CEMTREX INC. 10-Q Summary: Quarter Ended December 31, 2025
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended December 31, 2025. Cemtrex, Inc. operates through two primary reporting segments: Security (operating as Vicon Industries, providing AI-based surveillance solutions) and Industrial Services (operating as Advanced Industrial Services, providing rigging and maintenance). The company is classified as a non-accelerated filer and a smaller reporting company. As of February 13, 2026, there were 10,078,089 shares of common stock outstanding.
Key Financial Metrics
| Metric | Q1 2026 (Ended Dec 31, 2025) | Q1 2025 (Ended Dec 31, 2024) |
|---|---|---|
| Revenues | $16,133,311 | $13,739,899 |
| Gross Profit | $5,621,866 (34.8% Margin) | $5,701,936 (41.5% Margin) |
| Operating Loss | $(2,806,160) | $(2,281,436) |
| Net Loss | $(20,556,147) | $(28,934,519) |
| Cash & Equivalents | $20,505,781 | $4,224,130 |
| Total Debt (Current + Long-term) | $12,753,835 | $13,512,276 |
| Working Capital | $24,748,544 | $5,184,339 |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 17% year-over-year, driven primarily by a 28% increase in the Industrial Services segment ($10.6M vs $8.3M). The Security segment saw a modest 1% increase.
- Margin Compression: Gross margin declined from 41.5% to 34.8%. Management attributed this to tariffs impacting the Security segment and lower project margins in Industrial Services.
- Net Loss Reduction: Net loss decreased by approximately $8.4M compared to the prior year. This improvement was largely due to a significant reduction in non-cash losses related to warrant liabilities (down from $15.8M in 2024 to $4.7M in 2025).
- Liquidity Surge: Cash and cash equivalents increased by over $16M, rising from $4.2M to $20.5M. This was fueled by $6M in equity offerings, $5.7M from warrant exercises, and $7M in new note proceeds.
- Debt Settlement: The company issued 3,000,296 shares of common stock to satisfy approximately $7.8M in notes payable and accrued interest, recording $11.8M as interest expense.
Outlook, Risks, and Unusual Items
- Going Concern Warning: Management has disclosed substantial doubt regarding the company's ability to continue as a going concern for the next twelve months due to accumulated losses and debt obligations. While recent capital raises provide short-term relief, there is no guarantee of future funding success.
- Unusual Non-Cash Items: The quarter included significant non-cash charges, including $11.8M in interest expense related to debt-for-equity swaps and a $441k write-off of obsolete demonstration equipment.
- Digital Assets: The company holds Solana (SOL) digital assets valued at $699k, recording an unrealized loss of $470k for the quarter due to market volatility.
- Subsequent Acquisitions: Post-period, the company acquired Invocon ($7.1M cash) to launch an Aerospace and Defense segment and Richland Industries ($600k note + $4.9M facility purchase) to expand Industrial Services.
- Warrant Resets: Multiple equity offerings in December 2025 triggered downward resets of Series A and Series B warrant exercise prices, increasing the number of outstanding warrants and potential dilution.
Investor Verification Checklist
- Capital Adequacy: Verify the sustainability of operations given the "substantial doubt" disclosure and reliance on future equity raises or debt restructuring.
- Dilution Impact: Review the terms of the recent warrant price resets and the volume of shares issued for debt settlement to assess long-term shareholder dilution.
- Debt Covenants: Confirm compliance with loan covenants, particularly for the new Streeterville Capital note and Fulton Bank mortgages, given the high interest expense.
- Acquisition Integration: Monitor the financial impact and integration of the Invocon and Richland Industries acquisitions in the next reporting period.
- Margin Trends: Track whether the gross margin compression in the Security segment (due to tariffs) and Industrial Services persists in Q2 2026.