Cemtrex Reports Second Quarter 2021 Financial Results

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Brooklyn, NY, June 24, 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 second quarter ended March 31, 2021.

Second Quarter 2021 Financial Results

Revenue for the three months ended March 31, 2021, and 2020 was $9.3 million and $12.1 million, respectively, a decrease of 24%. Revenue for the six months ended March 31, 2021, and 2020 was $18.1 million and $24.3, respectively, a decrease of 26%. The decrease in revenue was primarily due to shutdowns and limited operations of businesses due to the COVID-19 crisis. The Advanced Technologies segment revenues for the three months ended March 31, 2021, decreased by 11% to $5.5 million, and the Industrial Services segment revenues for quarter decreased by 36%, to $3.8 million.

Gross Profit for the second quarter of 2021 was $3.9 million, or 42% of revenues as compared to gross profit of $5.3 million, or 44% of revenues for the year ago period. Gross profit decreased due to lower sales and varies from product to product and from customer to customer.

Total operating expenses for three months ended March 31, 2021 were $5.9 million, compared to $5.9 million in the prior year’s quarter.

Operating activities for continuing operations used $2.9 million for the quarter ended March 31, 2021 compared to using $1.4 million of cash for the quarter ended March 31, 2020.

Net income for the quarter ended March 31, 2021 was $2.5 million, as compared to a net loss of $1.6 million in 2020. Net income increased in the second quarter as compared to the same period last year primarily due to other income items including a one-time settlement agreement and unrealized gains on marketable securities.

Cash and cash equivalents totaled $15.6 million at March 31, 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 second quarter of 2021 we continued to see a weakness due to COVID-19 which affected our overall business. Looking ahead we continue to focus on driving top line growth as markets return to normal and spending returns. We continue to further develop our product lines, with ongoing R&D in our 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. We believe with ongoing investments in our core technologies and a rebounding economy, we continue to be well positioned for a return to growth that will create long term value for our shareholders,” concluded Govil.

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.

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

Cemtrex, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

Condensed Consolidated Balance Sheets – USD ($)

Mar. 31, 2021

Sep. 30, 2020

Current assets

Cash and equivalents

$

15,573,734

$

19,490,061

Restricted cash

1,706,926

1,582,798

Short-term investments

522,612

887,746

Trade receivables, net

5,403,292

6,686,797

Trade receivables – related party

1,498,776

1,432,209

Inventory -net of allowance for inventory obsolescence

7,358,808

6,793,806

Prepaid expenses and other assets

1,820,031

1,188,317

Total current assets

33,884,179

38,061,734

Property and equipment, net

7,335,201

6,961,751

Right-of-use assets

2,862,154

2,728,380

Assets held for sale

8,323,321

8,323,321

Goodwill

5,886,096

4,370,894

Other

1,074,861

744,207

Total Assets

59,365,812

61,190,287

Current liabilities

Accounts payable

2,314,545

2,857,817

Short-term liabilities

6,595,935

7,034,510

Lease liabilities – short-term

764,108

721,036

Deposits from customers

96,468

29,660

Accrued expenses

2,676,724

2,392,487

Deferred revenue

1,473,041

1,651,784

Accrued income taxes

553

89,318

Total current liabilities

13,921,374

14,776,612

Long-term liabilities

Loans payable to bank

1,323,989

1,871,201

Long-term lease liabilities

2,106,545

2,027,406

Notes payable

3,154,743

6,029,999

Mortgage payable

2,306,834

2,355,542

Other long-term liabilities

1,075,171

1,063,733

Paycheck Protection Program Loans

5,406,477

2,169,437

Deferred Revenue – long-term

784,667

467,329

Total long-term liabilities

16,158,426

15,984,647

Total liabilities

30,079,800

30,761,259

Commitments and contingencies

Shareholders’ equity

Preferred stock value

1,795

2,157

Common stock, $0.001 par value, 50,000,000 shares authorized, 18,711,463 shares issued and outstanding at March 31, 2021 and 17,622,539 shares issued and outstanding at September 30, 2020

18,711

17,623

Additional paid-in capital

58,320,570

60,221,766

Retained earnings (accumulated deficit)

(31,758,563

)

(32,520,084

)

Treasury stock at cost

(148,291

)

(148,291

)

Accumulated other comprehensive income (loss)

1,824,350

1,777,112

Total Cemtrex stockholders’ equity

28,258,622

29,351,383

Non-controlling interest

1,027,390

1,077,645

Total liabilities and shareholders’ equity

59,365,812

61,190,287

Series A and C Preferred Stock [Member]

Shareholders’ equity

Preferred stock value

$

50

$

100

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

Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss) (Unaudited) – USD ($)

3 Months Ended

6 Months Ended

Mar. 31, 2021

Mar. 31, 2020

Mar. 31, 2021

Mar. 31, 2020

Income Statement [Abstract]

Revenues

$

9,260,385

$

12,113,847

$

18,096,461

$

24,333,930

Cost of revenues

5,331,501

6,767,743

10,162,107

13,639,340

Gross profit

3,928,884

5,346,104

7,934,354

10,694,590

Operating expenses

General and administrative

5,249,985

5,458,071

10,667,181

10,032,481

Research and development

641,497

404,933

1,275,722

781,519

Total operating expenses

5,891,482

5,863,004

11,942,903

10,814,000

Operating income/(loss)

(1,962,598

)

(516,900

)

(4,008,549

)

(119,410

)

Other income/(expense)

Other income/(expense)

