Simplifying Digital
Transformation
NTG Clarity Networks Inc.
Annual Report 2024
30+ Years of Service
NTG Clarity Networks Inc.
Annual Report 2024
2
Who We Are
NTG Clarity is a digital
transformation service provider
with a focus on the rapidly
digitizing Saudi Arabian market.
By providing outsourced software
development solutions and
proprietary software products,
we accelerate and simplify the
digital journey for our clients in
the enterprise financial, IT, and
telecom sectors.
NTG Clarity helps clients scale
and stay connected by serving
as a long-term technology
partner in a rapidly- changing and
increasingly digital world.
Our Vision
Our Mission
Is to make digital
transformation accessible
worldwide, capitalizing on
our deep knowledge and
experience in different
industries to provide
competitive, top-tier
products and services.
Enabling clients’ Business
Excellence and efficiency
by architecting and
delivering world class
portfolios of integrated
IT solutions owned by
distinguished and highly
motivated professionals.
NTG Clarity Networks Inc.
Annual Report 2024
3
Industry Context
The rapid digital transformation of the Saudi Arabian market is creating significant growth opportunities and a
strong revenue tailwind.
$1.3T
Investment in all sectors by
the Kingdom of Saudi Arabia
as part of Vision 2030
Saudi ICT Market
GROWING at
8.5% CAGR
$50B
in 2024
EXPECTED
to reach
$82B
by 2030
Source: Mordor
Intelligence
8.5%
Compounded Annual Growth Rate of Saudi
Information Communication Technology Market
Saudi Arabia is in great need of
technical talent and has shown
preference for nearshoring in
destinations like Egypt.
NTG Clarity Networks Inc.
Annual Report 2024
4
About NTG Clarity
30+
Years of
Service
A proudly Canadian company serving the Saudi Arabian market, NTG harnesses Egypt’s
exceptional software talent to deliver cutting-edge solutions.
With over 30 years of experience, we provide enterprise services and software
solutions to leading tier-one enterprises.
Track Record of Revenue and Net Income Growth
NTG’s quality products and services have led to customers’ engagements expanding in scope and duration, as
well as new customers being referred by those same satisfied clients.
Team of Over
1,000
Software Development, IT and
Network Design, Engineering, and
Implementation professionals,
many of whom have been with
us 10+ years.
LTM Revenue
LTM Net Income
$56M
$47M
$39M
$33M
$25M
$28M
$19M
$22M
$12M
$14M
$15M
$16M
$18M
$10M
$8M
$9M
$9M
$6M
$7M
$4M
$1M
$1M
Q1-21 Q2-21 Q3-21
$1M
$2M
$1M
$2M
Q4-21 Q1-22 Q2-22 Q3-22
$1M
Q4-22
$1M
Q1-23
$1M
$1M
$2M
Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 Q4-24
NTG Clarity Networks Inc.
Annual Report 2024
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Investment in Education
NTG’s strategic investment in education and talent development has empowered
us to scale our team rapidly while maintaining exceptional service quality.
NTG Schools
Vocational high schools in Cario Egypt
First opened in 2023
Second opened in 2024
150
current students
Academy Training Programs
For university students, new grads, and upskilling employees
+3,500
historical participants
NTG Clarity Networks Inc.
Annual Report 2024
6
Lines of Business
Outsourced Software Development and Proprietary Software Products
A booming trend in Digital Transformation means enterprises are looking to rapidly digitize and expand their
software development teams.
50+
Enterprise Clients
Across Finance, IT, Telecom, and other large enterprises.
Telecom
8%
Other
2%
Financial
64%
System
Integrators
26%
For clients that prefer to work in- person or with a
hybrid model, we find local candidates ready to work or
handle any relocation required such as travel and work
permits.
Our 30+ years of experience means we have a
worldwide network of thousands of experienced
candidates.
Onsite
Services
59%
of Total
Revenue
With the three offices in Cairo, Egypt that make up our
Egypt Offshore Center, we’re in the best position to take
advantage of the city’s talent with a population of over
20M.
Our clients love the talented individuals and competitive
pricing that come with offshoring in Egypt, with many
experienced candidates ready to hit the ground running
and start work with as little as one week’s notice.
Offshore
Services
35%
of Total
Revenue
The NTGapps Digital Toolbox is NTG’s in-house
developed proprietary software product designed to
simplify digital transformation with customizable web
and mobile application templates.
NTGapps serves as an alternative to the traditional
software development process being used to develop
powerful business applications in less time with fewer
developers.
NTGapps
6%
of Total
Revenue
NTG Clarity Networks Inc.
Annual Report 2024
7
Praise From Our Customers
I am writing to express my
sincere appreciation for your
hard work and dedication to
TFS2.0 Enhancement. Your
contributions have been
invaluable to our team, and I am
grateful for all that you do.
Specifically, I want to recognize
your outstanding work on the
second module Card Expansion
Module Project. Your attention
to detail have been instrumental
in achieving our goals and
exceeding our customers’
expectations. Your contributions
have not gone unnoticed, and I
want to publicly acknowledge
your efforts.
I would like to take this
opportunity to express my
satisfaction with NTS Utilities
Solution... NTG Clarity us
provided with [NTGapps] Utilities
Solution, which turned out to be
robust and scalable while still
being competitively priced and
highly user-friendly.
Both NTG’s sales and
implementation teams were
experienced and professional,
helping our team get up and
running quickly with [NTGapps]
Utilities Solution. We were
exacting in our expectations,
and I would like to thank you
for not only meeting them
but exceeding them. I would
certainly recommend [NTGapps]
Utilities Solution to those in
need of an end-to-end utilities’
solution.
The NTG team was supporting,
patient, accommodating,
flexible and agile. It is important
to acknowledge the skills,
professionalism and capabilities
of the staff we dealt with...
...NTG team met all the target
dates and the project was
delivered on time. NTG team
kept us updated and worked
with us closely to guarantee our
requirements were met and the
successful deliver of the project.
We see NTG as an important
and effective partner, and
we would not hesitate to
recommend their products
and services. We look forward
to working with NTG team on
future projects.
90%
customer
retention
54%
of customers
increased
service
NTG Clarity Networks Inc.
Annual Report 2024
8
Letter to shareholders
Dear NTG Clarity Investor,
2024 has been a transformative year for NTG Clarity.
Decades of strategic investment have met significant
tailwinds in our key market to deliver remarkable
results. While we know there is still much more to
achieve, this year represents a pivotal moment in
our journey, showcasing the strength of our long-
term commitment to growing our business in Saudi
Arabia and across the region.
For more than 20 years, we have methodically built
NTG’s foundation in Saudi Arabia through three
strategic pillars:
•
Deeply entrenched relationships in Saudi
Arabia
We’ve cultivated trusted relationships with IT
professionals across all levels, many of whom
now hold leadership and key decision-making
roles in some of the largest financial, IT, and
telecom organizations in Saudi Arabia. These
relationships are driving our revenue growth
today and going forward.
•
Education & training programs to build our
talent pipeline
For decades, we’ve partnered with Egyptian
schools to upskill and train engineering and IT
professionals, creating a robust talent pipeline.
This strategy reached a new milestone in 2023
when we partnered with the Egyptian Ministry
of Education to establish two NTG schools
dedicated to training future professionals. This
is allowing us to rapidly scale to handle the
demand and continue providing outstanding
service to our customers.
•
Investing in the future
We’ve expanded our training programs
within Saudi Arabia to develop the technical
and business leaders of tomorrow. These
investments are already compounding the
relationship network effects that have been
central to our growth.
NTG Clarity’s disciplined execution
and long-term strategy have driven 15
consecutive quarters of last twelve-month
revenue growth, with positive net income
and cash flow.
The success of our strategy, the trust of our
customers, and the dedication of the entire NTG
team are all evident in our 2024 results.
2024 revenue increased by 102% to $56.1 million,
with Net Income of $9.9 million up 326%, exceeding
our previously-raised guidance for both revenue
and net income, as well as marking our fourth
consecutive year of revenue growth and profitable
operations.
Our underlying KPIs are also showing the strength
of our strategy, product market fit, and the excellent
value that our customers get from our services. In
2024 we saw:
•
Larger and longer contract wins
We signed three major contracts valued at over
$80M over three years, including our largest
contract ever. This puts our backlog of unbilled
purchase orders and contracts on hand as of 31-
DEC-2024, along with any orders and contracts
announced since then at over $105 million, with
visibility out over three years.
•
Increase in new customers:
We’ve seen a 25% increase in customers1 year-
over-year driven by our relationships with key
decision makers at some of the largest Saudi
organizations.
•
Strong customer satisfaction
With 90% customer retention2 and 54% of
customers increasing their level of service3 it is
clear they recognize the quality and value NTG
provides.
•
Accelerating interest in software products
In and leading up to 2024, our largest
professional services clients have signed on
to work on proofs of concept and projects to
implement our proprietary NTGapps software. In
2024, this resulted in 18% growth for our high-
margin NTGapps offering.
NTG Clarity Networks Inc.
Annual Report 2024
9
With the pace of investment in Saudi Arabia
increasing and our team’s growing reputation, 2024
is just the start.
Our 2025 guidance reflects our confidence in
another year of meaningful growth, profitability, and
cash generation. Our backlog now exceeds $105
million, with approximately $80 million of the backlog
secured against three-year contracts. This visibility
into future revenue along with our isolation from
North American tariffs and uncertainty gives us
strong conviction in our outlook.
Financial Outlook for 2025
•
Revenue: Expected to be around $75 million
•
Adjusted EBITDA Margin4: Forecasted in the
range of 16% - 20%
While Q4 2024 showcased the strength and
profitability of our operating model, our 2025
Adjusted EBITDA guidance reflects a deliberate
decision to provide ourselves flexibility to reinvest in
the business.
We are prioritizing strategic investments in hiring,
training, and operational scale to support and
accelerate sustainable long-term growth.
In 2025 our strategic priorities are:
•
Expand and solidify our position as an integral
part of clients’ long-term digital strategy,
leveraging our superior cost structure, quality
offerings, and trusted relationships built over
multiple years of service.
•
Win new customers through the expanding
network effect of recommendations from
current and past clients.
•
Increase adoption and traction of NTGapps,
positioning them as essential tools within our
clients’ digital ecosystems.
People
With three years of consistent profitability
under our belt, we’re actively identifying
opportunities to make sure our revenue
growth continues and as much of this new
revenue as possible flows on to the bottom
line.
Shareholders
We empower our staff to build and deliver
challenging projects while providing
opportunities for training and career
advancement both internally and outside
NTG
Community
We provide youth education and
employment opportunities tailored to
the modern job market through the NTG
School.
We enter 2025 with an exceptional team, a proven
strategy, and a strong foundation for continued
success. On behalf of our leadership team and
employees, I want to thank our shareholders for your
continued trust and support. We remain steadfast in
our commitment to driving long-term value and look
forward to another year of growth, innovation, and
opportunity.
Sincerely,
Ashraf Zaghloul
Ashraf Zaghloul
Chairman and Chief Executive Officer
NTG Clarity Networks
Importantly, we will maintain our commitment to our
customers, our employees, our shareholders, and
our community.
Customers
We accelerate and simplify the digital
transformation journey for our clients by
providing the right solution delivered by
passionate professionals both on their
sites and offshore.
1.
Customer defined as accounts spending more than $100,000 in a
year. Increase in number of customers as of twelve months ended
December 31, 2024, compared to prior year period.
2.
Customer retention based on customers as of twelve months ended
December 31, 2024. Customer defined as accounts spending more
than $100,000 in a year.
3.
Calculated as % of total customers that spent more with NTG through
twelve months ended December 31, 2024, compared to prior year
period. Customer defined as accounts spending more than $100,000
in a year.
4.
Adjusted EBITDA is a non-IFRS (non-GAAP) measure. Management
believes that Adjusted EBITDA is a useful supplemental measure
– but not an alternative – to Net Income. Please see the Non-IFRS
Measures section towards the end of this MD&A for details and
reconciliation of non-IFRS measures to IFRS measures.
NTG Clarity Networks Inc.
Annual Report 2024
10
Table of Contents
Management’s Discussion & Analysis of Financial Conditions and Results of Operations
12
Forward-Looking Statements
12
Business Overview
12
Summary of Major NTG Events in 2024
13
Outlook
15
Summary of Quarterly Results
16
Quarterly and Annual Results of Operations
17
Revenue
17
Costs of Sales and Gross Margin
18
Operating Expenses
19
Other Expenses
21
Total Comprehensive Income after Taxes (Net Income)
22
Assets and non-current liabilities
23
Property, plant and equipment
23
Intangible assets
23
Liabilities
23
Liquidity and Capital Resources
24
Cash Flow Provided by Operations
24
Cash Flow from Financing Activities
24
Cash Flow from Investing Activities
24
Commitments and Contractual Obligations
25
Off-Balance Sheet Arrangements
25
Transactions with Related Parties
25
Basis of Preparation and Significant Accounting Policies
26
Proposed Transactions
26
Business Risk and Management
26
Market risk
26
Interest rate risk
27
Credit risk
27
Devaluation of Egyptian pound in 2024
27
Foreign currency risk
28
Liquidity risk
28
Capital Management
29
Legal claim contingency
29
Guarantees
29
NTG Clarity Networks Inc.
Annual Report 2024
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Disclosure Controls and Procedures and Internal Controls over Financial Reporting
29
Standards issued but not yet effective
30
Non-IFRS measures
30
Management’s Statement of Responsibility
32
Independent Auditor’s Report
33
Consolidated Statements of Financial Position
36
Consolidated Statements of Changes in Equity
37
Consolidated Statements of Profit and Loss and Comprehensive Income
38
Consolidated Statements of Cash Flows
39
Notes to the Audited Consolidated Financial Statements
40
1.CORPORATE INFORMATION
40
2.BASIS OF PRESENTATION
40
3.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
40
4.SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES, AND ASSUMPTIONS
48
5.STANDARDS ISSUED BUT NOT YET EFFECTIVE
50
6.OPERATING SEGMENT INFORMATION
50
7.INCOME TAXES
53
8.EARNINGS PER SHARE
54
9.CASH AND CASH EQUIVALENTS
55
10.TRADE AND OTHER RECEIVABLES
55
11.PROPERTY AND EQUIPMENT
56
12.INTANGIBLE ASSETS
57
13.INVESTMENT IN JOINT VENTURE
57
14.RIGHT OF USE ASSET AND LEASE LIABILITIES
57
15.ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
59
16.OTHER FINANCIAL ASSETS AND FINANCIAL LIABILITIES
59
17.EQUITY INSTRUMENTS
61
18.CONTRIBUTED SURPLUS
65
19.DIVIDENDS PAID AND PROPOSED
65
20.REVENUE
65
21.COST OF SALES
65
22.EXPENSES: DISCLOSURE OF FUNCTION EXPENSES
66
23.LOANS PAYABLE
66
24.RELATED PARTY DISCLOSURES
67
25.FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
68
26.COMMITMENTS, CONTINGENCIES, AND GUARANTEES
71
27.COMPARATIVE FIGURES
71
Corporate Information
72
NTG Clarity Networks Inc.
Annual Report 2024
12
Management’s Discussion &
Analysis of Financial Conditions
and Results of Operations
This management discussion and analysis (MD&A) focuses on key statistics from the consolidated financial
statements and pertains to known risks and uncertainties relating to the digital transformation, telecom and
consulting industries. This discussion should not be considered all-inclusive, as it excludes changes that may
occur in general economic, political and environmental conditions. This discussion and analysis of the financial
condition and results of operations has been prepared as of April 10, 2025, for the year ending December 31,
2024 and should be read in conjunction with the audited consolidated financial statements and related notes
and material contained in other parts of this annual report.
Additional information related to the Corporation is available on SEDAR at www.sedar.com.
Forward-Looking Statements
Certain statements in this MD&A and associated notes and financial statements may be considered “forward-
looking” within the meaning of applicable securities laws. These statements reflect the Corporation’s plans
and expectations based on our experience, interpretation of past trends, key assumptions and other relevant
information available at the date that such statements are made.
The statements involve business, economic and competitive risks, uncertainties and contingencies. There is
significant risk that predictions, projections or conclusions will not prove to be accurate and actual results may
differ materially from estimates, expectations, or intentions expressed.
The forward-looking statements in this MD&A and associated notes and financial statements are based on
what we believe are reasonable assumptions, however we caution readers not to place undue reliance on our
forward-looking statements. We assume no obligation to update or revise these forward-looking statements to
reflect new events or circumstances, except as required by securities law.
Business Overview
NTG Clarity (“NTG”, “we”, “us”, “our”) is a Canadian publicly traded Corporation (TSXV: NCI; OTC: NYWKF) that
provides digital transformation solutions: software development outsourcing and software products. We have
been providing engineering, Information Technology, and networking services and developing niche software
products for telecommunications and utilities providers since our start in 1992. We have also expanded into the
financial and government sectors, providing technical resources and products to assist customers with digital
transformation and other technology projects.
We are headquartered in Toronto, Canada and have subsidiaries/branch offices in Cairo, Egypt; the USA; Riyadh,
Saudi Arabia and Muscat, Oman. The Corporation is organized into two business segments: the Canadian
segment, which is made up of activities in Canada and our offices in Saudi Arabia and Oman; and the Egypt
segment, which is our primary delivery centre for software development and professional services, offshoring
services and network services to customers worldwide.
