by the Company pursuant
to an underwriting agreement by and between the Company and Aegis Capital Corp., as the underwriter (the “Underwriting Agreement”).
You
have requested our opinion as to the matters set forth below in connection with the issuance of the Securities. For purposes of rendering
that opinion, we have examined: (i) the Registration Statement, (ii) the form of Underwriting Agreement, (iii) the form of Series A Warrant,
(iv) the form of Series B Warrant, (v) the form of Pre-Funded Warrant, (vi) the Articles of Incorporation of the Company, as amended
and in effect as of the date hereof (the “Charter”), (vii) the Company’s Bylaws (the “Bylaws”),
(viii) the Company’s stock ledger, and (ix) the corporate action of the Company’s Board of Directors which, among other things,
authorizes the issuance of the Securities. We have also reviewed such matters of law as we have deemed necessary to render the opinion
expressed herein.
For
the purposes of this opinion letter, we have assumed that each document submitted to us is accurate and complete, that each such document
that is an original is authentic, the conformity to the original or final versions of the documents submitted to us as copies or drafts,
including without limitation, the Charter, the Bylaws, the Underwriting Agreement, and the forms of the Warrants and Pre-Funded Warrants,
and that all signatures on each such document are genuine. We have also assumed the legal capacity of natural persons and have made such
other assumptions as are customary in opinion letters of this kind. We have not verified any of those assumptions or any of the other
assumptions contained herein.
Our
opinions set forth below in numbered paragraph 1, numbered paragraph 2, numbered paragraph 3 and numbered paragraph 4 are limited to
the Delaware Corporation General Law. Each of our opinions set forth below is subject to the application of equitable principles and
considerations of public policy.
Based
upon and subject to the foregoing, it is our opinion that:
1.
The Closing Units have been duly authorized for issuance by the Company. The Closing Units, if and when issued, delivered and paid for
as described in the prospectus related to the Registration Statement (the “Prospectus”) and pursuant to the Underwriting
Agreement, will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms,
subject to the effects of bankruptcy, insolvency, fraudulent transfer, reorganization, receivership, moratorium and other laws affecting
the rights and remedies of creditors generally and to the exercise of judicial discretion in accordance with general principles of equity,
whether applied by a court of law or equity.
2.
The Closing Shares have been duly authorized for issuance by the Company and, when issued, delivered and paid for as described in the
Prospectus and pursuant to the Underwriting Agreement, will be validly issued, fully-paid and non-assessable.
3.
The Warrants and Pre-Funded Warrants have been duly authorized for issuance by the Company.
4.
The Warrant Shares and Pre-Funded Warrant Shares have been duly authorized for issuance by the Company and, when issued and delivered
by the Company against payment therefor, upon exercise of the Warrants or Pre-Funded Warrants, as applicable, in accordance with the
terms therein and the terms of the Warrants or Pre-Funded Warrants, as applicable, will be validly issued, fully-paid and non-assessable.
The
opinions set forth above are subject to the following additional assumptions:
(a)
the Registration Statement and any amendment thereto (including any post-effective amendment) will have become effective under the Securities
Act, and such effectiveness shall not have been terminated, suspended or rescinded;
(b)
any Prospectus required by applicable law will have been delivered and filed as required by such laws;
(c)
all Securities offered pursuant to the Registration Statement will be (i) issued and sold in the manner provided in the Registration
Statement and the Prospectus, (ii) issued and sold only upon payment of the consideration fixed therefor in accordance with the Underwriting
Agreement and, if applicable, the Securities themselves, and there will not have occurred any change in law or fact affecting the validity
of the opinion rendered herein with respect thereto between the date hereof and the date of such issuance and (iii) duly noted in the
Company’s stock or warrant ledger, as applicable, upon their issuance;
(d)
the Company will have sufficient authorized and unissued shares of Common Stock at the time of each issuance of a Warrant Share or Pre-Funded
Warrant Share upon the exercise of a Warrant or Pre-Funded Warrant, as applicable, and each such Warrant Share or Pre-Funded Warrant
Share, as applicable, as well as the Shares, will be noted in the Company’s stock ledger upon issuance;
(e)
the Company’s Board of Directors shall have approved the issuance of the Closing Units, the final number of Securities to be issued
and the price to be paid therefor pursuant to the Underwriting Agreement, and
(f)
to the extent that there are obligations of the Company under any agreement pursuant to which any Securities offered pursuant to the
Registration Statement are to be issued or governed, including any amendment or supplement thereto, may be dependent upon such matters,
(i) each party to any such agreement other than the Company will be duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization; that each such other party will be duly qualified to engage in the activities contemplated thereby;
(ii) each such agreement and the applicable Securities will have been duly authorized, executed and delivered by each such other party
and will constitute the valid and binding obligations of each such other party, enforceable against each such other party in accordance
with their terms; (iii) each such other party will be in compliance, with respect to acting in any capacity contemplated by any such
agreement, with all applicable laws and regulations; and (iv) each such other party will have the requisite organizational and legal
power and authority to perform its obligations under each such agreement.
