Cemtrex Inc. (NASDAQ:CETX), a technology company specializing in electronic components and accessories, has announced a reverse stock split of its common stock at a ratio of 1-for-60, effective Thursday, October 3, 2024. This strategic move is aimed at regaining compliance with Nasdaq's minimum bid price requirement.
The decision for the reverse split follows the approval from the company's stockholders on August 27, 2024, to implement a reverse split at a ratio to be determined by the board. On June 14, 2024, Cemtrex was notified by Nasdaq that its stock price had fallen below the $1 minimum bid price for 30 consecutive business days, necessitating action to maintain its listing on the Nasdaq Capital Market.
Cemtrex's board believes the reverse split will increase the per-share trading price of the company's common stock, allowing it to satisfy the Nasdaq Listing Rule 5550(a)(2). To comply with this rule, the stock must maintain a closing bid price of at least $1 per share for a minimum of ten consecutive business days.
At the time of the reverse split, the number of shares held by each shareholder will be adjusted accordingly, with the company issuing whole shares to replace any fractional shares that would have resulted from the split. Consequently, no fractional shares will be issued, and no cash or other consideration will be paid for fractional shares.
The reverse split will also proportionately adjust the number of shares issuable upon the exercise of outstanding stock options and warrants, as well as the exercise prices. Notably, the Adjustable Warrants, which are set to purchase 50,009,047 shares of common stock, will have their exercise price reduced and the number of shares issuable significantly increased post-split.
Cemtrex filed the necessary Charter Amendment with the Secretary of State of Delaware on September 30, 2024, to effectuate the reverse stock split. The company's common stock will begin trading on a split-adjusted basis on October 3, 2024, under the same ticker symbol "CETX," with a new CUSIP number 15130G808.
This report is based on a press release statement and contains factual information regarding Cemtrex's corporate actions.
In other recent news, Cemtrex Inc. announced its decision to distribute dividends in the form of additional shares on Series 1 Preferred Stock. The decision, reflective of the company's commitment to its shareholders, is set to take effect in October for shareholders on record as of the close of September. The company also reported a steady revenue of $14.7 million in the third quarter of 2024, with the Industrial Services segment seeing a 49% increase in revenue, reaching $8.5 million, while the Security segment experienced a 31% decline to $6.2 million. This resulted in an operating loss of $3.2 million for the quarter.
In a recent earnings call, Cemtrex revealed a net loss of $9.1 million for the same quarter, a significant increase from a net loss of $1.2 million in the previous year. The company conducted a $10 million upsized underwritten public offering to improve its balance sheet and pay off some debt. Looking forward, Cemtrex aims for a full year operating profit, with tight cost controls in place.
It also plans to invest in new technologies and marketing to drive future sales in the Security segment. The firm's Industrial Services segment is poised for a record year of revenue, with potential for over 30% annual growth.
InvestingPro Insights
In light of Cemtrex Inc.'s (NASDAQ:CETX) announcement of a 1-for-60 reverse stock split, recent InvestingPro data provides additional context to the company's financial situation. As of the last twelve months ending Q3 2024, Cemtrex's revenue stood at $65.32 million, with a notable revenue growth of 19.78%. However, the company's operating income was negative at -$4.97 million, indicating ongoing profitability challenges.
InvestingPro Tips highlight that Cemtrex is "trading near its 52-week low" and has "not been profitable over the last twelve months." These factors likely contributed to the need for the reverse stock split to maintain Nasdaq compliance. The company's stock price has also "fallen significantly over the last year," with a one-year price total return of -97.43% as of the most recent data.
It's worth noting that Cemtrex "operates with a significant debt burden" and is "quickly burning through cash," which may pose additional challenges as the company seeks to improve its financial position post-split. Investors considering Cemtrex should be aware that there are 13 additional InvestingPro Tips available, offering a more comprehensive analysis of the company's financial health and market position.
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