(via Thenewswire.ca)
Toronto, ON / TheNewswire / April 7, 2016 - NTG Clarity Networks Inc. (TSX.V:NCI) reported its year end results for the fiscal year ended December 31, 2015 (all figures in Canadian Dollars).
Annual and Quarterly highlights
The following are some of the key achievements in 2015 that will enable us to achieve our success and growth objectives in the coming years:
-Diversified our customer base both numerically and geographically, more than tripling the number of active customers during the year.
-In December 2015 we signed an $11 Million, 3 year agreement from our new Kuwait branch, our largest contract to-date. Services under this contract commenced in January 2016 and should have a meaningful impact on financial performance over the course of the next 3 years.
-Introduced our new product Stage Enterprise Management (StageEM) which was very positively received by our customers (www.stageem.com).
-Actively promoted our products and services in the US, through our involvement in the Plug and Play Center in Silicon Valley, California.
-Started providing Network Build services in Saudi Arabia. We are expecting to build several hundred sites throughout 2016.
-Implemented our water billing system in a few more water utilities in Egypt, making our system the leading water utility billing system in that market.
-Hired new senior management to assist in developing and marketing our products and services.
-Remained free of long-term debt with positive working capital of $4.7 Million.
2015 has been an exciting and challenging year in terms of new projects, customers, products and senior management. Though revenue stayed steady at $15.5 Million, we ended the year in much stronger position, and we look forward to capitalizing on these positive factors in 2016 and beyond. At the same time, our net income was impacted as cost of sales increased by 14%, and selling and G&A costs increased by 33% and 40%, respectively, due to expenses for our new offices in the U.S., Egypt, Oman and Kuwait. In 2016 we will continue to work on balancing between growth and expenses to help generate higher margins.
During the year, we continued delivering NTS - our Operations Support System/Business Support System (OSS/BSS) product and the associated consulting services and training to implement the product. NTS continues to generate substantial revenue and is expected to generate positive net cash inflows into the foreseeable future.
Our Mobile Application division developed and launched several initiatives into the marketplace, including Budget Eye, a simplified version of our new product StageEM, built for consumers. It allows you to manage, track and control you and your family's budget, income and expenses, and is updated in real-time.
Income Statement Highlights for the Year Ended December 31, 2015 and 2014
|
December 31, 2015 |
December 31, 2014 |
|||
|
REVENUE |
$ |
15,532,514 |
$ |
15,503,201 |
|
COST OF SALES |
10,654,373 |
9,353,075 |
||
|
GROSS PROFIT |
$ |
4,878,141 |
$ |
6,150,126 |
|
Operating Expenses |
3,417,226 |
2,610,796 |
||
|
Other Expenses |
1,222,866 |
1,632,499 |
||
|
Net Income |
$ |
368,443 |
$ |
1,241,923 |
|
per share (basic) |
$ |
0.01 |
$ |
0.03 |
|
per share (fully diluted) |
$ |
0.01 |
$ |
0.03 |
Balance Sheet Highlights
|
December 31, 2015 |
December 31, 2014 |
|||
|
Current Assets |
$ |
11,887,900 |
$ |
13,489,237 |
|
Current Liabilities |
$ |
7,220,191 |
$ |
7,294,990 |
|
Long-Term Debt |
$ |
nil |
$ |
nil |
|
Shareholder's Equity |
$ |
9,592,137 |
$ |
8,942,188 |
Revenues for the three months ended December 31, 2015 were $3,872,393; a decrease of 6% compared to the same period in 2014. The decrease was due to the delay in closing new customer projects. For Q4 2015, revenue consisted of 41% professional services, 48% product sales and 11% field services. Gross margin for the three months was 9% (2014: 20%). Initial project setup expenses in Kuwait and cost of travel for staff for new projects in Oman and KSA contributed significantly to the higher cost of sales for the period compared to 2014.
Selling expenses increased by 41% in the fourth quarter of 2015 to $362,666 due to increased selling efforts to increase and diversify our customer base. Amortization and depreciation increased by 83% compared to 2014 as we added depreciation of our new intangible asset (Stage EM) and continued to depreciate equipment and computers purchased for new professional service staff placed at customer sites in Egypt. Bad debts during the fourth quarter decreased by 86% as the Company was advised to write-off some receivables at the end of 2014. NTG reported a net loss of $774,576 in Q4 2015 compared to a net loss of $304,973 in Q4 2014. The loss is due primarily to the investment in new offices in the USA, Kuwait, Egypt and Canada.
For the year ended December 31, 2015, revenues were $15,532,514, just higher than 2014 revenues of $15,503,201. Revenues for the year consisted of 65% professional services, 33% product sales, and 3% field services. We expect professional services to remain strong, and software sales to increase with the introduction of our new product, StageEM. Gross margin for the year was 31% (2014: 40%), which was due to the timing of new projects and increased cost of sales. As our product sales increase, realistic margins are between 40-50% based on the product mix.
Selling expenses for 2015 increased by 33% to $1,305,303. Our selling efforts are increasing as we expand into new markets and work to diversify our customer base. General and administration costs increased to $ 2,411,201 from $1,717,775 in 2014 due to an increase in salary and wages, new branches, and increased consulting and professional fees. Amortization and depreciation also increased to $568,107 compared to $440,693 in 2014.
Net income for the year ended December 31, 2015 was $368,443 compared to $1,241,923 in 2014. The reduction in earnings is due primarily to the significant increase in the cost of sales, selling and G&A, and the delay in closing new projects. As we opened up new offices and put an emphasis on business development in new areas, we incurred additional costs. We will monitor these expenses to ensure levels are optimized in future periods.
Looking towards the future, we remain committed to our growth strategy and continue to focus on growing organic operations, expanding our marketing reach geographically and enhancing our product offering. We are also looking to increase our scope through acquisitions and/or partnerships with global system integrators.
In addition to existing customers and projects, in 2016 we will also continue to focus on developing business for our new offices in USA, Oman and Kuwait. We will be aggressively looking for an acquisition to increase our customer base, revenue and geographical presence.
2015 turned out to be a year in which the company focused on diversifying its revenue base and building new projects and branches to drive future growth. While our overall growth rate moderated in 2015, we are excited about the scope of new opportunities that lie ahead as we have worked hard to lay the foundation for several years to come.
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 400 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:
Doren Quinton, President QIS Capital
Ph: 250-377-1182
Fax: 250-377-1183
Email: info@smallcaps.ca
Kristine Lewis, President, NTG Clarity Networks Inc.
Ph: 905-305-1325
Fax: 905-752-0469
Email: klewis@ntgclarity.com
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