Cemtrex Reports Third Quarter 2021 Financial Results

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Brooklyn, NY, Aug. 16, 2021 (GLOBE NEWSWIRE) — – Cemtrex Inc. (NASDAQ: CETX, CETXP, CETXW), a technology company driving innovation in Internet of Things (IoT), security, machine vision & artificial intelligence, and augmented & virtual reality, has reported its financial and operational results for the third quarter ended June 30, 2021.

Third Quarter 2021 Financial Results

Revenue for the three months ended June 30, 2021, and 2020 was $10.3 million and $8.4 million, respectively, an increase of 22%. This increase is mainly due to an improvement in economic conditions from the impact of the COVID-19 crisis during the same period last year. Revenue for the nine months ended June 30, 2021, and 2020 was $28.4 million and $32.8, respectively, a decrease of 13%. The Advanced Technologies segment revenues for the three months ended June 30, 2021, increased by 17% to $5.8 million, and the Industrial Services segment revenues for quarter increased by 29%, to $4.5 million.

Gross Profit for the third quarter of 2021 was $4.1 million, or 40% of revenues as compared to gross profit of $3.3 million, or 39% of revenues for the year ago period. Gross profit increased due to higher sales and varied from product to product and from customer to customer.

Total operating expenses for three months ended June 30, 2021, were $6.4 million, compared to $5.7 million in the prior year’s quarter.

Operating activities for continuing operations used $6.2 million for the nine months ended June 30, 2021 compared to using $3.4 million of cash for the nine months ended June 30, 2020.

Net income for the quarter ended June 30, 2021 was approximately $1.1 million, as compared to a net loss of $4.2 million in 2020. Net income increased in the third quarter as compared to the same period last year primarily due to overall economic improvement from the impact of the COVID-19 crisis during the same period last year and the result of PPP Loan forgiveness.

Cash and cash equivalents totaled $12.9 million at June 30, 2021, as compared to $15.9 million at December 31, 2020 and $19.5 million at September 30, 2020.

Management Commentary

Cemtrex’s Chairman and CEO, Saagar Govil, commented on the results: “In the third quarter of 2021 we continued to see a renewed improvement in our segments, with revenue for the quarter up 12% sequentially from the second quarter. We remain optimistic that our revenue will continue to trend upward as the economic uncertainty due to the pandemic recedes.”

“Throughout the year we have striven to remain at the forefront of innovation by continuing to invest in the development of our roadmap including Advanced Technologies Segment’s proprietary technology, including Virtual Reality solutions, SmartDesk, and Artificial Intelligence (AI) based, next generation solutions associated with security and surveillance systems software. While we experienced some delays due to the pandemic, we believe that as we continue to roll out our exciting new products and solutions over the next year that our outlook remains positive.”

“Despite the challenges of the pandemic, we believe this focus on the evolution of our core technologies, and a commitment to driving top line growth, has put us in a strong position as our market returns to normal and customers reopen for business and resume purchasing.”

About Cemtrex

Cemtrex, Inc. (CETX) is a leading multi-industry technology company that is driving innovation in markets such as Internet of Things (IoT), Augmented and Virtual Reality (AR & VR), and Artificial Intelligence and Computer Vision (AI & CV) in a wide range of sectors, including consumer products, industrial manufacturing, digital applications, and intelligent security & surveillance systems. www.cemtrex.com.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to the closing of the offering, gross proceeds from the offering, our new product offerings, expected use of proceeds, or any proposed fundraising activities. These forward-looking statements are based on management’s current expectations and are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by such forward looking statements. Statements made herein are as of the date of this press release and should not be relied upon as of any subsequent date. These risks and uncertainties are discussed under the heading “Risk Factors” contained in our Form 10-K filed with the Securities and Exchange Commission. All information in this press release is as of the date of the release and we undertake no duty to update this information unless required by law.

Cemtrex, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

    (UNAUDITED)   (Restated)
    June 30,   September 30,
Assets     2021       2020  
Current assets        
Cash and equivalents   $ 12,879,278     $ 19,490,061  
Restricted cash     1,690,873       1,582,798  
Short-term investments     452,175       887,746  
Trade receivables, net     5,234,216       6,686,797  
Trade receivables – related party     1,505,789       1,432,209  
Inventory –net of allowance for inventory obsolescence     8,669,397       6,793,806  
Prepaid expenses and other assets     2,164,367       1,188,317  
Total current assets     32,596,095       38,061,734  
         
Property and equipment, net     7,236,755       6,961,751  
Right-of-use assets     3,098,523       2,728,380  
Assets held for sale     8,323,321       8,323,321  
Goodwill     5,886,096       4,370,894  
Other     1,094,429       744,207  
Total Assets   $ 58,235,219     $ 61,190,287  
         