NTG Clarity Networks Inc.
Annual Report 2024
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Summary of Major NTG Events in 2024
This year’s major announcements included $139.8 million in contracts and Purchase Orders (“POs”) signed with
both new and existing customers. This total comprised of $57.3 million in business-as-usual contracts and POs,
and $82.5 million in expanded 3-year engagements with three existing customers. Over the year, we saw strong
momentum in contract wins, driven primarily by existing customers renewing their contracts with increased
scope and duration. Our customer base also grew meaningfully, fueled by our strong referral network – resulting
in six new customers who contributed 15% of our 2024 revenue.
In Q1 2024, we announced:
•
$26.7 million in contracts and POs signed.
•
Four New NTGapps Implementation projects for customers in Iraq. NTGapps will provide ERP systems,
an HR payroll platform, and a mobile app to support billing, collections, and meter reading for a utilities
operator.
•
The launch of our Artificial Intelligence (AI) Department, which successfully integrated AI with our
proprietary NTGapps platform with the aim of using Large Language Models (LLMs) for financial and
business decision-making purposes as well as for personnel training applications.
•
Attendance at two major conferences: Mobile World Congress (MWC) in Barcelona, Spain, and LEAP 2024
in Riyadh, Saudi Arabia.
•
The closing of a board and shareholder approved Share consolidation at a 5:1 ratio. The number of issued
and outstanding shares were reduced from 187,672,355 shares to 37,534,471 shares, subject to treatment
of fractional shares.
In Q2 2024, we announced:
•
$8.242 million in contracts and POs signed.
•
Launched our new specialized offering of software testing as a service. As the Middle East continues its
rapid digital transformation, software testing and quality assurance services are seeing rapidly increasing
demand.
In Q3 2024, we announced:
•
The signing of our largest-ever contract: a 3-year $53 million Offshore Development Centre Agreement to
provide offshore digital transformation services out of our Egypt Offshore Centre for an existing client in the
Middle East. We have received and expect to continue to receive POs against this engagement in the future
as work ramps up.
•
Another 3-year $7.5 million accepted Commercial Proposal for new to provide onsite resources to a
new system integrator customer. We have received and expect to continue to receive POs against this
engagement in the future as work ramps up.
•
$12 million in other contracts and POs signed.
•
The closing of a Brokered LIFE Offering, raising gross proceeds of $5,208,000 (net $4,789,329). We will use
the net proceeds, as required, for working capital to fund the rapid expansion required to deliver our digital
transformation solutions through our Egypt Offshore Centre and Saudi sales office.
In Q4 2024, we announced:
•
A 3-year $22 million Master Service Agreement renewal and expansion to provide offshore digital
transformation services from our Egypt Offshore Center for a customer in the financial sector. We have
received and expect to continue to receive POs against this engagement in the future as work ramps up.
•
$10.3 million in other contracts and POs signed.
•
Upgraded 2024 guidance with expected revenue of $55 million, and a revised net income margin target of
14%.
The funds from our accelerating growth have allowed us to reduce our long-term debt by $706,355 year-to-date.
Improvements on our balance sheet have led to a shareholder’s equity of $12,601,184 as of December 31, 2024,
compared to a deficit of $3,237,143 at December 31, 2023.
NTG Clarity Networks Inc.
Annual Report 2024
14
Kingdom of Saudi Arabia (KSA)
KSA has continued to be the main hub for NTG sales, and has shown an unprecedented increase in demand for
our digital transformation services and software products. The Saudi Vision 2030 economic development plan
is investing heavily into technological development with the goal of diversifying the country’s economy away
from the Oil & Gas sector. We saw a 68% increase in revenue contribution for the country this year with 95% of
our revenue coming from KSA (2023: 81%).
Through our more than 20 years of work in the region, NTG has developed an expansive network of key IT
decision makers, and a track record of quality work delivered at a competitive price. As a result, we have been
able to expand our business and diversify our customer base into sectors like banking & finance, IT & system
integration, and government departments.
Egypt
Our Egypt offices serve as our primary delivery centre for offshore professional services and software
development.
Since 2021, due to continuing economic slowdown in Egypt and devaluation of the Egyptian Pound,
management has transformed NTG Egypt into primarily a delivery centre for offshore software development
services for international customers through our Egypt Offshore Centre. While Egypt’s legacy customers are still
being serviced, this has resulted in reduced revenue on translation from Egypt, whose contribution in 2024 was
2% of the Corporation’s revenue (2023: 9%).
In general, Egypt can be a challenging place to do business with restrictions on using foreign currency for
business operations and on moving funds out of the country. The Egyptian pound (EGP) has continued to drop
in value, dropping from around 23.4 EGP to the Canadian dollar in January to about 35.3 EGP in December 2024,
a 34% drop in value (https://www.exchange-rates.org/exchange-rate-history/cad-egp-2024). Other effects in the
economy include a benchmark interest rates of 19.25% and official inflation rate of 24.1 percent in December.
This has resulted in NTG Egypt having to increase salaries to help personnel cope with the changing economy.
Despite difficult economic times in Egypt, NTG has been able to thrive by providing employment and
professional development opportunities for Egyptians and providing offshore services to customers in Saudi
Arabia. Egypt is a favorable outsourcing destination due to Egyptians’ ability to speak the same language,
work in the same or similar time zone, and share strong cultural ties with Saudi customers, all while providing
considerable cost savings compared to hiring locally. This is the primary driver behind our growth and
profitability in recent years.
In 2024, we expanded our commitment to education, training, and personal development by opening a second
NTG School – the first being opened and announced in 2023 – in cooperation with the Egyptian Ministry
of Education. This partnership aims to equip Egyptian secondary technology school students with a dual
curriculum, integrating NTG’s specialized technology training alongside the ministry’s standard curriculum.
NTG donates the time of a team of educational engineers to ensure a robust talent pipeline and comprehensive
training for the next generation in the exciting field of digital transformation.
NTG Clarity Networks Inc.
Annual Report 2024
15
Oman
In 2024, we continued work for our customer in Oman, who is using our NTGapps Network Inventory and
Project Management software products. This customer has been with NTG for over 10 years and while recurring
revenues have decreased as the development and implementation was completed, annual support fees and
change requests contributed 1% to NTG’s revenue in 2024 (2023: 2%).
Iraq
We onboarded our first Iraqi customer in 2021 and have been growing our business in Iraq ever since. Our four
active customers in Iraq account for 2% of our revenue in 2024 (2023: 6%). As Iraq embarks on an oil-funded
digital transformation similar to Saudi Arabia, we look forward to offering our software products and services to
guide them through the process.
Canada
Our Canadian office serves as our corporate headquarters and accounts for 1% of NTG’s revenue (2023: 1%).
We continued to work on projects with two North American customers through our Canadian office.
Outlook
NTG has seen another year of incredible growth and profitability with each quarter continuing to break revenue
records, and with Q4 having our highest single-quarter revenue ever. Consolidated revenue for Q4 2024 was
$17,211,038, up 109% from $8,224,124 for the same period in 2023. NTG has exceeded its 2024 revenue
guidance of $55,000,000, with a full-year revenue of $56,126,751, up 102% from $27,728,117 in 2023.
For Q4 2024, the Corporation recorded a net income of $2,980,357, up 480% compared to $469,848 for the
same period in 2023. For the year ending December 31, 2024, the Corporation recorded a net income of
$9,855,552, up 326% compared to $2,315,735 in 2023. This results in a net profit margin of 18%, exceeding 2024
guidance of 14%.
As KSA continues its drive to diversify its economy away from Oil & Gas and towards sectors like Technology,
Finance, and Entertainment, we expect the strong demand for our services and products to continue as these
sectors rapidly build out technical infrastructure and software. Our 20-year track record of quality work in the
region has helped us build deep relationships with key IT decision makers, who are eager to both expand their
existing engagements with us and refer us to peers and colleagues as new customers.
These customers are served well by our Egyptian workforce. Since 2021, NTG Egypt has transformed into a
supplier of outsourced services for international customers through our Egypt Offshore Centre. Outsourcing
out of Egypt can result in up to 50% cost saving compared to hiring locally in Saudi Arabia, and Egyptians speak
the same language, work in the same or similar time zone, and share a cultural background with our Saudi
customers, leading to better collaboration and better results.
Egypt is a massive country with a population in excess of 100 million and has a strong technical culture, with
many universities providing technical education. We expect Egypt to be able to provide ample talent to fulfill our
clients’ needs for the foreseeable future, and we run many educational and training programs in partnership with
the Ministry of Education as well as colleges and universities to further fortify NTG as a preferred employer for
Egyptian technologists.
NTG Clarity Networks Inc.
Annual Report 2024
16
With our existing backlog of over $105 million in POs and contracts on hand, we anticipate that 2025 will be
another record-breaking year with a revenue target of $75 million and Adjusted EBITDA* margin in the range of
16% to 20%.
We are shifting in our financial reporting metrics, moving from net income margin guidance to Adjusted EBITDA
margin guidance. This change in reporting better reflects the underlying strength of our business by excluding
the impact of foreign exchange fluctuations. While we are not affected by tariffs and the macro environment
in North America, foreign exchange dynamics can create variability that is not representative of our core
performance.
As we continue through 2025, our top priority is to focus on continuing to leverage the organic growth
opportunities in Saudi Arabia. As large investments in technology are expected to continue, we will put our
decades of experience, expansive professional network, and robust talent pipeline to work to continue our
growth and meet our targets of:
•
Revenue: Target of $75 million
•
Adjusted EBITDA* Margin: Forecasted in the range of 16% - 20%
While Q4 2024 showcased the strength and profitability of our operating model, our 2025 Adjusted EBITDA
guidance reflects a deliberate decision to provide ourselves flexibility to reinvest in the business. We are
prioritizing strategic investments in hiring, training, and operational scale to support and accelerate sustainable
long-term growth.
Summary of Quarterly Results
We are continuing to see increasing record-setting revenues as existing and new customers continue to expand
their engagements with us, and new customers are being onboarded.
Historically, NTG’s operating results have fluctuated due to the timing of new contracts and their corresponding
billing, and we expect this trend to continue. The following table shows a summary of our eight most recent
quarters (in Canadian dollars).
2024
Revenue
Adjusted
EBITDA*
Net Income
Profit per
Share
Diluted Profit
per Share
Total Assets
Quarter One
$11,755,520
$1,987,691
$2,377,866
$0.06
$0.05
$15,049,269
Quarter Two
$12,488,315
$2,816,491
$2,443,374
$0.05
$0.05
$18,805,235
Quarter Three
$14,671,878
$3,180,141
$2,053,955
$0.05
$0.05
$27,376,727
Quarter Four
$17,211,038
$4,322,955
$2,980,357
$0.07
$0.05
$28,292,859
TOTAL
$56,126,751 $12,307,278
$9,855,552
$0.23
$0.20
$28,292,859
2023
Revenue
Adjusted
EBITDA*
Net Income
Profit per
Share
Diluted Profit
per Share
Total Assets
Quarter One
$6,127,177
$1,195,818
$637,745
$0.004
$0.004
$9,826,280
Quarter Two
$6,373,261
$990,176
$698,261
$0.005
$0.004
$10,014,812
Quarter Three
$7,003,553
$1,324,263
$509,880
$0.003
$0.003
$11,332,113
Quarter Four
$8,224,124
$(390,230)
$469,848
$0.000
$0.000
$12,456,036
TOTAL
$27,728,117
$3,120,027
$2,315,735
$0.01
$0.01
$12,456,036
* Adjusted EBITDA is a non-IFRS (non-GAAP) measure. Management believes that Adjusted EBITDA is a useful
supplemental measure – but not an alternative – to Net Income. Please see the Non-IFRS Measures section
towards the end of this MD&A for details and reconciliation of non-IFRS measures to IFRS measures.
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Annual Report 2024
17
Quarterly and Annual Results of Operations
The trust and commitment of our customers, combined with the dedication and hard work of the entire NTG
team, led to a record-breaking year in 2024. We achieved the highest annual revenue in NTG’s history, with Q4
2024 marking our strongest single quarter performance to date.
Financial highlights for the three months and year ending December 31, 2024:
Revenue
Consolidated revenue for the three months ending December 31, 2024 was up 109% to $17,211,038 compared
to $8,224,124 for the same period in 2023. Revenue for the year increased 102% to $56,126,751 compared to
$27,728,117 reported in the prior year.
Outsourced professional service revenue continues to be our largest service line, given its generally recurring
nature. Offshoring now makes up 35% of NTG’s consolidated revenue this year (2023: 12%), while onsite
outsourcing makes up 59% (2023: 78%). In total, professional services contributed $52,759,146 (94%) to
revenue compared to $24,875,456 (90%) in 2023.
Product-related revenue was $3,367,605 or 6%, compared to $2,852,662 or 10%, in 2023. While the percentage
of product-related revenue contribution has declined, the absolute contribution has increased by 18% over 2023.
The demand for our outsourcing services has increased at a much more rapid pace. We continue to work on
marketing NTGapps, our low-code digital transformation product, in an effort to make product sales a larger
part of NTG’s revenue mix.
For the Egypt operating segment, revenue for the three months and year ending December 31, 2024 was
$343,430 and $1,060,946 compared to $573,474 and $2,604,969 in 2023. Though we continue to support
Egypt’s legacy customers, NTG Egypt is now primarily the delivery centre for offshore services for our
international customers.
For the Canadian operating segment, Q4 revenue increased 120% to $16,867,608 compared to $7,650,650
in Q4 2023. For the year ending December 31, 2024 revenues increased 119% to $55,065,805 compared to
$25,123,148 in 2023. The increase in revenue in Canada is driven primarily by expansion in the KSA market,
which has become a rapidly growing emerging market in need of technology and software to help meet their
growth goals.
Consolidated revenues are 102% higher this year primarily due to:
•
a 522% and 110% increase in work for our two largest customers respectively in KSA
•
the addition of 6 new customers bringing in 15% of our 2024 revenue
Though we have 2 North American customers, the Middle East continues to be where the majority of NTG’s
revenue comes from and as of December 31, 2024, represents 99% of total revenue.
Historically, the majority of our revenue has come from the telecommunications industry; however, since
2021 we have been increasing work with customers in Banking & Finance and Government sectors. As the
banking industry experiences rapid growth and digital transformation, NTG is meeting the demand by providing
specialized IT and software development services. In 2024, 64% of our revenue came from the Banking &
Finance sector, while 26% was driven by partnerships with System Integrators.
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Annual Report 2024
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Contract Assets (formerly Unbilled Revenue)
Contract assets consists of revenue for services that have been delivered but not invoiced as of the period end
date and is recognized in accordance with NTG’s revenue recognition policy.
Revenue can be recognized for projects based on time and materials for professional services, or on a
percentage of completion basis for product implementation and support. Based on NTG’s contracts, the
customer is invoiced upon the completion of defined milestones and/or the required customer acceptance,
which is typically monthly. However, for some customers, contract milestones and customer acceptances
fall mid-month, requiring unbilled revenue for work in the final month of the quarter to be recognized. This will
typically be billed in the next month.
As of December 30, 2024, contract assets revenue was $3,617,035 compared to $198,729 at December 31,
2023. The large unbilled amount is primarily due to the previously described timing of milestones and customer
acceptance requirements for major 2024 customer contracts in the Middle East. We expect a similar amount of
revenue to remain unbilled each quarter for the foreseeable future due to the timing of these contracts, which
are typically billed shortly after quarter end.
Costs of Sales and Gross Margin
Cost of sales consists of the expense of personnel providing professional services, and services to implement
and provide technical support for our software solutions. In addition, it includes an allocation of certain direct
and indirect costs attributable to these activities.
The cost of sales for the three months and year ending December 31, 2024 were $10,969,853 and $35,279,794
(2023: $7,187,625 and $18,926,200). Cost of sales for 2024 are up less than our increased revenue (86% vs
102% increase for revenue), resulting in a higher gross margin for the year.
Cost of sales
December 31, 2024 December 31, 2023
Salaries and wages
$ 25,556,292
$ 14,030,727
Travel
600,179
518,168
Hardware
17,865
57,522
Medical
40,357
--
Consulting
7,990,040
3,533,530
Amortization (Note 12)
528,733
421,218
Other
546,328
365,035
Total
$ 35,279,794
$ 18,926,200
Notably, the Cost of Sales – Consulting for the year ending December 31, 2024 was $7,990,040 compared to
$3,533,530 in 2023, an increase of 126%. In 2023, the consulting line item reflected higher-cost contractors
employed to fill short-term contract needs, however this is no longer the case. In 2024, consulting reflects the
employment of a third-party company that NTG works with to meet Saudi government-imposed quotas for
hiring Saudi Nationals. These employees report directly to NTG and deliver NTG services but are employed
through a different model due to government regulations.
Additionally, in 2024, the Amortization line item was moved from Operating Expenses to Cost of Sales. This is
due to the increasing revenue generated from sales of NTGapps, requiring its amortization to be recognized as a
cost of sales in order to align with accounting best practises.
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19
For the Egypt operating segment, the cost of sales for the three months and year ending December 31, 2024
were $291,001 and $592,796 respectively compared to $2,928,137 and $3,366,344 in 2023. Egypt now serves
primarily as our delivery centre for offshore development services, meaning Cost of Sales for KSA customers is
recognized in the Canadian segment.
