CEMTREX INC
For the period ended Mar 31, 2024. Filed May 14, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2024 · Filed May 14, 2024
CETX$0.63-18.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2023-12-31; filed 2024-02-14.
0001493152-24-006268
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-03-31; filed 2024-05-14.
0001493152-24-019239
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 41 previous paragraphs and 59 current paragraphs.
23 unchanged; 17 reworded; 14 added; 1 removed; 0 previous and 5 current paragraphs rearranged.
Tables are not compared: 0 previous and 0 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
Our Security segment revenues for the three months ended March 31, 2024, decreased by $1,828,966 or 18% to $8,084,932 from $9,913,898 for the three months ended March 31, 2023. This decrease is due to the delay of multiple projects for the Security segment’s products and services.
Current report
Gross profit in our Security segment was $4,112,969 or 51% of the segment’s revenues for the three months ended March 31, 2024, as compared to gross profit of $5,120,081 or 52% of the segment’s revenues for the period ended March 31, 2023. Gross profit was down due to decreased revenues in the three months ended March 31, 2024, compared to the three months ended March 31, 2023.
Current report
Results of Operations – For the six months ended March 31, 2024, and 2023
Current report
Revenues
Current report
Gross Profit
Current report
Gross Profit for the six months ended March 31, 2024, was $14,021,815 or 41% of revenues as compared to gross profit of $12,831,096 or 44% of revenues for the six months ended March 31, 2023.
Current report
Gross profit in our Industrial Services segment was $5,391,899 or 32% of the segment’s revenues for the six months ended March 31, 2024, as compared to gross profit of $3,855,116 or 35% of the segment’s revenues for the six-month period ended March 31, 2023. Gross profit as a percentage of revenues decreased due to lower margins related to Heisey acquisition related projects in the six months ended March 31, 2024, compared to the six months ended March 31, 2023.
Current report
General and Administrative Expenses
Current report
General and administrative expenses for the six months ended March 31, 2024, increased $3,509,518 or 33% to $13,992,123 from $10,482,605 for the six months ended March 31, 2023. The increase in general and administrative expenses is mainly related to increased payroll, fringe benefits, insurance, professional fees and travel. Increases in payroll include approximately $680,000 in severance and bonus payments. Legal expenses for the six months ended March 31, 2024, include non-recurring expenses of $360,000.
Current report
Research and Development Expenses
Current report
Other Income/Expense
Current report
Provision for Income Taxes
Current report
Income/(loss) from Discontinued Operations
Current report
While current debt indicates a substantial doubt regarding the Company’s ability to continue as a going concern, the Company has historically, from time to time, satisfied and may continue to satisfy certain short-term liabilities through the issuance of common stock, thus reducing our cash requirement to meet our operating needs. The Company has $2,916,120 in cash and cash equivalents as of March 31, 2024. Additionally, the Company has (i) secured a line of credit for its Vicon brand to fund operations, which as of March 31, 2024, has available capacity of $980,766, (ii) continually reevaluated its pricing model on our Vicon brand to improve margins on those products, (iii) entered into an underwriting agreement in connection with underwritten public offering, the aggregate gross proceeds to the Company were approximately $10,035,000, before deducting underwriting discounts and other estimated expenses payable by the Company, and (iv) entered into a Standstill Agreement with Streeterville Capital, LLC (“Streeterville”) in which Streeterville agreed not to seek to redeem any portion of its two outstanding notes with the Company for a period of one year expiring on April 30, 2025, in exchange, the Company agreed to pay to Streeterville the greater of $4,000,000 or fifty percent (50%) of the net proceeds the Company receives from the sale of any of its common stock or preferred stock during the Standstill Period.
Removed paragraphs (1)
Previous report
Our Corporate segment is the holding company for the other two segments and did not generate any revenue for the three months ended December 31, 2023 or 2022.
Reworded paragraphs (17)
Previous wording
The Company’s reporting segments consist of Security and Industrial Services.
Current wording
The Company’s reporting segments consist of Security and Industrial Services. Additionally, the Company’s operational structure also reports unallocated corporate expenses.
Previous wording
Our Industrial Services segment revenues for the three months ended December 31, 2023, increased by $2,744,867 or 55%, to $7,710,365 from $4,965,498 for the three months ended December 31, 2022. This increase is mainly due to increased demand for the segment’s services and the additional business from the Heisey acquisition.
