Cemtrex Reports Third Quarter 2021 Financial Results

Third Quarter Revenues Increase 22% to $10.3 Million & Net Income Rises to $1.1 million

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

CONTACT: Investor Relations Chris Tyson Executive Vice President – MZ North America Direct: 949-491-8235 [email protected] www.mzgroup.us

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