For the Canadian operating segment, the cost of sales for the three months and year ending December 31, 2024
were $10,678,852 and $34,686,998 respectively compared to $4,259,488 and $15,559,856 in 2023.
The gross margin for Q4 2024 was $6,241,185 or 36% compared to $1,036,499 or 13% for Q4 2023. For the
year ended December 31, 2024 the gross margin was $20,846,957 or 37%, compared to $8,801,917 or 32%
for the same period in 2023. As professional services become a larger proportion of our business compared
to software licensing and solutions, we expect gross margins in the range of 35 – 40% depending on the ratio
between offshore and onsite services, with offshore having a slightly higher margin than onsite. We continue to
work in all regions to optimize the cost of sales for our revenue.
Operating Expenses
For the three months and year ending 2024, expenses were $1,872,490 and $8,504,817 respectively compared
to $2,127,157 and $6,628,123 in 2023.
Selling and Marketing
Selling and marketing expenses consist primarily of sales staff remuneration, commissions, travel, advertising,
consulting, and trade show costs.
Sales and marketing expenses for the three months and year ending December 31, 2024 were $703,308 and
$2,922,216 respectively compared to $817,485 and $2,172,925 in 2023.
For the twelve months ended
Selling
December 31, 2024 December 31, 2023
Salary and wages
$1,723,694
$1,586,791
Marketing
95,569
16,977
Mailing and courier
7,700
6,903
Professional services
77,556
19,538
Meals and entertainment
152,606
118,246
Travel
865,091
424,469
Total
$2,922,216
$2,172,924
Selling and marketing costs as a portion of revenue decreased to 5.2% of revenue from 7.8% in 2023. Absolute
costs increased by 34% year over year, mainly due to:
•
Increase in salaries and commissions as a result of the 102% increased revenue.
•
Significant increase in travel expenses as we increase the size and footprint of our sales and marketing
teams in order to take advantage of the rapid growth in the KSA market.
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Annual Report 2024
20
General and Administrative
General and administration expenses (G&A) consist primarily of salary and benefits, rent and office expenses,
insurance, professional fees, accounting and legal fees, director’s fees, etc.
G&A expenses for the three months and year ending December 31, 2024 were $1,743,659 and $6,146,196
respectively compared to $963,855 and $3,872,199 in 2023.
General and Administrative
December 31, 2024 December 31, 2023
Salary and wages
$3,527,012
$2,147,793
Occupancy
349,691
148,704
Consulting
216,397
47,016
Professional fees
307,254
155,675
Insurance
1,250,948
954,900
Dues and subscriptions
56,279
40,853
Penalties and fees
45,042
24,215
Office and general
393,573
353,043
Total
$6,146,196
$3,872,199
G&A costs have increased by 59% year over year. G&A as a portion of revenue fell as we saw the benefits of
operating leverage. The higher absolute G&A expenses were due to several factors related to expanding our
Egypt Offshore Centre and Saudi sales office:
•
Increase in salaries as we staff new offices and onboard/train personnel in preparation for deployment to
customer sites and offshore positions. In general, new staff will be booked as G&A while they are onboarded
and trained before being moved to Cost of Sales when they are deployed and billable with customers.
•
Increase in rent because of the new office space in Cairo, Egypt, that is serving as our Egypt Offshore
Centre. In August 2024, we expanded to an additional floor in the building to accommodate our large
contracts announced in August. We also required more office space and accommodations in KSA for our
growing team.
•
Increase in consulting fees in Canada as we establish our Digital Marketing team.
•
Increase in accounting and legal fees as we participated in a Share Consolidation in March 2024 and a LIFE
Offering in September 2024 where we raised $5,208,000. There were additional professional fees for the
transactions.
•
Significant increases in insurance costs because of the 75% increase in staff.
•
Other office expenses have increased due to the increased number of offices in Egypt and KSA, supporting
our large increase in revenue and projected revenue growth in 2025 and going forward.
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Annual Report 2024
21
Foreign Exchange Gain/Loss
Each entity in the Corporation determines its own functional currency and items included in the financial
statements of each entity are measured using that functional currency. The functional currency and the
presentation currency of the parent entity is the Canadian dollar. Transactions in foreign currencies are initially
recorded in respective functional currency rates at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are re-translated at the functional currency rate at the reporting date.
Differences are taken to the statement of profit or loss and comprehensive income. Non-monetary items that
are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the
dates of the initial transactions.
The functional currency of the subsidiary NTG Egypt Advanced is the Egyptian pound, and the functional
currency of the subsidiary NTG Clarity Networks US Inc. is the US Dollar.
An entity may present its financial statements in any currency (or currencies). If the presentation currency
differs from the entity’s functional currency, it translates its results and financial position into the presentation
currency. For example, when a group contains individual entities with different functional currencies, the
results and financial position of each entity are expressed in a common currency so that consolidated financial
statements may be presented.
For practical reasons, a rate that approximates the exchange rates at the dates of the transactions, for example
an average rate for the period, is often used to translate income and expense items. However, if exchange rates
fluctuate significantly, the use of the average rate for a period is inappropriate.
IAS 21.–47, in addition to IAS 21.–43, apply when the results and financial position of a foreign operation are
translated into a presentation currency so that the foreign operation can be included in the financial statements
of the reporting entity by consolidation or the equity method.
For the quarter ended December 31, 2024, the Corporation recognized a foreign currency exchange gain of
$574,477 compared to a loss of $345,818 for the same period in 2023. For the year ending December 31, 2024,
the Corporation recognized a foreign currency exchange gain of $563,595 compared to a loss of $583,000 for
the year ending 2023. For more information on foreign exchange, see Note 3(b): Foreign currency translation.
Other Expenses
Research and Development
With the exception of NTGapps, our flagship product, research and development are paid for by customer
requests and is therefore, included in cost of sales.
Provision for Bad Debt
NTG made no provision for bad debt in 2024 (2023: $66,606).
Amortization of Intangible Assets
Intangible assets are related to the NTGapps low-code digital transformation platform initially capitalized
in 2020 and until the product reached a mature steady state in late 2023. Expenditures on development of
the software are recognized as an asset from the time the Corporation has determined an indefinite future
economic benefit exists. Amortization costs are included in the Cost of Sales.
The amortization costs for the three months and year ending December 31, 2024 were $132,183 and $528,733
respectively compared to $122,033 and $421,218 in 2023.
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Annual Report 2024
22
Interest Expense
As of December 31, 2024, the interest expense for the three months and year was $191,305 and $435,332
compared to $128,236 and $378,985 for the same periods in 2023. Despite continued pay-down of interest-
bearing debt, the increase is due in large part to the implicit interest on increased lease liabilities in Egypt due to
our office expansion.
Share-based Compensation
NTG has a formal stock option plan allowing the issuance of options to directors, officers, employees and
consultants in order to attract and retain qualified and experienced individuals. All options granted are non-
assignable, generally expire five years after the grant date, and usually vest over one year but can have varying
vesting periods.
No options were granted to any entities other than employees or consultants of NTG during 2024. Stock options
granted prior to consolidation totalled 350,000. Stock options granted post-consolidation totalled 1,533,000.
The weighted average expected contractual lives of outstanding and exercisable options are shown in Note
17(b). 3,915,266 options have vested and there are 4,072,000 issued. The difference of 156,734 will vest in the
foreseeable future (within the next 12 months) and the expense will be charged in the future quarters.
The resulting share-based payment for these options issued totaled $740,115 and $974,266 for the three and
twelve-months ending December 31, 2024 respectively, compared to $25,750 and $104,250 for the same
periods in 2023. The rapid increase in our market capitalization and share price over 2024 has resulted in NTG’s
share-based compensation plan increasing in cost.
Management is actively reviewing the plan and expects the growth in this expense to slow in the near future.
Income Taxes
NTG has available income tax losses in the amounts of $70,307 for the Canadian federal and provincial
tax purposes which may be carried forward to reduce future years’ taxable income which expires in 2040
(December 31, 2023: $12,657,781). NTG was required to pay foreign income taxes in Saudi Arabia in 2024
($947,992 compared to $0 in 2023).
Total Comprehensive Income after Taxes (Net Income)
For Q4 2024, the Corporation recorded a net income of $2,980,357 compared to $469,848 for the same period in
2023. For the year ending December 31, 2024, the Corporation recorded a net income of $9,855,552 compared
to $2,315,735 in 2023.
The Egypt operating segment, for the three months ending December 31, 2024, recorded a net loss of $229,579
compared to a net loss of $1,051,006 in 2023. For the year ending December 31, 2024, there was a net loss of
$429,367 compared to a net loss of $563,881 in 2023.
For the Canadian operating segment, for the three months ending December 31, 2024, recorded a net income of
$3,209,934 compared to $1,520,854 in 2023. For the year ending December 31, 2024, there was a net income of
$10,284,919 compared to $2,879,616 in 2023.
NTG Clarity Networks Inc.
Annual Report 2024
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Assets and non-current liabilities
As of December 31, 2024, the Corporation closed the year with $4,946,341 cash on hand (2023: $358,088), bid/
performance bonds of $Nil (2023: $293) and prepaid amounts of $298,590 (2023: $129,842).
Differences in prepaid amounts are due to the timing of insurance and rental renewals. The difference in cash
on hand is due to positive operating cashflow and the Brokered LIFE Offering closed in September 2024, raising
gross proceeds of $5,208,000 (net $4,789,329) to fund the rapid expansion of our Egypt Offshore Centre and
Saudi sales office, and for working capital and general corporate purposes. See Note 17(a) for more information.
Property, plant and equipment
Property, plant and equipment of $1,580,477 as of December 31, 2024 (2023: $814,911) consists of computer
equipment and office furniture with a useful life of 4-10 years, as well as buildings and land. In 2024, we
purchased real estate for $422,513 (Land: $84,503, Building: $338,010) in Egypt to accommodate the growth in
staff working out of our Egypt Offshore Centre offices. In 2023, we purchased real estate in Egypt for $418,772
(Land: $83,755, Building: $335,017).
NTG had total additions of $1,625,997 in 2024 (2023: $689,149) and depreciation of $478,193 (2023: $86,580),
primarily for furniture and computer equipment additions were made in Egypt and KSA for our new and
expanded offices, and laptops for our expanding workforce. Note additions include right-of-use asset addition of
$658,375 and the depreciation includes depreciation of our right-of-use asset of $276,137 (2023: $79,202) (see
Note 14 for more information).
The increase in depreciation is largely due to significant building additions in the prior year which were
purchased midway through the year. The full effect has been seen in the current year as the prior year was not a
full year of amortization.
Intangible assets
Intangible assets relate to the upgrade of our internally developed NTGapps platform capitalized from 2020 until
the product reached a mature steady state in late 2023. NTGapps facilitates the digital transformation journey
for enterprises in all business verticals and allows them to automate their processes and create applications
without the need for traditional software development.
In 2024, no NTGapps development was capitalized (2023: $1,673,091). The amortization cost for 2024 was
$528,733 (2023: $421,218) and is included in Cost of Sales.
An impairment test is performed on the non-current assets at year end, or when indicators warrant it. A test was
performed at year end 2024 and there was no impairment. We will continue to assess on a quarterly basis for
indicators of impairment.
Liabilities
As of December 31, 2024, NTG had the following current and non-current liabilities:
•
The outstanding indebtedness of $5,970,635 (2023: $6,512,880) held by a numbered Company is disclosed
as a long-term debt on the Statements of Financial Position. In Q4 2024, an additional $150,000 was paid
towards this long-term debt. In 2024, $600,000 has been repaid. See Note 16(a) and Note 23 for more
information.
•
Two bank facilities in NTG Egypt; an overdraft facility with QNB bank and a loan with CIB bank repayable in
monthly installments. See Note 16 for more information.
•
An amount due from and owed to related parties includes balances owing to key management and key
management compensation. See Note 27 for more information.
•
Loans payable of $Nil (December 31, 2023: $493,767). See Note 23 for more information.
NTG Clarity Networks Inc.
Annual Report 2024
24
Liquidity and Capital Resources
NTG’s principal requirement for capital is to provide working capital to fund its operations and support its
organic growth. Historically, we have funded operations by using profits generated by operations and through
the issuance of equity. In 2024, we funded operations, changes in non-cash working capital and capital
expenditures using internally generated cash flows and cash on hand. In September we raised funds for our
growth through a Brokered LIFE Offering (net $4,789,329). As of year end 2024, cash on hand remains strong
with $4,946,341 cash on hand, cash equivalents, and cashable GICs.
As of December 31, 2024, we had a positive working capital of $12,671,007, compared to a deficit of $2,092,663
as of December 31, 2023.
Cash Flow Provided by Operations
The cash in-flow from operating activities for the year ending December 31, 2024 was $2,572,960 compared to
$1,862,379 for the same period in 2023. The main differences include:
•
a significantly larger net income ($9,855,552 compared to $2,315,735 in 2023)
•
increased amortization and depreciation amounts ($528,733 and $478,193 compared to $421,218 and
$165,782 in 2023). Note amortization amounts are included in Cost of Sales.
•
a $974K share-based payment expense compared to $104K in 2023
•
a $10.4M increase in receivables with a small $359K increase in payables
Cash Flow from Financing Activities
The cash in-flow from financing activities for the year ending December 31, 2024 was $2,840,779 compared to
$275,065 for the same period in 2023. The main reasons for this significant increase in in-flow was:
•
a significant paydown (repayment) of our long-term debt ($706,355 compared to $71,011 in 2023)
•
a LIFE offering that took place in September 2024 and the issuance of common shares ($5,008,509
compared to $1,120,000 in 2023). In December 2023, NTG closed a Private Placement in the amount of
$1,110,000.
•
a paydown (repayment) of the balance of our loans payable of $493,767 compared to $207,993 in 2023
Cash Flow from Investing Activities
Cash out-flow from investing activities for the year ending December 31, 2024, was $825,486 compared to an
out-flow of $2,504,376 for 2023. This was mainly because of:
•
the purchase of additional real estate in Egypt to accommodate the growth in staff working out of our Egypt
Offshore Centre offices
•
the purchase of computers and furniture associated with our new office in Egypt and our expanded office in
KSA
•
no capitalization of our intangible asset in 2024 (2023: $1,673,091)
NTG Clarity Networks Inc.
Annual Report 2024
25
Commitments and Contractual Obligations
NTG was committed under agreements for the rental of office space in Canada at a monthly rate of $8,195
monthly for the period from June 1, 2022 to May 31, 2023. In February 2023, we renewed the agreement and
committed to pay $8,195 monthly for the period from June 1, 2023 to May 31, 2024 and $9,232 monthly for the
period from June 1, 2024 to May 31, 2025.
Additionally, we are committed under agreements for the rental of office spaces in Egypt, KSA and Oman at a
monthly rate ranging from $272 to $1,955 for 2025. The total contractual obligations for operating leases and
lease liabilities are $829,148. See Note 14 for further explanation.
Debt and Credit Facilities
As of December 31, 2024, NTG’s indebtedness continues to be controlled by a numbered Company, controlled
by Ashraf Zaghloul, NTG CEO and Kristine Lewis, NTG President. The numbered Company retains the
Indebtedness and the Security, and all the rights, title and interest together with the full benefit of all powers
and all covenants and provisions contained in the Security. The Company has agreed to principal installment
repayments of $150,000 per quarter, as cash flow permits. The Indebtedness held by the Company is secured
by a General Security Agreement (GSA) over the assets of the Corporation. It is listed as Long-term debt on the
Interim Consolidated Statements of Financial Position.
Additionally, as of December 31, 2024, NTG Egypt Advanced Software, a subsidiary of NTG, had the following:
•
an overdraft facility with a bank in Egypt for supporting operations in the amount of 7,000,000 Egyptian
pounds with an interest rate of 18%. The amount drawn on the facility as at December 31, 2024 is $113,083
(2023: $298,743). The loan is unsecured.
•
a loan with a bank in Egypt for 5,750,000 EGP, repayable in monthly principal payments of 239,584 Egyptian
pounds plus interest and with a maturity date of December 1, 2025.
As of December 31, 2024, the amount due was 3,994,521 EGP (approximately $113,083) (December 31, 2023:
$245,496).
Off-Balance Sheet Arrangements
The Corporation has not entered into off-balance sheet financing arrangements. All commitments are reflected
on the Corporation’s balance sheet.
Transactions with Related Parties
Transactions between the Corporation and its subsidiaries, which are related parties to the Corporation, have
been eliminated on consolidation. Related parties include key management, the Board of Directors, close family
members and entities which are controlled by these individuals as well as certain persons performing similar
functions.
The standard key management compensation is listed in Note 27.
The Corporation’s long-term debt is controlled by a numbered Company, controlled by Ashraf Zaghloul, NTG
CEO and Kristine Lewis, NTG President.
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Annual Report 2024
26
Basis of Preparation and Significant Accounting Policies
The audited consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
Significant accounting policies are presented in detail in Note 3 of our audited consolidated financial statements
for the year ending December 31, 2024. These are available on SEDAR (www.sedar.com). The policies applied in
these statements are based on IFRS issued and outstanding as of April 10, 2025, the date the Board of Directors
approved the consolidated financial statements
Proposed Transactions
There are no Proposed Transactions.
