XML 31 R15.htm IDEA: XBRL DOCUMENT v3.25.4
FAIR VALUE MEASUREMENTS
 12 Months Ended
Sep. 30, 2025
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS

NOTE 4 – FAIR VALUE MEASUREMENTS

 

Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level hierarchy is applied to prioritize the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

 

The three levels of the fair value hierarchy under the guidance for fair value measurements are described below:

 

Level 1 — Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Our Level 1 assets include cash equivalents, banker’s acceptances, trading securities investments, and investment funds. The Company measures trading securities investments and investment funds at quoted market prices as they are traded in an active market with sufficient volume and frequency of transactions.

 

Level 2 — Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified contractual term, a Level 2 input must be observable for substantially the full term of the asset or liability.

 

Level 3 — Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date. Level 3 assets and liabilities include cost method investments, goodwill, intangible assets, and property, plant, and equipment, which are measured at fair value using a discounted cash flow approach when they are impaired. Quantitative information for Level 3 assets and liabilities reviewed at each reporting period includes indicators of significant deterioration in the earnings performance, credit rating, asset quality, business prospects of the investee, and financial indicators of the investee’s ability to continue as a going concern.

 

The Company’s fair value assets and liabilities for the years ended September 30, 2025, and 2024, are as follows.

 

   Quoted Prices  Significant       
   in Active  Other   Significant   Balance 
   Markets for  Observable   Unobservable   as of 
   Identical Assets  Inputs   Inputs   September 30, 
   (Level 1)  (Level 2)   (Level 3)   2025 
Assets                            
Digital assets - SOL  1,158,238   -    -    1,158,238 
Liabilities                  
Warrant liabilities  833,854   7,901,343    -    8,735,197 

 

   Quoted Prices  Significant       
   in Active  Other   Significant   Balance 
   Markets for  Observable   Unobservable   as of 
   Identical Assets  Inputs   Inputs   September 30, 
   (Level 1)  (Level 2)   (Level 3)   2024 
Liabilities                    
Warrant liabilities  $ 4,160,658  $1,038,778   $                 -   $5,199,436 

 

Digital Assets – SOL

 

On July 29, 2025, the Company invested $998,642 in Solana (SOL) and staked our holdings. SOL is a fungible crypto asset that meets the criteria for an intangible asset, resides on a distributed ledger, is secured by cryptography, and does not grant enforceable rights to underlying goods or services to its holder. The digital assets were measured at fair value after acquisition, with changes reported in net income. Staking earnings are recorded as revenue.

 

Digital Asset staking allows holders of specific cryptocurrencies to earn rewards for helping to validate blocks of transaction data as it is submitted to the blockchain network.

 

The staking process serves two key purposes:

 

  ● Ensures the accuracy of new information as it is added to the blockchain.
  ● Helps to secure the underlying blockchain network against the majority of the network taking over control, known as a 51% attack.

 

The staking process uses incentives and penalties governed by computer-based rules to encourage honest participation in the network. Stakers who act within the rules of the protocol receive rewards for their contributions, while those who act dishonestly can face penalties, such as losing their staked cryptocurrency through a process called slashing. Staking rewards are distributed as newly minted cryptocurrency units, oftentimes at a proportionate rate to the amount a person stakes. With some proof-of-stake blockchains, depositing more assets in a staking smart contract increases the chance of being selected to validate blocks. This mechanism is based on the assumption that those with more “skin in the game” are more likely to act within the best interests of the network because they have more to lose financially if their assets are slashed (confiscated by the network). However, to avoid favoring wealthier participants, some protocols incorporate randomness to ensure everyone, including those with smaller stakes, has a chance to earn rewards.

 

Staking incentives, in the form of additional SOL, are recognized on the date received at the fair market value on that date. There are no lockups or restrictions on the Company’s digital asset holdings due to staking.

 

 

Cemtrex Inc. and Subsidiaries

 

The Company’s digital assets for the year ended September 30, 2025, is as follows.

 

   Units   Cost per Unit   Cost Basis   Fair Value 
Balance, September 30, 2025                    
SOL   5,549   $181.70   $1,008,229   $1,158,238 

 

The following table is a summary of our digital assets for the year ended September 30, 2025.

 

   For the year 
   ended 
  

September 30,

2025

 
     
Fair Value, September 30, 2024  $- 
Cash purchase   998,462 
Receipt of SOL from staking   12,522 
Non-cash transaction fees   (2,755)
Unrealized gain   150,009 
Fair Value, September 30, 2025  $1,158,238 

 

Warrant Liabilities

 

The fair value of the Series B Warrants is estimated on the balance sheet date using the Black-Scholes model, which requires inputs based on certain subjective assumptions, including the fair value of the Company’s common shares, expected share price volatility, the expected term of the award, the risk-free interest rate for a period that approximates the expected term of the option, and the Company’s expected dividend yield.

 

At September 30, 2025, and 2024, the following inputs were used in the Black-Scholes model.

 

   September 30, 2025  September 30, 2024  
Expected term  3.59 Years  4.59 Years  
Risk-free interest rate  3.61%  3.60%  
Expected volatility  178.98%  134.00%  
Expected dividend yield  0%  0%  

 

A summary of the warrant liabilities activity for the years ended September 30, 2025, and 2024, is as follows.

 

   Series A Warrants   Series B Warrants   Prefunded Warrants   Total 
Warrant Liabilities at September 30, 2023  $-   $-   $-   $- 
Warrants Issued   11,242,940    2,942,711    3,105,170    17,290,821 
Warrants Exercised   (1,060,113)   -    (3,190,320)   (4,250,433)
Fair market revaluation   (6,022,169)   (1,903,933)   85,150    (7,840,952)
Warrant Liabilities at September 30, 2024  $4,160,658   $1,038,778   $-   $5,199,436 
Warrants Issued   -    -    -    - 
Warrants Exercised   (5,669,909)   (1,727,742)   -    (7,397,651)
Fair market revaluation   2,343,105    8,590,307    -    10,933,412 
Warrant Liabilities at September 30, 2025  $833,854   $7,901,343   $-   $8,735,197