We
hereby consent to the filing of this opinion letter with the SEC as Exhibit 5.1 to the Registration Statement. We also consent to the
reference to our Firm under the caption “Legal Matters” in the Registration Statement and in the Prospectus. In giving our
consent, we do not thereby admit that we are experts with respect to any part of the Registration Statement, the Prospectus or any prospectus
supplement within the meaning of the term “expert”, as used in Section 11 of the Securities Act or the rules and regulations
promulgated thereunder, nor do we admit that we are in the category of persons whose consent is required under Section 7 of the Securities
Act or the rules and regulations thereunder. We assume no obligation to update or supplement our opinion to reflect any changes of law
or fact that may occur.
| Very
truly yours, |
|
| |
|
| /s/
The Doney Law Firm |
|
| The
Doney Law Firm |
|
Exhibit
10.14
Cemtrex
Inc. - Lock-Up Agreement
[●],
2024
Aegis
Capital Corp.
1345
Avenue of the Americas, 27th Floor
New
York, NY 10105
Ladies
and Gentlemen:
The
undersigned understands that Aegis Capital Corp. (the “Underwriter”) proposes to enter into an Underwriting
Agreement (the “Underwriting Agreement”) with Cemtrex Inc., a Delaware corporation (the “Company”),
providing for the public offering (the “Public Offering”) of shares of Common Stock, $0.001 par value per share
(“Common Stock”).
To
induce the Underwriter to continue its efforts in connection with the Public Offering, the undersigned hereby irrevocably agrees that,
without the prior written consent of the Underwriter, the undersigned will not, during the period commencing on the date hereof and ending
ninety (90) days after the Closing Date (as defined in the Underwriting Agreement) (the “Lock-Up Period”),
(1) offer, pledge, sell, contract to sell, grant, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for shares of Common Stock, whether now owned or hereafter acquired
by the undersigned (or any Affiliate of the undersigned) or with respect to which the undersigned (or any Affiliate of the undersigned)
has or hereafter acquires the power of disposition (collectively, the “Lock-Up Securities”); (2) enter into
any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Lock-Up
Securities, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Lock-Up Securities, in
cash or otherwise; (3) make any demand for or exercise any right with respect to the registration of any Lock-Up Securities; or (4) publicly
disclose the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement
relating to any Lock-Up Securities.
Notwithstanding
the foregoing, and subject to the conditions below, the undersigned may transfer Lock-Up Securities without the prior written consent
of the Underwriter in connection with:
| 1. | transactions
relating to Lock-Up Securities acquired in open market transactions after the completion
of the Public Offering; provided that no filing under Section 16(a) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), shall be
required or shall be voluntarily made in connection with subsequent sales of Lock-Up Securities
acquired in such open market transactions; |
| | |
| 2. | transfers
of Lock-Up Securities as a bona fide gift, by will or intestacy or to a family member
or trust for the benefit of a family member (for purposes of this lock-up agreement, “family
member” means any relationship by blood, marriage or adoption, not more remote than
first cousin), provided that the transferee agrees to sign and deliver a lock-up agreement
substantially in the form of this lock-up agreement for the balance of the Lock-Up Period; |
| 3. | transfers
of Lock-Up Securities to a charity or educational institution; or |
| | |
| 4. | if
the undersigned, directly or indirectly, controls a corporation, partnership, limited liability
company or other business entity, any transfers of Lock-Up Securities to any stockholder,
partner or member of, or owner of similar equity interests in, the undersigned, as the case
may be; provided that in the case of any transfer pursuant to the foregoing clauses
(b), (c) or (d), |
4.1.