Business Risk and Management
NTG’s primary risk management objective is to protect our balance sheet and cash flow. Principal financial
liabilities are made up of a Company Indebtedness and trade and other payables. NTG has also taken on short-
term debt from overseas to assist with cash flow.
We are exposed to market risk, interest rate risk, foreign exchange risk, credit risk, and liquidity risk. Senior
management oversees the management of these risks and is supported by a Committee that advises on
financial risks and the appropriate financial risk governance framework. The Board of Directors reviews and
agrees policies for managing risks.
In addition to risks described elsewhere, NTG is subject to a number of risk factors. We have significant reliance
on certain key personnel, some of whom are also key shareholders; Ashraf Zaghloul, CEO; Kristine Lewis,
President; and Yaser Yousef, CTO.
Though we have worked hard to diversify our customer base, we are dependent on a few large customers. As
of December 31, 2024, 70% of NTG’s revenue was from five customers (2023: 54% from three customers).
Management continues to work to diversify the customer base and country concentration. In 2024, 73% of our
trade accounts receivable balance was from four customers (2023: 53% from three customers).
Additional risks and uncertainties not described below or not presently known to the Corporation may also
impact our business. If any of these risks occur, our company’s business, financial condition or results of
operations could be harmed and the trading price of NTG’s common shares could be materially affected. The
purpose of discussing these risks and uncertainties is to highlight factors that could cause actual results to
differ materially from past results or from those described in forward-looking statements. It is not to describe
facts, trends and circumstances that could have a positive impact on the results or financial position.
Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because
of changes in market prices. Market prices comprise several types of risk: interest rate risk, currency risk,
commodity price risk, and other price risk, such as equity risk. The Corporation is not subject to price risk from
fluctuations in market prices of commodities and has no exposure to equity price risk.
There is a high concentration of competition in the digital transformation, IT, and telecom industries and is little
barrier of entry for new competitors into the market. Many of our competitors are larger companies that have
greater resources. To help mitigate this risk, we have partnered with, or signed agreements to work through a
few of the large competitors, as we can offer seasoned resources at extremely competitive rates.
NTG Clarity Networks Inc.
Annual Report 2024
27
Changes in the regulatory environment would always affect our plans and investments. As we continue to grow,
we will continually monitor and evaluate the various policies and procedures to ensure that they consider any
changes in the Corporation and its marketplace.
In 2024, approximately 95% of our revenue came from work done for KSA customers (2023: 81%). The majority
of NTG’s KSA customers are consistently within our payment terms.
Historically 7-11% of our revenue comes from work done through our subsidiary, NTG Egypt, based in Cairo,
Egypt. Egypt’s revenue contribution in 2024 was 2% (2023: 9%). This drop in revenue was planned as NTG Egypt
is now primarily a delivery centre for offshore services. Egypt continues to support our legacy customers in
Egypt.
Oman’s major customer contributed 1% of the revenue in 2024 (2023: 2%). Customers in Iraq account for 2% of
our revenue in 2024 (2023: 6%).
Interest rate risk
NTG’s exposure to interest rate fluctuations is primarily interest paid on its indebtedness and long-term loans.
The Corporation performed sensitivity analysis on interest rates on December 31, 2024 to determine how a
change in interest rates would impact equity and net loss.
During the year, NTG paid $435,332 (2023: $378,985) on its loans and liabilities. An increase or decrease
of 100 basis points in the average interest rate paid during the period would have adjusted net earnings by
approximately $43,533 (2023: $37,899). This analysis assumes that all other variables remain constant.
Credit risk
Credit risk is the risk of an unexpected loss if a customer or counterparty to a financial instrument fails to meet
its contractual obligation. NTG’s financial instruments that are exposed to credit risk consist primarily of trade
receivables. Our exposure to credit risk is impacted by the economic conditions for the industry which could
affect the customers’ ability to satisfy their obligations. To reduce risks, we perform periodic credit evaluations
of the financial conditions of its customers and typically do not require collateral from them. Management
assesses the need for allowance for potential credit losses by considering the credit risk of specific customers,
historical trends and other information.
The credit quality of all the accounts receivable of the Corporation that are neither past due nor impaired and
the age of accounts receivable that are past due but not impaired have been assessed on an individual basis
and determined to have a mitigated risk profile.
Devaluation of Egyptian pound in 2024
The Egyptian Central Bank continues to devalue the currency. By the end of 2024 the EGP’s value dropped
from around 23 EGP to the Canadian dollar in January to about 35 EGP in December 2024. Other effects in the
economy include interest rates which have been increasing (17-20%) and inflation rates have been going down
(35.5-24.1%). (https:// https://www.cbe.org.eg/en/economic-research/statistics/). NTG Egypt continues to
review/increase salaries, on a quarterly basis, to help personnel cope with the changing economy.
We continue to mitigate much of the risk of doing business in the country as our expenses and our contracts
with legacy customers in Egypt are both in the local currency. Additionally, NTG Egypt is a supplier of offshore
services for international customers. As a result, contracts for offshoring services are billed in more stable
currencies such as USD or Saudi Riyals (SAR).
NTG Clarity Networks Inc.
Annual Report 2024
28
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in foreign exchange rates. Our exposure to the risk of changes in foreign exchange rates
relates primarily to operating activities, when revenue or expense are denominated in a different currency from
our functional currency, the Canadian dollar.
We do not hedge the risk related to fluctuations of the exchange rate between USA and Canadian dollars from
the date of the sales transactions to the collection date due to the short-term nature of this exposure. The
Corporation does not hedge the risk related to fluctuations of the exchange rate between USA and Canadian
dollars from the date of the sales transactions to the collection date due to the short-term nature of this
exposure.
A 10% change in exchange rates on December 31, 2024 would have the following approximate impacts:
10% impact
to:
U.S. Dollar
USD
Omani
Riyal OMR
Kuwait
Dinar KWD
Saudi Riyal
SAR
Turkish
Lira TRY
Iraqi Dinar
IQD
Egyptian
Pound LE
P&L in CAD
$137,757
$6,645
$13,696
$1,391,491
$1,662
$0
$25,350
Equity in CAD
$101,251
$4,884
$10,067
$1,022,746
$1,222
$0
$18,632
Liquidity risk
Liquidity risk is the risk that NTG will not be able to meet its financial obligations as they fall due. Our approach
to managing liquidity is to ensure, as far as possible, that we will always have sufficient liquidity to meet our
liabilities when due, under normal and stressed conditions. We manage liquidity risk by reviewing capital
requirements on an ongoing basis. We continuously review both actual and forecasted cash flows to ensure
that we have appropriate capital capacity.
The following table summarizes the amount of contractual undiscounted future cash flow requirements for
financial instruments as of December 31, 2024:
Contractual obligations
2025
2026
2027
2028
and after
Total
Operating line of credit
$ 113,083
$ –
$ –
$ –
$ 113,083
Accounts payable and accrued liabilities
6,374,612
–
–
–
6,374,612
Operating lease and lease liability
502,905
275,426
50,817
–
829,148
Long-term debt
81,386
5,970,635
–
–
6,052,021
The aging of trade accounts payable are as follows:
December 31,
2024
2023
Current
$ 174,829
$ 1,000,607
31 – 60 days
22,420
39,432
61 – 90 days
21,958
2,729
91 – 180 days
24,578
151,434
More than 180 days
180,994
674,993
$ 424,779
$ 1,869,195
NTG Clarity Networks Inc.
Annual Report 2024
29
Expenses are accrued when incurred. Accounts are deemed payable once an event occurs that requires
payment by a specific date. The contractual maturity of the majority of accounts payable is within one month.
Capital Management
NTG manages its capital, which consists of cash provided from operations and long-term debt, with the primary
objective being safeguarding sufficient working capital to sustain operations. The Board of Directors has not
established capital benchmarks or other targets.
There have been no changes in NTG’s approach to capital management during the year ending December 31,
2024. Also, no changes were made in the objectives, policies, or processes during the year ending December
31, 2024. We will continually assess the adequacy of our capital structure and capacity and make adjustments
within the context of NTG’s strategy, economic conditions, and the risk characteristics of the business.
NTG’s objectives when managing capital are to:
(i) safeguard the Corporation’s ability to continue as a going concern, so that it can provide adequate returns
for shareholders and benefits for other stakeholders;
(ii) fund capital projects for facilitation of business expansion provided there is sufficient liquidity of capital to
enable the internal financing; and
(iii) maintain a capital base to maintain investor, creditor, and market confidence.
NTG considers the items included in the consolidated statements of changes in shareholders’ equity as
capital. We manage and adjust the capital structure in light of changes in economic conditions and the risk
characteristics of the underlying assets. In order to maintain or adjust the capital structure, we may issue new
shares. We are not subject to externally imposed capital requirements.
Legal claim contingency
NTG is subject to a variety of claims and suits that arise from time to time in the ordinary course of business.
Although management currently believes that resolving claims against NTG, individually or in aggregate, will not
have a material adverse impact on our financial position, results of operations, and cash flows, these matters
are subject to inherent uncertainties and management’s view of these matters may change in the future. To
date, there are no claims or suits outstanding.
Guarantees
The Corporation indemnifies its directors and officers against claims reasonably incurred and resulting from the
performance of their services to the Corporation, and maintains liability insurance for its directors and officers.
As of June 7, 2024, the Corporation now has Director’s and Officer’s Insurance.
Disclosure Controls and Procedures and Internal Controls over Financial
Reporting
The Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Corporation’s
disclosure controls and procedures as of December 31, 2024 and have concluded that such disclosure controls
and procedures were effective to provide reasonable assurance that material information relating to the
Corporation or its subsidiaries is made known to them.
NTG Clarity Networks Inc.
Annual Report 2024
30
In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification
of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not
include representations relating to the establishment and maintenance of disclosure controls and procedures
(DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying
officers (CFO and CEO) filing the NI 52-109 certificate is not making any representations relating to the
establishment and maintenance of:
i)
controls and other procedures designed to provide reasonable assurance that information required to be
disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities
legislation is recorded, processed, summarized and reported within the time periods specified in securities
legislation; and
ii) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with the issuer’s GAAP (IFRS).
The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with
sufficient knowledge to support the representations they are making in the NI 52-109 certificate. Investors
should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and
implement on a cost-effective basis DC&P and ICFR as defined in NI 52- 109 may result in additional risks to
the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under
securities legislation.
Standards issued but not yet effective
As at April 10, 2025, the date of authorization of these financial statements, certain new standards,
amendments, and interpretations to existing IFRS standards have been published but are not yet effective and
have not been adopted by the Corporation. All other standards were early adopted as explained in the prior
year’s financial statements.
Non-IFRS measures
As mentioned previously in this MD&A, NTG references Adjusted EBITDA, which is a non-IFRS (non-GAAP)
measure and Adjusted EBITDA margin, which is a non-GAAP ratio. Adjusted EBITDA means adjusted earnings
before interest, taxes, depreciation and amortization. EBITDA is equal to net income (loss) before income taxes
plus finance costs plus depreciation. Adjusted EBITDA is equal to EBITDA before other discretionary expenses
and expenses outside of the control of NTG. In NTG’s case these are other income, share-based payments, and
expenses related to foreign exchange. Adjusted EBITDA margin is Adjusted EBITDA as a percentage of total
revenue.
Adjusted EBITDA and Adjusted EBITDA margin are not recognized measures under IFRS. Management believes
that in addition to net income (loss), Adjusted EBITDA and Adjusted EBITDA margin are useful supplemental
measures as they provide an indication of the results generated by the Company’s primary business activities
prior to consideration of how those activities are financed, amortized, or how the results are taxed and
consolidated in various jurisdictions and currencies as well as the cash generated by the Company’s primary
business activities without consideration of the timing of the monetization of non-cash working capital items.
Readers should be cautioned, however, that Adjusted EBITDA and Adjusted EBITDA margin should not be
construed as an alternative to net income determined in accordance with IFRS as an indicator of the Company’s
performance. The Company’s method of calculating Adjusted EBITDA and Adjusted EBITDA margin may
differ from other organizations and, accordingly, Adjusted EBITDA and Adjusted EBITDA margin may not be
comparable to measures used by other organizations.
The non-IFRS measures referenced in this MD&A reconcile to the IFRS measures reported in the Consolidated
Financial Statements as follows, unless reconciled elsewhere:
NTG Clarity Networks Inc.
Annual Report 2024
31
For the three months ended
For the twelve months ended
Adjusted EBITDA
December 31,
2024
December 31,
2023
December 31,
2024
December 31,
2023
Net Income (Margin)
$2,980,357
(17%)
$469,848
(6%)
$9,855,552
(18%)
$2,315,734
(8%)
Add back:
(Gain) loss on foreign exchange
(574,477)
345,818
(563,595)
583,000
Depreciation
322,577
83,894
478,193
165,782
Amortization
132,183
122,033
528,733
421,218
Interest, net
191,305
128,236
435,332
378,985
Taxes
513,700
11,563
810,636
-
Other income
(222,226)
(252,308)
(436,147)
(252,308)
Share-based payment
401,281
25,750
974,266
104,250
Loss on joint venture
267,730
0
267,730
0
Loss on disposal of assets
0
9,390
0
9,390
Exchange (gain) loss arising on
translation of foreign operations
310,525
(1,334,454)
(43,422)
(606,024)
Adjusted EBITDA (Margin)
$4,322,955
(25%)
$(390,230)
(-5%)
$12,307,278
(22%)
$3,120,027
(11%)
NTG Clarity Networks Inc.
Annual Report 2024
32
Management’s Statement of Responsibility
The management of NTG Clarity Networks Inc. is responsible for the preparation of the accompanying
consolidated financial statements and the preparation and presentation of information in the Annual Report.
The consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards, and are considered by management to present fairly the financial position and operating results of
the Corporation.
The Corporation maintains various systems of internal control to provide reasonable assurance that
transactions are properly authorized and recorded, that assets are safeguarded, and that financial reports are
properly maintained to provide reliable financial statements.
The Corporation’s audit committee is comprised of independent directors and a management representative
and is appointed by the Board of Directors annually. The committee meets periodically with the Corporation’s
management and independent auditors to review the consolidated financial statements and the independent
auditors report. The audit committee has approved the consolidated financial statements and reported its
findings to the Board of Directors.
The Corporation’s independent auditors, NVS Professional Corporation, have examined the consolidated
financial statements and their report follows.
“Ashraf Zaghloul”
“Kristine Lewis”
Ashraf Zaghloul
Chief Executive Officer
April 10, 2025
Kristine Lewis
President
April 10, 2025
Independent Auditor’s Report
To the Shareholders of
NTG Clarity Networks Inc.:
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the accompanying consolidated financial statements of NTG Clarity Networks Inc. and
its subsidiaries (the “Corporation”), which comprise the consolidated statements of financial position as
at December 31, 2024 and December 31, 2023, and the consolidated statements of profit and loss and
comprehensive income, consolidated statements of changes in equity and consolidated statements of cash
flows for the years then ended, and notes to the consolidated financial statements, including a summary of
significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the
consolidated financial position of the Corporation as at December 31, 2024 and December 31, 2023, and its
consolidated financial performance and its consolidated cash flows for the years then ended in accordance with
International Financial Reporting Standards (IFRS).
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Consolidated Financial Statements section of our report. We are independent of the Corporation in accordance
with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada,
and we have fulfilled our ethical responsibilities in accordance with these requirements. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the consolidated financial statements of the current period. These matters were addressed in the context of
our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
We have determined that there are no key audit matters to communicate in our report.
Other Information
Management is responsible for the other information. The other information comprises:
•
Management’s Discussion and Analysis
•
The information, other than the financial statements and our auditor’s report thereon, in the Annual Report.
Our opinion on the financial statements does not cover the other information and we do not and will not
express any form of assurance conclusion thereon. In connection with our audit of the financial statements,
Markham: 100 Allstate Parkway, Suite 201, Markham, ON | L3R 6H3 | Tel: 905.415.2511 | Fax: 905.415.2011
our responsibility is to read the other information identified above and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.
We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the
work we have performed on this other information, we conclude that there is a material misstatement of this
other information, we are required to report that fact in this auditor’s report. We have nothing to report in this
regard.
The Annual Report is expected to be made available to us after the date of the auditor’s report. If, based on the
work we will perform on this other information, we conclude that there is a material misstatement of this other
information, we are required to report that fact to those charged with governance.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements
in accordance with IFRS, and for such internal control as management determines is necessary to enable the
preparation of consolidated financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the consolidated financial statements, management is responsible for assessing the Corporation’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless management either intends to liquidate the Corporation or to cease
operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Corporation’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Canadian generally accepted auditing standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
•
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the Corporation’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management.
•
Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Corporation’s ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related
disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Corporation to cease to continue as a going concern.
•
Evaluate the overall presentation, structure, and content of the consolidated financial statements, including
the disclosures, and whether the consolidated financial statements represent the underlying transactions
and events in a manner that achieves fair presentation.
•
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Corporation to express an opinion on the consolidated financial statements. We are
responsible for the direction, supervision and performance of the group audit. We remain solely responsible
for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that
may reasonably be thought to bear on our independence, and where applicable, related safeguards.
The engagement partner on the audit resulting in this independent auditor’s report is Sadik Najarali.