Current wording
Our Industrial Services segment revenues for the three months ended March 31, 2024, increased by $2,915,164 or 47%, to $9,074,663 from $6,159,499, for the three months ended March 31, 2023. This increase is mainly due to increased demand for the segment’s services and the additional business from the Heisey acquisition completed during the fourth quarter of fiscal year 2023.
Previous wording
Gross Profit for the three months ended December 31, 2023, was $7,082,399 or 42% of revenues as compared to gross profit of $5,042,615 or 42% of revenues for the three months ended December 31, 2022.
Current wording
Gross Profit for the three months ended March 31, 2024, was $6,939,416 or 40% of revenues as compared to gross profit of $7,338,481 or 46% of revenues for the three months ended March 31, 2023.
Previous wording
Gross profit in our Industrial Services segment was $2,565,452 or 33% of the segment’s revenues for the three months ended December 31, 2023, as compared to gross profit of $1,638,925 or 33% of the segment’s revenues for the period ended December 31, 2022. Gross profit as a percentage of revenues remained constant in the three months ended December 31, 2023, compared to the three months ended December 31, 2022.
Current wording
Gross profit in our Industrial Services segment was $2,826,447 or 31% of the segment’s revenues for the three months ended March 31, 2024, as compared to gross profit of $2,216,191 or 36% of the segment’s revenues for the period ended March 31, 2023. Gross profit as a percentage of revenues decreased due to lower margins related to Heisey acquisition related projects in the three months ended March 31, 2024, compared to the three months ended March 31, 2023.
Previous wording
General and administrative expenses for the three months ended December 31, 2023, increased $1,516,133 or 28% to $6,971,966 from $5,455,833 for the three months ended December 31, 2022. The increase in general and administrative expenses is mainly related to increased payroll, insurance, office supplies and repairs and maintenance expenses offset by decreased depreciation, professional fees, rent, and travel expenses. One-time fees in the current quarter include approximately $155,000 in severance payments.
Current wording
General and administrative expenses for the three months ended March 31, 2024, increased $1,701,890 or 32% to $7,020,157 from $5,318,267 for the three months ended March 31, 2023. The increase in general and administrative expenses is mainly related to increased sales and marketing activities including payroll, fringe benefits, legal expenses, insurance, travel as well as an increase in insurance, and repairs and maintenance expenses. Legal expenses for the three months ended March 31, 2024, include non-recurring expenses of $360,000.
Previous wording
Research and Development expenses for the three months ended December 31, 2023, were $848,805 compared to $1,538,218 for the three months ended December 31, 2022, a decrease of $689,413 or 45%. Research and Development expenses are primarily related to the Security Segment’s development of next generation solutions associated with security and surveillance systems software.
Current wording
Research and Development expenses for the three months ended March 31, 2024, were $951,400 compared to $1,615,341 for the three months ended March 31, 2023, a decrease of $663,941 or 41%. Research and Development expenses are primarily related to the Security Segment’s development of next generation solutions associated with security and surveillance systems software.
Previous wording
Other expense for the three months ended December 31, 2023, was $505,272, as compared to $1,145,317 for the three months ended December 31, 2022. Other expense for the three months ended December 31, 2023, and 2022, was mainly driven by interest on the Company’s debt. Decreases in interest expense relate to $221,831 in deferral charges and $441,733 of amortization of original issue discounts in the three months ended December 31, 2022, that did not occur in the current period.
Current wording
Other expense for the three months ended March 31, 2024, was $448,039, as compared to $958,634 for the three months ended March 31, 2023. Other expense for the three months ended March 31, 2024, and 2023, was mainly driven by interest on the Company’s debt. Decreases in interest expense relate to $451,422 in deferral charges and $441,733 of amortization of original issue discounts in the three months ended March 31, 2023, that did not occur in the current period.
Previous wording
During the three months ended December 31, 2023 and 2022, the Company had income tax expense from continuing operations of $70,751 and $0. The provision for income tax is based upon the current income tax from the Company’s various U.S. and international subsidiaries that are subject to their respective income tax jurisdictions and the Company’s current ability to utilize net loss carryforwards.
Current wording
During the three months ended March 31, 2024 and 2023, the Company had income tax expense from continuing operations of$100,004 and $0, respectively. The provision for income tax is based upon the current income tax from the Company’s various U.S. and international subsidiaries that are subject to their respective income tax jurisdictions and the Company’s current ability to utilize net loss carryforwards.
