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, 2024

☐ 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

$Z:\2024 OPERATIONS\EDGAR\08 AUGUST\Cemtrex Inc\08-09-2024\Form 10-Q\Draft\Production$

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 August 9, 2024, the issuer had 17,437,456 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, 2024 (Unaudited) and September 30, 2023	3

	Condensed Consolidated Statements of Operations for the three and nine months ended June 30, 2024 and 2023 (Unaudited)	4

	Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended June 30, 2024 and 2023 (Unaudited)	4

	Condensed Consolidated Statement of Stockholders’ Equity for the three and nine months ended June 30, 2024 (Unaudited)	5

	Condensed Consolidated Statement of Stockholders’ Equity for the three and nine months ended June 30, 2023 (Unaudited)	6

	Condensed Consolidated Statements of Cash Flow for the nine months ended June 30, 2024 and 2023 (Unaudited)	7

	Notes to Unaudited Condensed Consolidated Financial Statements	9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		30

Item 4. Controls and Procedures		35

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		36

Item 1A Risk Factors		36

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		36

Item 3. Defaults Upon Senior Securities		36

Item 4. Mine Safety Disclosures		36

Item 5. Other Information		36

Item 6. Exhibits		37

SIGNATURES		38

Part I. Financial Information

Item 1. Financial Statements

Cemtrex, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

	(Unaudited)
	June 30,			September 30,
		2024			2023
Assets
Current assets
Cash and cash equivalents	$	6,468,197		$	5,329,910
Restricted cash		1,152,028			1,019,652
Trade receivables, net		7,800,883			9,209,695
Trade receivables, net - related party		755,198			1,143,342
Trade receivables, net		755,198			1,143,342
Inventory, net		7,531,955			8,739,219
Contract assets, net		1,115,060			1,739,201
Prepaid expenses and other current assets		1,582,026			2,112,022
Total current assets		26,405,347			29,293,041

Property and equipment, net		8,583,113			9,218,701
Right-of-use operating lease assets		1,936,441			2,287,623
Royalties receivable, net - related party		453,330			674,893
Note receivable, net - related party		-			761,585
Goodwill		4,238,822			4,381,891
Other		2,210,090			1,836,009
Total Assets	$	43,827,143		$	48,453,743

Liabilities & Stockholders’ Equity
Current liabilities
Accounts payable	$	3,612,634		$	6,196,406
Accounts payable - related party		3,797			68,509
Accounts payable		3,797			68,509
Sales tax payable		37,865			35,829
Revolving line of credit		2,730,325			-
Current maturities of long-term liabilities		661,271			14,507,711
Operating lease liabilities - short-term		780,423			741,487
Deposits from customers		246,765			57,434
Accrued expenses		2,347,458			2,784,390
Contract liabilities		1,901,606			980,319
Deferred revenue		1,284,688			1,583,406
Accrued income taxes		398,054			388,627
Total current liabilities		14,004,886			27,344,118
Long-term liabilities
Long-term debt		16,893,184			9,929,348
Long-term operating lease liabilities		1,216,184			1,607,202
Other long-term liabilities		299,988			501,354
Deferred Revenue - long-term		631,581			727,928
Warrant liabilities		10,428,397			-
Total long-term liabilities		29,469,334			12,765,832
Total liabilities		43,474,220			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, 2,456,827 shares issued and 2,392,727 shares outstanding as of June 30, 2024 and 2,293,016 shares issued and 2,228,916 shares outstanding as of September 30, 2023 (liquidation value of $10 per share)		2,457			2,293
Series C, 100,000 shares authorized, 50,000 shares issued and outstanding at June 30, 2024 and September 30, 2023		50			50
Preferred stock value
Common stock, $0.001 par value, 50,000,000 shares authorized,16,352,270 shares issued and outstanding at June 30, 2024 and 1,045,783 shares issued and outstanding at September 30, 2023		16,353			1,046
Additional paid-in capital		73,002,738			68,881,705
Accumulated deficit		(75,787,626	)		(64,125,895	)
Treasury stock, 64,100 shares of Series 1 Preferred Stock at June 30, 2024, and September 30, 2023		(148,291	)		(148,291	)
Accumulated other comprehensive income		2,962,275			3,076,706
Total Cemtrex stockholders’ equity		47,956			7,687,614
Non-controlling interest		304,967			656,179
Total liabilities and stockholders’ equity	$	43,827,143		$	48,453,743