NVS Professional Corporation
NVS Professional Corporation
Chartered Professional Accountants
Authorized to practise public accounting by
The Chartered Professional Accountants
Markham, Ontario
April 10, 2025
NTG Clarity Networks Inc.
Annual Report 2024
36
NTG CLARITY NETWORKS INC.
Consolidated Statements of Financial Position
(In Canadian Dollars)
As at December 31,
2024
2023
ASSETS
Current assets
Cash and cash equivalents (Note 9)
$ 4,946,341
$ 358,088
Trade and other receivables (Note 10)
16,898,548
6,432,724
Prepaid expenses and deposits
298,590
129,842
Bid/performance bonds
–
293
Total current assets
$ 22,143,479
$ 6,920,947
Non-current assets
Deferred income tax asset (Note 7)
$137,356
$ –
Property, plant and equipment (Note 11)
1,580,477
814,911
Intangible assets (Note 12)
3,928,741
4,457,474
Investment in joint venture (Note 13)
–
142,136
Right-of-use of assets (Note 14)
502,806
120,568
Total non-current assets
6,149,380
5,535,089
Total Assets
$ 28,292,859
$ 12,456,036
LIABILITIES
Current liabilities
Income taxes payable (Note 7)
$ 575,560
$ –
Current portion of lease liabilities (Note 14)
391,454
86,829
Accounts payable and accrued liabilities (Note 15)
8,370,924
8,011,523
Bank indebtedness (Note 16)
113,083
298,743
Current portion of long-term debt (Note 16)
81,386
122,748
Loans payable (Note 23)
–
493,767
Total current liabilities
$ 9,532,407
$ 9,013,610
Non-current liabilities
Lease liabilities (Note 14)
188,633
43,941
Long-term debt (Note 16) (Note 24)
5,970,635
6,635,628
Total non-current liabilities
$ 6,159,268
$6,679,569
Total liabilities
$15,691,675
$15,693,179
SHAREHOLDER’S EQUITY
Share capital (Note 17)
18,457,593
14,736,986
Contributed surplus (Note 18)
3,235,934
2,711,523
Foreign exchange reserve
(173,311)
(216,733)
Deficit
(8,919,032)
(20,468,919)
Total shareholders’ equity
12,601,184
(3,237,143)
Total liabilities and shareholders’ equity
$28,292,859
$12,456,036
Approved on behalf of the Board:
“Ashraf Zaghloul”
“Kristine Lewis”
Ashraf Zaghloul
Kristine Lewis
Director
Director
See accompanying notes to consolidated financial statements.
NTG Clarity Networks Inc.
Annual Report 2024
37
NTG CLARITY NETWORKS INC.
Consolidated Statements of Changes in Equity
For the years ended December 31, 2024 and December 31, 2023
(In Canadian Dollars)
Share
Capital
Contributed
Surplus
Deficit
Foreign
Exchange
Reserve
Total
Shareholders’
Equity
Balance, January 1, 2023
$ 13,606,986
$ 2,617,273
$(22,178,630)
$ (822,757)
$ (6,777,128)
Income from continuing
operations
–
–
1,709,711
–
1,709,711
Other comprehensive income
–
–
–
606,024
606,024
Issuance of share capital (Note
17)
1,120,000
–
–
–
1,120,000
Reallocation of contributed
surplus (Note 17) (Note 18)
10,000
(10,000)
–
–
–
Share-based compensation
–
104,250
–
–
104,250
Balance, December 30, 2023
$ 14,736,986
$2,711,523 $ (20,468,919)
$ (216,733)
$ (3,237,143)
Income from continuing
operations
–
–
9,812,130
–
9,812,130
Other comprehensive income
–
–
–
43,422
43,422
Issuance of share capital (Note
17)
3,435,693
1,572,816
–
–
5,008,509
Expired options transfer (Note
17)
–
(1,737,757)
1,737,757
–
–
Reallocation of contributed
surplus (Note 17) (Note 18)
284,914
(284,914)
–
–
–
Share-based compensation
(Note 17)
–
974,266
–
–
974,266
Balance, December 31, 2024
$ 18,457,593
$ 3,235,934
$ (8,919,032)
$ (173,311)
$ 12,601,184
NTG Clarity Networks Inc.
Annual Report 2024
38
NTG CLARITY NETWORKS INC.
Consolidated Statements of Profit and Loss and Comprehensive Income
(In Canadian Dollars)
For the years ended December 31,
2024
2023
REVENUE (Note 6) (Note 20)
$ 56,126,751
$ 27,728,117
COST OF SALES (Note 21)
35,279,794
18,926,200
GROSS MARGIN
20,846,957
8,801,917
OPERATING EXPENSES
Selling (Note 22)
2,922,216
2,172,925
General and administration (Note 22)
6,146,196
3,872,199
(Gain) Loss on foreign exchange
(563,595)
583,000
Total operating expenses
8,504,817
6,628,123
INCOME FROM OPERATIONS
$ 12,342,140
$ 2,173,794
OTHER (INCOME) EXPENSES
Provision for expected credit losses (Note 10)
–
66,606
Depreciation (Note 11) (Note 14)
478,193
165,782
Interest
435,332
378,985
Share-based payments (Note 17)
974,266
104,250
Other income
(436,147)
(252,308)
Loss on joint venture
267,730
–
Loss on disposal of assets
–
9,390
Total other expense
1,719,374
472,705
NET INCOME BEFORE INCOME TAXES
$ 10,622,766
$ 1,701,089
INCOME TAXES (Note 7)
Current income tax expense (recovery)
947,992
(8,622)
Deferred income tax recovery
(137,356)
–
INCOME FROM CONTINUING OPERATIONS
$ 9,812,130
$ 1,709,711
Other comprehensive income:
Exchange gain arising on translation of foreign operations
43,422
606,024
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
$ 9,855,552
$ 2,315,735
Earnings per share (Note 8)
Basic
$ 0.23
$ 0.01
Diluted
$ 0.20
$ 0.01
Weighted average number of shares outstanding
Basic
42,155,658
185,172,355
Diluted
48,310,858
204,978,355
See accompanying notes to consolidated financial statements.
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39
NTG CLARITY NETWORKS INC.
Consolidated Statements of Cash Flows
(In Canadian Dollars)
For the years ended December 31,
2024
2023
Cash provided by (used in)
OPERATING ACTIVITIES
Total comprehensive income for the year
$ 9,855,552
$ 2,315,735
Add-Items not affecting cash:
Deferred income tax expense (Note 7)
(137,356)
–
Bad debt expense (Note 10)
–
66,606
Depreciation (Note 11) (Note 14)
478,193
165,782
Amortization (Note 12)
528,733
421,218
Interest expense
435,332
378,985
Share-based payment (Note 17)
974,266
104,250
Loss on disposal of asset
–
9,390
$12,134,720
$3,461,966
Net change in non-cash working capital items,
Increase in trades and other receivable
$ (10,465,824)
$ (2,547,322)
Increase in income taxes payable
575,560
–
Decrease in bid/performance bond
293
17,138
(Increase) in prepaid expenses and deposits
(168,748)
(43,091)
Increase in accounts payable and accrued liabilities
359,401
955,767
Increase in leasehold liabilities
137,558
17,921
TOTAL CASH IN-FLOW FROM OPERATING ACTIVITIES
$ 2,572,960
$ 1,862,379
FINANCING ACTIVITIES
Principle payment of lease (Note 14)
(346,616)
(96,369)
Repayment of long-term debt (Note 16)
(706,355)
(71,011)
Repayment of bank indebtedness (Note 16)
(185,660)
(90,577)
Issuance of common shares (Note 17)
5,008,509
1,120,000
Repayment of loan payable (Note 23)
(493,767)
(207,993)
Interest paid
(435,332)
(378,985)
TOTAL CASH IN-FLOW FROM FINANCING ACTIVITIES
$ 2,840,779
$ 275,065
INVESTING ACTIVITIES
Purchase of property, plant and equipment (Note 11)
(967,622)
(689,149)
Additions to intangible assets (Note 12)
–
(1,673,091)
Investments in joint venture (Note 13)
142,136
(142,136)
TOTAL CASH (OUT-FLOW) FROM INVESTING ACTIVITIES
$ (825,486)
$ (2,504,376)
NET INCREASE (DECREASE) IN CASH
4,588,253
(366,932)
Cash balance, beginning of period
358,088
725,020
Cash balance, end of period
$ 4,946,341
$ 358,088
See accompanying notes to consolidated financial statements.
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NTG CLARITY NETWORKS INC.
Notes to the Audited Consolidated Financial Statements
December 31, 2024 and 2023
1. CORPORATE INFORMATION
NTG Clarity Networks Inc. (the “Corporation”) is domiciled in Canada and its shares are traded publicly on the
TSX Venture Exchange under ticker symbol NCI.V. The Corporation was incorporated on May 15, 2001 under the
laws of Alberta. In the current year the registration of the corporation was moved from Alberta to Ontario. The
Corporation’s principal and registered office is Suite 202, 2820 14th Avenue, Markham, Ontario, L3R 0S9.
The Corporation provides network, telecom, IT and infrastructure solutions to medium and large network service
providers. The Corporation specializes in providing telecommunications engineering, networking and related
software solutions and has developed niche software products directed at the telecom service providers. NTG
continues to offer professional telecom and IT services in the North American and Middle Eastern markets.
There is a high concentration of competition in the digital transformation, IT, and telecom industries and little
barrier of entry for new competitors into the market. Many of our competitors are larger companies that have
greater resources. To help mitigate this risk, we have partnered with, or signed agreements to work through a
few of the large competitors, as we can offer seasoned resources at extremely competitive rates.
2. BASIS OF PRESENTATION
The audited consolidated financial statements have been prepared on a historical cost basis, except for certain
financial instruments that have been measured at fair value.
Statement of Compliance
The consolidated financial statements have been prepared in accordance with IFRS Accounting Standards as
issued by the International Accounting Standards Board. The consolidated financial statements were authorized
for issue by the Corporation’s Board of Directors on April 10, 2025.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of consolidation
The audited consolidated financial statements comprise the financial statements of the Corporation and its
subsidiaries as at December 31, 2024.
The subsidiaries are fully consolidated from the date of acquisition, being the date on which the Corporation
obtains control, and continues to be consolidated until the date that such control ceases. The financial
statements of the subsidiary is prepared for the same reporting period as the parent corporation using
consistent accounting policies. All intra group balances, income and expenses, unrealized gains and losses, and
dividends resulting from intra group transactions, if any, are eliminated in full.
A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity
transaction.
The subsidiary of the Corporation as of December 31, 2024 is its 95% owned subsidiary, NTG Egypt Advanced
Software, and its wholly owned U.S. subsidiary, NTG Clarity Networks US Inc.
The audited consolidated financial statements comprise the financial statements of the Corporation and its
subsidiaries as at December 31, 2024.
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41
Associates and joint arrangements
The Corporation’s interests in equity accounted investees comprise interests in associates and joint ventures.
Associates are those entities in which the Corporation has significant influence, but not control or joint control,
over the financial and operating policies. Significant influence is presumed to exist when the Corporation holds
between 20% and 50% of the voting power of another entity.
The Corporation classifies its interest in joint arrangements as either joint operations (if the Corporation
has rights to the assets and has obligations for the liabilities relating to an arrangement) or joint ventures
(if the Corporation has the rights only to the net assets of an arrangement). When making this assessment,
the Corporation considers the structure of the arrangements, the legal form of any separate vehicles, the
contractual terms of the arrangements and other facts and circumstances.
Investments in associates and joint ventures are accounted for using the equity method and are recognized
initially at cost. The Corporation’s investments include goodwill identified on acquisition, net of any accumulated
impairment losses. The consolidated financial statements include the Corporation’s share of the income and
expenses and equity movements of equity accounted investees, after adjustments to align the accounting
policies with those of the Corporation, from the date that significant influence commences until the date that
it ceases. When the Corporation’s share of losses exceeds its interest in an equity accounted investee, the
carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition
of further losses is discontinued, except to the extent that the Corporation has an obligation or has made
payments on behalf of the investee.
(b) Foreign currency
Presentation currency
These consolidated financial statements are presented in Canadian dollars, which is the Corporation’s
presentation currency.
Translation to the presentation currency
Each entity in the Corporation determines its own functional currency and items included in the financial
statements of each entity are measured using that functional currency. The functional currency and the
presentation currency of the parent entity is the Canadian dollar. Transactions in foreign currencies are initially
recorded in respective functional currency rates at the date of the transaction.
The functional currency of the subsidiary NTG Egypt Advanced is the Egyptian pound, and the functional
currency of the subsidiary NTG Clarity Networks US Inc. is the US Dollar.
Foreign currency transactions
Transactions carried out in foreign currencies are translated using the exchange rate prevailing at the
transaction date. Monetary assets and liabilities denominated in a foreign currency at the reporting date are
translated at the exchange rate at that date. The foreign currency gain or loss on such monetary items is
recognized as income or expense for the period. Non monetary assets and liabilities denominated in a foreign
currency are translated at the historical exchange rate prevailing at the transaction date.
Translation of financial statements of foreign operations
The assets and liabilities of subsidiaries whose functional currency is not the Canadian dollar are translated
into Canadian dollars at the exchange rate prevailing at the reporting date. The income and expenses of foreign
operations whose functional currency is not the Canadian dollar are translated to Canadian dollars at the
exchange rate prevailing on the date of transaction. Foreign currency differences on translation are recognized
in other comprehensive income (loss) in the cumulative translation account net of income tax.
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(c) Financial instruments
Financial assets and liabilities
The Corporation recognizes financial assets and financial liabilities initially at fair value and subsequently
measures these at either fair value or amortized cost based on their classification as described below:
Fair value through profit or loss
Financial assets and financial liabilities purchased or incurred, respectively, with the intention of generating
earnings in the near term, and derivatives other than cash flow hedges, are classified as FVTPL. This category
includes cash and cash equivalents, and derivative instruments that do not qualify for hedge accounting.
For items classified as FVTPL, the Corporation initially recognizes such financial assets on the consolidated
balance sheet at fair value and recognizes subsequent changes in the consolidated statement of operations.
Transaction costs incurred are expensed in the consolidated statement of operations. The Corporation does not
currently hold any liabilities designated as FVTPL.
Fair value through other comprehensive income
This category includes investments in equity securities. Subsequent to initial recognition, they are measured
at fair value on the consolidated balance sheet and changes therein are recognized in other comprehensive
income (loss). When an investment is derecognized, the accumulated gain or loss in other comprehensive
income (loss) is transferred to the consolidated statement of operations.
Amortized cost
The Corporation classifies financial assets held to collect contractual cash flows at amortized cost, including
trade and other receivables and investments in convertible debentures. The Corporation initially recognizes
the carrying amount of such assets on the consolidated balance sheet at fair value plus directly attributable
transaction costs, and subsequently measures these at amortized cost using the effective interest rate method,
less any impairment losses.
Other financial liabilities
This category is for financial liabilities that are not classified as FVTPL and includes trade and other payables
and long-term debt. These financial liabilities are recorded at amortized cost on the consolidated balance sheet.
Financial assets and liabilities classification
Cash and cash equivalents, trade and other receivables, bid/ performance bonds are classified as amortized
cost. Similarly, accounts payable and accrued liabilities, long term debt, loans payable are classified as
amortized cost. Carrying value of cash and cash equivalents, trade and other receivables, bid/ performance
bonds, deposits, accounts payable and accrued liabilities, long term debt and loans payable approximate fair
values.
Impairment of financial assets
A forward looking “expected credit loss” (ECL) model is used in determining the allowance for doubtful accounts
as it relates to trade and other receivables. The Corporation’s allowance is determined by historical experiences,
and considers factors including the aging of the balances, the customer’s credit worthiness, and updates based
on the current economic conditions, expectation of bankruptcies, and the political and economic volatility in the
markets/location of customers.
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(d) Property, plant and equipment
Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated
impairment losses. Cost includes the cost of material and labour and other costs directly attributable to bringing
the asset to a working condition for its intended use.
When significant components of an item of property, plant and equipment have different useful lives, they are
accounted for as separate items of property, plant and equipment.
Gains and losses on disposal
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the
proceeds from disposal with the carrying amount of property, plant and equipment, and are recognized net
within profit or loss.
Subsequent costs
The cost of replacing a part of an item of property, plant and equipment is recognized in the carrying amount of
the item if it is probable that the future economic benefits embodied within the part will flow to the Corporation,
and its cost can be measured reliably. The carrying amount of the replaced part is derecognized. Maintenance
and repair costs are expensed as incurred, except where they serve to increase productivity or to prolong the
useful life of an asset, in which case they are capitalized.
Depreciation
Depreciation is recognized in profit or loss over the estimated useful life of each item of property, plant and
equipment, since this period most closely reflects the expected pattern of consumption of the future economic
benefits embodied in the asset. Depreciation is recorded on the following bases and at the following rates:
Computer software
Straight-line 1-2 years
Computer equipment
Straight-line 2-4 years
Office equipment
Straight-line 4-10 years
Building
Straight-line 20 years
Leasehold improvements
Straight-line over the lesser of the expected term of the lease or the
useful life of the asset
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted
prospectively, if appropriate.
