Cemtrex(US:CETX)2024-12-30 21:20Financial Performance - The company incurred substantial losses of $7.2 million and $9.2 million for fiscal years 2024 and 2023, respectively[144] - The company incurred substantial losses of $7,229,491 and $9,196,875 for fiscal years 2024 and 2023, respectively[68] - The company's gross profit was $27,478,204 and $25,685,826 for fiscal years 2024 and 2023, respectively[6] - The company's operating loss was $5,269,745 and $1,511,508 for fiscal years 2024 and 2023, respectively[6] - The company's net loss attributable to Cemtrex, Inc. stockholders was $7,229,491 and $9,196,875 for fiscal years 2024 and 2023, respectively[6] - The company's total operating expenses were $32,747,949 and $27,197,334 for fiscal years 2024 and 2023, respectively[6] - The company's revenues were $66,863,884 and $59,368,562 for fiscal years 2024 and 2023, respectively[6] - The company's cost of revenues was $39,385,680 and $33,682,736 for fiscal years 2024 and 2023, respectively[6] - The company's general and administrative expenses were $28,860,019 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, compared to $9,233,438 in the previous year[8] - Comprehensive loss attributable to Cemtrex, Inc. stockholders was $7,356,900 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, compared to $9,233,438 in 2023[16] - Net loss for 2024 was $(7,635,505), an improvement from $(9,233,438) in 2023[499] - The company's net loss improved to $(7,635,505) in 2024 from $(13,292,242) in 2022[499] - The company incurred net losses of $7.2 million in 2024, $9.2 million in 2023, and $13.0 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, 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 $155,918 and $234,924 at September 30, 2024, and 2023, respectively[79] - The company's inventory obsolescence reserve was $1,044,530 and $618,021 at September 30, 2024, and 2023, respectively[84] - Inventory obsolescence reserve increased to $1,044,530 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, an improvement from $4,724,305 in 2023[16] - Depreciation and amortization expenses increased to $1,328,741 in 2024 from $1,026,075 in 2023[16] - Goodwill impairment of $530,475 was recorded in 2024, compared to none in 2023[16] - Inventory increased by $1,893,759 in 2024, compared to an increase of $48,598 in 2023[16] - Net cash used by investing activities decreased to $1,257,393 in 2024 from $5,628,400 in 2023[16] - Proceeds from offerings in 2024 amounted to $10,035,292, with expenses of $995,333[16] - Total cash, cash equivalents, and restricted cash decreased to $5,420,392 in 2024 from $6,349,562 in 2023[19] - The company raised $9,039,959 in net proceeds through its May 2024 equity financing[36] - The company anticipates an additional $5 to $10 million when the Series B warrants are exercised[36] - The company raised approximately $9.0 million in net proceeds through May 2024 equity financing and anticipates an additional $5 to $10 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 $68,882,750 in the previous year[11] - Accumulated deficit increased to $71,355,386 as of September 30, 2024, up from $64,125,895 in the previous year[11] - Cemtrex stockholders' equity decreased to $4,710,677 as of September 30, 2024, down from $7,687,614 in the previous year[11] - Noncontrolling interest decreased to $250,165 as of September 30, 2024, down from $656,179 in the previous year[11] - Share-based compensation for the year ended September 30, 2024 was $30,235, compared to $106,839 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] - 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 $8,799 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] - 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 $1.00 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 $665,520 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 $456,611 in long-term royalties receivable from CXR, Inc. as of September 30, 2024[530] - The company discounted royalties due to $660,621 and recognized $53,126 in royalties for 2024[529] Segment Performance - Identifiable assets for Security segment decreased to $17,253,328 from $21,829,183[191] - Identifiable assets for Industrial Services segment increased to $24,576,055 from $23,781,349[191] - Total assets decreased to $44,115,458 from $48,453,743[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 $1,874,989 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 $1.9 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) 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] - 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] - Contract assets, net increased by $8,696 due to ASC 326 adoption[176] - Royalties receivable, net - related party remained unchanged at $10,000 post ASC 326 adoption[176] Executive Compensation - Total compensation for the PEO in 2024 was $1,089,451, with $702,443 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]