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DISCONTINUED OPERATIONS
 12 Months Ended
Sep. 30, 2024
Discontinued Operations and Disposal Groups [Abstract]  
DISCONTINUED OPERATIONS

NOTE 23 – DISCONTINUED OPERATIONS

 

On November 22, 2022, the Company entered into two Asset Purchase Agreements and one Simple Agreement for Future Equity (“SAFE”) with the Company’s CEO, Saagar Govil, to secure the sale of the subsidiaries Cemtrex Advanced Technologies, Inc, which include the brand SmartDesk, and Cemtrex XR, Inc., which include the brands Cemtrex XR, Virtual Driver Interactive, Bravo Strong, and good tech (formerly Cemtrex Labs), to Mr. Govil

 

 

Due to the on-going losses and risk associated with the SmartDesk business the Company has valued the royalty and SAFE agreement associated with the SmartDesk sale at $0 and considers such consideration to be a gain contingency.

 

Based on sales projections for Cemtrex XR, Inc., the Company does not believe that it will exceed the sales levels required to exceed the $820,000 royalties due and has not accounted for any additional royalties at this time. In accordance with ASC 310 – Receivables, the Company has discounted the royalties due to $660,621 and during the years ended September 30, 2024, and 2023 the Company recognized $53,126 and $44,272 of royalties due, respectively, and will amortize the remaining amount over the period the royalties are due. Additionally, the Company received $76,000 in royalty payments.

 

As of September 30, 2024, there was $685,788 in trade receivables due from CXR, Inc. Of these receivables $60,628 are related to costs paid by Cemtrex related to payroll during the transition of employees to the new company and some subscription services that are set up on auto pay with a credit card. $215,408 is related to the current amount of royalties due and the remaining $409,752 is related to services provided by Cemtrex Technologies Pvt. Ltd. in the normal course of business. These balances are presented on the Consolidated Balance Sheets under the caption “Trade receivables - related party”. The long-term balance of royalties of $456,611 is presented on the Company’s Consolidated Balance Sheets under the caption “Note receivable, net - related party”. During Fiscal year 2024, the Company recognized $665,520 of revenue from CXR, Inc.

 

The following table summarizes the loss on the sale recorded during fiscal year 2023, included in Income/(loss) from discontinued operations, net of tax in the accompanying Consolidated Statement of Operations.

    

      
Purchase Price  $745,621 
Less cash and cash equivalents transferred   (699,423)
Less liabilities assumed   (10,924)
Net purchase price  $35,274 
      
Assets Sold     
Accounts receivable, net  $625,638 
Inventory, net   980,730 
Prepaid expenses and other assets   502,577 
Property and equipment, net   837,808 
Goodwill   598,392 
Total Assets Sold   3,545,145 
Liabilities Transferred     
Accounts payable   370,774 
Short-term liabilities   364,775 
Long-term liabilities   318,981 
Total Liabilities Transferred   1,054,530 
Net assets sold  $2,490,615 
      
Pretax loss on sale of Cemtrex Advanced Technologies, Inc, and Cemtrex XR, Inc.  $(2,455,341)

 

During the first quarter of fiscal 2023, Vicon completed the closure of its discontinued operating entity Vicon Systems, Ltd. located in Israel. The Company received funds related to benefit obligations of $96,095, which at the time of operational closure were not guaranteed to be retrievable. The company paid $7,010 in consulting fees for assistance in retrieving these funds. The net amount of $89,085 is recognized on the Company’s Consolidated Income Statement as part of the Loss on Discontinued Operations.

 

 

Gain/(loss) from discontinued operations, net of tax and the loss on sale of discontinued operations, net of tax, of Cemtrex Advanced Technologies, Inc. and Cemtrex XR, Inc., sold during the first quarter of fiscal year 2023, which are presented in total as discontinued operations, net of tax in the Company’s Consolidated Statements of Operations for the years ended September 30, 2024 and 2023, are as follows.

 

   2024   2023 
   Year ended September 30, 
   2024   2023 
         
Total net sales  $-   $649,061 
Cost of sales   -    57,429 
Operating, selling, general and administrative expenses   681    1,104,506 
Other (income)/expenses   -    3,195 
Income (loss) from discontinued operations   (681)   (516,069)
Amortization of discounted royalties   53,126    44,272 
Loss on sale of discontinued operations   -    (2,455,341)
Adjustment of benefit obligation   -    89,085 
Income tax provision   9,321    - 
Discontinued operations, net of tax  $43,124   $(2,838,053)