Cemtrex (CETX) is a three-segment industrial holding company based in Hauppauge, New York, with a September 30 fiscal year and roughly 240 employees. In fiscal 2025 it reported $76.5 million in revenue and a $28.1 million net loss. It has run four reverse stock splits in twenty months, carries a preferred stock claim worth more than its entire common equity, and funds its cash burn by continuously issuing new shares. Underneath all of that sits one genuinely good business: an industrial services operation that earns a 10% operating margin and is growing through cheap acquisitions. The central question for an investor is whether there is any way to own the good business without being destroyed by the structure wrapped around it.
The short answer is that the common stock is the wrong instrument. The reasons why are worth walking through in detail, because Cemtrex is a clean case study in how a listed micro-cap can transfer value away from its public shareholders while the legal entity survives and even reports revenue growth.
What the company does
Cemtrex operates three unrelated businesses stapled together under one listing.
Security (Vicon Industries). Vicon sells browser-based video surveillance systems, AI analytics, cameras, servers, and access control hardware. Its customers are prisons, hospitals, schools, universities, and government offices, reached through system integrators and channel partners. Cemtrex describes Vicon as majority owned, but that language is stale. In February 2025 Cemtrex ran a reverse split inside Vicon itself, exchanging 98,521 shares for 6 and cutting authorized shares from 75,000,000 to 15,000. That maneuver squeezed out the minority holders for $70,013 and left Cemtrex owning essentially all of Vicon.
Industrial Services (Advanced Industrial Services, or AIS). AIS does rigging, millwrighting, machinery erection, plant relocation, in-plant maintenance, specialty welding, and scaffolding for manufacturing, chemical, packaging, and printing customers. Fixed-price contracts are booked on a percentage-of-completion basis; time-and-materials work is billed cost plus markup. This is the profitable segment, and Cemtrex has been expanding it through small acquisitions: Richland LLC (now AIS-TN) closed in February 2026, and Plant Engineering Services of Indiana closed in July 2026.
Aerospace and Defense (Invocon). Cemtrex bought Invocon for $7.06 million in January 2026. Invocon is a Texas systems-engineering firm that makes wireless sensing, instrumentation, and telemetry hardware. Its equipment has flown on satellites, launch vehicles, the Space Shuttle, and the International Space Station, and it holds Missile Defense Agency and prime-contractor relationships.
How the money actually moves
The stated model is straightforward: win competitive bids, ship equipment and services, book revenue. The cash flow statement tells a different story about where value goes.
Here are the two most recent reporting periods side by side.
| Line | FY2025 | H1 FY2026 |
|---|---|---|
| Revenue | $76.5M | $34.2M |
| Gross profit | $32.3M (42%) | $12.5M (36%) |
| Operating income | $0.5M | ($5.0M) |
| Other expense, net | ($27.8M) | ($14.1M) |
| Net loss | ($28.1M) | ($19.7M) |
| Operating cash flow | $0.2M | ($5.3M) |
| Financing cash flow | $4.1M | $20.9M |
Fiscal 2025 produced a razor-thin operating profit, and it came from a single order. One Vicon sale of $10.375 million made up 27% of the Security segment’s revenue at roughly 50% gross margin, contributing about $5.2 million of gross profit. Strip that one order out and fiscal 2025 operating income is a loss of about $4.7 million. That order is also the reason Security revenue collapsed 66% in the second quarter of fiscal 2026, falling from $17.0 million a year earlier to $5.8 million. There was nothing to repeat.
The segment detail for the first half of fiscal 2026 shows which business works and which does not.
| Segment | Revenue | Operating income |
|---|---|---|
| Industrial Services (AIS) | $21.7M | $2.1M |
| Security (Vicon) | $11.3M | ($4.4M) |
| Aerospace and Defense (Invocon) | $1.2M | ($0.4M) |
| Corporate | n/a | ($2.3M) |
AIS earns money. Vicon loses more than AIS makes. Corporate overhead consumes the rest. Financing activities supplied $20.9 million in six months against $5.3 million of operating cash burn. The company runs on issued securities, not on operations.
