Cemtrex Reports First Quarter 2022 Financial Results

First Quarter Revenues Increase 21% to $10.7 Million


Brooklyn, NY, Feb. 22, 2022 (GLOBE NEWSWIRE) --  - Cemtrex Inc. (NASDAQ: CETX, CETXP), 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 first quarter ended December 31, 2021.

Key First Quarter 2022 and Subsequent Highlights

  • Revenue increased 21% to $10.7 million compared to $8.8 million in Q1’21.
  • Regained compliance with Nasdaq Audit Committee composition requirements.
  • Appointed independent directors Chris Wagner, a technology expert in the video internet streaming industry, and Manpreet Singh, CFA, founder and Chief Investment Officer of Singh Capital Partners, to the Board of Directors.
  • Initiated a process with the Company’s board of directors to evaluate potential strategic alternatives to maximize shareholder value.
    • A full range of strategic, operational and financial alternatives including the sale of one or more of the Company’s business units.
  • Second investment of $0.5 million into Masterpiece Studio (formerly MasterPieceVR), a developer of a professional desktop and VR application suite that offers 3D content creation tools, primarily for virtual reality and the Metaverse.
  • onXRP.com, a leading technology and content platform which provides user-driven innovation to the XRP Ledger (XRPL), and CXR, a subsidiary of Cemtrex, partnered to create a set of modular extensions that will help further develop the onXRP ecosystem.
  • Launched the SmartDesk Connect D, a new version that extends compatibility to more devices including most mid- to high-end laptops, Apple® M1 products and select Microsoft Surface® devices.
  • Bravo Strong has continued with the development of first VR game and expects a beta release of StarForceVR in Oculus Quest App Lab in CY22 Q1.
  • Presented at the Imperial Capital 2021 Security Investor Conference.

Management Commentary

Cemtrex Chairman and CEO, Saagar Govil, commented on the results: “Cemtrex has engaged in a series of acquisitions and investments over the last several years, executing on an aggressive growth strategy focused on building a leading multi-industry technology company. With a strong cash position and consecutive year-over-year revenue growth for our core business segments (industrial and security), management believes the current valuation does not reflect the sum of the parts for our Internet of Things (IoT), machine vision & artificial intelligence, and augmented & virtual reality segments. In conjunction with our new board appointments, Cemtrex has commenced a strategic review of our business units to determine a more focused approach and to unlock shareholder value through the potential sale of one of more of our business units. We expect to update shareholders more on this initiative in the coming months.”

“The first quarter of 2022 was highlighted by the development of key partnerships with technology companies in blockchain and VR and improving year over year revenues. We remained focused on our top line growth with investments in our sales and marketing program, ongoing research and development, and advancing our technology partnerships.”

“We continue to invest in opportunities that will rapidly expand our breadth as a company, with a recent follow-on investment in Masterpiece Studio, a developer of the most intuitive and powerful software for content creation using virtual reality. The ability to create 3D content easily and quickly is rapidly gaining in importance with the rise of the far more interactive and collaborative metaverse, and we are looking forward to further collaboration with the team.”

“Our recent partnership with OnXRP to create a set of modular extensions will help further develop XRPL NFT-supporting technology that strives to be the first of its kind on this Blockchain. With increasing market adoption around crypto economies - the metaverse, blockchain and NFTs are rapidly becoming the new internet, and these partnerships will enable us to be stay at the forefront of their evolution.”

“During the quarter we released an improved SmartDesk Connect product that allows users to use their own laptop instead of a built-in PC. As supply chain and delivery issues improve, we expect this advanced version will continue to resonate with customers seeking an all-in-one multiple monitor display and motorized sit-stand desk, powered by just a laptop.”

First Quarter 2022 Financial Results

Revenue for the three months ended December 31, 2021, and 2020 was $10.7 million and $8.8 million, respectively, an increase of 21%. 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. The Advanced Technologies segment revenues for the three months ended December 31, 2021, increased by 20% to $5.6 million, and the Industrial Services segment revenues for quarter increased by 21%, to $5.1 million.

Gross Profit for the first quarter of 2022 was $3.9 million, or 36% of revenues as compared to gross profit of $4.0 million, or 45% of revenues for the year ago period. Gross profit decreased due to increased cost of revenues and varied from product to product and from customer to customer.

Total operating expenses for three months ended December 31, 2021, were $7.9 million, compared to $6.1 million in the prior year’s quarter.

Operating activities for continuing operations used $4.4 million for the three months ended December 31, 2021 compared to using $1.1 million of cash for the three months ended December 31, 2020.

