Ms. Kristine Lewis reports

NTG CLARITY NETWORKS ANNOUNCES FIRST QUARTER 2019 FINANCIAL RESULTS

NTG Clarity Networks Inc. has released its first quarter results for the period ended March 31, 2019.

Significant recent company milestones include:

• In February, 2019, closed a shares for debt private placement which reduced payables by $360,000;
• Returned the company to profitability in Q1 2019;
• Income from operations of $452,078;
• Subsequent to quarter end, in May, 2019, the company issued a series of press releases starting with the announcement of a new sales model and then announcing a new project with a new customer worth $2.4-million.

Consolidated revenue for the three months ended March 31, 2019, was $3,616,344, compared with $4,049,061 for the same period in 2018, and is made up of product-related revenue, professional services and a small amount for hardware. Professional service revenue continues to be an important strategic source of revenue for the company, given its generally recurring nature (71 per cent). The contribution of product-related revenue increased to 19 per cent in Q1 2019 as the company works to make product sales a more balanced part of NTG's revenue stream.

Gross margin for Q1 2019 was $1,583,959 or 44 per cent compared with $1,547,831 or 38 per cent for the same period in 2018. The company continues to work in all regions to optimize the cost of sales for its revenue growth.

General and administrative expenses for the three months ended March 31, 2019, were $584,195 compared with $621,086 in Q1 2018, as management worked to reduce expenses. This 6-per-cent reduction was due to the continued reduction of salaries as the company reduce staff and salaries as contracts allow.

Selling expenses were also reduced by 6 per cent during Q1 2019 and totalled $398,995 compared with $423,523 during the first quarter of 2018. Selling and marketing expenses consist primarily of sales staff remuneration, commissions, travel, advertising, consulting and trade show costs.

During the first quarter of 2019 the corporation recorded net income of $304,719 compared with net income of $160,482 in Q1 2018. This is a substantial improvement, and the company continues to work to optimize costs for its current revenue.

Working capital as at March 31, 2019, was ($4,081,521) compared with ($4,861,655) as at Dec. 31, 2018. The company has no long-term debt.

                        INCOME STATEMENT HIGHLIGHTS 

                                               For the three months ended
                                             March 31, 2019   March 31, 2018

Revenue                                        $  3,616,344     $  4,049,061  
Cost of sales                                     2,032,385        2,501,230  
Gross margin                                      1,583,959        1,547,831  
Operating expenses                                1,131,881        1,053,459  
Other expenses                                      254,814          244,893    
Net income before taxes                             197,264          249,479    
Other -- exchange gain (loss) on translation        107,455          (88,997)   
Net income after taxes                              304,719          160,482    
                                                                       
                                                                       
Per share (basic)                                   $  0.01          $  0.00       
Per share (fully diluted)                              0.01             0.00       


                BALANCE SHEET HIGHLIGHTS 
 
                            March 31, 2019   Dec. 31, 2018

Current assets                 $ 7,421,247   $   6,739,520    
Current liabilities             11,502,768      11,479,398   
Long-term debt                          --           8,005        
Shareholders equity             (2,659,638)     (2,900,141)  

Outlook

Looking toward the future, NTG is very pleased with having returned the company to profitability in Q1 2019. It has already experienced success with its new sales model, announced on May 6, and it expects to announce a number of additional contracts under this model as they are received.

The company is also optimistic that Saudi Arabia, its principal operating region where NTG Clarity has been doing business for over 13 years, is starting to show signs of recovery. Although the company's Saudi Arabia revenue decreased significantly in 2018, the spending reduction in the government sector seems to be improving in 2019 and the company looks forward to winning new projects accordingly.

NTG Clarity's cost-cutting measures implemented over the last couple of years have shown significant improvement in the bottom line performance of the company but the more meaningful cuts in this regard are now coming to an end. The company is now focusing on improving revenue through legacy sales channels as well as through new sales partnerships which are already showing significant promise. The company would like to thank all of its shareholders who have supported the company over the last couple of very challenging years and looks forward to returning the company to solid sales growth and profitability.

About NTG Clarity Networks Inc.

NTG Clarity's vision is to be a global leader in providing networking solutions. As a Canadian company established in 1992, NTG Clarity has delivered networking, information technology and network-enabled application software solutions to network service providers and large enterprises. More than 300 network professionals provide design, engineering, implementation, software development and security expertise to the industry's leading network service providers and enterprises.

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