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Cemtrex(CETX) - 2024 Q4 - Annual Report
CETXCemtrex(CETX)2024-12-30 21:20

Financial Performance - The company incurred substantial losses of 7.2millionand7.2 million and 9.2 million for fiscal years 2024 and 2023, respectively[144] - The company incurred substantial losses of 7,229,491and7,229,491 and 9,196,875 for fiscal years 2024 and 2023, respectively[68] - The company's gross profit was 27,478,204and27,478,204 and 25,685,826 for fiscal years 2024 and 2023, respectively[6] - The company's operating loss was 5,269,745and5,269,745 and 1,511,508 for fiscal years 2024 and 2023, respectively[6] - The company's net loss attributable to Cemtrex, Inc. stockholders was 7,229,491and7,229,491 and 9,196,875 for fiscal years 2024 and 2023, respectively[6] - The company's total operating expenses were 32,747,949and32,747,949 and 27,197,334 for fiscal years 2024 and 2023, respectively[6] - The company's revenues were 66,863,884and66,863,884 and 59,368,562 for fiscal years 2024 and 2023, respectively[6] - The company's cost of revenues was 39,385,680and39,385,680 and 33,682,736 for fiscal years 2024 and 2023, respectively[6] - The company's general and administrative expenses were 28,860,019and28,860,019 and 23,929,340 for fiscal years 2024 and 2023, respectively[6] - Net loss for the year ended September 30, 2024 was 7,635,505,comparedto7,635,505, compared to 9,233,438 in the previous year[8] - Comprehensive loss attributable to Cemtrex, Inc. stockholders was 7,356,900fortheyearendedSeptember30,2024,comparedto7,356,900 for the year ended September 30, 2024, compared to 8,497,694 in the previous year[8] - Net loss for the year ended September 30, 2024, was 7,635,505,comparedto7,635,505, compared to 9,233,438 in 2023[16] - Net loss for 2024 was (7,635,505),animprovementfrom(7,635,505), an improvement from (9,233,438) in 2023[499] - The company's net loss improved to (7,635,505)in2024from(7,635,505) in 2024 from (13,292,242) in 2022[499] - The company incurred net losses of 7.2millionin2024,7.2 million in 2024, 9.2 million in 2023, and 13.0millionin2022,withanaccumulateddeficitof13.0 million in 2022, with an accumulated deficit of 71.4 million as of September 30, 2024[196] Revenue Recognition - Revenue from fixed price contracts is recognized using the percentage-of-completion method[151] - Revenue from time and material price contracts is recognized based on costs incurred and projected markup[152] - The company's contracts generally contain one performance obligation, recognized as revenue over time[153] - Over time revenue recognition increased to 57% in 2024 from 48% in 2023[155] - Point-in-time revenue recognition decreased to 43% in 2024 from 52% in 2023[155] International Operations - International operations accounted for approximately 5.9% of net sales in 2024[140] - Foreign currency translation loss for the year ended September 30, 2024 was 127,409,comparedtoagainof127,409, compared to a gain of 699,181 in the previous year[8] Tax and Warranty Provisions - The company did not take any uncertain tax positions for the years ended September 30, 2024 and 2023[158] - The company may recognize tax benefits from uncertain tax positions only if more likely than not to be sustained[159] - The company provides for estimated costs of product warranties and processes[155] Credit and Inventory Reserves - The company's allowance for credit losses was 155,918and155,918 and 234,924 at September 30, 2024, and 2023, respectively[79] - The company's inventory obsolescence reserve was 1,044,530and1,044,530 and 618,021 at September 30, 2024, and 2023, respectively[84] - Inventory obsolescence reserve increased to 1,044,530asofSeptember30,2024,comparedto1,044,530 as of September 30, 2024, compared to 618,021 in 2023[404] Cash Flow and Financing - Net cash used by operating activities for 2024 was 3,949,360,animprovementfrom3,949,360, an improvement from 4,724,305 in 2023[16] - Depreciation and amortization expenses increased to 1,328,741in2024from1,328,741 in 2024 from 1,026,075 in 2023[16] - Goodwill impairment of 530,475wasrecordedin2024,comparedtononein2023[16]−Inventoryincreasedby530,475 was recorded in 2024, compared to none in 2023[16] - Inventory increased by 1,893,759 in 2024, compared to an increase of 48,598in2023[16]−Netcashusedbyinvestingactivitiesdecreasedto48,598 in 2023[16] - Net cash used by investing activities decreased to 1,257,393 in 2024 from 5,628,400in2023[16]−Proceedsfromofferingsin2024amountedto5,628,400 in 2023[16] - Proceeds from offerings in 2024 amounted to 10,035,292, with expenses of 995,333[16]−Totalcash,cashequivalents,andrestrictedcashdecreasedto995,333[16] - Total cash, cash equivalents, and restricted