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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 March 31, 2024

 

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.)

 

135 Fell Ct. Hauppauge, NY   11788
(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

 

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 May 10, 2024, the issuer had 10,652,287 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 March 31, 2024 (Unaudited) and September 30, 2023 3
     
  Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2024 and 2023 (Unaudited) 4
     
  Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended March 31, 2024 and 2023 (Unaudited) 5
     
  Condensed Consolidated Statement of Stockholders’ Equity for the three and six months ended March 31, 2024 (Unaudited) 6
     
  Condensed Consolidated Statement of Stockholders’ Equity for the three and six months ended March 31, 2023 (Unaudited) 7
     
  Condensed Consolidated Statements of Cash Flow for the six months ended March 31, 2024 and 2023 (Unaudited) 8
     
  Notes to Unaudited Condensed Consolidated Financial Statements 10
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 27
     
Item 4. Controls and Procedures 32
     
PART II. OTHER INFORMATION  
     
Item 1. Legal Proceedings 33
     
Item 1A Risk Factors 33
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 33
     
Item 3. Defaults Upon Senior Securities 33
     
Item 4. Mine Safety Disclosures 33
     
Item 5. Other Information 33
     
Item 6. Exhibits 34
     
SIGNATURES 35

 

 2 
 

 

Part I. Financial Information

 

Item 1. Financial Statements

Cemtrex, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

 

   (Unaudited)     
   March 31,   September 30, 
   2024   2023 
Assets          
Current assets          
Cash and cash equivalents  $2,916,120   $5,329,910 
Restricted cash   1,172,416    1,019,652 
Short-term investments   13,853    13,663 
Trade receivables, net   11,535,880    9,209,695 
Trade receivables, net - related party   1,479,703    1,143,342 
Inventory, net   7,397,747    8,739,219 
Contract assets, net   1,979,679    1,739,201 
Prepaid expenses and other current assets   1,910,415    2,098,359 
Total current assets   28,405,813    29,293,041 
           
Property and equipment, net   8,902,051    9,218,701 
Right-of-use operating lease assets   2,193,011    2,287,623 
Royalties receivable, net - related party   440,049    674,893 
Note receivable, net - related party   761,585    761,585 
Goodwill   4,381,891    4,381,891 
Other   2,161,862    1,836,009 
Total Assets  $47,246,262   $48,453,743 
           
Liabilities & Stockholders’ Equity          
Current liabilities          
Accounts payable  $5,741,091   $6,196,406 
Accounts payable - related party   9,214    68,509 
Sales tax payable   37,487    35,829 
Revolving line of credit   4,019,234    - 
Current maturities of long-term liabilities   914,170    14,507,711 
Operating lease liabilities - short-term   792,141    741,487 
Deposits from customers   207,708    57,434 
Accrued expenses   2,676,079    2,784,390 
Contract liabilities   1,899,409    980,319 
Deferred revenue   1,404,608    1,583,406 
Accrued income taxes   404,288    388,627 
Total current liabilities   18,105,429    27,344,118 
Long-term liabilities          
Long-term debt   21,553,920    9,929,348 
Long-term operating lease liabilities   1,462,545    1,607,202 
Other long-term liabilities   317,093    501,354 
Deferred Revenue - long-term   654,617    727,928 
Total long-term liabilities   23,988,175    12,765,832 
Total liabilities   42,093,604    40,109,950 
           
Commitments and contingencies   -    - 
           
Stockholders’ equity          
Preferred stock , $0.001 par value, 10,000,000 shares authorized, Series 1, 3,000,000 shares authorized, 2,408,053 shares issued and 2,272,002 shares outstanding as of March 31, 2024 and 2,293,016 shares issued and 2,228,916 shares outstanding as of September 30, 2023 (liquidation value of $10 per share)   2,408    2,293 
Series C, 100,000 shares authorized, 50,000 shares issued and outstanding at March 31, 2024 and September 30, 2023   50    50 
Common stock, $0.001 par value, 50,000,000 shares authorized, 1,055,636 shares issued and outstanding at March 31, 2024 and 1,045,783 shares issued and outstanding at September 30, 2023   1,056    1,046 
Additional paid-in capital   68,936,696    68,881,705 
Accumulated deficit   (66,806,600)   (64,125,895)
Treasury stock, 136,051 shares of Series 1 Preferred Stock at March 31, 2024 and 64,100 shares of Series 1 Preferred Stock at September 30, 2023   (217,996)   (148,291)
Accumulated other comprehensive income   2,773,784    3,076,706 
Total Cemtrex stockholders’ equity   4,689,398    7,687,614 
Non-controlling interest   463,260    656,179 
Total liabilities and stockholders’ equity  $47,246,262   $48,453,743 

 

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

 

 3 
 

 

Cemtrex, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

 

   March 31, 2024   March 31, 2023   March 31, 2024   March 31, 2023 
   For the three months ended   For the six months ended 
   March 31, 2024   March 31, 2023   March 31, 2024   March 31, 2023 
                 