The capital structure is the whole story
Cemtrex has completed four reverse stock splits in twenty months:
- 60-for-1 on October 2, 2024
- 35-for-1 on November 26, 2024
- 15-for-1 on September 29, 2025
- 10-for-1 on June 5, 2026
Compounded, those splits equal a 315,000-to-1 reduction. The reason the splits keep coming is a financing structure that feeds on them.
In May 2024, Cemtrex raised $10 million in an offering underwritten by Aegis Capital. The deal included Series A and Series B warrants. Under the Series A “alternate cashless exercise” provision, a holder can receive three times the number of shares a normal cash exercise would produce. The warrants also reset their exercise price to the lowest VWAP around any future reverse split, with a proportional increase in the underlying share count. The prospectus for that offering spells this out directly: the holder receives shares equal to the cash-exercise amount multiplied by 3.0, and the exercise price resets on a reverse split. The warrants’ fair value at issuance was $17.3 million against $10.0 million of gross proceeds, which forced a day-one loss of $7.3 million on the excess.
Each reverse split lowers the strike and multiplies the warrant shares. The split does not reduce the dilution. It powers it. The observed reset cascade ran from $5.30 down through $4.56, then $2.43, then $2.25 across late 2025 and early 2026, with the Series B share count expanding at each step.
The share count history shows the result.
| Date | Common shares outstanding |
|---|---|
| September 30, 2025 | 830,606 |
| March 31, 2026 | 10,078,089 |
| May 13, 2026 | 11,121,834 |
| June 5, 2026 (post 10-for-1 split) | ~1,112,183 |
| July 2, 2026 | 1,721,141 |
Cemtrex issued roughly 609,000 unregistered shares in under four weeks after the June split, which is about 35% of the share count, re-diluting what the split had just consolidated. During the first half of fiscal 2026, the company issued $19.6 million of stock to satisfy notes payable and booked $11.8 million of non-cash “excess value of shares issued” as interest expense. Cash interest paid was $324,000. Cemtrex retires debt with equity at a punitive premium and passes the cost to common holders.
The preferred stack most screens miss
The Series 1 Preferred is the claim that reframes everything. There were about 2.78 million Series 1 shares outstanding, each with a $10 liquidation preference, for a total claim of roughly $27.8 million that sits ahead of the common. The dividend is 10% and cumulative, and Cemtrex pays it in more preferred shares rather than cash. The company issued 252,278 preferred shares for dividends in fiscal 2025 and 135,592 in the first half of fiscal 2026. There is also a small Series C preferred block, discussed below.
Line the balance sheet up against that preferred claim, using the March 31, 2026 figures:
| Item | Amount |
|---|---|
| Total assets | $70.7M |
| Total liabilities | ($36.0M) |
| Book equity | $34.7M |
| Less goodwill | ($7.7M) |
| Less intangibles | ($3.0M) |
| Tangible equity | $24.0M |
| Less Series 1 preference | ($27.8M) |
| Tangible book to common | ($3.7M) |
Tangible book value attributable to the common stock is negative. The equity that public shareholders buy sits behind roughly $36 million of liabilities and a $28 million preferred claim, on an asset base that is partly goodwill and acquired intangibles.
The debt
Funded debt totaled about $19.6 million at March 31, 2026, including a $2.0 million Vicon revolver with Pathward. The instrument that matters most is a promissory note with Streeterville Capital. Cemtrex issued it on November 7, 2025 with an original principal of $7,025,000, receiving $7.0 million in cash after fees. The 8-K describing the note lays out the terms: interest at 8% after December 31, 2025, an 18-month maturity, redemptions permitted starting six months after issuance, and a one-time $1,050,000 fee automatically added to the balance because the note remained outstanding on January 1, 2026. By March 31, 2026 the note was carried at $8.28 million. The redemption feature lets the lender pull up to $700,000 per month starting around May 2026, which is a heavy draw relative to what the business generates in cash.
The rest of the debt is a stack of Fulton Bank mortgages and equipment loans secured against specific AIS and Heisey properties, plus smaller acquisition notes. Most of it is secured, and all of it ranks ahead of both the preferred and the common. The company disclosed $10.8 million of debt coming due within the following fiscal year, which is one of the pillars of its going concern warning.
