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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934

 

For the quarterly period ended June 30, 2021

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934

 

For the transition period from ___________to ____________

 

Commission File Number 001-37464

 

 

CEMTREX, INC.

(Exact name of registrant as specified in its charter)

 

Delaware   30-0399914

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

276 Greenpoint Ave, Suite 208, Brooklyn, NY   11222
(Address of principal executive offices)   (Zip Code)

 

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

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading symbol   Name of each exchange on which registered
Common Stock   CETX   Nasdaq Capital Market
Series 1 Preferred Stock   CETXP   Nasdaq Capital Market
Series 1 Warrants   CETXW   Nasdaq Capital Market

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

Yes ☐ No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

 

Yes ☐ No

 

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.

 

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 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

☐ Yes ☒ No

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of August 13, 2021, the issuer had 20,782,194 shares of common stock issued and outstanding.

 

 

 

 

 

 

Table of Contents

 

CEMTREX, INC. AND SUBSIDIARIES

 

INDEX

 

    Page
     
PART I. FINANCIAL INFORMATION  
     
Item 1. Financial Statements  
     
  Condensed Consolidated Balance Sheets as of June 30, 2021 (Unaudited) and September 30, 2020 (Restated) 3
     
  Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss) for the three months ended June 30, 2021 (Unaudited) and June 30, 2020 (Restated) 4
     
  Consolidated Statement of Stockholders’ Equity for the nine months ended June 30, 2021 (Unaudited)/(Restated) 5
     
  Consolidated Statement of Stockholders’ Equity for the nine months ended June 30, 2020 (Unaudited)/(Restated) 6
     
  Condensed Consolidated Statements of Cash Flow for the nine months ended June 30, 2021 (Unaudited) and June 30, 2020 (Restated) 7
     
  Notes to Unaudited Condensed Consolidated Financial Statements 9
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 23
     
Item 4. Controls and Procedures 28
     
PART II. OTHER INFORMATION  
     
Item 1. Legal Proceedings 29
     
Item 1A Risk Factors 29
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 29
     
Item 6. Exhibits 30
     
SIGNATURES 31

 

2

 

 

Part I. Financial Information

 

Item 1. Financial Statements

 

Cemtrex, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

 

   (UNAUDITED)   (Restated) 
   June 30,   September 30, 
   2021   2020 
Assets          
Current assets          
Cash and equivalents  $12,879,278   $19,490,061 
Restricted cash   1,690,873    1,582,798 
Short-term investments   452,175    887,746 
Trade receivables, net   5,234,216    6,686,797 
Trade receivables - related party   1,505,789    1,432,209 
Inventory –net of allowance for inventory obsolescence   8,669,397    6,793,806 
Prepaid expenses and other assets   2,164,367    1,188,317 
Total current assets   32,596,095    38,061,734 
           
Property and equipment, net   7,236,755    6,961,751 
Right-of-use assets   3,098,523    2,728,380 
Assets held for sale   8,323,321    8,323,321 
Goodwill   5,886,096    4,370,894 
Other   1,094,429    744,207 
Total Assets  $58,235,219   $61,190,287 
           
Liabilities & Stockholders’ Equity (Deficit)          
Current liabilities          
Accounts payable  $2,888,144   $2,857,817 
Short-term liabilities   6,381,047    7,034,510 
Lease liabilities - short-term   840,016    721,036 
Deposits from customers   39,227    29,660 
Accrued expenses   2,476,812    2,392,487 
Deferred revenue   1,794,187    1,651,784 
Accrued income taxes   331    89,318 
Total current liabilities   14,419,764    14,776,612 
           
Long-term liabilities          
Loans payable to bank   1,046,504    1,871,201 
Long-term lease liabilities   2,261,148    2,027,406 
Notes payable   3,079,743    6,029,999 
Mortgage payable   2,282,409    2,355,542 
Other long-term liabilities   1,078,752    1,063,733 
Paycheck Protection Program Loans   2,871,161    2,169,437 
Deferred Revenue - long-term   449,563    467,329 
Total long-term liabilities   13,069,280    15,984,647 
           
Total liabilities   27,489,044    30,761,259 
           
Commitments and contingencies   -    - 
           
Shareholders’ equity          
Preferred stock , $0.001 par value, 10,000,000 shares authorized,          
Series 1, 3,000,000 shares authorized, 1,885,151 shares issued and outstanding as of June 30, 2021 and 2,156,784 shares issued and outstanding as of September 30, 2020 (liquidation value of $10 per share)   1,885    2,157 
Series A, 1,000,000 shares authorized, zero shares issued and outstanding at June 30, 2021 and 1,000,000 shares issued and outstanding at September 30, 2020   -    1,000 
Series C, 100,000 shares authorized, 50,000 shares issued and outstanding at June 30, 2021 and 100,000 shares issued and outstanding at September 30, 2020   50    100 
Common stock, $0.001 par value, 50,000,000 shares authorized, 18,711,463 shares issued and outstanding at June 30, 2021 and 17,622,539 shares issued and outstanding at September 30, 2020   18,711    17,623 
Additional paid-in capital   58,846,576    60,221,766 
Retained earnings (accumulated deficit)   (30,660,550)   (32,520,084)
Treasury stock at cost   (148,291)   (148,291)
Accumulated other comprehensive income (loss)   1,624,673    1,777,112 
Total Cemtrex stockholders’ equity   29,683,054    29,351,383 
Non-controlling interest   1,063,121    1,077,645 
Total liabilities and shareholders’ equity  $58,235,219   $61,190,287 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

