Toronto, ON / TNW-Accesswire / April 12, 2022 / NTG Clarity Networks Inc. (TSX.V:NCI) reports its fourth quarter and year end results for the fiscal year ended December 31, 2021 (all figures in Canadian Dollars).

 

2021 was a very good year for NTG that has seen an increase in revenue and a turnaround towards profitability. Revenues for 2021 were up 50% to $11.895M compared to $7.9M in 2020. Profit was $1.36M compared to a loss of $1M in 2020. The gross margin in 2021 improved to 55% compared to 28% in 2020 primarily because of license fees that have a higher margin.

 

Our Q4 2021 revenue is the highest quarterly revenue since 2016 and we have been profitable for a sixth straight quarter. Revenue for Q4 2021 was $4,132,046 and the net income was $416,748; compared to a revenue of $1,547,766 and a net profit of $267,776 in Q4 2020. We expect these strong quarterly results to continue in 2022 due to the new contracts announced in December 2021.

 

We have capitalized on our track record and experience, and the goodwill we have built with our customers and partners throughout the years. NTG is now recognized as a provider of top-tier, high quality services with very competitive pricing, and we have added new clients to our customer base, especially in the financial sector where we have been focusing expansion this year. This sector is outside our traditional telecom vertical and is an important growth opportunity for us as they are going through a digital transformation. We are working hard to capitalize on the booming demands for IT and telecom services and on establishing NTG as a major offshoring hub for technology and IT services.

 

Going forward, we are focusing on promoting and expanding our product offerings that provide a high profit margin. We are focused on our NTGapps digital transformation platform that integrates with our Network Asset Management product. Digital Transformation is one of the current key objectives of most organizations and NTGapps provides a tool to help organizations achieve this goal while integrating with their legacy systems. We believe that NTGapps is one of the best digital transformation platforms available. It enables our customers to consolidate their end-to-end business software and integrate with specialty third-party platforms, enhancing operational efficiency and saving clients time that can instead be used to create new revenue streams.

 

Income Statement Highlights for the Year Ended December 31, 2021 and 2020

 

 

	Dec 31, 2021		Dec 31, 2020
REVENUE	$	11,895,943	$	7,906,989
COST OF SALES		5,307,491		5,673,356
GROSS PROFIT	$	6,588,452	$	2,233,633
Operating Expenses		3,992,545		3,394,410
Other Expenses		1,225,819		471,676
Net Income (loss)	$	1,363,958	$	(1,098,617)
per share (basic)	$	0.01	$	(0.01)
per share (fully diluted)	$	0.01	$	(0.01)

 

Balance Sheet Highlights

 

	Dec 31, 2021		Dec 31, 2020
Total Assets	$	6,490,706	$	3,406,422
Total Liabilities	$	14,409,518	$	15,942,492
Shareholder’s Equity	$	(7,918,812)	$	(12,536,069)

 

Canada

Before 2021, our Canadian operations were relatively small compared to our international operations. This year, Canadian customers account for 14% of NTG’s revenue. In December 2021, we were awarded two projects through our Canadian office to:

• license and install NTG’s NTS Asset Management, Network Discovery, Discrepancy and Reconciliation software, including our new low-code NTGapps digital toolbox. The license revenue included in 2021 was approximately $1.22M for this new customer. Future implementation revenue over the next 15 months (PO announced December 9, 2021) is expected to be $1.3M.

 

• license, install and support our NTS Utility Billing software. The USD$360K contract includes a license amount of USD$126K that was invoiced and received in January 2022. Future milestone billing for the balance is expected over 8 months (contract announced January 5, 2022).

Egypt

Egypt continues to be a challenging place to do business with 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 for offshoring and outsourcing are based in Egypt, allowing NTG to provide experienced resources and expertise at extremely competitive prices. This has proven to be a successful strategy as the offshoring of resources to Egypt is increasingly popular.

 

We are also working to diversify our customer base in the country. In addition to our 2 major customers who represent 50% of Egypt’s annual revenue (2020: 75%), we are increasing work with other existing customers and have added 7 new customers (6% of revenue) in the financial and telecom sectors.

In addition to offshoring and providing professional services to customers in Egypt, we have focused efforts more on our core software products and our NTGapps low-code development platform. We have sold our NTGapps software product to 4 of our existing customers in Egypt.

 

In 2021, Egypt’s revenue contribution continues to be strong with the subsidiary contributing 23% of the Corporation’s revenue (2020: 26%).

 

Subsequent to year end, in March 2022, Egypt devalued its currency by 14%, prompting an increase in interest rates and inflation in the country. The effects on NTG’s operations are not yet quantifiable. We anticipate, as in 2016, there will be more growth opportunities as other companies leave the marketplace because of reluctance to do business in the local currency. We also expect to increase some salaries to retain our highly skilled personnel.

 

Kingdom of Saudi Arabia (KSA)

NTG has been doing business in KSA for over 15 years, and ongoing initiatives continue to show returns with 70% of our professional service work and 58% of our revenue being from KSA (2020: 79% and 63% 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.

 

During the year, COVID-19 travel restrictions slowed the movement of personnel to customer sites. We were required to quarantine our personnel for two weeks in another country (Bahrain or Maldives) prior to arriving in KSA. This resulted in significant increases in travel and accommodation costs during the year.

 

We have sold our NTGapps software to new and existing customers in the country, and product demos show promising interest across multiple sectors.

 

Our KSA revenue has increased by 42% over 2020 revenues. Additionally, customers in the banking and in public sectors are contributing significantly to our revenue (26%).

 

Oman

In 2021, 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 5% to NTG’s revenue in 2021 (2020: 11%).

 

Outlook

Customers have been recognizing our quality of work and track record and this has resulted in increased work from our major customers, including sales of our NTGapps software product. KSA’s economic rebound, due in large part to increasing prices for oil, has shown increasing demand for our products and services. Our Q4 2021 revenue is the highest quarterly revenue since 2016 and we have been profitable for the sixth straight quarter.

 

Subsequent to year end, most of the marketplaces we operate in have relaxed or eliminated COVID-19 requirements and we are seeing many of our customers and activities return to normal. However, some customers have retained some form of the “work from home” model and some are making use of the technical, IT and professional services we offer through our Egypt Offshore Centre. We are excited about the increasing demand for this offering model as we expand our business into new verticals that include government and financial sectors. We expect the additional travel and accommodation costs that were necessary in KSA this year will be greatly reduced going forward, however this remains a concern.

 

Finally, with the increased demand for our software product; NTGapps digital toolbox, we anticipate being able to further expand into new verticals. We are expanding the focus of NTGapps to include tools related to small and medium enterprise (SME) end-to-end business operations. We are already seeing demand in the financial and government sectors and we see this as an opportunity to present our product for use in the medical sector. Of particular note is the PO we received in March of this year for a new customer in the medical sector to deliver their digital products on the NTGapps platform. For more information, visit www.ntgapps.com. We are also seeing an increased demand for our Utility software and Network Asset Management and feel this will lead to new customers and increased recurring revenue.

 

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 750,000 share options each; Saleem Siddiqi and Zeeshan Hasnain will receive 350,000 share options each. 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 30 years ago in 1992, NTG Clarity has delivered networking, IT and network enabled application software solutions to network service providers and large enterprises. More than 350 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