Previous wording
Our Security segment revenues for the three months ended December 31, 2023, increased by $2,163,057 or 31% to $9,167,801 from $7,004,744 for the three months ended December 31, 2022. This increase is due to an increased demand for the Security segment’s products and services.
Current wording
Our Security segment revenues for the six months ended March 31, 2024, increased by $334,091 or 2% to $17,252,733 from $16,918,642 for the six months ended March 31, 2023. This increase is due to an increased demand for the Security segment’s products and services.
Previous wording
Gross profit in our Security segment was $4,516,947 or 49% of the segment’s revenues for the three months ended December 31, 2023, as compared to gross profit of $3,403,690 or 49% of the segment’s revenues for the period ended December 31, 2022. Gross profit as a percentage of revenues remained constant in the three months ended December 31, 2023, compared to the three months ended December 31, 2022.
Current wording
Gross profit in our Security segment was $8,629,916 or 50% of the segment’s revenues for the six months ended March 31, 2024, as compared to gross profit of $8,523,771 or 50% of the segment’s revenues for the six-month period ended March 31, 2023. Gross profit as a percentage of revenues remained constant in the six months ended March 31, 2024, compared to the six months ended March 31, 2023.
Previous wording
For the three months ended December 31, 2023, the Company had income on discontinued operations, net of tax of $10,492. This income is mainly related to the recognition of the royalties due from CXR, Inc. Losses on discontinued operations for the three months ended December 31, 2022, were $3,239,621 attributable to the operations and sale of the Cemtrex brands discussed in Note 3 to the financial statements included herein.
Current wording
For the six months ended March 31, 2024, the Company had income on discontinued operations, net of tax of $20,955. This income is mainly related to the recognition of the royalties due from CXR, Inc. Losses on discontinued operations for the six months ended March 31, 2023, were $3,225,389 attributable to the operations and sale of the Cemtrex brands discussed in Note 3 to the financial statements included herein.
Previous wording
Working capital deficit was $2,284,787 at December 31, 2023, compared to working capital of $1,948,923 at September 30, 2023. This includes cash and equivalents and restricted cash of $4,016,732 at December 31, 2023, and $6,349,562 at September 30, 2022. The decrease in working capital was primarily due to the Company’s payment of accounts payable and accrued expenses.
Current wording
Working capital was $10,300,384 at March 31, 2024, compared to working capital of $1,948,923 at September 30, 2023. This includes cash and equivalents and restricted cash of $4,088,536 at March 31, 2024, and $6,349,562 at September 30, 2023. The increase in working capital was primarily due to the Company’s entry into a standstill agreement on two notes extending the maturity date and holding redemptions for a period of one year.
Previous wording
Cash used by operating activities for continuing operations for the three months ended December 31, 2023, and 2022 was $3,139,073 and $5,872,310, respectively. Cash provided by operating activities for discontinued operations for the three months ended December 31, 2022, was $2,501,426.
Current wording
Cash used by operating activities for continuing operations for the six months ended March 31, 2024, and 2023 was $2,752,236 and $5,383,060, respectively. Cash provided by operating activities for discontinued operations for the six months ended March 31, 2023, was $2,488,144. Our negative operating cash flow was mainly the result of our net loss combined with operating changes in trade receivables.
Previous wording
Trade receivables increased by $694,860 or 8% to $9,904,555 at December 31, 2023, from $9,209,695 at September 30, 2023. The increase in trade receivables is attributable to increased sales in the Security segment.
Current wording
Trade receivables increased by $2,326,185 or 25% to $11,535,880 at March 31, 2024, from $9,209,695 at September 30, 2023. The increase in trade receivables is attributable to increased sales in the Industrial Services segment.
Previous wording
Cash used by investing activities for continuing operations for the three months ended December 31, 2023, was $390,310 compared to $568,111 for the three months ended December 31, 2022. Cash provided by investing activities for discontinued operations was $207,329 for the three months ended December 31, 2022. Investing activities for the three months ended December 31, 2023, were driven by the Company’s purchase of property and equipment and investment in Masterpiece VR.
Current wording
Cash used by investing activities for continuing operations for the six months ended March 31, 2024, was $455,308 compared to $252,706 used for the six months ended March 31, 2023. Investing activities for the six months ended March 31, 2024, were driven by the Company’s purchase of property and equipment and investment in Masterpiece VR. Investing activities for the six months ended March 31, 2023, were driven by the Company’s purchase of property and equipment.