3

 

 

Cemtrex, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss)

 

             
   For the three months ended  For the nine months ended 
   June 30, 2021   June 30, 2020   June 30, 2021   June 30, 2020 
Revenues   10,326,431    8,440,867    28,422,892    32,774,797 
Cost of revenues   6,198,715    5,161,015    16,360,822    18,800,355 
Gross profit   4,127,716    3,279,852    12,062,070    13,974,442 
                     
Operating expenses                    
General and administrative   5,670,019    5,347,718    16,337,200    15,380,199 
Research and development   757,966    331,936    2,033,688    1,113,455 
Total operating expenses   6,427,985    5,679,654    18,370,888    16,493,654 
Operating income/(loss)   (2,300,269)   (2,399,802)   (6,308,818)   (2,519,212)
                     
Other income/(expense)                    
Other income/(expense)   3,901,658    158,134    6,532,590    830,251 
Settlement Agreement - Related Party   -    -    3,674,165    - 
Interest Expense   (433,009)   (1,982,101)   (1,891,026)   (3,812,921)
Total other income/(expense), net   3,468,649    (1,823,967)   8,315,729    (2,982,670)
                     
Net loss before income taxes   1,168,380    (4,223,769)   2,006,911    (5,501,882)
Income tax benefit/(expense)   (40,759)   (7,658)   (168,190)   (197,201)
Net income/(loss)   1,127,621    (4,231,427)   1,838,721    (5,699,083)
                     
Less income in noncontrolling interest   29,608    (35,751)   (20,813)   151,312 
Net income/(loss) attributable to Cemtrex, Inc. shareholders  $1,098,013   $(4,195,676)  $1,859,534   $(5,850,395)
                     
Net income/(loss)  $1,127,621   $(4,231,427)  $1,838,721   $(5,699,083)
Other comprehensive income/(loss)                    
Foreign currency translation gain/(loss)   (193,554)   154,443    (234,045)   161,460 
Defined benefit plan actuarial gain/(loss)   -    -    87,895    - 
Comprehensive income/(loss)   934,067    (4,076,984)   1,692,571    (5,537,623)
Less comprehensive income/(loss) attributable to noncontrolling interest   (35,731)   41,266    14,524    (118,623)
                     
Comprehensive income/(loss) attributable to Cemtrex, Inc. shareholders  $969,798   $(4,118,250)  $1,678,047   $(5,419,000)
                     
Income/(loss) Per Share-Basic  $0.06   $(0.38)  $0.10   $(0.82)
Income/(loss) Per Share-Diluted  $0.06   $(0.38)  $0.10   $(0.82)
                     
Weighted Average Number of Shares-Basic   18,711,463    10,933,926    18,368,274    7,161,785 
Weighted Average Number of Shares-Diluted   18,711,463    10,933,926    18,368,274    7,161,785 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

4

 

 

Cemtrex, Inc. and Subsidiaries

Condensed Consolidated Statement of Stockholders’ Equity

(Unaudited/Restated)

 

   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Deficit)   At cost   Income(loss)   Equity   interest 
   Preferred Stock Series 1  

Preferred Stock

Series A

   Preferred Stock Series C   Common Stock         Retained        Accumulated         
   Par Value $0.001   Par Value $0.001   Par Value $0.001   Par Value $0.01   Additional   Earnings   Treasury    other   Cemtrex
   Non- 
   Number of       Number of       Number of       Number of      

Paid-in

  

(Accumulated

  

Stock,

  

Comprehensive

   Stockholders’   controlling 
   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Deficit)   At cost   Income(loss)   Equity   interest 
Balance at September 30, 2020, as reported   2,156,784   $2,157    1,000,000   $1,000    100,000   $100    17,622,539   $17,623   $63,313,336   $(33,172,690)  $(148,291)  $853,643   $ 30,866,878   $1,077,645 
Adjustment                                           (3,091,570)   652,606         923,469    (1,515,495)     
Balance at September 30, 2020, as restated   2,156,784   $2,157    1,000,000   $1,000    100,000   $100    17,622,539   $17,623   $60,221,766   $(32,520,084)  $(148,291)  $1,777,112   $29,351,383   $1,077,645 
Foreign currency translation gain/(loss)                                                          37,864    37,864      
                                                                       