         
Liabilities & Stockholders’ Equity (Deficit)        
Current liabilities        
Accounts payable   $ 2,888,144     $ 2,857,817  
Short-term liabilities     6,381,047       7,034,510  
Lease liabilities – short-term     840,016       721,036  
Deposits from customers     39,227       29,660  
Accrued expenses     2,476,812       2,392,487  
Deferred revenue     1,794,187       1,651,784  
Accrued income taxes     331       89,318  
Total current liabilities     14,419,764       14,776,612  
         
Long-term liabilities        
Loans payable to bank     1,046,504       1,871,201  
Long-term lease liabilities     2,261,148       2,027,406  
Notes payable     3,079,743       6,029,999  
Mortgage payable     2,282,409       2,355,542  
Other long-term liabilities     1,078,752       1,063,733  
Paycheck Protection Program Loans     2,871,161       2,169,437  
Deferred Revenue – long-term     449,563       467,329  
Total long-term liabilities     13,069,280       15,984,647  
         
Total liabilities     27,489,044       30,761,259  
         
Commitments and contingencies            
         
Shareholders’ equity        
Preferred stock , $0.001 par value, 10,000,000 shares authorized,         
Series 1, 3,000,000 shares authorized, 1,885,151 shares issued and        
outstanding as of June 30, 2021, and 2,156,784 shares issued and        
outstanding as of September 30, 2020 (liquidation value of $10 per share)     1,885       2,157  
Series A, 1,000,000 shares authorized, zero shares issued and outstanding at        
June 30, 2021, and 1,000,000 shares issued and outstanding at September 30, 2020           1,000  
Series C, 100,000 shares authorized, 50,000 shares issued and outstanding at        
June 30, 2021, and 100,000 shares issued and outstanding at September 30, 2020     50       100  
Common stock, $0.001 par value, 50,000,000 shares authorized,        
18,711,463 shares issued and outstanding at June 30, 2021, and        
17,622,539 shares issued and outstanding at September 30, 2020     18,711       17,623  
Additional paid-in capital     58,846,576       60,221,766  
Retained earnings (accumulated deficit)     (30,660,550 )     (32,520,084 )
Treasury stock at cost     (148,291 )     (148,291 )
Accumulated other comprehensive income (loss)     1,624,673       1,777,112  
Total Cemtrex stockholders’ equity     29,683,054       29,351,383  
Non-controlling interest     1,063,121       1,077,645  
Total liabilities and shareholders’ equity   $ 58,235,219     $ 61,190,287  
         

Cemtrex, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss)

    For the three months ended   For the nine months ended
    June 30, 2021   June 30, 2020   June 30, 2021   June 30, 2020
Revenues   $ 10,326,431     $ 8,440,867     $ 28,422,892     $                   32,774,797  
Cost of revenues     6,198,715       5,161,015       16,360,822       18,800,355  
Gross profit     4,127,716       3,279,852       12,062,070       13,974,442  
                 
Operating expenses                
General and administrative     5,670,019       5,347,718       16,337,200       15,380,199  
Research and development     757,966       331,936       2,033,688       1,113,455  
Total operating expenses     6,427,985       5,679,654       18,370,888       16,493,654  
Operating income/(loss)     (2,300,269 )     (2,399,802 )     (6,308,818 )     (2,519,212 )
                 
Other income/(expense)                
Other income/(expense)     3,901,658       158,134       6,532,590       830,251  
         Settlement Agreement – Related Party                      3,674,165        
Interest Expense     (433,009 )     (1,982,101 )     (1,891,026 )     (3,812,921 )
Total other income/(expense), net     3,468,649       (1,823,967 )     8,315,729       (2,982,670 )
                 
Net loss before income taxes     1,168,380       (4,223,769 )     2,006,911       (5,501,882 )
Income tax benefit/(expense)     (40,759 )     (7,658 )     (168,190 )     (197,201 )
Net income/(loss)   $                    1,127,621     $                    (4,231,427 )   $                     1,838,721     $                   (5,699,083 )
                 
Less income in noncontrolling interest     29,608       (35,751 )     (20,813 )     151,312  
Net income/(loss) attributable to Cemtrex, Inc. shareholders   $ 1,098,013     $ (4,195,676 )   $ 1,859,534     $ (5,850,395 )
                 
Net income/(loss)   $ 1,127,621     $ (4,231,427 )   $ 1,838,721     $ (5,699,083 )
Other comprehensive income/(loss)                
Foreign currency translation gain/(loss)     (193,554 )     154,443       (234,045 )     161,460  
Defined benefit plan actuarial gain/(loss)                 87,895        
Comprehensive income/(loss)     934,067       (4,076,984 )     1,692,571       (5,537,623 )
Less comprehensive income/(loss) attributable to noncontrolling interest     (35,731 )     41,266       14,524       (118,623 )
                 