cash decreased to 5,420,392 in 2024 from 6,349,562in2023[19]−Thecompanyraised6,349,562 in 2023[19] - The company raised 9,039,959 in net proceeds through its May 2024 equity financing[36] - The company anticipates an additional 5to5 to 10 million when the Series B warrants are exercised[36] - The company raised approximately 9.0millioninnetproceedsthroughMay2024equityfinancingandanticipatesanadditional9.0 million in net proceeds through May 2024 equity financing and anticipates an additional 5 to 10millionfromSeriesBwarrants[193]StockandEquity−Paid−inadditionalcapitalincreasedto10 million from Series B warrants[193] Stock and Equity - Paid-in additional capital increased to 73,262,536 as of September 30, 2024, up from 68,882,750inthepreviousyear[11]−Accumulateddeficitincreasedto68,882,750 in the previous year[11] - Accumulated deficit increased to 71,355,386 as of September 30, 2024, up from 64,125,895inthepreviousyear[11]−Cemtrexstockholders′equitydecreasedto64,125,895 in the previous year[11] - Cemtrex stockholders' equity decreased to 4,710,677 as of September 30, 2024, down from 7,687,614inthepreviousyear[11]−Noncontrollinginterestdecreasedto7,687,614 in the previous year[11] - Noncontrolling interest decreased to 250,165 as of September 30, 2024, down from 656,179inthepreviousyear[11]−Share−basedcompensationfortheyearendedSeptember30,2024was656,179 in the previous year[11] - Share-based compensation for the year ended September 30, 2024 was 30,235, compared to 106,839inthepreviousyear[11][13]−TreasurystockpurchasesfortheyearendedSeptember30,2024amountedto106,839 in the previous year[11][13] - Treasury stock purchases for the year ended September 30, 2024 amounted to 69,705[11] - Shares issued to pay for services during the year ended September 30, 2024 amounted to 169,000[11]−Thecompanycompleteda60:1reversestocksplitonOctober2,2024,anda35:1reversestocksplitonNovember26,2024[23]−Thecompanycompleteda60:1reversestocksplitonOctober2,2024,anda35:1reversestocksplitonNovember26,2024[55]−Thecompanyhas1,724,162sharesofcommonstockoutstandingasofDecember23,2024[45]−Thecompany’scommonstockhadanaggregatemarketvalueof169,000[11] - The company completed a 60:1 reverse stock split on October 2, 2024, and a 35:1 reverse stock split on November 26, 2024[23] - The company completed a 60:1 reverse stock split on October 2, 2024, and a 35:1 reverse stock split on November 26, 2024[55] - The company has 1,724,162 shares of common stock outstanding as of December 23, 2024[45] - The company’s common stock had an aggregate market value of 4,249,917 based on the average bid and asked price of 8,799onMarch28,2024[44]−Thecompanyissued123,167sharesofSeries1PreferredStocktopaydividendsonOctober7,2024[398]−Thecompany′sequitycompensationplanshad18outstandingoptionswithaweightedaverageexercisepriceof8,799 on March 28, 2024[44] - The company issued 123,167 shares of Series 1 Preferred Stock to pay dividends on October 7, 2024[398] - The company's equity compensation plans had 18 outstanding options with a weighted average exercise price of 105,258.92 as of September 30, 2024[393] Nasdaq Compliance and Delisting - The company received a Nasdaq notification on August 21, 2024, for not meeting the minimum stockholder's equity requirement of 2,500,000[28]−Thecompanymaybesubjecttodelistingifitfailstoevidencecompliancewiththestockholders′equityrequirementbyMarch31,2025[31]−TheCompanyreceivedaNasdaqnotificationonJuly29,2022,forfailingtomeettheminimumbidpricerequirementof2,500,000[28] - The company may be subject to delisting if it fails to evidence compliance with the stockholders' equity requirement by March 31, 2025[31] - The Company received a Nasdaq notification on July 29, 2022, for failing to meet the minimum bid price requirement of 1.00 for Series 1 Preferred Stock[56] - The Company's Series 1 Preferred Stock was delisted from NASDAQ on January 22, 2024, and is now quoted on OTC Markets under the symbol "CETXP"[57] - The Company received a Nasdaq notification on June 14, 2024, for failing to meet the minimum bid price requirement of 1.00forcommonstock[58]−TheCompanyreceivedaNasdaqnotificationonAugust21,2024,forfailingtomeettheminimumstockholder′sequityrequirementof1.00 for common stock[58] - The Company received a Nasdaq notification on August 21, 2024, for failing to meet the minimum stockholder's equity requirement of 2,500,000[59] Corporate Governance - The Company's disclosure controls and procedures were effective as of September 30, 2024[452] - The Board of Directors held four meetings during the fiscal year ended September 30, 2024[469] - The Company is classified as a "Controlled Company" under NASDAQ Listing Rule 5615 and is not required to have a Compensation Committee[481] - Saagar