Share-based compensation             -     -     -     -               16,071         -          16,071      
Shares issued to pay notes payable                                 345,638    345    407,507                   407,852      
Dividends paid in Series 1 preferred shares   108,169    108                                  (108)                  -      
Net income/(loss) attributable to noncontrolling interest                                                               -    (40,247)
Comprehensive income/(loss) attributable to noncontrolling interest                                                               -    9,617 
Net loss                                                (1,692,611)             (1,692,611)     
Balance at December 31, 2020   2,264,953   $2,265    1,000,000   $1,000    100,000   $100    17,968,177   $17,968   $60,645,236   $(34,212,695)  $(148,291)  $1,814,976   $28,120,559   $1,047,015 
Foreign currency translation gain/(loss)                                                          (78,521)   (78,521)     
Defined benefit plan actuarial gain/(loss)                                                          87,895    87,895      
Share-based compensation                                           49,246                   49,246      
Shares issued to pay notes payable                                 743,286    743    1,298,733         -          1,299,476      
Income in noncontrolling interest                                                                    (19,625)
Shares and options surrendered in settelment agreement   (469,949)   (470)   (1,000,000.00)   (1,000)   (50,000)   (50)             (3,672,645)                  (3,674,165)     
Net income                                                2,454,132              2,454,132      
Balance at March 31, 2021   1,795,004   $1,795    -   $-    50,000   $50    18,711,463   $18,711   $58,320,570   $(31,758,563)  $(148,291)  $1,824,350   $28,258,622   $1,027,390 
Foreign currency translation gain/(loss)                                                          (199,677)   (199,677)     
Dividends paid in Series 1 preferred shares   90,147    90    -     -     -     -     -     -     (90)        -          -      
Share-based compensation                                           45,587                   45,587      
Shares granted to pay notes payable                                           480,509                   480,509      
Income in noncontrolling interest                                                               -    35,731 
                                                                -      
Net income                                                1,098,013              1,098,013      
Balance at June 30, 2021   1,885,151   $1,885    -   $-    50,000   $50    18,711,463   $18,711   $58,846,576   $(30,660,550)  $(148,291)  $1,624,673   $29,683,054   $1,063,121 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

5

 

 

Cemtrex, Inc. and Subsidiaries

Condensed Consolidated Statement of Stockholders’ Equity (Continued)

(Unaudited/Restated)

 

   Preferred Stock Series 1   Preferred Stock Series A   Preferred Stock Series C   Common Stock Par                       
   Par Value $0.001   Par Value $0.001   Par Value $0.001   Value $0.01      Retained      Accumulated       
   Number of       Number of       Number of       Number of       Additional
Paid-in
   Earnings
(Accumulated
   Treasury
Stock,
   other
Comprehensive
   Cemtrex
Stockholders’
   Non-
controlling
 
   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Deficit)   At cost   Income(loss)   Equity   interest 
Balance at September 30, 2019   2,110,718   $2,111    1,000,000   $1,000    -   $-    3,962,790   $3,963   $39,337,117   $(23,676,887)  $-   $1,791,153   $   17,458,457   $885,874 
Foreign currency translation gain                                                          582,156    582,156      
Share-based compensation                       100,000    100              119,004                   119,104      
Shares issued to pay accounts payable                                 18,358    18    27,520                   27,538      
Shares sold in Securities Purchase Agreements, net of offering costs                                 338,393    338    359,712                   360,050      
Stock issued to pay notes payable                                 105,042    105    130,147                   130,252      
Dividends paid in Series 1 preferred shares   105,965    106    -     -                         (106)        -          -      
Net income/(loss) attributable to noncontrolling interest                                                               -    194,911 
Comprehensive income/(loss) attributable to noncontrolling interest                                                               -    (18,429)
Net loss                                                (55,618)             (55,618)     
Balance at December 31, 2019   2,216,683   $2,217    1,000,000   $1,000    100,000   $100    4,424,583   $4,424   $39,973,394   $(23,732,505)  $-   $2,373,309   $18,621,939   $1,062,356 
                                                                       
Foreign currency translation gain                                                          (748,929)   (748,929)     
Share-based compensation                                           24,104                   24,104      
Shares sold in Securities Purchase Agreements, net of offering costs   -     -     -     -     -     -     847,000    847    1,160,253                   1,161,100      
Stock issued to pay notes payable                                 2,518,045    2,519    3,499,747                   3,502,266      
Shares issued for services                                 150,000    150    170,850                   171,000      
Purchase of treasury stock                                                     (190,483)        (190,483)     
Noncontrolling interest                                                               -    (16,593)
Net loss                                                (1,599,101)             (1,599,101)     
Balance at March 31, 2020   2,216,683   $2,217    1,000,000   $1,000    100,000   $100    7,939,628   $7,940   $44,828,348   $(25,331,606)  $(190,483)  $1,624,380   $20,941,896   $1,045,763 
Foreign currency translation gain                                                          154,443    154,443      
Share-based compensation                                           24,104                   24,104      
Shares sold in Securities Purchase Agreements, net of offering costs                                 5,458,479    5,459    10,095,311                   10,100,770      
Stock issued to pay notes payable   -     -     -     -     -     -     2,595,608    2,595    3,298,811         -          3,301,406      
Shares issued for services                                 270,000    270    229,730                   230,000      
Noncontrolling interest                                                               -    (41,266)
Net loss