any such transfer shall not involve a disposition for value;
4.2.
each transferee shall sign and deliver to the Underwriter a lock-up agreement substantially in the form of this lock-up agreement; and
4.3.
no filing under Section 16(a) of the Exchange Act shall be required or shall be voluntarily made. The undersigned also agrees and consents
to the entry of stop transfer instructions with the Company’s transfer agent and registrar against the transfer of the undersigned’s
Lock-Up Securities except in compliance with this lock-up agreement.
| 5. | the
receipt by the undersigned from the Company of Common Stock upon the vesting of restricted
stock awards or units or upon the exercise of options to purchase the shares of Common Stock
issued under an equity incentive plan of the Company or an employment arrangement (the “Plan
shares of Common Stock”) or the transfer or withholding of Common Stock or
any securities convertible into Common Stock to the Company upon a vesting event of the Company’s
securities or upon the exercise of options to purchase the Company’s securities, in
each case on a “cashless” or “net exercise” basis or to cover tax
obligations of the undersigned in connection with such vesting or exercise provided that
if the undersigned is required to file a report under Section 13 of the Exchange Act reporting
a reduction in beneficial ownership of Common Stock during the Lock-Up Period, the undersigned
shall include a statement in such schedule or report to the effect that the purpose of such
transfer was to cover tax withholding obligations of the undersigned in connection with such
vesting or exercise and, provided further that the Plan Common Stock shall be subject to
the terms of this lock-up agreement; |
| | |
| 6. | the
establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer
of Lock-Up Securities provided that (i) such plan does not provide for the transfer of Lock-Up
Securities during the Lock-Up Period and (ii) to the extent a public announcement or filing
under the Exchange Act, if any, is required of or voluntarily made by or on behalf of the
undersigned or the Company regarding the establishment of such plan, such public announcement
or filing shall include a statement to the effect that no transfer of Lock-Up Securities
may be made under such plan during the Lock-Up Period; |
| | |
| 7. | the
transfer of Lock-Up Securities that occurs by operation of law, such as pursuant to a qualified
domestic order or in connection with a divorce settlement, provided that the transferee agrees
to sign and deliver a lock-up agreement substantially in the form of this lock-up agreement
for the balance of the Lock-Up Period, and provided further that any filing under Section
13 of the Exchange Act that is required to be made during the Lock-Up Period as a result
of such transfer shall include a statement that such transfer has occurred by operation of
law; and provided further that competent legal counsel for the Company shall have first advised
that such transfer is a mandatory and not voluntary transfer; and |
| 8. | the
transfer of Lock-Up Securities pursuant to a bona fide third party tender offer, merger,
consolidation or other similar transaction made to all holders of the Common Stock involving
a change of control (as defined below) of the Company after the closing of the Transaction
and approved by the Company’s board of directors; provided that in the event that the
tender offer, merger, consolidation or other such transaction is not completed, the Lock-Up
Securities owned by the undersigned shall remain subject to the restrictions contained in
this lock-up agreement. For purposes of clause (i) above, “change of control”
shall mean the consummation of any bona fide third party tender offer, merger, amalgamation,
consolidation or other similar transaction the result of which is that any “person”
(as defined in Section 13(d)(3) of the Exchange Act), or group of persons, becomes the beneficial
owner (as defined in Rules 13d-3 and 13d-5 of the Exchange Act) of a majority of total voting
power of the voting stock of the Company. The undersigned also agrees and consents to the
entry of stop transfer instructions with the Company’s transfer agent and registrar
against the transfer of the undersigned’s Lock-Up Securities except in compliance with
this lock-up agreement. |
If
the undersigned is an officer or director of the Company, (i) the undersigned agrees that the foregoing restrictions shall be equally
applicable to any Common Stock that the undersigned may purchase in the Public Offering; (ii) the Underwriter agrees that, at least three
(3) business days before the effective date of any release or waiver of the foregoing restrictions in connection with a transfer of Lock-Up
Securities, the Underwriter will notify the Company of the impending release or waiver; and (iii) the Company has agreed in the Underwriting
Agreement to announce the impending release or waiver by press release through a major news service at least two (2) business days before
the effective date of the release or waiver. Any release or waiver granted by the Underwriter hereunder to any such officer or director
shall only be effective two (2) business days after the publication date of such press release. The provisions of this paragraph will
not apply if (a) the release or waiver is affected solely to permit a transfer of Lock-Up Securities not for consideration and (b) the
transferee has agreed in writing to be bound by the same terms described in this lock-up agreement to the extent and for the duration
that such terms remain in effect at the time of such transfer.
