Ms. Kristine Lewis reports

NTG CLARITY NETWORKS ANNOUNCES AN IMPROVED THIRD QUARTER 2020 FINANCIAL RESULTS

NTG Clarity Networks Inc. has released its third quarter results for the period ended Sept. 30, 2020. The company is pleased to see that, despite the continuing difficulties, it has returned to profitability in Q3 2020 with a net profit of $246,515.

The continuing COVID-19 pandemic measures present a significant source of economic uncertainty in 2020 and there have been impacts on NTG sales activities and collections have slowed. Though revenues have strengthened in Q3 2020, collections and cash flow still remain an issue.

Consolidated revenue for the three and nine months ended Sept. 30, 2020, were $2,233,248 and $6,359,223, compared with $575,594 and $6,227,237 for the same periods in 2019, and is made up of product-related revenue and professional services.

The gross margin for Q3 2020 was $846,241, or 38 per cent. Year-to-date gross margin was $2,360,901, or 37 per cent.

Selling and marketing expenses for the three and nine months ended Sept. 30, 2020, were $187,105 and $654,355, respectively, compared with $617,450 and $1,483,505 in the previous year. This 70-per-cent decrease in the selling and marketing in the quarter (56 per cent year to date) was the result continued customer site closures, restricted travel and customer visits, suspended trade shows, and reduced salaries.

General and administrative expenses for the three and nine months ended Sept. 30, 2020, were $384,815 and $2,172,818, respectively, compared with $941,281 and $2,020,750 in the previous year. General and administrative costs have decreased in this period due to reduced salaries and no Kuwait expenses compared with the same period last year. In Q3, as in Q2 2020, there were no salaries accrued or paid for employees and management in the Canadian office due to COVID-19.

Working capital as at Sept. 30, 2020, was a deficit of $5,870,854, compared with a deficit of $4,490,883 at Dec. 31, 2019.

Outlook

COVID-19 continues to impact NTG in the form of lower-than-expected revenues and slower collections.

In Q3 2020, existing projects resumed and employees are now working either on customer sites or remotely.

COVID-19-related business changes, such as the cancellation of marketing events, customer in-person meetings and travel, combined with management mandated salary reductions, have combined to reduce cost of sales by 16 per cent and selling expenses by 46 per cent.

In Q3 2020, its revenue amounts were stronger and it showed a net profit of $246,515. The company also announced three new projects that it anticipates will be starting in Q4 2020:

• A significant project in a government department in the Gulf area to provide technical resources (24 to 36 months -- $1.9-million);
• A project to provide technical resources to a major telecom operator in Canada (one year -- $375,000);
• Another project in a government department in the Gulf area to provide technical resources (three years -- $1-million).

It remains uncertain how long COVID-19 conditions will continue and what long-term impact they will have on its customers, its business and cash flows.

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, IT 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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