Previous wording
Cash provided by financing activities for the three months ended December 31, 2023, was $998,099 compared to using cash of $600,920 for the three months ended December 31, 2022. Financing activities were primarily driven by proceeds and payments on the Company’s revolving line of credit and payments on its secured debt. Financing activities for the three months ended December 31, 2022, were primarily driven by payments on the Company’s debt.
Current wording
Cash provided by financing activities for the six months ended March 31, 2024, was $1,250,540 compared to using cash of $920,127 for the six months ended March 31, 2023. Financing activities were primarily driven by proceeds and payments on the Company’s revolving line of credit and payments on its secured debt. Financing activities for the six months ended March 31, 2023, were primarily driven by payments on the Company’s debt.
Previous wording
While our working capital deficit and current debt indicate a substantial doubt regarding the Company’s ability to continue as a going concern, the Company has historically, from time to time, satisfied and may continue to satisfy certain short-term liabilities through the issuance of common stock, thus reducing our cash requirement to meet our operating needs. The Company has approximately $2.84 million in cash as of December 31, 2023. Additionally, the Company has (i) secured a line of credit for its Vicon brand to fund operations, which as of December 31, 2023, has available capacity of $1,642,676, (ii) sold unprofitable brands, reducing the cash required to maintain those brands, (iii) continually reevaluate our pricing model on our Vicon brand to improve margins on those products, and (iv) has effected a 35:1 reverse stock split on our common stock to remain trading on the Nasdaq Capital Markets, and improve our ability to potentially raise capital through equity offerings that we may use to satisfy debt. In the event additional capital is raised through equity offerings and/or debt is satisfied with equity, it may have a dilutive effect on our existing stockholders. While the Company believes these plans if successful, would be sufficient to meet the capital demands of our current operations for at least the next twelve months, there is no guarantee that we will succeed. Overall, there is no guarantee that cash flow from our existing or future operations and any external capital that we may be able to raise will be sufficient to meet our working capital needs. The Company currently does not have adequate cash or available liquidity/available capacity on our lines of credit to meet our short or long-term needs. Absent an ability to raise additional outside capital and restructure or refinance all or a portion of our debt, the Company will be unable to meet its obligations as they become due over the next twelve months beyond the issuance date.
Current wording
In the event additional capital is raised through equity offerings and/or debt is satisfied with equity, it may have a dilutive effect on our existing stockholders. While the Company believes these plans if successful, would be sufficient to meet the capital demands of our current operations for at least the next twelve months, there is no guarantee that we will succeed. Overall, there is no guarantee that cash flow from our existing or future operations and any external capital that we may be able to raise will be sufficient to meet our working capital needs. The Company currently does not have adequate cash or available liquidity/available capacity on our lines of credit to meet our short or long-term needs. Absent an ability to raise additional outside capital and restructure or refinance all or a portion of our debt, the Company will be unable to meet its obligations as they become due over the next twelve months beyond the issuance date.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
For the three months ended March 31, 2024 and 2023, the Company had income on discontinued operations, net of tax of $10,463, and $14,232, respectively. This income is mainly related to the recognition of the royalties due from CXR, Inc.
Current report — wording carried from elsewhere
Our Industrial Services segment revenues for the six months ended March 31, 2024, increased by $5,660,031 or 51%, to $16,785,028 from $11,124,997 for the six months ended March 31, 2023. This increase is mainly due to increased demand for the segment’s services and the additional business from the Heisey acquisition completed during the fourth quarter of fiscal year 2023.
Current report — wording carried from elsewhere
Research and Development expenses for the six months ended March 31, 2024, were $1,800,205 compared to $3,445,054 for the six months ended March 31, 2023, a decrease of $1,644,849 or 48%. Research and Development expenses are primarily related to the Security Segment’s development of next generation solutions associated with security and surveillance systems software.
Current report — wording carried from elsewhere
Other expense for the six months ended March 31, 2024, was $953,311, as compared to $2,103,951 for the six months ended March 31, 2023. Other expense for the six months ended March 31, 2024, and 2023, was mainly driven by interest on the Company’s debt. Decreases in interest expense relate to $673,253 in deferral charges and $841,800 of amortization of original issue discounts in the six months ended March 31, 2023, that did not occur in the current period.
Current report — wording carried from elsewhere
During the six months ended March 31, 2024 and 2023, the Company had income tax expense from continuing operations of $170,755 and $0. The provision for income tax is based upon the current income tax from the Company’s various U.S. and international subsidiaries that are subject to their respective income tax jurisdictions and the Company’s current ability to utilize net loss carryforwards.