Management and governance
Saagar Govil is Chairman, President, and CEO. He earned a materials engineering degree from Stony Brook University, joined Cemtrex in 2008 as a field engineer, and became CEO in December 2011 in his mid-twenties. He is the son of Aron Govil, who founded Cemtrex in 2004, ran it as CEO until 2011, and handed the role to Saagar.
The regulatory record is central to understanding this company, not a side note.
In 2022, the SEC issued an administrative order against both Cemtrex and Saagar Govil personally. The SEC found that a February 2017 press release falsely stated that Aron Govil had not sold Cemtrex shares in years, when he had. Cemtrex paid $2.2 million and Saagar paid $350,000 to settle.
The SEC separately pursued Aron Govil for defrauding investors and misappropriating more than $7 million of Cemtrex investor funds. On January 20, 2026, a federal judge in the Southern District of New York entered a final judgment of $9,708,592.59 against him, consisting of $6,670,977 in disgorgement and $3,037,615.59 in prejudgment interest, in case number 1:21-cv-06150. That judgment landed during the same period as the dilution activity described above.
The control structure closes off the usual shareholder remedies. Saagar Govil owns all 50,000 shares of Series C preferred. The Series C votes at a rate that gives the block a fixed multiple of the entire common vote, and the March 2026 proxy statement shows the result: roughly 86.6% of total voting power resides in that Series C block, adjusting automatically as the common count changes. The company states plainly that public stockholders may be unable to influence director elections or significant corporate transactions. A proxy fight cannot be won. A hostile acquirer cannot accumulate control, because the Series C multiple scales with the common count. Control is not contestable.
Two capital allocation decisions round out the picture. While warning that it lacked adequate liquidity, Cemtrex bought 13,058 Solana tokens for $2.0 million (carried at $1.1 million on March 31, 2026, a 47% markdown) and placed $5 million of what it called surplus cash into marketable securities. In fiscal 2023, Saagar Govil personally bought two operating subsidiaries from the company. The Richland acquisition also produced a bargain purchase gain of $2.07 million, which flatters reported other income and signals a distressed seller.
The financing ecosystem
Cemtrex’s access to capital does not come from a track record. It carries a $99 million accumulated deficit and a fraud history on both father and son. The capital comes from a set of micro-cap financing structures whose terms deliver a return regardless of where the stock goes.
- Aegis Capital underwrote the May 2024 offering that carried the Series A and Series B reset warrants.
- Stock-settled promissory notes let Cemtrex retire debt by issuing common shares at a premium to the dollar amount repaid, which converts debt into dilution.
- Streeterville Capital holds an $7,025,000 cash note whose lender-controlled monthly redemptions drain the company’s liquidity on the lender’s schedule.
- Registered direct offerings sold stock and pre-funded warrants to single institutional investors at steadily declining prices through late 2025 and early 2026.
None of these structures underwrites the business. Each one protects the provider’s return through its own terms. The common shareholder supplies the exit liquidity. Insiders own almost no common stock, and the company reported just 81 holders of record as of December 22, 2025. The float is manufactured and sold, over and over.
How these financing structures protect their own return
The structures above share one trait: each is built so the provider’s return is largely decoupled from whether the stock rises or falls. A conventional investor and a common shareholder are aligned, because both need the price to go up. These structures break that link. The mechanism that produces the provider’s return is often the same mechanism that dilutes the common holder.
Reset warrants
A warrant is the right to buy a share at a fixed exercise price. Normally it is a directional bet: if the stock rises above the strike, the warrant pays off, and if it stays below, it expires worthless. The CETX Series A and Series B warrants remove that dependence with two provisions.
The first is a price reset. The strike does not stay fixed. It resets down to the lowest VWAP around any future reverse split or cheaper issuance. Walk through it with round numbers. A warrant struck at $5.00 covers 1,000 shares, for $5,000 of aggregate exercise value. The stock falls, a reverse split occurs, and the strike resets to $2.50. Because the reset preserves aggregate value, the share count roughly doubles to 2,000. The warrant did not lose value when the stock dropped. It gained shares. In the May 2024 offering, the strike cascaded from $5.30 to $4.56 to $2.43 to $2.25, with the underlying share count expanding at each step.
