Mr. Ashraf Zaghloul reports
NTG CLARITY NETWORKS ANNOUNCES FIRST QUARTER 2020 FINANCIAL RESULTS
NTG Clarity Networks Inc. has released
its first quarter results for the period ended March 31, 2020.
The following outlines the events that occurred in first quarter 2020:
- On Feb. 3, 2020, after the required stock exchange (Toronto Stock Exchange) review, NTG's shares resumed trading.
- On March 11, 2020, the World Health Organization (WHO) declared COVID-19 to be a global pandemic. Countries restricted travel, closed non-essential businesses and asked that people stay home. NTG closed all offices and asked staff to work remotely.
- On March 20, 2020, due to the global economic situation and the inability of NTG to renew its directors and officers' insurance, the corporation announced that the two independent board members and one other board member resigned from NTG's board. Ashraf Zaghloul, chairman and chief executive officer, and Kristine Lewis, director and president, are the two remaining directors of NTG.
Consolidated revenue for the three months ended March 31, 2020, was $2,474,766 compared with $3,616,344 for the same period in 2019 and is made up of product-related revenue and professional services. Professional service revenue continues to be an important strategic source of revenue for the company, given its generally recurring nature (77 per cent). The contribution of product-related revenue increased to 22 per cent in first quarter 2020 as the company works to make product sales a more balanced part of NTG's revenue stream; however, the revenue mix varies from quarter to quarter. Much of the company's professional service revenue arises from the company's product sales.
The gross margin for first quarter 2020 was $887,409 or 36 per cent, compared with $1,583,959 or 44 per cent for the same period in 2019. The company continues to work in all regions to optimize the cost of sales for its revenue.
General and administrative expenses for the three months ended March 31, 2020, were $596,720 compared with $584,195 in first quarter 2019. The small increase was due to end-of-service costs for terminated employees in KSA.
Selling expenses for the three months ended March 31, 2020, were reduced to $273,289 compared with $398,995 in first quarter 2019. The company has worked to reduce selling costs in first quarter 2020. Some technical personnel was reassigned to projects and trade shows, and marketing events were cancelled.
For first quarter 2020, NTG recorded a net loss of $598,736 as compared with a net income of $304,719 in first quarter 2019. This loss for both operating segments was substantially attributable to the foreign exchange resulting from the stronger U.S. dollar. In all, the exchange loss contributed $545,045 toward the company's $598,736 loss for the period.
Working capital as at March 31, 2020, was a deficit of $5,475,931 compared with a deficit of $4,490,883 at Dec. 31, 2019.
INCOME STATEMENT HIGHLIGHTS FOR THREE-MONTH PERIOD
March 31, 2020 March 31, 2019
Revenue $2,474,766 $3,616,344
Cost of sales 1,587,358 2,032,385
========== ==========
Gross margin 887,409 1,583,959
Operating expenses 870,009 983,190
Foreign exchange loss 344,830 148,691
Other expenses 71,091 254,814
========== ==========
Net (loss) income before taxes (398,521) 197,264
========== ==========
Other -- exchange (loss) gain on
translation (200,215) 107,455
---------- ----------
Net (loss) income after taxes (598,736) 304,719
========== ==========
Per share (basic) (0.01) 0.01
Per share (fully diluted) (0.01) 0.01
Outlook
The company anticipates the COVID-19 pandemic will continue to have an impact on its customers and operating activities. It continues to adjust to changing circumstances. It had two positive announcements subsequent to quarter-end:
- On May 27, 2020, NTG announced it had received a renewal of work for a project for one of the major banks in the Gulf area. The project value is about $1.5-million. This is for a one-year extension with the potential of additional work.
- On June 1, 2020, NTG announced it had received a renewal of resource work for one of the major telecom operators in the Middle East. This one-year extension is valued at approximately $725,000.
At the time of publishing of this report, NTG's offices have reopened with the Egypt office starting a gradual return with enhanced health and safety protocols. Employees working at customer sites are following customers' protocols for working on site or remotely.
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.
We seek Safe Harbor.
© 2024 Canjex Publishing Ltd. All rights reserved.