Govil owns 153,153 shares of Series 1 Preferred Stock, representing 1.3% of the voting stock[513] - All directors and executive officers as a group own 203,189 shares, representing 73.1% of the voting stock[513] Related Party Transactions - The company recognized 665,520ofrevenuefromCXR,Inc.duringfiscalyear2024[530]−TradereceivablesduefromCXR,Inc.amountedto665,520 of revenue from CXR, Inc. during fiscal year 2024[530] - Trade receivables due from CXR, Inc. amounted to 685,788 as of September 30, 2024[530] - The company's total assets included 456,611inlong−termroyaltiesreceivablefromCXR,Inc.asofSeptember30,2024[530]−Thecompanydiscountedroyaltiesdueto456,611 in long-term royalties receivable from CXR, Inc. as of September 30, 2024[530] - The company discounted royalties due to 660,621 and recognized 53,126inroyaltiesfor2024[529]SegmentPerformance−IdentifiableassetsforSecuritysegmentdecreasedto53,126 in royalties for 2024[529] Segment Performance - Identifiable assets for Security segment decreased to 17,253,328 from 21,829,183[191]−IdentifiableassetsforIndustrialServicessegmentincreasedto21,829,183[191] - Identifiable assets for Industrial Services segment increased to 24,576,055 from 23,781,349[191]−Totalassetsdecreasedto23,781,349[191] - Total assets decreased to 44,115,458 from 48,453,743[191]LiquidityandCapitalResources−Thecompanyhas48,453,743[191] Liquidity and Capital Resources - The company has 3,897,511 in cash as of September 30, 2024[36] - The company secured a line of credit for its Vicon brand with available capacity of 1,874,989asofSeptember30,2024[36]−Thecompany’sworkingcapitalandcurrentdebtindicatesubstantialdoubtregardingitsabilitytocontinueasagoingconcern[36]−Thecompanyhasapproximately1,874,989 as of September 30, 2024[36] - The company’s working capital and current debt indicate substantial doubt regarding its ability to continue as a going concern[36] - The company has approximately 3.9 million in cash as of September 30, 2024[193] - The company secured a line of credit for its Vicon brand with 1.9millionavailablecapacityanda1.9 million available capacity and a 3.5 million line of credit for its AIS brand as of September 30, 2024[193] - The company’s ability to meet debt obligations depends on financial and operating performance, which is subject to external economic and competitive factors[200] - The company’s ability to secure sufficient credit arrangements is critical for continued operations, with no assurance of obtaining additional equity or debt financing[201] - The company’s substantial debt could adversely affect its ability to raise additional capital and meet obligations[198] - The company’s plans to meet capital demands for the next twelve months may prove inadequate, despite current safeguards[193] Product Development and Market Acceptance - The company’s Vicon brand is introducing new innovative products to grow revenues[36] - The company’s future operating results depend on successful research, development, and marketing of new products and services in the Security segment[210] - The company’s success is heavily dependent on the market acceptance of its technology, which impacts sales, profits, and cash flow[203] Accounting Adjustments - Short-term investments reclassified to Prepaid expenses and other current assets, resulting in a revised amount of 2,112,022[169]−Gain/(loss)onmarketablesecuritiesreclassifiedtoPrepaidexpensesandothercurrentassets,resultinginarevisedamountof2,112,022[169] - Gain/(loss) on marketable securities reclassified to Prepaid expenses and other current assets, resulting in a revised amount of (458,476)[169] - Non-cash royalty income correction resulted in a revised Trade receivables - related party amount of (1,099,070)[171]−SharesissuedtopayforservicescorrectionresultedinarevisedAccountspayableamountof(1,099,070)[171] - Shares issued to pay for services correction resulted in a revised Accounts payable amount of 3,145,469[171] - Trade receivables, net under ASC 326 adoption showed no impact, remaining at 234,924[176]−Contractassets,netincreasedby234,924[176] - Contract assets, net increased by 8,696 due to ASC 326 adoption[176] - Royalties receivable, net - related party remained unchanged at 10,000postASC326adoption[176]ExecutiveCompensation−TotalcompensationforthePEOin2024was10,000 post ASC 326 adoption[176] Executive Compensation - Total compensation for the PEO in 2024 was 1,089,451, with 702,443actuallypaid[499]ShareRepurchaseProgram−TheCompanyrepurchased71,951sharesofSeries1PreferredStockfor702,443 actually paid[499] Share Repurchase Program - The Company repurchased 71,951 shares of Series 1 Preferred Stock for 69,705 under the Share Repurchase Program approved on August 22, 2023[57]