No
provision in this lock-up agreement shall be deemed to restrict or prohibit (i) the adoption of an equity incentive plan and the grant
of options and/or restricted stock grants thereunder, and the filing of a registration statement on Form S-8; provided, however,
that any sales by the undersigned shall be subject to the terms of this lock-up agreement, (ii) the issuance of Common Stock in connection
with an acquisition or a strategic relationship which may include the sale of equity securities; and (iii) the exercise, exchange or
conversion by the undersigned of any securities exercisable or exchangeable for or convertible into Common Stock, as applicable; provided
that none of such Common Stock shall be saleable in the public market until the expiration of the Lock-Up Period.
The
undersigned understands that the Company and the Underwriter are relying upon this lock-up agreement in proceeding toward consummation
of the Public Offering. The undersigned further understands that this lock-up agreement is irrevocable and shall be binding upon the
undersigned’s heirs, legal representatives, successors and assigns. This Letter Agreement is intended for the benefit of the parties
hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provisions hereof be enforced
by, any of other person or entity.
The
undersigned understands that, if the Underwriting Agreement is not executed by [●], 20241, or if the Underwriting Agreement
(other than the provisions thereof which survive termination) shall terminate or be terminated prior to payment for and delivery of the
Shares to be sold thereunder, then this lock-up agreement shall be void and of no further force or effect.
Whether
or not the Public Offering actually occurs depends on a number of factors, including market conditions. Any Public Offering will only
be made pursuant to an Underwriting Agreement, the terms of which are subject to negotiation between the Company and the Underwriter.
[CETX
Lock-Up Agreement Signature Page Follows]
1
Insert date that is 30 days after pricing.
[CETX
Lock-Up Agreement Signature Page]
The
undersigned has read and agrees to be bound by the terms of this Lock-Up Agreement dated as of [●], 2024.
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Very
truly yours, |
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(Signature) |
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Name: |
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Address: |
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Exhibit 23.1
CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We
hereby consent to the incorporation by reference in this Registration Statement on Form S-1/A (File No. 333-276556) of our report dated
December 28, 2023, with respect to the consolidated financial statements of Cemtrex, Inc., included in its Annual Report on Form 10-K
for the year ended September 30, 2023. Our opinion includes an explanatory paragraph as to Cemtrex, Inc.’s ability to continue
as a going concern. We also consent to the reference to our firm under the heading “Experts” in such Registration Statement.
/s/
Grassi & Co., CPAs, P.C.
Jericho,
New York
April
23, 2024
EXHIBIT
107
Calculation
of Filing Fee Tables
S-1
(Form
Type)
CEMTREX,
INC.
