Cemtrex Inc. (NASDAQ:CETX), a manufacturer of electronic components, has announced a reverse stock split of its common stock at a ratio of 1-for-35, effective Tuesday, November 26, 2024. This strategic move is aimed at regaining compliance with Nasdaq's minimum bid price requirement.
The decision for a reverse stock split follows the approval from the company's stockholders on October 17, 2024, granting the board the discretion to determine the specific ratio within a predetermined range. The split is expected to increase the per-share trading price of Cemtrex's common stock, thereby satisfying the Nasdaq Capital Market's continued listing criteria.
Cemtrex received a notice from Nasdaq on June 14, 2024, indicating that its stock had closed below the required minimum bid price of $1 per share for 30 consecutive business days. The company was given until December 11, 2024, to meet the standard or face potential delisting.
The reverse stock split will reduce the number of Cemtrex's shares outstanding by consolidating every 35 shares into one new share. As a result, the company anticipates that the bid price of its common stock will exceed the $1 threshold. To maintain its listing, the bid price must stay above this level for at least ten consecutive business days.
At the effective time of the split, the company's common stock will begin trading on a split-adjusted basis when the market opens on November 26. The CUSIP number for the common stock will change to 15130G881, although the trading symbol "CETX" will remain the same.
Stockholders will receive one whole share for any fractional shares they would have held post-split, eliminating the issuance of fractional shares. The reverse stock split will also proportionally adjust the terms of all outstanding stock options, warrants, and other equity awards.
Cemtrex filed a Certificate of Amendment to its Certificate of Incorporation with the Delaware Secretary of State on November 21, 2024, to effectuate the reverse stock split.
In other recent news, electronic components manufacturer Cemtrex Inc. has been granted an extension by Nasdaq to regain compliance with the exchange's minimum stockholder's equity requirement. As part of its strategy, the company completed a 1-for-60 reverse stock split and adjusted its warrant exercise prices. Cemtrex also issued dividends on Series 1 Preferred Stock in the form of additional shares.
Turning to financial performance, Cemtrex reported a stable revenue of $14.7 million in the third quarter of 2024, with the Industrial Services segment seeing a 49% increase, while the Security segment experienced a 31% decline. This resulted in a net loss of $9.1 million for the same quarter. To improve its balance sheet, Cemtrex conducted a $10 million upsized underwritten public offering.
In terms of future plans, Cemtrex aims for a full year operating profit, with a focus on investing in new technologies and marketing to drive future sales in the Security segment. These recent developments reflect Cemtrex's ongoing efforts to maintain a robust capital structure and deliver value to its shareholders.
InvestingPro Insights
Cemtrex Inc.'s decision to implement a reverse stock split comes at a critical time for the company. According to InvestingPro data, Cemtrex's market capitalization stands at a modest $4.99 million, reflecting its current challenges. The company's revenue for the last twelve months as of Q3 2024 was $65.32 million, with a revenue growth of 19.78% over the same period. However, this growth hasn't translated into profitability, as evidenced by the negative operating income of $4.97 million.
InvestingPro Tips highlight that Cemtrex "operates with a significant debt burden" and is "quickly burning through cash," which underscores the urgency of the reverse stock split to maintain Nasdaq listing compliance. The tip that the "stock price movements are quite volatile" is particularly relevant, given the company's struggle to meet the minimum bid price requirement.
It's worth noting that despite recent challenges, InvestingPro Tips indicate that "analysts anticipate sales growth in the current year," which could potentially improve the company's financial position post-split. Additionally, the tip that "liquid assets exceed short term obligations" suggests that Cemtrex may have some financial flexibility as it navigates this transition.
For investors seeking a more comprehensive analysis, InvestingPro offers 18 additional tips for Cemtrex, providing a deeper understanding of the company's financial health and market position.
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