Net loss for the quarter ended December 31, 2021 was $4.5 million, as compared to a net loss of $1.7 million in 2020. Net loss increased in the first quarter as compared to the same period last year primarily due to costs of revenues and operating expenses.

Cash and cash equivalents totaled $10.3 million at December 31, 2021, as compared to $15.4 million at September 30, 2021.

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 an offering, gross proceeds from an 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)

     
  (Unaudited)  
  December 31, September 30,
Assets  2021   2021 
Current assets    
Cash and equivalents $10,338,978  $15,426,976 
Restricted cash  1,633,452   1,759,347 
Short-term investments  14,960   14,981 
Trade receivables, net  5,547,749   7,810,896 
Trade receivables - related party  1,492,321   1,487,155 
Inventory –net of allowance for inventory obsolescence  7,085,698   5,657,287 
Prepaid expenses and other assets  2,727,511   2,585,652 
Total current assets  28,840,669   34,742,294 
     
Property and equipment, net  6,736,871   6,738,944 
Right-of-use assets  2,725,616   2,940,127 
Goodwill  7,821,283   7,821,283 
Other  697,624   697,240 
Total Assets $ 46,822,063   $ 52,939,888  
     
     
Liabilities & Stockholders' Equity (Deficit)    
Current liabilities    
Accounts payable $3,512,267  $4,235,002 
Short-term liabilities  7,591,892   9,977,972 
Lease liabilities - short-term  789,346   830,791 
Deposits from customers  722,690   62,970 
Accrued expenses  1,478,746   2,094,303 
Deferred revenue  1,621,244   2,004,170 
Accrued income taxes  323,371   448,194 
Total current liabilities  16,039,556   19,653,402 
     
Long-term liabilities    
Loans payable to bank  486,262   767,279 
Long-term lease liabilities  1,936,270   2,017,408 
Notes payable  2,400,000   2,350,000 
Mortgage payable  2,232,812   2,257,785 
Other long-term liabilities  750,905   839,171 
Paycheck Protection Program Loans  60,700   1,032,200 
Deferred Revenue - long-term  497,771   467,967 
Total long-term liabilities  8,364,720   9,731,810 
     
Total liabilities  24,404,276   29,385,212 
     
Commitments and contingencies  -   - 
     
Shareholders' equity    
Preferred stock , $0.001 par value, 10,000,000 shares authorized,     
Series 1, 3,000,000 shares authorized, 1,979,753 shares issued and    
outstanding as of December 31, 2021 and 1,885,151 shares issued and    
outstanding as of September 30, 2020 (liquidation value of $10 per share)  1,980   1,885 
Series C, 100,000 shares authorized, 50,000 shares issued and outstanding at    
December 31, 2021 and September 30, 2021  50   50 
Common stock, $0.001 par value, 50,000,000 shares authorized,    
23,673,210 shares issued and outstanding at September 30, 2021 and    
20,782,194 shares issued and outstanding at September 30, 2021  23,673   20,782 
Additional paid-in capital  65,058,290   61,727,834 
Retained earnings (accumulated deficit)  (46,386,013)  (41,908,062)
Treasury stock at cost  (148,291)  (148,291)
Accumulated other comprehensive income (loss)  2,955,944   2,896,452 
Total Cemtrex stockholders' equity  21,505,633   22,590,650 
Non-controlling interest  912,154   964,026 
Total liabilities and shareholders' equity $ 46,822,063   $ 52,939,888  


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

  For the three months ended
  December 31, 2021 December 31, 2020
Revenues $10,672,489  $8,836,076 
Cost of revenues  6,803,295   4,830,606 
Gross profit  3,869,194   4,005,470 
     
Operating expenses    
General and administrative  6,612,004   5,417,196 
Research and development  1,311,713   634,225 
Total operating expenses  7,923,717   6,051,421 
Operating income/(loss)  (4,054,523)  (2,045,951)
     
Other income/(expense)    
Other income/(expense)  930,169   950,988 
Interest Expense  (1,405,469)  (608,941)
Total other income/(expense), net  (475,300)  342,047 
     
Net loss before income taxes  (4,529,823)  (1,703,904)
Income tax benefit/(expense)  -   (28,954)
Net income/(loss)  (4,529,823)  (1,732,858)
     
Less income/(loss) in noncontrolling interest  (51,872)  (40,247)
Net income/(loss) attributable to Cemtrex, Inc. shareholders $(4,477,951) $(1,692,611)
     
