Cemtrex, Inc. (CETX) - 10-Q Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2026. Cemtrex, Inc. operates through three primary segments: Security (Vicon Industries), Industrial Services (Advanced Industrial Services), and Aerospace and Defense (Invocon, Inc.). The company is classified as a non-accelerated filer and a smaller reporting company. As of May 13, 2026, there were 11,121,834 shares of common stock outstanding.
Key Financial Metrics (Six Months Ended March 31, 2026)
| Metric | Value |
|---|---|
| Total Revenues | $34,194,678 |
| Gross Profit | $12,469,070 (36.5% Margin) |
| Operating Loss | $(4,978,197) |
| Net Loss | $(19,649,099) |
| Cash and Cash Equivalents | $6,567,030 |
| Restricted Cash | $1,343,088 |
| Total Debt (Current + Long-Term) | $17,526,344 |
| Working Capital | $13,706,571 |
Material Changes vs. Prior Period
- Revenue Decline: Total revenue decreased 16.6% to $34.2M from $41.0M in the prior year period. The Security segment saw a 50% drop due to the absence of a $10.4M large sale recorded in the prior year. Conversely, the Industrial Services segment grew 17% due to the acquisition of Richland Industries.
- Segment Expansion: The Aerospace and Defense segment generated $1.23M in revenue following the January 2026 acquisition of Invocon, Inc.
- Net Loss Drivers: The net loss of $19.6M was significantly impacted by non-cash items, including a $12.7M interest expense (largely due to shares issued to pay debt), a $4.7M loss on the exercise of warrant liabilities, and a $1.1M unrealized loss on digital assets. These were partially offset by a $2.1M bargain purchase gain from the Richland acquisition.
- Balance Sheet Growth: Total assets increased to $70.7M from $47.8M, driven by acquisitions and new debt financing. Stockholders' equity increased to $34.7M from $8.7M, primarily due to equity offerings and warrant exercises.
Guidance, Outlook, and Risks
- Going Concern: Management has raised substantial doubt about the company's ability to continue as a going concern for the next twelve months due to accumulated losses and significant debt obligations ($10.8M due in the next fiscal year). The financial statements do not include adjustments related to this uncertainty.
- Liquidity Strategy: The company plans to meet capital needs through equity offerings, warrant exercises, and issuing stock to satisfy debt. During the period, the company raised $10M in equity offerings and $5.7M from warrant exercises.
- Dilution Risk: Future capital raising through equity or debt-for-equity swaps will likely result in significant dilution to existing stockholders.
- Acquisition Integration: The company is integrating Invocon (Aerospace) and Richland (Industrial Services). Final purchase price allocations are preliminary and subject to adjustment within one year.
Investor Verification Checklist
- Debt Structure: Verify the terms of the $7.0M note payable to Streeterville Capital (8% interest) and the $3.9M mortgage for the Richland facility, noting the high interest expense recognized via equity issuance.
- Warrant Liability Volatility: Review the fair value adjustments of Series A and B warrants, which caused significant non-cash losses ($4.7M on exercise, $2.3M on fair value change) and reset exercise prices multiple times during the period.
- Security Segment Sustainability: Assess the Security segment's revenue stability given the 50% year-over-year decline attributed to the lack of a single large transaction.
- Digital Asset Exposure: Confirm the valuation and risk profile of the $1.1M Solana (SOL) holdings, which contributed to unrealized losses.
- Going Concern Mitigation: Evaluate the probability of successfully raising additional capital or restructuring debt to avoid default, as current cash flow from operations is negative ($5.3M used).