Toronto, ON – TheNewswire - April 29, 2021 - NTG Clarity Networks Inc. (TSXV:NCI) (OTC:NYWKF) reports its fourth quarter and year end results for the fiscal year ended December 31, 2020 (all figures in Canadian Dollars).
2020 was a good year for NTG that has seen a turnaround to profitability in third and fourth quarters. We have capitalized on our track record and experience and the goodwill we have built throughout the years. NTG is now recognized as a provider of top tier quality service with very competitive pricing. We have added new clients to our customer base, especially in the financial sector. These are outside our traditional telecom vertical and are an important growth opportunity for us as they are going through digital transformation.
Despite the COVID-19 lockdowns and the slowdown in Q2 2020, we have managed to keep quarter over quarter revenues strong and in Q3 and Q4 2020 we have returned NTG to profitability.
Sales for the year ended December 31, 2020 were $7,906,989 representing an 8% decline from the $8,626,429 recorded in the prior year. The gross margin in 2020 improved to 28% compared to 26% in 2019. Realistic margins are anticipated to be between 30-40%, based on the product mix. The Company posted a net loss of $1,098,617 for the year, a substantial improvement from the net loss of $9.2 million in the previous year.
COVID-19-related business changes, such as the cancellation of marketing events and related travel, had a significant impact on 2020 results. NTG’s operating expenses were significantly reduced to $3,394,410 in 2020 compared to $6,896,496 in the prior fiscal year. This is primarily because of significantly reduced selling/marketing and G&A costs as a result of office closures and COVID-19 lockdowns.
Income Statement Highlights for the Year Ended December 31, 2020 and 2019
|
December 31, 2020 |
December 31, 2019 |
||||
|
REVENUE |
$ |
7,906,989 |
$ |
8,626,429 |
|
|
COST OF SALES |
5,673,356 |
6,373,463 |
|||
|
GROSS PROFIT |
$ |
2,233,633 |
$ |
2,252,966 |
|
|
Operating Expenses |
3,394,410 |
6,896,496 |
|||
|
Other Expenses |
471,676 |
4,168,205 |
|||
|
Net Income (loss) |
$ |
(1,098,617) |
$ |
(9,184,109) |
|
|
per share (basic) |
$ |
(0.01) |
$ |
(0.16) |
|
|
per share (fully diluted) |
$ |
(0.01) |
$ |
(0.15) |
|
|
December 31, 2020 |
December 31, 2019 |
|||
|
Current Assets |
$ |
2,154,910 |
$ |
2,588,976 |
|
Current Liabilities |
$ |
8,491,588 |
$ |
7,079,859 |
|
Long-Term Debt |
$ |
7,217,784 |
$ |
7,100,712 |
|
Shareholder’s Equity |
$ |
(12,536,069) |
$ |
(12,102,151) |
Egypt
Historically, Egypt has been a challenging place to do business with continued restrictions on using foreign currency for business operations and on moving funds out of the country. We mitigate much of the risk of doing business in the country as our expenses and the majority of our contracts in Egypt are both in the local currency. Additionally, most of the technical and professional services are based in Egypt and allow NTG to provide experienced resources and expertise at extremely competitive prices.
This has proven to be a successful strategy because the offshoring of resources to Egypt is becoming increasing popular, and has resulted in NTG multiple opportunities being awarded to NTG subsequent to year end. In addition to offshoring and our existing professional services outsourcing in Egypt, we are focusing efforts on our core software products and our Smart2Go low code digital transformation platform.
NTG Egypt’s revenue contribution continues to be strong. In 2020, the subsidiary contributed 26% of the Corporation’s revenue (2019: 33%).
Kingdom of Saudi Arabia (KSA)
NTG has been doing business in KSA for over 15 years, and ongoing initiatives continue to show returns with 79% of our professional service work and 63% of our revenue being from KSA (2019: 62% and 49% respectively). NTG has developed good brand recognition and a solid track record over the years, which is an asset to our work in the region.
Our KSA revenue has increased by 14% over 2019 revenues. Additionally, new customers in the banking sector and in public sectors are contributing significantly to our revenue (28%).
Oman
In 2020, we continued work for our customer in Oman, who is using our NTS Network Inventory and Project Management modules. Recurring revenues in Oman from product maintenance, support, and change requests as well as professional services contributed 11% to NTG’s revenue in 2020 (2019: 9%).
Outlook
We at NTG started 2020 with high expectations as we had the struggles with our indebtedness issues resolved and we hoped to see a return to some normalcy. However NTG, along with the world, faced the challenges associated with COVID-19 and the global shut-down. The ongoing pandemic measures presented and continue to present a significant source of economic uncertainty and there have been impacts on NTG’s sales and operations.
COVID-19-related business changes such as the cancellation of marketing events and many customer in-person meetings and travel, combined with management mandated salary reductions, have combined to reduce our cost of sales by 12% and selling and G&A expenses by more than 50%.
Providing the offshoring and outsourcing of our technical, IT and professional services resources has proven to be a successful strategy as working remotely has become increasing popular, most likely due to COVID-19. This has helped us grow and expand our business into new verticals that include government and financial sectors. We are looking forward to more contracts such as those announced subsequent to year end, in Q1 2021.
Finally, with the soft release of our latest digital transformation software product, Smart2Go, we anticipate further expansion into new verticals. Smart2Go allows enterprises to automate their processes and create applications by offering rapid application development without the need for knowledge of development languages. Smart2Go is built on NTG’s proven Workflow technology and provides both a Portal and Mobile Apps for its users.
At the time of publishing of this report, it is uncertain how long COVID-19 conditions will last and what economic impact they will have on our business, ongoing cash flows and our ability to continue as a going concern.
In an unrelated matter, the Company announced that share options will be issued for each member of the Board of Directors for the Company; Ashraf Zaghloul and Kristine Lewis will receive 400,000 share options each; Saleem Siddiqi will receive 100,000 share options; and Zeeshan Hasnain will receive 150,000 share options. Each option will be exercisable at a price of $0.05 per share and will vest immediately.
About NTG Clarity Networks Inc.
NTG Clarity Networks’ vision is to be a global leader in providing networking solutions. As a Canadian company established in 1992, NTG Clarity has delivered networking, IT and network enabled application software solutions to network service providers and large enterprises. More than 275 network professionals provide design, engineering, implementation, software development and security expertise to the industry’s leading network service providers and enterprises.
Forward Looking Information
Certain statements in this release, other than statements of historical fact, are forward looking information that involves various risks and uncertainties. Such statements relating to, among other things, the prospects for the company to enhance operating results, are necessarily subject to risks and uncertainties, some of which are significant in scope and nature.
These uncertainties may cause actual results to differ from information contained herein. There can be no assurance that such statements will prove to be accurate. Actual results and future events could differ materially from those anticipated in such statements. These and all subsequent written and oral forward looking statements are based on the estimates and opinions of the management on the dates they are made and expressly qualified in their entirety by this notice. The Company assumes no obligation to update forward looking statements should circumstances or management's estimates or opinions change.
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.
For Further Information:
Kristine Lewis, President, NTG Clarity Networks Inc.
Ph: 905-305-1325
Fax: 905-752-0469
Email: klewis@ntgclarity.com
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