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

Cemtrex, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

	June 30, 2024			June 30, 2023			June 30, 2024			June 30, 2023
	For the three months ended						For the nine months ended
	June 30, 2024			June 30, 2023			June 30, 2024			June 30, 2023

Revenues	$	14,686,398		$	14,730,140		$	48,724,159		$	42,773,779
Cost of revenues		8,809,251			8,249,497			28,825,197			23,914,249
Gross profit		5,877,147			6,480,643			19,898,962			18,859,530
Operating expenses
General and administrative		8,192,180			5,376,960			22,184,303			16,456,602
Research and development		864,483			1,049,909			2,664,688			3,895,717
Total operating expenses		9,056,663			6,426,869			24,848,991			20,352,319
Operating (loss)/income		(3,179,516	)		53,774			(4,950,029	)		(1,492,789	)
Other (expense)/income
Other (expense)/income, net		(933,539	)		34,652			(710,363	)		394,073
Interest expense		(521,316	)		(1,254,185	)		(1,697,803	)		(3,717,557	)
Loss on excess fair value of warrants		(7,255,528	)		-			(7,255,528	)		-
Changes in fair value of warrant liability		2,807,890			-			2,807,890			-
Total other expense, net		(5,902,493	)		(1,219,533	)		(6,855,804	)		(3,323,484	)
Net loss before income taxes		(9,082,009	)		(1,165,759	)		(11,805,833	)		(4,816,273	)
Income tax expense		(67,294	)		(19,641	)		(238,049	)		(19,641	)
Loss from Continuing operations		(9,149,303	)		(1,185,400	)		(12,043,882	)		(4,835,914	)
(Loss)/income from discontinued operations, net of tax		9,984			13,281			30,939			(3,212,108	)
Net loss		(9,139,319	)		(1,172,119	)		(12,012,943	)		(8,048,022	)
Less loss in noncontrolling interest		(158,293	)		(25,595	)		(351,212	)		(29,493	)
Net loss attributable to Cemtrex, Inc. stockholders	$	(8,981,026	)	$	(1,146,524	)	$	(11,661,731	)	$	(8,018,529	)
(Loss)/income per share - Basic & Diluted
Continuing Operations	$	(0.29	)	$	(1.36	)	$	(1.06	)	$	(5.90	)
Discontinued Operations	$	0.00		$	0.01		$	0.00		$	(3.89	)
Weighted Average Number of Shares-Basic & Diluted		31,346,628			897,897			11,044,569			824,689

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)

	June 30, 2024			June 30, 2023			June 30, 2024			June 30, 2023
	For the three months ended						For the nine months ended
	June 30, 2024			June 30, 2023			June 30, 2024			June 30, 2023
Other comprehensive loss
Net loss	$	(9,139,319	)	$	(1,172,119	)	$	(12,012,943	)	$	(8,048,022	)
Foreign currency translation gain/(loss)		188,491			22,470			(114,431	)		(71,179	)
Comprehensive loss		(8,950,828	)		(1,149,649	)		(12,127,374	)		(8,119,201	)
Comprehensive loss attributable to noncontrolling interest		158,293			25,595			351,212			29,493
Comprehensive loss attributable to Cemtrex, Inc. stockholders	$	(9,109,121	)	$	(1,175,244	)	$	(12,478,586	)	$	(8,148,694	)

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

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										Treasury			Accumulated
	Par Value $0.001						Par Value $0.001				Value $0.001				Additional						Stock,			other			Cemtrex			Non-
	Number of						Number of				Number 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, 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	)
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
Foreign currency translation loss																									188,491			188,491
Share-based compensation																7,559												7,559
Dividends paid in Series 1 preferred shares		120,725			121											(121	)											-
Issuance of common stock												554,705		555		(555	)											-
Exercise of prefunded warrants												11,210,000		11,210		3,179,110												3,190,320
Exercise of Series A warrants												3,508,593		3,509		860,705												864,214
Cancellation of treasury stock		(71,951	)		(72	)										(69,633	)					69,705						-
Loss attributable to noncontrolling interest																												-			(158,293	)
Shares issued to pay for services												23,336		23		88,977												89,000
Net loss								-		-									(8,981,026	)								(8,981,026	)
Balance at June 30, 2024		2,456,827		$	2,457			50,000	$	50		16,352,270	$	16,353	$	73,002,738		$	(75,787,626	)	$	(148,291	)	$	2,962,275		$	47,956		$	304,967