The second is the alternate cashless exercise. The Series A warrants deliver three times the shares a normal cash exercise would produce. A warrant nominally over 1,000 shares delivers 3,000. Put the reset and the multiplier together, and every reverse split management runs to defend the bid price simultaneously lowers the strike and multiplies the warrant shares. This is why the warrants were worth $17.3 million at issuance against $10.0 million of proceeds, forcing a $7.3 million day-one loss. The market priced in on day one that the structure would extract more than the cash it provided. The return arrives as the stock falls, not as it rises, which is the definition of a death spiral: holders exercise into cheap shares, sell them, push the price down, and trigger the next reset.
Stock-settled notes
The clearest dilution engine at Cemtrex is the practice of repaying debt with common stock at a premium to the amount owed. During the six months ended March 31, 2026, Cemtrex issued 3,000,296 common shares to satisfy $7,759,168 of notes payable, and recorded $11,798,283 of “excess value of shares issued” as interest expense. Cash interest paid in the same period was $324,000.
The $11.8 million figure is the mechanism in plain view. It is the gap between the market value of the shares handed to the note holder and the dollar amount of debt those shares retired. The note holder receives stock worth far more than the debt being settled, then sells it. The company books the difference as a non-cash expense, and the common shareholder absorbs both the dilution and the premium. A conventional lender wants cash back. A stock-settled note holder is repaid in freshly issued shares priced in the holder’s favor, so the size of the claim expands as the stock weakens.
The Streeterville redemption drain
The Streeterville note works differently and does not convert to stock. It is a cash instrument: $7,025,000 of principal, 8% interest, an 18-month maturity, and a one-time $1,050,000 fee that was automatically added to the balance because the note stayed outstanding past January 1, 2026. By March 31, 2026 it was carried at $8.28 million, above its face.
The protective feature is the redemption right. Starting six months after issuance, the lender can require Cemtrex to redeem up to $700,000 per month. In a normal loan the borrower controls the repayment schedule. Here the lender does. That lets the lender pull principal out steadily and on its own timetable, de-risking its position while draining the company’s cash during a period when Cemtrex has stated it lacks adequate liquidity. The note holder does not need the business to improve. It holds senior priority and a contractual straw into whatever cash the company can find.
The registered directs
Through late 2025 and early 2026, Cemtrex sold stock and immediately-exercised pre-funded warrants to single institutional investors in a series of registered direct offerings. The prices stepped down across the sequence, from $3.00 to $2.50 to $2.25. The declining price line tracks the same downward pressure the warrants and stock-settled notes create, with each raise priced below the last.
The common thread
| Structure | What produces the return | Who bears the cost |
|---|---|---|
| Reset warrants | Strike resets down and share count multiplies as the stock falls | Common holders, through an expanding share count |
| Stock-settled notes | Debt repaid in shares worth more than the amount owed | Common holders, through dilution and the booked premium |
| Streeterville note | Lender-controlled monthly cash redemptions with senior priority | The company’s liquidity, ahead of preferred and common |
| Registered directs | Fresh stock sold to single investors at each lower price | Common holders, through repeated dilution |
Three of these four never require the business to improve or the stock to rise. The reset warrants and the stock-settled notes pay more when the stock falls, because a lower price means more shares per dollar of claim. The dilution that destroys the common holder is the same event that pays the provider. This is how Cemtrex generated $76 million of revenue and grew a profitable industrial services segment while the common shareholder still lost to the denominator. When a micro-cap funds itself this way, the share count, not the business, becomes the variable that decides shareholder outcomes.
Valuation
Consolidated EBITDA is negative, running near a $8 million annual loss at the operating level after Vicon and corporate overhead. No earnings multiple produces a positive enterprise value on the whole company. The only method that fits is SOTP, valuing each operating business and then subtracting everything senior to the common.
AIS. Run-rate revenue is heading past $45 million including the PES acquisition, with operating income around $4.2 million annualized and EBITDA near $6.6 million. Industrial services roll-ups of this kind trade at 4 to 6 times EBITDA. Cemtrex itself buys these businesses at or below 4 times, which anchors the low end. This supports a range of $26M to $40M, with a base case of $33M.