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(e) Intangible assets
The Corporation’s intangible assets are composed of development costs. Development activities involve a plan
or design for the production of new or substantially improved products and processes. Development costs are
capitalized only if:
•
the development costs can be measured reliably;
•
the product or process is technically and commercially feasible;
•
the future economic benefits are probable; and
•
the Corporation intends and has sufficient resources to complete the development of and to use or sell the
asset.
Capitalized development costs correspond to projects for specific customer applications that draw on approved
generic standards or technologies already applied in production. These projects are analyzed on a case by
case basis to ensure they meet the criteria for capitalization as described above. Development costs are
subsequently amortized over the life of the asset from the start of usage.
Amortization of development costs is recognized in cost of sales in the consolidated statement of operations.
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical
knowledge and understanding, is recognized in profit or loss when incurred.
The amortization methods and estimated useful lives of intangible assets are reviewed annually. Intangible
assets are tested for impairment as required by IAS 38 and IAS 36 if there are indicators of impairment. If any
such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognized whenever
the carrying amount of the intangible assets or the cash generating unit exceeds their recoverable amount.
Impairment losses are recognized in the statements of comprehensive income. Amortization is provided on a
straight-line basis over 10 years.
(f) Leases
The Corporation recognizes right of use assets and lease liabilities for all leases with a term of more than 12
months, unless the underlying asset is of low value. The right of use asset is measured based on the initial
value of the lease liability adjusted for lease payments made at or before the commencement of the lease,
initial direct costs and estimated dismantling and restoring costs. The right of use asset is depreciated over the
shorter of the lease term and the asset’s useful life, unless it is reasonably certain the Corporation will obtain
ownership by the end of the lease term, in which case the asset is depreciated over its useful life.
The lease liability is measured at the present value of all future lease payments discounted at the lessee’s
incremental borrowing rate. Lease liabilities are measured at amortized cost using the effective interest rate
method whereby interest is recognized in profit or loss over the lease term.
The Corporation has adopted the practical expedients related to short-term leases and leases of low
value assets whereby lease obligations associated with these leases are recognized as an expense in the
consolidated income statement when incurred.
(g) Impairment of non-financial assets
The carrying amounts of the Corporation’s non-financial assets, other than inventories and deferred tax assets
are reviewed at each reporting date to determine whether there is any indication of impairment. If any such
indication exists, then the asset’s recoverable amount is estimated. For intangible assets that are not yet
available for use, the recoverable amount is estimated each year at the same time.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell.
In assessing value in use, the estimated future cash flows are discounted to their present value using a discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset or
CGU. Fair value less costs to sell is the amount obtainable from the sale of an asset or CGU in an arm’s length
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45
transaction between knowledgeable, willing parties, less the costs of disposal. Costs of disposal are incremental
costs directly attributable to the disposal of an asset or CGU, excluding finance costs and income tax expense.
For the purpose of impairment testing, assets are grouped together into the smallest group of assets that
generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or
groups of assets.
An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated
recoverable amount. Impairment losses are recognized in profit or loss. Impairment losses recognized in
respect of CGUs are allocated to the carrying amounts of the assets in the unit (group of units).
In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date
for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has
been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed
only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortization, if no impairment loss had been recognized.
(h) Provisions
A provision is recognized if, as a result of a past event, the Corporation has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be
required to settle the obligation. Where the Corporation expects some or all of the provision to be reimbursed,
the reimbursement is recognized as a separate asset when reimbursement is virtually certain. Commitments
resulting from restructuring plans are recognized when an entity has a detailed formal plan and has raised a
valid expectation with those affected that it will carry out the restructuring by starting to implement that plan or
announcing its main features.
When the effect of the time value of money is material, the amount of the provision is discounted using a rate
that reflects the market’s current assessment of this value and the risks specific to the liability concerned. The
increase in the provision related to the passage of time is recognized in the consolidated statement of profit and
loss and other comprehensive income in other income (expense).
(i) Revenue Recognition
Revenue represents the amount the Corporation expects to receive for products and services in its contracts
with customers, net of discounts and sales taxes. The Corporation reports revenue under three revenue
categories being, License, Professional services, and Maintenance and other recurring revenue.
Software license revenue is comprised of non-recurring license fees charged for the use of software products
licensed under multiple year or perpetual arrangements. Professional service revenue consists of fees charged
for implementation services, custom programming, product training, certain managed services, and consulting.
Maintenance and other recurring revenue primarily consists of fees charged for customer support on software
products post delivery and also includes recurring fees derived from combined software/support contracts,
transaction revenues, managed services associated with NTGapps software that has been sold to the customer,
and hosted software as a service products.
Contracts with multiple products or services
The Corporation enters into contracts that contain multiple products and services such as software licenses,
hosted software as a service, maintenance and professional services. The Corporation evaluates these
arrangements to determine the appropriate unit of accounting (performance obligation) for revenue recognition
purposes based on whether the product or service is distinct from some or all of the other products or services
in the arrangement. A product or service is distinct if the customer can benefit from it on its own or together
with other readily available resources and Constellation’s promise to transfer the good or service is separately
identifiable from other promises in the contractual arrangement with the customer. Non-distinct products and
services are combined with other goods or services until they are distinct as a bundle and therefore form a
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46
single performance obligation. Where a contract consists of more than one performance obligation, revenue is
allocated to each based on their estimated standalone selling price.
The Corporation sells on-premise software licenses on a perpetual basis. Revenue from the license of distinct
software is recognized at the time that 1) the right-to-use the software has commenced; and 2) the software
has been made available to the customer.
Professional services revenue including installation, implementation, training and customizations of software
is recognized by the stage of completion of the performance obligation determined using the percentage of
completion method based on contract costs incurred to date as a percentage of total estimated contract costs
required to complete development work, or as such services are performed as appropriate in the circumstances.
Professional services revenue also includes managed services not associated with NTGapps software. The
revenue and profit of fixed price contracts is recognized on a percentage of completion basis when the outcome
of a contract can be estimated reliably. When the outcome of the contract cannot be estimated reliably but the
Corporation expects to recover its costs, the amount of expected costs is treated as variable consideration and
the transaction price is updated as more information becomes known.
Maintenance and other recurring revenues is recognized on a straight-line basis over the term of the contract.
The timing of revenue recognition often differs from contract payment schedules, resulting in revenue that has
been earned but not billed. These amounts are included in contract assets. Amounts billed in accordance with
customer contracts, but not yet earned, are recorded and presented as part of contract liability.
(j) Taxes
Income taxes
The tax rate is calculated on the basis of the fiscal regulations enacted or substantively enacted at the fiscal
year end in each country where the entities in the Corporation carry out heir business.
Income tax expense comprises current and deferred tax. Income tax expense is recognized in profit or loss
except to the extent that it relates to items recognized directly in equity or in other comprehensive income
(loss). Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax
rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of
previous years.
Deferred tax is recognized using the balance sheet method, with respect to temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences
when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities
and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on
different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets
and liabilities will be realized simultaneously.
A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences to the
extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred
tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that
the related tax benefit will be realized.
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Sales tax
Revenues, expenses, liabilities and assets are recognized net of the amount of sales tax except:
•
Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation
authority, in which case the sales tax is recognized as part of the cost of acquisition of the asset or as part
of the expense item as applicable.
•
Receivables and payables that are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of
receivables or payables in the statement of financial position.
(k) Compound Instruments
The component parts of compound instruments (e.g., debt issued with warrants) issued by the Corporation
are classified separately as financial liabilities and equity in accordance with the substance of the contractual
arrangements and the definitions of a financial liability and an equity instrument. At the date of issue, the fair
value of the liability component is estimated using the prevailing market interest rate for similar debt without
warrants. This amount is recorded as a liability on the amortized cost basis using the effective interest method
until extinguished or at the instrument’s maturity date.
The warrants classified as equity are determined by deducting the amount of the liability component from
the fair value of the instrument as a whole. This is recognized and included in equity and is not subsequently
remeasured. Warrants classified as equity will remain in equity until the conversion option is exercised, in which
case the balance recognized in equity will be transferred to common shares within equity. When the warrants
remain unexercised at their maturity date, the balance recognized in equity will be transferred to retained
earnings or deficit. No gain or loss is recognized in profit or loss upon conversion or expiration of the warrants.
Transaction costs that relate to the issue of the instruments are allocated to the liability and equity components
in proportion to the allocation of the gross proceeds. Transaction costs relating to the equity component are
recognized directly in equity. Transaction costs relating to the liability component are included in the carrying
amount of the liability component and are amortized over the life of the debt using the effective interest method.
(l) Stock-based payments
The Corporation accounts for all stock-based payments to employees and non-employees using the fair value-
based method of accounting. The Corporation measures the compensation cost of stock-based option awards
at the grant date using the Black Scholes option valuation model to determine the fair value of the options. The
stock-based compensation cost of the options is recognized as stock-based compensation expense over the
relevant vesting period of the stock options.
(m) Earnings per share
The Corporation presents basic and diluted earnings per share (“EPS”) data for its common shares. Basic
EPS is calculated by dividing the profit or loss attributable to common shareholders of the Corporation by the
weighted average number of common shares outstanding during the period. Diluted EPS is determined by
adjusting the profit or loss attributable to common shareholders and the weighted average number of common
shares outstanding, adjusted for own shares held, for the effects of all dilutive potential common shares, which
comprise share options granted to employees.
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(n) Segment reporting
A segment is a distinguishable component of the Corporation that is engaged either in providing related
products and services (business segment) or in providing products and services within a particular economic
environment (geographical segment) and that is subject to risks and returns that are different from those of
other segments. Segment information is presented in respect of the Corporation’s business and geographical
segments. The Corporation’s primary format for segment reporting is based on business segments. The
business segments are determined based on the Corporation’s management and internal reporting structure.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can
be allocated on a reasonable basis. Unallocated items comprise mainly other investments and related revenue,
loans and borrowings and related expenses, corporate assets (primarily the Corporation’s headquarters)
and head office expenses. Segment capital expenditure is the total cost incurred during the period to acquire
property, plant and equipment.
4. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES, AND
ASSUMPTIONS
The preparation of the Corporation’s consolidated financial statements requires management to make
judgments, estimates, and assumptions that affect the reported amounts of revenues, expenses, assets, and
liabilities, and the disclosure of contingent liabilities, at the end of the reporting years. However, uncertainty
about these assumptions and estimates could result in outcomes that require a material adjustment to the
carrying amount of the asset or liability affected in future years.
In the process of applying the Corporation’s accounting policies, management has made the following
judgments, which has the most significant effect on the amounts recognized in the consolidated financial
statements.
Revenues
The Corporation derives revenue from fees charged to customers for licenses for software products and for
professional services (support, consulting, development, training, etc.). Some of the software arrangements
may contain multiple elements (product sales and professional services). The Corporation accounts for
software, consulting and other service deliverables as separate units of accounting and allocate revenue based
on their individual fair values. The revenue amounts allocated to the individual elements are recognized when
the revenue recognition criteria have been met for the respective element. When services are essential to the
functionality of the software, the software does not have standalone value and is combined with the essential
services as a single element.
Contract assets
Contract assets is revenue which had been earned and therefore recognized in compliance with IFRS, but which
has not been billed to the client(s) due to contract terms and/or billing cycle. Revenue can be recognized for
projects based on time and materials, for professional services or on a percentage of completion basis for
product implementation and support. Both can result in contract assets until the customer is invoiced.
Impairment of non-financial assets
Impairment exists when the carrying value of a non-financial asset or cash generating unit exceeds its
recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The value in use
calculation is based on a discounted cash flow model. The cash flows are derived from the Corporation’s budget
and do not include restructuring activities, if any, that the Corporation is not yet committed to or significant
future investments that will enhance the non-financial asset’s performance of the cash generating unit being
tested.
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The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well
as the expected future cash inflows and the growth rate used for extrapolation purposes. The key assumptions
used to determine the recoverable amount for the different cash generating units may include a sensitivity
analysis.
Taxes
Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing
of future taxable income. Given the range of business relationships and the long-term nature of existing
contractual agreements, differences arising between the actual results and the assumptions made, or future
changes to such assumptions, could necessitate future adjustments to tax income and expense already
recorded. The Corporation may establish provisions, based on reasonable estimates, for possible consequences
of audits by the tax authorities. The amount of such provisions is based on various factors, such as experience
of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible
tax authority.
Deferred tax assets, if any, are recognized for all unused tax losses to the extent that it is probable that taxable
profit will be available against which the losses can be utilized. Significant management judgment is required to
determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level
of future taxable profits together with future tax planning strategies.
Share-based compensation
The Corporation has a share-based compensation plan. The Corporation accounts for share based
compensation options granted to employees and consultants using the fair value method determined using
the Black Scholes option valuation model. The estimated compensation expense related to share based
compensation is recognized over the vesting period of the options granted, with the related credit being charged
to contributed surplus. Consideration paid by employees on the exercise of share-based compensation is
recorded as capital stock and the related share-based compensation is transferred from capital reserves to
capital stock.
Fair value of financial instruments
Where the fair value of financial assets and financial liabilities recorded in the statement of financial position
cannot be derived from active markets, they are determined using valuation techniques including the discounted
cash flows model. The inputs to these models are taken from observable markets where possible, but
where this is not feasible, a degree of judgment is required in establishing fair values. The judgments include
considerations of inputs such as liquidity risk, credit risk, and volatility. Changes in assumptions about these
factors could affect the reported fair value of financial instruments.
Useful life of tangible assets
Tangible assets are amortized on a straight-line basis over their expected useful life once the asset is available
for use. The Company reviews the estimated useful lives, residual values, and depreciation methods of its
tangible assets at each reporting period. Management applies judgment in determining the expected useful life
of assets based on factors such as historical experience, expected usage, technological advancements, and
industry trends. Any revisions to useful lives are accounted for prospectively as changes in estimates.
Useful life of an intangible asset
Intangible assets with finite lives are amortized on a straight line basis over their expected useful life once the
asset is available for use. Many factors are considered in determining the useful life of an intangible asset,
including technical, technological, commercial or other types of obsolescence and typical product life cycles for
the asset. Changes to the expected useful life of an asset is accounted for prospectively.
NTG Clarity Networks Inc.
Annual Report 2024
50
Treatment of development costs
Costs to develop products are capitalized to the extent that the criteria are met for recognition as intangible
assets in accordance with IAS 38. Such criteria require that the product is technically and economically feasible,
the Company has the intention and ability to use the asset, and that the asset will generate future benefits
to the Company. Management assessed the capitalization of development costs based on the attributes of
each development project, perceived user needs, industry trends and expected future economic conditions.
Management considers these factors in aggregate and applies significant judgment to determine whether the
product is technically and economically feasible.
5. STANDARDS ISSUED BUT NOT YET EFFECTIVE
As at April 10, 2025, the date of authorization of these financial statements, The Corporation performed an
assessment of new and revised standards issued by the IASB that are not yet effective. The Company has
assessed that the impact of adopting these accounting standards on its consolidated financial statements
would not be material.
6. OPERATING SEGMENT INFORMATION
For management purposes, the Corporation is organized into two operating segments. The Corporation’s
chief decision makers; the Chief Executive Officer, the President and the Chief Financial Officer, tracks the
Corporation’s operations by country.
These country segments represent the Corporation’s reportable operating segments, which are used to manage
the business. The Corporation analyses the performance of its operating segments based on expenditures and
revenue growth.
Statement of profit and loss for the year ended December 31, 2024
NTG Canada
NTG Egypt Consolidated Total
Revenue
$ 55,065,805
$ 1,060,946
$ 56,126,751
Cost of sales
34,686,998
592,796
35,279,794
Gross margin
20,378,807
468,150
20,846,957
Expenses
(8,004,229)
(500,588)
(8,504,817)
Depreciation / Amortization
(123,153)
(355,040)
(478,193)
Other (expenses) / income
(1,155,870)
(85,311)
(1,241,181)
Income tax expense
(810,636)
–
(810,636)
Exchange gain arising on translation
–
43,422
43,422
Total comprehensive income (loss) for the year
$ 10,284,919
$ (429,367)
$ 9,855,552
NTG Clarity Networks Inc.
Annual Report 2024
51
Statement of profit and loss for the year ended December 31, 2023
NTG Canada
NTG Egypt
Consolidated Total
Revenue
$ 25,123,148
$ 2,604,969
$ 27,728,117
Cost of sales
15,559,856
3,366,344
18,926,200
Gross margin
$ 9,563,292
$ (761,376)
$ 8,801,917
Expenses
(6,168,434)
(459,689)
(6,628,123)
Depreciation / Amortization
(95,734)
(70,049)
(165,782)
Other (expenses)/ income
(428,130)
121,207
(306,923)
Income tax expense
8,622
–
8,622
Exchange gain arising on translation
–
606,024
606,024
Total comprehensive income (loss) for the year
$ 2,879,616
$ (563,881)
$ 2,315,735
All of the Corporation’s assets are located in Canada and the Middle East.