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

Cemtrex, Inc. and Subsidiaries

Condensed Consolidated Statement of Stockholders’ Equity (Continued)

(Unaudited)

	Preferred Stock Series 1				Preferred Stock Series C				Common Stock Par										Treasury			Accumulated
	Par Value $0.001				Par Value $0.001				Value $0.001				Additional						Stock,			other			Cemtrex			Non-
	Number of				Number of				Number 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
Balance		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
Foreign currency translation gain/(loss)																							22,470			22,470
Share-based compensation														26,736												26,736
Dividends paid in Series 1 preferred shares		109,553		110										(110	)											-
Shares issued to pay notes payable										122,702		123		1,193,883												1,194,006
Income/(loss) attributable to noncontrolling interest																										-			(25,595	)
Shares issued to pay for services										6,488		7		39,365												39,372
Net loss						-		-									(1,146,524	)		-						(1,146,524	)
Balance at June 30, 2023		2,293,016	$	2,293		50,000	$	50		957,760	$	958	$	68,302,617		$	(62,947,549	)	$	(148,291	)	$	2,306,346		$	7,516,424		$	663,249
Balance		2,293,016	$	2,293		50,000	$	50		957,760	$	958	$	68,302,617		$	(62,947,549	)	$	(148,291	)	$	2,306,346		$	7,516,424		$	663,249

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

Cemtrex, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Cash Flows from Operating Activities	2024			2023
	For the nine months ended
	June 30,
Cash Flows from Operating Activities	2024			2023

Net loss	$	(12,012,943	)	$	(8,048,022	)

Adjustments to reconcile net loss to net cash used by operating activities
Depreciation and amortization		998,641			698,269
(Gain)/loss on disposal of property and equipment		(13,595	)		69,611
Noncash lease expense		645,695			614,254
Bad debt expense		1,429,791			(155	)
Share-based compensation		22,675			93,313
Interest expense paid in equity shares		-			276,151
Accounts payable paid in equity shares		129,000			141,872
Accrued interest on notes payable		937,899			1,858,631
Non-cash royalty income		(39,846	)		-
Amortization of original issue discounts on notes payable		-			1,200,200
Amortization of loan origination costs		54,400			-
Loss on excess fair value of warrants		7,255,528			-
Changes in fair value of warrant liability		(2,807,890	)		-

Changes in operating assets and liabilities net of effects from acquisition of subsidiaries:
Trade receivables		1,420,733			(2,108,384	)
Trade receivables - related party		(136,277	)		(578,388	)
Inventory		1,350,333			(231,923	)
Contract assets		624,141			215,304
Prepaid expenses and other current assets		548,129			(883,018	)
Other assets		(274,081	)		(246,658	)
Accounts payable		(1,588,439	)		674,168
Accounts payable - related party		(5,009	)		(15,761	)
Sales tax payable		2,036			66,121
Operating lease liabilities		(646,595	)		(550,019	)
Deposits from customers		189,331			(38,863	)
Accrued expenses		(496,932	)		1,198,788
Contract liabilities		921,287			369,072
Deferred revenue		(395,065	)		156,108
Income taxes payable		11,942			(45,773	)
Other liabilities		(201,366	)		(278,946	)
Net cash used by operating activities - continuing operations		(2,076,477	)		(5,394,048	)
Net cash provided by operating activities - discontinued operations		-			2,474,863
Net cash used by operating activities		(2,076,477	)		(2,919,185	)

Cash Flows from Investing Activities
Purchase of property and equipment		(429,334	)		(761,470	)
Proceeds from sale of property and equipment		77,110			26,205
Royalties on related party revenues		46,000			-
Investment in MasterpieceVR		(100,000	)		-
Net cash used by investing activities		(406,224	)		(735,265	)

Cash Flows from Financing Activities
Proceeds on revolving line of credit		26,682,873			-
Payments on revolving line of credit		(24,025,081	)		-
Payments on debt		(7,818,405	)		(1,260,837	)
Payments on Paycheck Protection Program Loans		(30,365	)		(20,154	)
Proceeds on bank loans		28,267			-
Purchases of treasury stock		(69,705	)		-
Proceeds from offerings		10,035,293			-
Expenses on offerings		(935,333	)		-
Net cash provided by/(used by) financing activities		3,867,544			(1,280,991	)

Effect of currency translation		(114,180	)		(104,123	)
Net increase/(decrease) in cash, cash equivalents, and restricted cash		1,384,843			(4,935,441	)
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	$	7,620,225		$	6,434,112

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