Vicon. Chronically unprofitable, with revenue running $23M to $28M after the lost mega-order and losses near $8.8 million annualized. A buyer pays for the installed base, software, and channel rather than the income statement. Range of $3M to $12M, base case $8M.
Invocon. Revenue near $5 million at a 42% gross margin, currently loss-making, bought for $7.06 million in January 2026. Range of $5M to $12M, base case $7M.
Rolling those together and subtracting net debt and the preferred stack:
| Scenario | Enterprise value | Less net debt | Less preferred (par) | Equity to common | Per share |
|---|---|---|---|---|---|
| Bear | $34M | ($13M) | ($27.8M) | ($6.8M) | $0 |
| Base | $48M | ($13M) | ($27.8M) | $7.2M | ~$4.20 |
| Bull | $64M | ($13M) | ($27.8M) | $23.2M | ~$13.50 |
Per-share figures use the July 2, 2026 count of 1,721,141 shares. That denominator is the weakest assumption in the entire model. Cemtrex grew its share count 35% in four weeks after the June split, and any continued issuance pushes every per-share figure toward the bear case. A model that depends on the share count holding still is modeling something Cemtrex has not done in two years.
There is a second way to read the same numbers. If the Series 1 preferred is marked at roughly 30% of par, which is where distressed, non-cash-paying, OTC-traded preferreds often trade, the equity-to-common figures rise to roughly $7.40, $15.50, and $24.80 per share. The spread between that and the table above, running from $0 to $25, is not really a valuation. It is a statement that the outcome depends on capital structure decisions controlled by one person, not on how the businesses perform.
The CETXP preferred is the more rational claim, with a catch
If the operating businesses are worth something and the common is structurally impaired, the natural move is to look one level up the capital structure at the Series 1 preferred, which trades over-the-counter as CETXP after being delisted from Nasdaq in early 2024. It sits ahead of the common and closest to the value in AIS. On the sum-of-the-parts, the $27.8 million par claim has meaningful asset coverage in the base and bull cases and partial coverage in the bear case.
Weak terms, by design
The certificate of designation explains why that senior position is less useful than it looks. CETXP has no maturity date, no holder put right, and no conversion into common. Redemption is entirely at the company’s option, at $10 plus accrued dividends. The dividend is cumulative but payable in more preferred shares, so a holder receives paper rather than cash. Critically, the certificate states that a merger or a sale of substantially all assets does not by itself count as a liquidation. A buyer could acquire the operating businesses while CETXP remains outstanding at the parent.
That last point defeats the simplest bull thesis. The claim does not pay off just because the assets get sold. It pays off only if the company voluntarily redeems, formally liquidates after paying every creditor, or a buyer specifically negotiates to retire the preferred. Cemtrex controls the timing of all three.
The seniority is real today, and undefended tomorrow
A buyer reaching for CETXP instead of the common is buying seniority. The certificate of designation shows how thin that seniority is. Section 2, the ranking clause, does not restrict the company from issuing stock that outranks CETXP. It authorizes it:
“The Series 1 Preferred shall… rank (a) senior to the Corporation’s series A preferred stock… the Common Stock, and any other class of capital stock the Corporation issues in the future unless the terms of that stock provide that it ranks senior to any or all of the Series 1 Preferred; (b) on a parity with any class of capital stock the Corporation issues in the future the terms of which provide that it will rank on a parity…; (c) junior to each class of capital stock issued in the future the terms of which expressly provide that such capital stock will rank senior to the Series 1 Preferred… and (d) junior to all of the Corporation’s existing and future indebtedness.”
Every subsection leaves room for new senior or equal-ranking stock. The certificate contains no covenant requiring Series 1 consent before the company creates a senior series. The only class vote CETXP holders get covers “any amendment altering or changing the powers, preferences or special rights of the Series 1 Preferred so as to affect them adversely.” Creating a new senior series is an issuance, not an amendment to the existing terms, so it sits outside that protection. The board also holds blank-check authority to fix the terms of new preferred series and can increase the Series 1 count without a shareholder vote.
Put those provisions together with the control structure. The board that could mint a new senior class is controlled by Saagar Govil through the Series C supervote, and it needs no consent from the Series 1 holders to do it. CETXP ranks ahead of the common today, behind all debt, and one board resolution away from ranking behind a new preferred class as well.