1,679,944

447,792

2,630,932

672,117

Settlement Agreement – Related Party

3,674,165

3,674,165

Interest Expense

(849,076

)

(1,348,298

)

(1,458,017

)

(1,830,820

)

Total other income/(expense), net

4,505,033

(900,506

)

4,847,080

(1,158,703

)

Net loss before income taxes

2,542,435

(1,417,406

)

838,531

(1,278,113

)

Income tax benefit/(expense)

(98,477

)

(189,543

)

(127,431

)

(189,543

)

Net income/(loss)

2,443,958

(1,606,949

)

711,100

(1,467,656

)

Less income in noncontrolling interest

(10,174

)

(7,848

)

(50,421

)

187,063

Net income/(loss) attributable to Cemtrex, Inc. shareholders

2,454,132

(1,599,101

)

761,521

(1,654,719

)

Net income/(loss)

2,443,958

(1,606,949

)

711,100

(1,467,656

)

Other comprehensive income/(loss)

Foreign currency translation gain/(loss)

(87,972

)

(749,826

)

(40,491

)

(166,800

)

Defined benefit plan actuarial gain/(loss)

87,895

87,895

Comprehensive income/(loss)

2,443,881

(2,356,775

)

758,504

(1,634,456

)

Less comprehensive income/(loss) attributable to noncontrolling interest

19,625

(897

)

50,255

(214,237

)

Comprehensive income/(loss) attributable to Cemtrex, Inc. shareholders

$

2,424,256

$

(2,355,878

)

$

708,249

$

(1,420,219

)

Income/(loss) Per Share-Basic

$

0.13

$

(0.26

)

$

0.04

$

(0.31

)

Income/(loss) Per Share-Diluted

$

0.13

$

(0.26

)

$

0.04

$

(0.31

)

Weighted Average Number of Shares-Basic

18,559,113

6,250,761

18,195,731

5,292,167

Weighted Average Number of Shares-Diluted

18,629,064

6,250,761

18,200,974

5,292,167

Condensed Consolidated Statements of Cash Flows
(Unaudited/Restated)

Condensed Consolidated Statements of Cash Flows (Unaudited) – USD ($)

6 Months Ended

Mar. 31, 2021

Mar. 31, 2020

Cash Flows from Operating Activities

Net income/(loss)

$

711,100

$

(1,467,656

)

Adjustments to reconcile net loss to net cash provided/(used) by operating activities:

Depreciation and amortization

680,004

888,391

Gain on disposal of property and equipment

9,219

311

Amortization of right-of-use assets

438,539

281,758

Change in allowance for inventory obsolescence

(948,733

)

(19,569

)

Change in allowance for doubtful accounts

(137,356

)

(6,416

)

Share-based compansation

65,318

143,208

Income tax expense/ (benefit)

127,431

189,543

Interest expense paid in equity shares

657,329

1,004,518

Accrued interest on notes payable

41,833

291,384

Amortization of original issue discounts on notes payable

475,000

317,667

Gain on marketable securities

(1,869,338

)

(338,057

)

Settlement Agreement – Related Party

(3,674,165

)

Changes in operating assets and liabilities net of effects from acquisition of subsidiaries:

Accounts receivable

1,420,861

(62,013

)

Accounts receivable – related party

(71,581

)

(90

)

Inventory

383,731

(419,711

)

Prepaid expenses and other curent asstets

(631,714

)

(297,176

)

Other assets

169,346

(834,561

)

Other liabilities

11,438

(90,121

)

Accounts payable

(543,272

)

(854,616

)

Operating lease liabilities

(450,102

)

(293,138

)

Deposits from customers

66,808

9,166

Accrued expenses

161,820

(143,160

)

Deferred revenue

138,595

227,172

Income taxes payable

(88,765

)

102,463

Net cash used by operating activities

(2,856,654

)

(1,370,703

)

Cash Flows from Investing Activities

Purchase of property and equipment

(944,601

)

(4,340,023

)

Investment in Virtual Driver Interactive

(900,000

)

Investment in MasterpieceVR

(500,000

)

Proceeds from sale of marketable securities

7,080,375

13,083,547

Purchase of marketable securities

(4,845,903

)

(12,347,199

)

Purchases of treasury stock

(190,483

)

Note Receivable – Related party

Net cash used by investing activities

(110,129

)

(3,794,158

)

Cash Flows from Financing Activities

Proceeds from notes payable

2,990,000

Payments on notes payable

(2,070,257

)

(676,640

)

Proceeds on bank loans

2,476,000

Payments on bank loans

(655,276

)

(133,414

)

Proceeds from Paycheck Protection Program Loans

1,970,785

Proceeds from securities purchase agreements

1,580,100

Expenses on securities purchase agreements

(58,950

)

Revolving line of credit

387,598

Net cash provided/(used) by financing activities

(754,748

)

6,564,694

Effect of currency translation

(70,668

)

(193,974

)

Net increase in cash, cash equivalents, and restricted cash

(3,721,531

)

1,399,833

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

17,280,660

4,063,944

Balance Sheet Accounts Included in Cash, Cash Equivalents, and Restricted Cash

Cash and equivalents

15,573,734

2,809,591

Restricted cash

1,706,926

1,254,353

Total cash, cash equivalents, and restricted cash

17,280,660

4,063,944

Supplemental Disclosure of Cash Flow Information:

Cash paid during the period for interest

283,855

342,268

Cash paid during the period for income taxes

88,765

188

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

198,583

Stock issued to pay notes payable

$

1,707,327

$

3,632,518