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CETX Is An Over-Leveraged Companies That Acquired Poorly Performing Businesses By Ramping Up Debt. The ROB Cemtrex GmbH Case:

|Includes: Cemtrex, Inc. (CETX)

(Do not trade on my notes … Assume I am Wrong … do your OWN Due Diligence and act consequently!!):

CETX has performed $24.9m worth of acquisitions and financed 17.3m of them with debt.

Since 2013 CETX has performed $22.2m worth of acquisitions and financed only $5.9m of them with Equity, the remaining $16.3m has been financed by Debt.

Even Fundamentally CETX is a No Brainer STRONG SELL! CETX has just been acquiring performing businesses and financing the transactions mostly with debt. Retail investors see revenue grow and therefore buy into the growth story touted by the management and online newsletters…. Unfortunately, shareholders fail to consider the fact that everyone can buy a 30-50 Revenue business for 1m USD (or even less) … if the business is in poor conditions. That's exactly what CETX has been doing. Let me give you an example (or maybe two):

Let's have a Look at Rob Group Assets Acquisition now operating under "Rob Cemtrex GMBH" Umbrella:

You can judge the situation of the Balance Sheet yourself … in 2015 it even became Equity Negative.

The Rob Cemtrex GmbH 2014 Net Income:

From the 10-K for the Period Ending September 30, 2014 ( Page 15):

" Net income for years ended September 30, 2014 and 2013 was $2,668,886 and $288,497, respectively, an increase of $2,380,389, or 825%. The net income percentage in the period as compared to the previous one was higher as a result of the acquisition of ROB Cemtrex GmbH and execution of profitable environmental and filtration projects"

One page Later, CETX even stated that the Higher Net Income was due to the Acquisition of ROB Cemtrex Gmbh:" Net income for the year increased, as compared to net income for last year, due to higher overall sales due to the acquisition of ROB Cemtrex GmbH" (10-K for the Period Ending September 30, 2014 ( Page 16)).

Since I am a Diligent Investor, I decided to pull the Rob Cemtrex Gmbh Financial Statements from Germany, and I noticed that the Net Income in 2014 had only be EURO 30,706 (About USD 39,000 the at the time prevailing FX Rate).

According to Cemtrex Inc SEC filings ( Page 15) Net Income in 2014 Increased by more than $2m + " due to higher overall sales due to the acquisition of ROB Cemtrex GmbH ( Page 16) … … yet German Filings for ROB Cemtrex GmbH show that Net Income was only EURO 30,076 …. PUZZLING!

I recognize that there can be some adjustments between German Accounting and the Accounting Standards used in the SEC filings … however the difference seems to be too big. And in any case, German Filings shows that Rob Cemtrex GmbH in 2014 barely broke even … while CETX tries to illustrate a thriving business in the SEC filings / Financials.

The Rob Cemtrex GmbH 2015 Net Income:

For the Period Ending September 20, 2015, Rob Cemtrex GmbH (per German Filings) incurred a loss of Euro 639,587 (vs. the EURO 30,706 Profits in 2014), implying a deterioration of EURO 670,293 (Or Approximately $0.77m. Looks like CETX is not that turnaround Expert Management wants investors to believe!

According to the 10-K for the Fiscal Year ending September 30, 2015 ( page 15), Cemtrex Inc was able to increase it's net income by about $0.169m: "Net income for years ended September 30, 2015 and 2014 was $2,838,116 and $2,668,886, respectively, an increase of $169,230, or 6%. Net income in this period as compared to the previous one was higher as a result of higher overall sales."

It is Great how CETX is always able to growth, no matter what. So unfortunate I do not trust this Company … AT ALL! I think I have provided enough evidence (also in the Cemtrex India Private Limited Blog post … about why I do not trust CETX and its Management Team)!!

Has business at Griffin Filters LCC been shrinking over the year? It surely seems so!

10-K for FY 2009 (page F-12): "The Company's subsidiary Griffin Filters LLC leases approx. 10,000 sq. ft. of office and warehouse space in Liverpool, New York from a third party in a five year lease at a monthly rent of $ 4,858.00 expiring on March 30, 2012."

10-K for FY 2014 (page F-20): "The Company's subsidiary Griffin Filters LLC leases approx. 5,000 sq. ft. of office and warehouse space in Liverpool, New York from a third party in a five year lease at a monthly rent of $2,200 expiring on March 31, 2018.". Leased Space was unchanged in the 10-K for FY 2016 (page F-25)

It looks like that form 2009 to 2014 they have reduced the leased space by 50% … Not very indicative of a Thriving Business! Right?

DO NOT TRUST ME … I MIGHT BE WRONG … DO YOUR OWN DUE DILIGENCE AND ACT CONSEQUENTLY. Of course, I am high conviction short into this opaque and for me not trustworthy Company!

PS:

If you want a to take a closer look at past CETX 10-Ks … you might find interesting the fact that from 2011 to 2013 a vast majority of the revenue (>70%) of the Company (back then it only had the MIP Division & Filters Segment) used to come from Ducon Technology Inc (Govil's other Company). Then all of a sudden, in 2014 the Revenue generated from sales to Ducon Technologies went to $0 (from$10.8m). However, CETX revenue in the Segment did not decline by a single penny. CETX did not even give any explanation about why this Change happened!

Once CETX is over … I suggest Management starts a PR firm. They have been so good at issuing meaningless PR to promote CETX. Look at this Chart:

Disclosure: I am/we are short CETX.