Revenues  $17,159,595   $16,073,397   $34,037,761   $28,043,639 
Cost of revenues   10,220,179    8,734,916    20,015,946    15,662,543 
Gross profit   6,939,416    7,338,481    14,021,815    12,381,096 
Operating expenses                    
General and administrative   7,020,157    5,318,267    13,992,123    10,482,605 
Research and development   951,400    1,615,341    1,800,205    3,445,054 
Total operating expenses   7,971,557    6,933,608    15,792,328    13,927,659 
Operating (loss)/income   (1,032,141)   404,873    (1,770,513)   (1,546,563)
Other (expense)/income                    
Other income/(expense), net   144,765    376,504    223,176    359,421 
Interest expense   (592,804)   (1,335,138)   (1,176,487)   (2,463,372)
Total other (expense)/income, net   (448,039)   (958,634)   (953,311)   (2,103,951)
Net loss before income taxes   (1,480,180)   (553,761)   (2,723,824)   (3,650,514)
Income tax expense   (100,004)   -    (170,755)   - 
Loss from Continuing operations   (1,580,184)   (553,761)   (2,894,579)   (3,650,514)
Income/(loss) from discontinued operations, net of tax   10,463    14,232    20,955    (3,225,389)
Net loss   (1,569,721)   (539,529)   (2,873,624)   (6,875,903)
Less (loss)/income in noncontrolling interest   (96,510)   55,265    (192,919)   (3,898)
Net loss attributable to Cemtrex, Inc. stockholders  $(1,473,211)  $(594,794)  $(2,680,705)  $(6,872,005)
(Loss)/income per share - Basic & Diluted                    
Continuing Operations  $(1.46)  $(0.82)  $(2.62)  $(4.70)
Discontinued Operations  $0.01   $0.02   $0.02   $(4.09)
Weighted Average Number of Shares-Basic & Diluted   1,055,636    815,498    1,051,630    788,265 

 

 4 
 

 

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)

 

   March 31, 2024   March 31, 2023   March 31, 2024   March 31, 2023 
   For the three months ended   For the six months ended 
   March 31, 2024   March 31, 2023   March 31, 2024   March 31, 2023 
Other comprehensive loss                    
Net loss  $(1,569,721)  $(539,529)  $(2,873,624)  $(6,875,903)
Foreign currency translation loss   (530,686)   (317,218)   (302,922)   (93,649)
Comprehensive loss   (2,100,407)   (856,747)   (3,176,546)   (6,969,552)
Less comprehensive income/(loss) attributable to noncontrolling interest   96,510    (55,265)   192,919    3,898 
Comprehensive loss attributable to Cemtrex, Inc. stockholders  $(2,196,917)  $(801,482)  $(3,369,465)  $(6,973,450)

 

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

(Unaudited)

 

   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Deficit   Series 1 Preferred Stock   Income   Equity   interest 
                                     
   Preferred Stock
Series 1
   Preferred Stock
Series C
   Common Stock Par                         
   Par Value $0.001   Par Value $0.001   Value $0.001           Treasury   Accumulated         
   Number       Number       Number       Additional       Stock,   other   Cemtrex   Non- 
   of       of       of       Paid-in   Accumulated   136,051 shares of   Comprehensive   Stockholders’   controlling 
   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Deficit   Series 1 Preferred Stock   Income   Equity   interest 
Balance at September 30, 2023   2,293,016   $2,293            50,000   $50    1,045,783   $1,046   $68,881,705   $(64,125,895)  $(148,291)  $3,076,706   $    7,687,614   $656,179 
Foreign currency translation gain   -                   -          -     -          227,764    227,764    -  
Share-based compensation                                 7,558         -          7,558      
Dividends paid in Series 1 preferred shares   115,037    115                      (115)   -          -     -    -  
Loss attributable to noncontrolling interest   -                                       -          -    (96,409)
Shares issued to pay for services             -          9,853    10    39,990                   40,000      
Net loss                -                    (1,207,494)             (1,207,494)     
Balance at December 31, 2023   2,408,053   $2,408    50,000   $50    1,055,636   $1,056   $68,929,138   $(65,333,389)  $(148,291)  $3,304,470   $6,755,442   $559,770 
Foreign currency translation loss        -          -          -          -     -    $(530,686)   (530,686)   -  
Share-based compensation                                $7,558                   7,558      
Purchase of treasury stock                                       $(69,705)        (69,705)     
Loss attributable to noncontrolling interest        -          -                    -     -     -     -   $(96,510)
Shares issued to pay for services   -          -                    -               -     -    -  
Net loss                  -                   $(1,473,211)             (1,473,211)     
Balance at March 31, 2024   2,408,053   $2,408    50,000   $50    1,055,636   $1,056   $68,936,696   $(66,806,600)  $(217,996)  $2,773,784   $4,689,398   $463,260 

 

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

 

 6 
 

 

Cemtrex, Inc. and Subsidiaries

Condensed Consolidated Statement of Stockholders’ Equity (Continued)

(Unaudited)

 