The takeaway for anyone treating a preferred stock as a safer way into a distressed micro-cap: read the ranking and protective-provision language before assuming the label “preferred” means durable seniority. Here it does not. The seniority exists at the pleasure of a board the outside holders do not control.
Whether it ever pays off
There is real precedent for preferred overhangs getting cleaned up, which is what makes CETXP a live question rather than dead money. Exantas Capital cured suspended preferred dividends once its liquidity recovered. The iStar/Safehold merger required retiring the old preferred before the deal could close. Cedar Realty eventually addressed its preferred through discounted tender offers at $16.25 and $17.75 against a $25 preference, which is the more sobering template: a transaction can happen and still pay preferred holders well below par. Cemtrex has already repurchased small amounts of CETXP below par, buying 71,951 shares for $69,705 (about $0.97 each) through September 2024, which is exactly the kind of accretive move a rational board would repeat.
The honest characterization is that CETXP is a senior claim on a decent asset, purchasable below par, with no mechanism for the holder to force a payoff and a controller who has shown he moves value toward himself. Whether it is interesting depends entirely on the price relative to par and on the appearance of a catalyst, neither of which can be assessed from the filings alone.
Where this goes
Cemtrex is not likely to sell AIS voluntarily. AIS produces the operating cash, supports the growth narrative, and makes financiers willing to keep funding the company. Selling it would expose what remains. The base case is continued dilution, continued acquisitions, and continued reported revenue growth, funded by new share issuance, for as long as the financing market stays open.
The company stops doing this when an external constraint forces it, not when management decides shareholders have suffered enough. The most likely constraints are the Streeterville redemption schedule pulling cash the business does not generate, the equity financing market closing, a Nasdaq delisting that damages the issuance machine, or a working-capital failure. Because Nasdaq denies the normal cure period to companies that have done recent reverse splits, another sustained bid-price deficiency before June 2027 would push Cemtrex toward an expedited delisting rather than a 180-day grace window.
When one of those constraints hits, the beneficiaries of any asset sale are the creditors and the continuing entity, not the public common holders. In a restructuring or a Chapter 11, the Series C voting lock becomes irrelevant, because a court and the creditors control the estate. That is the one scenario where control changes hands, and it is a distressed-debt outcome, not an equity one.
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What to Watch
| Catalyst | Why It Matters | Timeline |
|---|---|---|
| Q3 FY2026 10-Q (quarter ended June 30, 2026) | Reveals updated share count, purpose of the 609,000-share issuance, cash left after the PES acquisition, and whether AIS earnings reach the parent | Filed around mid-August 2026 |
| Streeterville monthly redemptions | Up to $700,000 per month began around May 2026; a heavy cash draw the business does not generate | Ongoing through 2027 |
| Fifth reverse split | Would signal the bid-price problem has returned and the dilution cycle is continuing | Watch through June 2027 |
| Nasdaq bid-price compliance | A deficiency before June 2027 risks expedited delisting with no cure period, damaging the financing machine | Through June 2027 |
| CETXP repurchase authorization | Current authorization runs to August 31, 2026; a renewal signals management may retire preferred at a discount | August 2026 |
| Aron Govil judgment collection (case 1:21-cv-06150) | Post-judgment writs or charging orders indicate active SEC collection against the founder | Ongoing; track via PACER/CourtListener |
| FY2026 10-K | Full-year picture of segment economics, preferred count, and going concern status | Around December 2026 |
Sources:
- Form 10-K for fiscal year ended September 30, 2025
- Form 10-Q for quarter ended March 31, 2026
- Form 8-K filed July 6, 2026 (Plant Engineering Services acquisition and share count)
- Form 8-K filed November 12, 2025 (Streeterville Capital note)
- Proxy Statement (DEF 14A) filed March 26, 2026
- Prospectus (424B4) for the May 2024 offering and warrant terms
- Series 1 Preferred Certificate of Designation
- SEC v. Govil, No. 1:21-cv-06150 (S.D.N.Y.), final judgment entered January 20, 2026
Research and analysis conducted with AI assistance using SEC EDGAR filings as primary sources.