Long term asset additions for the year ended December 31, 2024
NTG Canada
NTG Egypt
Consolidated Total
Asset additions for the year ended December 31,
2024
Property and equipment (Note 11)
$ 187,820
$ 779,802
$ 967,622
Right of use of assets
–
658,375
658,375
$ 187,820
$ 1,438,177
$ 1,625,997
Long term asset additions for the year ended December 31, 2023
NTG Canada
NTG Egypt
Consolidated Total
Asset additions for the year ending December 31,
2024
Property and equipment (Note 11)
Additions
$ 30,315
$ 658,834
$ 689,149
Dispositions
–
(22,146)
(22,146)
Intangible assets (Note 12)
1,673,091
–
1,673,091
Right-of-use of assets
170,214
–
170,214
$1,873,620
$636,688
$2,510,308
Long term assets as at December 31, 2024
NTG Canada
NTG Egypt
Consolidated Total
Assets as at December 31, 2024
Property and equipment
$ 190,543
$ 1,389,934
$ 1,580,477
Intangible assets
3,928,741
–
3,928,741
Right-of-use of assets
35,461
467,345
502,806
Deferred income tax asset
137,356
–
137,356
$ 4,292,101
$ 1,857,279
$ 6,149,380
NTG Clarity Networks Inc.
Annual Report 2024
52
Long term assets for the year ended December 31, 2023
NTG Canada
NTG Egypt
Consolidated Total
Property and equipment
$40,687
$774,142
$814,911
Intangible assets
4,457,474
–
4,457,474
Right-of-use of assets
120,568
–
120,568
Investment in joint venture
–
142,136
142,136
$4,618,811
$916,278
$5,535,089
The Corporation determines the geographic location of revenues based on customer location.
Sales by geographic location for the year ended December 31,
2024
2023
North America
$ 280,734
$ 235,245
Iraq
1,014,857
1,788,890
Saudi Arabia
53,317,238
22,479,963
Egypt
$ 1,060,946
$ 2,604,969
Oman
$ 452,976
$ 619,802
Kuwait
–
$ (752)
$ 56,126,751
$ 27,728,117
In the past, the majority of the Corporation’s revenue is derived from the telecommunication industry. From
2021, the Corporation has also been working within the digital transformation and IT fields in the finance and
systems integration sectors. In 2024, approximately 70% (2023: 54%) of the Corporation’s revenue was derived
from five customers (2023: three customers).
Receivables by segment for the year ended December 31,
2024
2023
Canada
$ 16,209,858
$ 5,725,885
Egypt
$ 688,690
$ 642,961
$ 16,898,548
$ 6,432,724
As at December 31, 2024, approximately 73% (2023: 53%) of the Corporation’s trade accounts receivable
balance was from four (2023: three) customers.
Payables by segment for the year ended December 31,
2024
2023
Canada
$ 7,148,153
$ 7,182,754
Egypt
1,222,771
828,769
$ 8,370,924
$ 8,011,523
Bank indebtedness by segment for the year ending December 31,
2024
2023
Egypt
113,083
298,743
$ 113,083
$ 298,743
NTG Clarity Networks Inc.
Annual Report 2024
53
7. INCOME TAXES
The following is a reconciliation of the income taxes for the years ended as indicated.
NTG Canada
As at December 31,
2024
2023
Income before income taxes
$11,095,555
$2,870,994
Income tax at the Canadian federal tax rate of 38%
4,216,311
1,090,978
Tax effect of utilization of tax losses not previously recognized
(4,406,425)
(1,233,656)
Non-deductible share-based payments
370,221
39,615
CCA claimed in excess of amortization and depreciation
(1,378)
196,442
Other non-deductible expenses
13,427
3,754
Other deductions for tax purposes
(192,156)
(97,134)
Income tax expense in Canada
–
–
Income tax expense (recovery) in foreign operations
947,992
(8,622)
Income tax recognized on the statement of comprehensive income
$947,992
$(160,064)
The Corporation has the following deferred income tax assets for the years ended as indicated. They were not
recognized on the statements of financial position in 2023 as it was not probable that they would be utilized.
As at December 31,
2024
2023
Deferred tax asset in relation to:
Property and equipment
$ 2,332
$38,438
Intangible assets
124,478
–
Non-capital loss carry-forwards
10,546
3,354,312
Deferred tax assets not recognized
137,356
3,392,750
Less: Valuation allowance
–
3,392,750
Deferred tax asset recognized
$137,356
$–
The Corporation has available income tax losses in the amounts of $70,307 for the Canadian federal and
provincial tax purposes which may be carried forward to reduce future years’ taxable income which expires in
2040.
NTG Egypt Advanced Software
As at December 31,
2024
2023
Income before income taxes
$ (472,789)
$ (1,169,907)
Income tax at the combined Egyptian federal and provincial tax rate of
22.5%
–
–
Income tax recognized on the statement of comprehensive income
$
–
$
–
NTG Clarity Networks Inc.
Annual Report 2024
54
8. EARNINGS PER SHARE
Basic earnings per share amounts are calculated by dividing net income for the year attributable to ordinary
equity holders of the parent by the weighted average number of common shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net income attributable to ordinary equity
holders of the parent by the weighted average number of common shares outstanding during the year plus
the weighted average number of common shares, if any, that would be issued on conversion of all the dilutive
potential effects.
The outstanding number and type of securities that could potentially dilute basic net income per share in the
future but that were not included in the computation of diluted net income per shares because to do so would
have reduced the earnings per share (anti dilutive) for the year presented are as noted below.
The following outstanding instruments could have a dilutive effect in the future:
Options – Share-based payments (Note 17 (b)) 4,072,000 of which 3,915,266 had vested as of December 31,
2024.
Warrants – Equity Instruments (Note 17 (a)(v)), 2,083,200, all of which had vested as of December 31, 2024.
The following reflects the earnings and unit data used in the basic and diluted earnings per share computations:
December 31,
2024
2023
Net earnings attributable to ordinary equity holders of the parent for
basic earnings
$9,855,552
$2,315,735
Net earnings attributable to ordinary equity holders of the parent
adjusted for the effect of dilution
$9,855,552
$2,315,735
December 31,
2024
2023
Weighted average number of common shares outstanding for basic
earnings per share (Note 17)
42,155,658
185,172,355
Weighted average number with the effect of dilution on common
shares
48,310,858
204,978,355
Income per share (basic)
$0.23
$0.01
Income per share (diluted)
$0.20
$0.01
Had the share consolidation occurred in 2023, the weighted average number of common shares outstanding
for the purposes of calculating basic earnings per share would have been 37,034,471. The weighted average
number of common shares outstanding, adjusted for the effect of dilution, would have been 40,995,671.
Accordingly, basic earnings per share would have been $0.05, and diluted earnings per share would have been
$0.05.
NTG Clarity Networks Inc.
Annual Report 2024
55
9. CASH AND CASH EQUIVALENTS
December 31,
2024
2023
Chequing accounts
$1,921,891
$358,088
Cashable GICs
3,024,450
–
$4,946,341
$358,088
10. TRADE AND OTHER RECEIVABLES
December 31,
2024
2023
Trade receivables
$ 12,582,922
$ 5,847,655
Contract assets
3,617,035
198,729
Receivables from tax authorities
279,902
279,902
Other receivables
473,585
106,438
Total trade and other receivables
$ 16,898,548
$ 6,432,724
Trade receivables are non-interest bearing and are generally on 30-180 day terms. The Corporation recognized
$Nil (2023: $66,606) in bad debt expense during the year.
Included in other receivables is an amount receivable from related parties for $11,241 (2023: $26,303). The
balance is unsecured, non-interest bearing and has no specific terms of repayment.
Neither past due nor impaired
2024
2023
Current
$ 4,279,570
$ 2,983,147
31 – 60 days
4,490,862
2,111,346
61 – 90 days
2,146,019
203,030
91 – 180 days
1,521,256
337,372
Past due but not impaired
Greater than 180 days
145,215
212,760
$ 12,582,922
$ 5,847,655
Contract assets consists of service revenue that has already been rendered as at December 31, 2024 and
recognized in accordance with the Corporation’s revenue recognition policy from Note 3.
December 31,
2024
2023
Opening balance, January 1,
$ 198,729
$ 354,485
Revenue recognized during the year
3,617,035
198,729
Amounts billed
(198,729)
(354,485)
Closing balance December 31,
$ 3,617,035
$ 198,729
NTG Clarity Networks Inc.
Annual Report 2024
56
11. PROPERTY AND EQUIPMENT
The amount of borrowing costs capitalized during the year ending December 31, 2024 was $Nil (2023: $Nil).
Furniture and
Equipment
Computer
Equipment
Computer
Software
Buildings
Total
Cost:
At January 1, 2023
$617,510
$1,020,911
$400,996
$
–
$2,039,417
Additions
77,417
192,960
–
418,772
689,149
Disposals
(22,146)
–
–
–
(22,146)
At December 31, 2023
$672,781
$1,213,871
$400,996
$418,772
$2,706,420
Additions
118,480
426,629
–
422,513
1,625,997
Disposals
–
–
–
–
–
At December 31,
2024
$791,261
$1,640,500
$400,996
$841,285
$3,674,042
Furniture and
Equipment
Computer
Equipment
Computer
Software
Buildings
Total
Accumulated
depreciation and
impairment:
At January 1, 2023
$504,561
$956,794
$356,330
$
–
$1,817,685
Depreciation for the
year
22,327
53,340
–
10,913
86,580
Disposals
(12,756)
–
–
–
(12,756)
At December 31, 2023
$514,132
$1,010,134
$356,330
$10,913
$1,891,509
Depreciation for the
year
22,523
159,312
–
20,221
202,056
Disposals
–
–
–
–
–
At December 31,
2024
$536,655
$1,169,446
$356,330
$31,134
$2,093,565
Net book value:
At December 31,
2024
$254,606
$471,054
$44,666
$810,151
$1,580,477
At December 31, 2023
$158,649
$203,737
$44,666
$407,859
$814,911
Addition to land and buildings as at the end of the reporting period is as follows:
December 31,
2024
2023
Land
$ 84,503
$ 83,755
Building
338,010
335,017
$ 422,513
$ 418,772
NTG Clarity Networks Inc.
Annual Report 2024
57
12. INTANGIBLE ASSETS
The intangible asset related to the upgrade of the internally developed “NTGapps” (formerly “Smart2Go”)
platform capitalized from 2020 to 2023. Expenditures on development of the software are recognized as an
asset from the time the Corporation has determined future economic benefit exists.
The development costs are determined to have a useful life of 10 years are amortized on a straight line basis.
NTGapps
Cost:
At January 1, 2023
$ 3,614,239
Additions
1,673,091
Disposals
–
At December 31, 2023
$ 5,287,330
At December 31, 2024
$ 5,287,330
Accumulated amortization and impairment:
At January 1, 2023
$ 408,638
Amortization charge for the year
421,218
At December 31, 2023
$ 829,856
Amortization charge for the year
528,733
At December 31, 2024
$ 1,358,589
Net book value:
NTGapps Development Costs
At December 31, 2024
$ 3,928,741
At December 31, 2023
$ 4,457,474
13. INVESTMENT IN JOINT VENTURE
The Corporation has a 50% interest in Alamat E Commerce Systems Company, a joint venture originally
valued at 500,000 EGP. The Corporation interest in joint venture is accounted for using the equity method in
the consolidated financial statements at $NIL (2023: $142,136). As of December 31, 2024, the Company has
recognized a provision of $173,986 (2023: $Nil) included in other payables in Note 15, as its share of cumulative
losses has exceeded the carrying amount of the investment. The provision reflects the Corporation’s legal or
constructive obligations to fund the joint venture’s future operations or settle its outstanding liabilities.
If the joint venture generates future profits, the Company will resume recognizing its share of earnings only after
the previously recognized losses have been recovered. Management monitors the financial position of the joint
venture and assesses the necessity of additional provisions at each reporting period. The share of loss of the
joint venture of $267,730 (2023: $Nil) is included in other income on the face of the statement of profit and loss
and other comprehensive income.
14. RIGHT OF USE ASSET AND LEASE LIABILITIES
Right-of-use of Asset as at January 1, 2023
$ 29,556
Present value of lease commitments
170,214
Depreciation
(79,202)
Right-of-use of Asset as at December 31, 2023
$ 120,568
Present value of lease commitments
658,375
Depreciation
(276,137)
Right-of-use Asset as at December 31, 2024
$ 502,806
NTG Clarity Networks Inc.
Annual Report 2024
58
On June 1, 2021, the Corporation leased office space for a period of 2 years, expired May 31, 2023. The lease
was renewed for an additional 2 years, expiring May 31, 2025. The Corporation recognized a right of use
asset and lease liability of $170,214. The lease liabilities were measured at the present value of the remaining
lease payments, discounted at the Corporation’s incremental borrowing rate of 19%, representing a significant
accounting judgment.
On September 1, 2023, the Corporation leased office space for a period of 3 years, with a rent-free period for the
first 2 months, expiring August 31, 2026. The Corporation recognized a right of use asset and lease liability of
$332,227. The lease liabilities were measured at the present value of the remaining lease payments, discounted
at the Corporation’s incremental borrowing rate of 23%, representing a significant accounting judgment.
On August 1, 2024, the Corporation leased office space for a period of 3 years, expiring July 31, 2027. The
Corporation recognized a right of use asset and lease liability of $187,537. The lease liability was measured at
the present value of the remaining lease payments, discounted at the Corporation’s incremental borrowing rate
of 23%, representing a significant accounting judgment.
On October 1, 2024, the Corporation leased office space for a period of 2 years, expiring September 30, 2026.
The Corporation recognized a right of use asset and lease liability of $138,611. The lease liabilities were
measured at the present value of the remaining lease payments, discounted at the Corporation’s incremental
borrowing rate of 23%, representing a significant accounting judgment.
Lease liabilities
The lease liability as at December 31, 2024 is as follows:
Lease Liabilities as at January 1, 2023
$39,004
Add: present value of new lease commitments at a borrowing rate of 19%
170,214
Add: interest accretion during the reporting period
17,921
Subtract: lease payments during the reporting period
(96,369)
Lease Liabilities as at December 31, 2023
$130,770
Add: present value of new lease commitments
658,375
Add: interest accretion during the reporting period
137,558
Subtract: lease payments during the reporting period
(346,616)
Lease Liabilities as at December 31, 2024
$580,087
December 31,
2024
2023
Current portion of lease liabilities
391,454
86,829
Long-term portion of lease liabilities
188,633
43,941
580,087
130,770
The undiscounted future lease payments are as follows:
2025
393,674
2026
275,426
2027
50,817
$ 719,917
NTG Clarity Networks Inc.
Annual Report 2024
59
15. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
December 31,
2024
2023
Trade payables (i)
$ 424,779
$ 1,869,195
Accrued liabilities (i)
187,695
329,845
Due to related parties (ii)
1,499,135
1,122,290
Payroll liability (iii)
3,428,089
2,522,855
Payroll taxes payable
787,790
320,378
Sales taxes payable
1,034,536
935,404
Commissions payable
591,720
539,501
Other payables
417,180
372,055
$ 8,370,924
$ 8,011,523
(i) Trade payables and accrued liabilities are non-interest bearing.
(ii) Due to related parties are interest bearing at 5-8% interest p.a, on the balance of $1,460,102 (2023:
$1,094,450), and non-interest bearing on the balance of $39,033 (2023: $27,840), with no specified terms of
repayment. During the year, $88,392 (2023: $87,439) was recognised as interest accrued for the year.
(iii) As of December 31, 2024, Key management (Ashraf Zaghloul and Kristine Lewis) is owed a total of
$1,525,829 (2023: $1,448,572) end of service payroll liability. Included in payroll liability is an amount owed
to related parties for $10,319 (2023: $22,971).
(iv) Included in other payables is a provision for the Corporation’s share of cumulative losses in the joint
venture investment in the amount of $173,986 (2023: $Nil). The provision reflects the Corporation’s legal or
constructive obligations to fund the joint venture’s future operations or settle its outstanding liabilities.
16. OTHER FINANCIAL ASSETS AND FINANCIAL LIABILITIES
(a) Other financial liabilities
December 31,
2024
2023
Long-term debt (i)
$ 5,970,635
$ 6,512,880
Long-term portion of CIB loan (iii)
–
122,748
$ 5,970,635
$ 6,635,628
(i) The loan is due to 2729252 Ontario Inc., a company controlled by Ashraf Zaghloul, NTG CEO and Kristine
Lewis, NTG President.
The loan remains secured by a General Security Agreement over the assets of the Corporation and charge
interest as per company ability to pay subject to maximum of bank prime plus 2.05%. There are no specific
repayment terms and will not be repaid in the next 12 months. The Corporation recognized interest expense of
$49,271 (2023: $68,875) which is included in above loan balance.
As of December 31, 2024, NTG Egypt Advanced Software has the following credit facilities:
NTG Clarity Networks Inc.
Annual Report 2024
60
December 31,
2024
2023
Bank indebtedness (ii)
Bank indebtedness
$113,083
$298,743
Long-term debt (iii)
Long-term debt payable
$81,386
$245,496
- Current portion
$81,386
$122,748
- Long term
$ –
$122,748
(ii) Overdraft facility with a bank in Egypt for supporting operations in the amount of 7,000,000 Egyptian pounds
with an interest rate of 18%. The amount drawn on the facility as at December 31, 2024 is $113,083 (2023:
$298,743). The loan is unsecured.