   Preferred Stock
Series 1
   Preferred Stock
Series C
   Common Stock Par                         
   Par Value $0.001   Par Value $0.001   Value $0.001           Treasury    Accumulated         
   Number       Number       Number       Additional       Stock,   other   Cemtrex   Non- 
   of       of       of       Paid-in   Accumulated   64,100 shares of   Comprehensive   Stockholders’   controlling 
   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Deficit   Series 1 Preferred Stock   Income   Equity   interest 
Balance at September 30, 2022   2,079,122   $2,079          50,000   $50        754,711   $755   $66,641,698   $(54,929,020)  $ (148,291)  $2,377,525   $  13,944,796   $692,742 
Foreign currency translation gain       -         -               -               223,569    223,569      
Share-based compensation   -                    -          39,842    -               39,842    -  
Shares issued to pay notes payable       -     --     -     39,016    39    232,106         -     -     232,145      
Dividends paid in Series 1 preferred shares   104,341    104                       (104)   -          -     -    -  
Loss attributable to noncontrolling interest       -         -     -          -          -          -    (59,163)
Net loss                                      (6,277,211)             (6,277,211)     
Balance at December 31, 2022   2,183,463   $2,183    50,000   $50    793,727   $794   $66,913,542   $(61,206,231)  $(148,291)  $2,601,094   $8,163,141   $633,579 
Foreign currency translation loss   --          -          -     -     -     -         $(317,218)   (317,218)   -  
Share-based compensation                                 26,735                   26,735      
Additional rounding shares issued for reverse stock split       -         -     19,314    19    (19)   -     -     -     -    -  
Income attributable to noncontrolling interest   -                             -                    -   $55,265 
Shares issued to pay for services                       15,529    15    102,485         -     -     102,500      
Net loss                                     $(594,794)            $(594,794)     
Balance at March 31, 2023   2,183,463   $2,183    50,000   $50    828,570   $828   $67,042,743   $(61,801,025)  $(148,291)  $2,283,876   $7,380,364   $688,844 

 

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

 

 7 
 

 

Cemtrex, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

   2024   2023 
   For the six months ended 
   March 31,  
   2024   2023 
Cash Flows from Operating Activities        
         
Net loss  $(2,873,624)  $(6,875,903)
           
Adjustments to reconcile net loss to net cash used by operating activities          
Depreciation and amortization   673,190    448,388 
Gain on disposal of property  and equipment   -    64,908 
Noncash lease expense   389,125    420,411 
Bad debt expense   35,213    (1,543)
Share-based compensation   15,116    66,577 
Income tax expense   

(96,750

)   

-

 
Interest expense paid in equity shares   -    32,145 
Accounts payable paid in equity shares   40,000    102,500 
Accrued interest on notes payable   657,355    1,290,615 
Non-cash royalty income   (26,564)   - 
Gain/(loss) on marketable securities   (190)   58 
Amortization of original issue discounts on notes payable   -    883,467 
Amortization of loan origination costs   36,267    - 
           
Changes in operating assets and liabilities net of effects from acquisition of subsidiaries:          
Trade receivables   (2,317,074)   (1,870,729)
Trade receivables - related party   (178,980)   (408,464)
Inventory   1,341,472    (73,209)
Contract assets   (240,478)   (12,597)
Prepaid expenses and other current assets   483,043    (141,562)
Other assets   (225,853)   (185,165)
Accounts payable   (455,315)   256,584 
Accounts payable - related party   408    (15,765)
Sales tax payable   1,658    90,204 
Operating lease liabilities   (388,516)   (356,176)
Deposits from customers   150,274    1,618 
Accrued expenses   (108,311)   701,414 
Contract liabilities   919,090    554,966 
Deferred revenue   (252,109)   (86,106)
Income taxes payable   (146,422)   (37,698)
Other liabilities   (184,261)   (231,998)
Net cash used by operating activities - continuing operations   (2,752,236)   (5,383,060)
Net cash provided by operating activities - discontinued operations   -    2,488,144 
Net cash used by operating activities   (2,752,236)   (2,894,916)
           
Cash Flows from Investing Activities          
Purchase of property and equipment   (355,308)   (263,732)
Proceeds from sale of property and equipment   -    11,026 
Investment in MasterpieceVR   (100,000)   - 
Net cash used by investing activities   (455,308)   (252,706)
           
Cash Flows from Financing Activities          
Proceeds on revolving line of credit   19,360,672    - 
Payments on revolving line of credit   (15,413,971)   - 
Payments on debt   (2,429,743)   (544,370)
Payments on Paycheck Protection Program Loans   (20,242)   (10,033)
Proceeds on bank loans   28,331    - 
Payments on bank loans   (204,802)   (365,724)
Purchases of treasury stock   (69,705)     
Net cash provided by/(used by) financing activities   1,250,540    (920,127)
           
Effect of currency translation   (304,022)   (126,593)
Net decrease in cash, cash equivalents, and restricted cash   (1,957,004)   (4,067,749)
Cash, cash equivalents, and restricted cash at beginning of period   6,349,562    11,473,676 
Cash, cash equivalents, and restricted cash at end of period  $4,088,536   $7,279,334 
           
Balance Sheet Accounts Included in Cash, Cash Equivalents, and Restricted Cash          
Cash and cash equivalents  $2,916,120   $6,634,037 
Restricted cash   1,172,416    645,297