Comprehensive income/(loss) attributable to Cemtrex, Inc. shareholders   $ 969,798     $ (4,118,250 )   $ 1,678,047     $ (5,419,000 )
                 
Income/(loss) Per Share-Basic   $ 0.06     $    (0.38 )   $ 0.10     $ (0.82 )
Income/(loss) Per Share-Diluted   $ 0.06     $    (0.38 )   $ 0.10     $ (0.82 )
                 
Weighted Average Number of Shares-Basic     18,711,463       10,933,926       18,368,274       7,161,785  
Weighted Average Number of Shares-Diluted     18,711,463       10,933,926       18,368,274       7,161,785  
                 

Condensed Consolidated Statements of Cash Flows
(Unaudited/Restated)

    For the nine months ended
    June 30,
Cash Flows from Operating Activities     2021       2020  
    (unaudited)   (restated)
Net income/(loss)   $ 1,838,721     $ (5,699,083 )
         
Adjustments to reconcile net loss to net cash provided/(used) by operating activities:        
Depreciation and amortization     972,186       1,343,207  
Gain on disposal of property and equipment     18,583       457  
Amortization of right-of-use assets     653,175       352,691  
Change in allowance for doubtful accounts     (161,101 )     126  
Share-based compensation     110,904       167,312  
Income tax expense/ (benefit)     168,190       (197,201 )
Interest expense paid in equity shares     818,348       2,505,924  
Accrued interest on notes payable     64,748       308,748  
Amortization of original issue discounts on notes payable     575,000       757,278  
Gain on marketable securities     (2,407,841 )     (607,103 )
Settlement Agreement – Related Party     (3,674,165 )      
Discharge of Paycheck Protection Program Loans     (3,349,700 )      
         
Changes in operating assets and liabilities net of effects from acquisition        
of subsidiaries:        
Accounts receivable     1,613,682       1,654,383  
Accounts receivable – related party     (78,594 )     5,510  
Inventory     (1,875,591 )     (1,384,453 )
Prepaid expenses and other current assets     (976,050 )     (514,580 )
Other assets     149,778       (1,017,337 )
Other liabilities     15,019       (117,667 )
Accounts payable     30,327       (1,205,851 )
Operating lease liabilities     (650,535 )     (296,892 )
Deposits from customers     9,567       2,003  
Accrued expenses     (78,851 )     383,230  
Deferred revenue     124,637       (99,354 )
Income taxes payable     (88,987 )     272,925  
Net cash used by operating activities     (6,178,550 )     (3,385,727 )
         
Cash Flows from Investing Activities        
Purchase of property and equipment     (1,113,658 )     (4,541,537 )
Investment in Virtual Driver Interactive     (1,075,428 )      
Investment in MasterpieceVR     (500,000 )      
Investment in related party           (500,000 )
Proceeds from sale of marketable securities     9,134,159       22,720,132  
Purchase of marketable securities     (6,290,747 )     (23,479,038 )
Purchases of treasury stock           (190,483 )
Net cash used by investing activities     154,326       (5,990,926 )
Cash Flows from Financing Activities        
Proceeds from notes payable           4,485,000  
Payments on notes payable     (2,145,257 )     (726,640 )
Proceeds on bank loans           5,947,101  
Payments on bank loans     (957,186 )     (224,196 )
Proceeds from Paycheck Protection Program Loans     2,942,285        
Proceeds from securities purchase agreements           12,462,648  
Payments on capital lease liabilities     (20,061 )     (13,838 )
Expenses on securities purchase agreements           (840,728 )
Revolving line of credit           (425,812 )
Net cash provided/(used) by financing activities     (180,219 )     20,663,535  
         
Effect of currency translation     (298,265 )     128,771  
Net increase in cash, cash equivalents, and restricted cash     (6,204,443 )     11,286,882  
Cash, cash equivalents, and restricted cash at beginning of period     21,072,859       2,858,085  
Cash, cash equivalents, and restricted cash at end of period   $ 14,570,151     $ 14,273,738  
         
         
         
         
Balance Sheet Accounts Included in Cash, Cash Equivalents, and Restricted Cash        
Cash and equivalents   $ 12,879,278     $ 12,939,493  
Restricted cash     1,690,873       1,334,245  
Total cash, cash equivalents, and restricted cash   $     14,570,151     $     14,273,738  
         
Supplemental Disclosure of Cash Flow Information:        
Cash paid during the period for interest   $ 432,930     $ 240,971  
         
Cash paid during the period for income taxes   $ 88,987     $ 75,724  
         
Supplemental Schedule of Non-Cash Investing and Financing Activities        
Investment in Virtual Driver Interactive   $ 439,774     $     –  
Stock issued to pay for products and/or services   $     –     $ 428,538  
Stock issued to pay notes payable   $ 2,187,837     $ 6,933,924  
         

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