Other comprehensive income/(loss)    
Net income/(loss) $(4,529,823) $(1,732,858)
Foreign currency translation gain/(loss)  59,492   37,864 
Comprehensive income/(loss)  (4,470,331)  (1,694,994)
Less comprehensive income/(loss) attributable to noncontrolling interest  51,872   (40,247)
Comprehensive income/(loss) attributable to Cemtrex, Inc. shareholders $(4,522,203) $(1,654,747)
     
     
Income/(loss) Per Share-Basic $(0.20) $(0.09)
Income/(loss) Per Share-Diluted $(0.20) $(0.09)
     
Weighted Average Number of Shares-Basic  22,713,683   17,842,664 
Weighted Average Number of Shares-Diluted  22,713,683   17,842,664 

Condensed Consolidated Statements of Cash Flows
(Unaudited)

  For the three months ended
   December 31,

 
Cash Flows from Operating Activities  2021   2020 
     
Net income/(loss) $(4,529,823) $(1,732,858)
     
Adjustments to reconcile net loss to net cash provided/(used) by operating activities:    
Depreciation and amortization  262,833   360,578 
Gain on disposal of property and equipment  27,170   4,050 
Amortization of right-of-use assets  214,511   186,777 
Change in allowance for doubtful accounts  94,588   (3,979)
Share-based compensation  45,371   16,069 
Income tax expense/ (benefit)  -   (28,954)
Interest expense paid in equity shares  821,592   87,099 
Accrued interest on notes payable  132,162   126,390 
Amortization of original issue discounts on notes payable  325,000   250,000 
Gain/loss on marketable securities  21   (942,923)
Discharge of Paycheck Protection Program Loans  (971,500)  - 
     
Changes in operating assets and liabilities net of effects from acquisition    
of subsidiaries:    
Accounts receivable  2,168,559   2,213,132 
Accounts receivable - related party  (5,166)  (243,006)
Inventory  (1,428,411)  (632,610)
Prepaid expenses and other current assets  (141,859)  273,705 
Other assets  (384)  141,058 
Other liabilities  (88,266)  7,856 
Accounts payable  (722,735)  (702,285)
Operating lease liabilities  (122,583)  (192,534)
Deposits from customers  659,720   3,539 
Accrued expenses  (615,557)  (38,891)
Deferred revenue  (353,122)  (156,166)
Income taxes payable  (124,823)  (74,099)
Net cash used by operating activities - continuing operations  (4,352,702)  (1,078,052)
Net cash provided/(used) by operating activities - discontinued operations  -   - 
Net cash used by operating activities    (4,352,702)   (1,078,052)
     
Cash Flows from Investing Activities    
Purchase of property and equipment  (291,666)  (13,321)
Investment in Virtual Driver Interactive  -   - 
Investment in MasterpieceVR  -   (900,000)
Proceeds from sale of marketable securities  -   4,307,594 
Purchase of marketable securities  -   (3,569,760)
Net cash provided/(used) by investing activities    (291,666)   (675,487)
     
Cash Flows from Financing Activities    
Proceeds from notes payable  -   - 
Payments on notes payable  (326,763)  (1,275,000)
Payments received on notes receivable  -   
Proceeds on bank loans  -   - 
Payments on bank loans  (305,990)  (354,708)
Proceeds from Paycheck Protection Program Loans  -   
Proceeds from securities purchase agreements  -   - 
Payments on capital lease liabilities  -   
Expenses on securities purchase agreements  -   - 
Revolving line of credit  -   - 
Net cash provided by financing activities   (632,753)   (1,629,708)
     
Effect of currency translation  63,228   (24,116)
Net increase in cash, cash equivalents, and restricted cash  (5,277,121)  (3,383,247)
Cash, cash equivalents, and restricted cash at beginning of period  17,186,323   21,072,859 
Cash, cash equivalents, and restricted cash at end of period $ 11,972,430   $ 17,665,496  
     
Balance Sheet Accounts Included in Cash, Cash Equivalents, and Restricted Cash    
Cash and equivalents $10,338,978  $15,866,068 
Restricted cash  1,633,452   1,799,428 
Total cash, cash equivalents, and restricted cash $ 11,972,430   $ 17,665,496  
     
Supplemental Disclosure of Cash Flow Information:    
Cash paid during the period for interest $126,715  $145,452 
     
Cash paid during the period for income taxes $124,823  $74,099 
     
Supplemental Schedule of Non-Cash Investing and Financing Activities    
Investment in Virtual Driver Interactive $-  $439,774 
Stock issued to pay notes payable $3,288,071  $407,854 
     

 

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