(Exact
Name of Registrant as Specified in its Charter)
Registrant
Name in English, if applicable
(Translation
of Registrant’s Name into English)
Table
1: Newly Registered and Carry Forward Securities
| | |
| |
Fee | | |
| | |
| | |
| | |
| | |
| |
| | |
| |
Calculation | | |
| | |
Proposed | | |
Maximum | | |
| | |
| |
| | |
| |
or
Carry | | |
| | |
Maximum | | |
Aggregate | | |
| | |
Amount
of | |
| Security | |
Security | |
Forward | | |
Amount | | |
Offering | | |
Offering | | |
| | |
Registration | |
| Type | |
Class
Title | |
Rule | | |
Registered | | |
Price | | |
Price(1) | | |
Fee
Rate | | |
Fee
(2) | |
| Fees to Be Paid | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Equity | |
Units, each consisting of: (i) one share of common stock, $0.001 par value per share (“Common Stock”); (ii) one Series A Warrant to purchase one share of Common Stock (the “Series A Warrant”); and (iii) one Series B Warrant to purchase one share of Common Stock (together with the Series A Warrant, “Warrants”) | |
| - | | |
| - | | |
| - | | |
$ | 10,350,000 | | |
$ | 0.00014760 | | |
$ | 1,527.66 | |
| Equity | |
Common Stock included as part of the Units which include a share of Common Stock(2) | |
| 457 | (o) | |
| - | | |
| - | | |
$ | - | | |
$ | - | | |
$ | - | |
| Other | |
Units, each consisting of: (i) one Pre-Funded Warrant exercisable for one share of Common Stock; and (ii) the Warrants(3) | |
| - | | |
| - | | |
| - | | |
$ | - | | |
$ | - | | |
$ | - | |
| Other | |
Pre-Funded Warrants to purchase Common Stock, included as part of the Units which include a Pre-Funded Warrant(3) | |
| 457 | (g) | |
| - | | |
| - | | |
$ | - | | |
$ | - | | |
$ | - | |
| Equity | |
Common Stock underlying Pre-Funded Warrants(4) | |
| 457 | (o) | |
| - | | |
| - | | |
$ | - | | |
$ | - | | |
$ | - | |
| Other | |
Warrants to Purchase Common Stock, included as part of the Units(4) | |
| 457 | (g) | |
| - | | |
| - | | |
$ | - | | |
$ | - | | |
$ | - | |
| Equity | |
Common Stock underlying Warrants | |
| 457 | (o) | |
| - | | |
| - | | |
$ | 20,700,000 | | |
$ | 0.00014760 | | |
$ | 3,055.32 | |
| | |
TOTAL OFFERING AMOUNTS | | |
| | | |
| | | |
$ | 31,050,000 | | |
| | | |
$ | 4,582.98 | |
| | |
TOTAL FEES PREVIOUSLY PAID | | |
| | | |
| | | |
| | | |
| | | |
$ | 1,527.66 | |
| | |
NET FEES DUE | | |
| | | |
| | | |
| | | |
| | | |
$ | 3,055.32 | |
| (1) |
Estimated
solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457(o) under the Securities Act
of 1933, as amended (the “Securities Act”). Includes an additional 15% related to the exercise in full of the over-allotment
option by the underwriter. |
| |
|
| (2) |
Pursuant
to Rule 416 under the Securities Act, this registration statement shall also cover any additional shares of the registrant’s
securities that become issuable by reason of any share splits, share dividends or similar transactions. |
| |
|
| (3) |
The
registrant may issue Units which include a Pre-Funded Warrant to purchase Common Stock in lieu of a share of Common Stock in the
offering. The purchase price of each Unit which includes a Pre-Funded Warrant will equal the price per share at which Units which
include a share of Common Stock are being sold to the public in this offering, minus $0.001, which constitutes the pre-funded portion
of the exercise price of the Pre-Funded Warrants, and the remaining unpaid exercise price of the Pre-Funded Warrants will equal $0.001
per share (subject to adjustment as provided for therein). The proposed maximum aggregate offering price of the Units which include
a Pre-Funded Warrant will be reduced on a dollar-for-dollar basis based on the offering price of any Units which include a Pre-Funded
Warrant issued in the offering, and the proposed maximum aggregate offering price of the Units which include a share of Common Stock
to be issued in the offering will be reduced on a dollar-for-dollar basis based on the offering price of any Units which include
a share of Common Stock issued in the offering. Accordingly, the proposed maximum aggregate offering price of the Units which include
a share of Common Stock and Units which include a Pre-Funded Warrant is $10,350,000, including the Over-allotment Option,
if any. |
| |
|
| (4) |
No
separate registration fee is payable pursuant to Rule 457(g) under the Securities Act. |
Cemtrex (NASDAQ:CETXP)
過去 株価チャート
から 4 2024 まで 5 2024
Cemtrex (NASDAQ:CETXP)
過去 株価チャート
から 5 2023 まで 5 2024