(iii) In 2023, the Corporation increased the credit facility to 5,750,000 Egyptian pounds repayable over 2 years in
monthly principal payments of 239,584 Egyptian pounds plus interest at 10%. The loan outstanding as on
year end is 2,874,000 (2023: 5,750,000) Egyptian pounds (approximately $81,386, (2023: $(245,496)). The
loan matures October 31, 2025. The loan is unsecured.
(b) Fair values
Set out below is a comparison by class of the carrying amount and fair value of the Corporation’s financial
instruments that are carried in the financial statements.
Carrying Amount
Fair Value
December 31,
2024
December 31,
2023
December 31,
2024
December 31,
2023
Financial assets
Cash and cash equivalents
$ 4,946,341
$ 358,088
$ 4,946,341
$ 358,088
Trade and accounts receivable
16,673,542
6,152,822
16,673,542
6,152,822
Performance bonds
–
293
–
293
Total Financial Assets
$ 21,619,883
$ 6,511,203
$ 21,619,883
$ 6,511,203
Carrying Amount
Fair Value
December 31,
2024
December 31,
2023
December 31,
2024
December 31,
2023
Financial liabilities
Accounts payable and accrued
liabilities
$ 6,548,598
$6,755,740
$ 6,548,598
$6,755,740
Bank indebtedness
113,083
298,743
113,083
298,743
Current portion of long-term
debt
81,386
122,748
81,386
122,748
Long-term debt
5,970,635
6,635,628
5,970,635
6,635,628
Loan payable
–
493,767
–
493,767
Total Financial Liabilities
$12,713,702
$14,306,626
$12,713,702
$14,306,626
NTG Clarity Networks Inc.
Annual Report 2024
61
The fair value of the financial assets and financial liabilities are included at the amount at which the instrument
could be exchanged in an orderly transaction between market participants in an arm’s length transaction at the
measurement date.
The following methods and assumptions were used to estimate the fair values:
•
Trade and other accounts receivables, accounts payable and accrued liabilities, other current liabilities
approximate their carrying amounts largely due to the short term maturities of these instruments.
•
Fair values of quoted instruments are based on price quotations at the reporting date. The fair value of
unquoted instruments and other financial liabilities (loans payable) are estimated by discounting future
cash flows using rates currently available for debt on similar terms, credit risk, and remaining maturities.
Fair value hierarchy
As at December 31, 2024, the Corporation held cash measured at fair value.
The Corporation uses the following hierarchy for determining and disclosing the fair value of financial
instruments by valuation technique:
•
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
•
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are
observable, either directly or indirectly.
•
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not
based on observable market data.
Assets measured at fair
value
December 31, 2024
Level 1
Level 2
Level 3
Cash and cash
equivalents
$ 4,946,341
$ 4,946,341
$
–
$
–
Assets measures at fair
value
$ 4,946,341
$ 4,946,341
$
–
–
No liabilities were
measured at fair value
$
–
$
–
$
–
$
–
During the reporting year ending December 31, 2024, there were no transfers between Level 1 and Level 2 fair
value measurements, and no transfers into and out of Level 3 fair value measurements.
17. EQUITY INSTRUMENTS
(a) Common shares
As at December 31, 2024, the authorized share capital consists of an unlimited number of first preferred shares,
second preferred shares and common shares. To date, no first or second preferred shares have been issued.
Before any shares of a particular preferred share series are issued the directors of the Corporation, by resolution
shall fix the dividend rates, whether the dividends are cumulative and the redemption price of the redeemable
shares.
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Annual Report 2024
62
Share Consolidation
On March 18, 2024, the Corporation closed the Consolidation of its outstanding common shares on the basis of
one (1) post consolidation share for every five (5) pre-consolidation shares. The Consolidation was approved by
shareholders at the annual and special meeting of shareholders held on July 7, 2023. The Shares began trading
on a consolidated basis on the TSX Venture Exchange on March 20, 2024.
As a result of the Consolidation, the number of issued and outstanding shares were reduced from 187,672,355
shares to 37,534,458 shares, subject to treatment of fractional shares. Any fractional interest in shares that
is less than 0.5 of a share resulting from the Consolidation will be rounded down to the nearest whole share
and any fractional interest in Shares that is 0.5 or greater of a share will be rounded up to the nearest whole
share. The new CUSIP number for the post consolidation Shares is 62940V203 and the new ISIN number is
CA62940V2030.
Brokered LIFE Offering – Financing
On September 27, 2024, the Corporation closed its brokered LIFE Offering. NTG issued an aggregate of
3,720,000 units at a price of C$1.40 per Unit, for aggregate gross proceeds of $5,208,000 CAD. Each Unit
consists of one Common Share and one half (0.5) of one Common Share purchase warrant of the Corporation.
Each Warrant is exercisable to acquire one Common Share of the Corporation at a price of C$2.00 per Common
Share for a period of 24 months after closing.
The Units were issued pursuant to the listed issuer financing exemption under Part 5A of National Instrument
45 106 – Prospectus Exemptions. The securities offered under the listed issuer financing exemption are not
subject to a hold period, in accordance with applicable Canadian securities laws.
The Corporation intends to use the net proceeds of the Offering to support the expansion and delivery of
digital transformation solutions through the Corporation’s Egypt Offshore Centre and Saudi sales office and for
working capital and general corporate purposes.
In connection with the Offering and as consideration for their services, the Corporation paid to the Agent a
cash commission of up to 6.0% of the aggregate gross proceeds of the Offering and issued to the Agent non-
transferable warrants of the Company (the “Broker Warrants”) in an amount equal to 6.0% of the number of
Units issued under the Offering. Each Broker Warrant entitles the holder to acquire one Common Share at a
price of C$1.40, subject to adjustment in certain events, at any time on or before September 27, 2026.
Changes in the issued common shares of the Corporation are as follows:
Common Shares
Amount
Balance, January 1, 2023
147,972,355
$ 13,606,986
Shares issued on exercise of share options (i)
200,000
10,000
Allocation of contributed surplus (i)
–
10,000
Shares issued for private placement (ii)
37,000,000
1,110,000
Balance, December 31, 2023
185,172,355
$ 14,736,986
Shares issued on exercise of share options (iii)
2,500,000
125,000
Allocation of contributed surplus (iii)
–
107,500
Share consolidation of 5:1 (iv)
(150,137,897)
–
Number of shares, adjusted post share consolidation
37,534,458
–
Shares issued for LIFE offering (v)
3,720,000
3,085,393
Shares issued on exercise of share options (vi)
901,200
225,300
Allocation of contributed surplus (vi)
–
177,414
Balance, December 31, 2024
42,155,658
$ 18,457,593
NTG Clarity Networks Inc.
Annual Report 2024
63
(i) In 2023, a total of 200,000 options were exercised, with a total value of $10,000. This resulted in a re
allocation of contributed surplus to capital stock in the amount of $10,000.
(ii) On December 15, 2023, the Corporation closed a non-brokered Private Placement of 37,000,000 common
shares of the Company at a price of $0.03 per Common Share for gross proceeds of $1,110,000. The
common shares issued were subject to a four month hold period. 9,000,000 of these shares were issued to
directors of the Corporation and 28,000,000 of these shares were issued to 2729252 Ontario Inc, a company
controlled by directors.
(iii) In January 2024, a total of 2,500,000 options were exercised, with a total value of $125,000. This resulted in
a re allocation of contributed surplus to capital stock in the amount of $107,500.
(iv) On March 18, 2024, the Corporation closed consolidation of its outstanding common shares on the basis of
one (1) post consolidation share for every five (5) pre-consolidation shares. As a result of the consolidation,
the number of issued and outstanding shares were reduced from 187,672,355 shares to 37,534,458 shares,
subject to treatment of fractional shares.
(v) On September 27, 2024, the Corporation closed a brokered LIFE offering for 3,720,000 common shares, at
a price of $1.40 per Common Share for gross proceeds of $5,580,000. In connection with the offering, the
Corporation also issued 2,083,200 warrants, valued at $1,572,816, 223,200 warrants valued at $168,516
was included in share issuance costs. Total share issuance costs were $718,307.
(vi) From June to December 2024, a total of 901,200 options were exercised (post consolidation), with a total
value of $225,300. This resulted in a re allocation of contributed surplus to capital stock in the amount of
$177,414.
(b) Share-based payments
The Corporation has a formal stock option plan allowing the Company to issue options to its directors, officers,
employees and consultants in order to attract and retain qualified and experienced individuals. The Board of
Directors determines the exercise price and the number of options to be granted as well as all the terms of
conditions of the options. All options granted by the Corporation are non-assignable. The options generally
expire three to five years subsequent to the date of grant and vest over two years.
No options were granted to non-employees or consultants during 2024 and 2023.
Details of stock options are as follows:
Options
Weighted average
exercise price
Balance, 1 January 2023
17,715,000
$ 0.05
Granted
3,230,000
0.05
Exercised
(200,000)
0.05
Expired
(939,000)
0.08
Balance, December 31, 2023
19,806,000
$ 0.05
Granted (prior to consolidation)
350,000
$ 0.05
Exercised (prior to consolidation)
(2,500,000)
0.05
Share consolidation (5:1)
(14,124,800)
–
Balance, adjusted post share consolidation
3,531,200
$ 0.25
Granted (post consolidation)
1,533,000)
0.72
Exercised (post consolidation)
(901,200)
0.25
Expired (post consolidation) (i)
(91,000)
0.26
Balance, December 31, 2024
4,072,000
$ 0.45
NTG Clarity Networks Inc.
Annual Report 2024
64
(i) Expired Options Transfer
During the year, options in the amount of 91,000 (2023: 939,000) expired, resulting in a transfer of contributed
surplus in the amount of $19,045 (2023: $Nil).
During the year, there was a transfer of contributed surplus related to options which expired prior to 2024 in the
amount of $1,718,712.
The stock options expire at various dates between December 2025 and November 2029. The weighted average
expected contractual lives of outstanding and exercisable options are as follows:
Options Outstanding
Options Exercisable
Exercise Price
Number
outstanding
Dec 31/24
Remaining life of
option
Number
outstanding
Dec 31/24
Remaining life of
option
$ 0.25
2,574,000
2.09
2,572,333
2.09
$ 0.30
20,000
4.34
20,000
4.34
$ 0.32
143,000
4.35
143,000
4.35
$ 0.46
30,000
4.40
30,000
4.40
$ 0.50
100,000
2.29
100,000
2.29
$ 0.66
760,000
4.50
730,000
4.51
$ 0.86
100,000
3.33
11,111
3.33
$ 0.90
40,000
4.58
36,667
4.58
$ 1.00
70,000
4.27
69,167
4.29
$ 1.20
75,000
4.15
73,750
4.18
$ 1.40
40,000
4.55
40,000
4.55
$ 1.75
60,000
3.41
56,667
3.44
$ 2.00
40,000
4.90
24,000
4.90
$ 2.25
20,000
3.09
8,571
3.00
$ 0.45
4,072,000
2.86
3,915,267
2.83
Activity related to share-based compensation is as follows:
For the year ending December 31, 2024 the Corporation recorded $974,266 (2023: $104,250) as contributed
surplus and compensation expense, which is measured at fair value at the date of grant and is expensed over
the option’s vesting year. The weighted average fair value of options granted during the year 2024 is $0.71
(2023: $0.03).
In determining the amount of share-based compensation, the Corporation used the Black Scholes option pricing
model to establish the fair value of options granted by applying the following assumptions:
2024
2023
Stock price
$0.04 - $1.35
$0.03 - $0.04
Risk-free interest rate
2.94 – 4.32%
3.72 – 4.93%
Expected life (years)
3-5 years
5 years
Expected dividend yield
0%
0%
Expected volatility
0.00 – 162.57%
0.00 – 219.05%
Fair value of options issued in fiscal year
0.71
0.03
NTG Clarity Networks Inc.
Annual Report 2024
65
18. CONTRIBUTED SURPLUS
Contributed surplus for the year ending consisted of $974,266 (2023: $104,250) for share based payments and
re allocation of contributed surplus on exercise of share options $284,914 (2023: $10,000).
Opening balance January 1, 2024
$ 2,711,523
Share-based payments
974,266
Reallocation on exercise of share options
(284,914)
Issuance of warrants
1,572,816
Expired options transfer
(1,737,757)
Balance as at December 31, 2024
$ 3,235,934
19. DIVIDENDS PAID AND PROPOSED
Cash dividends
The Corporation’s practice is to not make dividend payments to shareholders.
20 REVENUE
The Corporation derives revenue from the transfer of goods and services over the time and at a point in time in
the following major business lines:
Disaggregation of revenue from contracts with customers
2024
2023
Professional services
$52,759,146
$ 26,896,273
Licenses
2,806,337
693,203
Maintenance
561,268
138,641
$56,126,751
$ 27,728,117
Timing of revenue recognition
2024
2023
Over the period of time
$52,759,146
$26,896,273
Point in time
3,367,605
831,844
$56,126,751
$27,728,117
21. COST OF SALES
The details of the Corporation’s cost of sales are as follows:
Cost of sales
2024
2023
Salaries
$ 25,556,292
$ 14,030,727
Travel
600,179
518,168
Hardware
17,865
57,522
Medical
40,357
–
Consulting
7,990,040
3,533,530
Amortization (Note 12)
528,733
421,218
Other
546,328
365,035
Total
$ 35,279,794
$ 18,926,200
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Annual Report 2024
66
22. EXPENSES: DISCLOSURE OF FUNCTION EXPENSES
The details of the Corporation’s function expenses are as follows:
Selling
2024
2023
Salaries and wages
$ 1,723,694
$ 1,586,791
Marketing
95,569
16,977
Mailing and courier
7,700
6,903
Professional services
77,556
19,538
Meals and entertainment
152,606
118,246
Travel
865,091
424,469
Total
$2,922,216
$2,172,924
General and administration
2024
2023
Salary and wages
$3,527,012
$2,147,793
Occupancy
349,691
148,704
Consulting
216,397
47,016
Professional fees
307,254
155,675
Insurance
1,250,948
954,900
Dues and subscriptions
56,279
40,853
Penalties and fees
45,042
24,215
Office and general
393,573
353,043
Total
$ 6,146,196
$ 3,872,199
23. LOANS PAYABLE
In 2020, the Corporation entered into an agreement for funding on a sales project in the amount of $338,080
(USD $266,667). The agreement states that the lender will be paid 67% interest on the funding for one sixth of
the profit from the project. The Corporation renewed the agreement in July 2021 and as per the revised term
interest is repayable based on the project’s profits at a rate of 63% of 1/11 of profit from the project and the
capital investment is payable on demand with 90 days’ notice. All other terms remain same. The loan was paid
in October 2024.
In 2022, the Corporation entered into an agreement for funding on a sales project in the amount of $325,000
(USD $240,000). The agreement states that the lender will pay interest based on the project’s profits at a rate of
63% of 1/11 of profit from the project. The Capital investment was paid in July 2023.
This transaction does not qualify as a joint arrangement or a principal agent relationship. The amount is non-
secured.
In 2022, the Corporation entered into a non-secured loan agreement in the amount of $15,530 (USD $11,467)
with no interest rate payable within 1 year. The amount was paid by January 2023.
In 2023, the Corporation entered into a non-secured loan agreement in the amount of $141,077 (USD 106,667)
with no interest rate payable by January 2024. The loan was paid in January 2024.
As of December 31, 2024, the Loans Payable amount owed is $Nil (2023: $493,767).
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67
24. RELATED PARTY DISCLOSURES
The financial statements include the financial statements of the Corporation and the subsidiaries listed in the
following table:
Name
Country of Incorporation
Equity Interest
NTG Egypt Advanced Software (Subsidiary)
Egypt
95%
NTG Clarity Networks US Inc. (Subsidiary)
USA
100%
All related party transactions are carried out in the normal course of operation and are recorded at fair value.
a) Balances owing to key management
The following tables provide the balances owing to key management and key management compensation for
the years:
Related party balances
2024
2023
Amounts owed to related parties (i)
$ 2,977,255
$ 2,233,699
Amounts owed by related parties (ii)
11,241
22,971
Key management compensation
2024
2023
Short-term employee benefits
$ 847,141
$ 559,457
Post-retirement employee benefits
68,000
56,667
Share-based payments
295,750
18,000
Total
$ 1,210,891
$ 634,124
(i) As of December 31, 2024, key management personnel (Ashraf Zaghloul and Kristine Lewis) is owed a total
of $2,977,255 (2023: $2,210,728) for unpaid salaries, expenses, benefits and compensation, outstanding
since 2016. These amounts are part of Accounts Payable in Note 15. Included in payroll liability is an
amount owed to related parties for $10,319 (2023: $22,971).
(ii) Included in other receivables is an amount receivable from related parties for $11,241 (2023: $26,303). The
balance is unsecured, non-interest bearing and has no specific terms of repayment.
b) The Ultimate Parent
The Corporation is the ultimate parent entity.
c) Related Party Transactions
Certain inter-company transactions between the Corporation and its subsidiaries, which are related parties to
the Corporation, have been eliminated.
Related parties include key management, the board of directors, close family members and entities controlled
by these individuals as well as certain persons performing similar functions.
During the year 2024, directors and officer of the Corporation were granted a total number of 350,000 (2023:
900,000) options, as described in Note 17 (b), that were valued at $295,750 (2023: $27,000). In the year 2024,
the directors and officer had exercised 600,000 (2023: None) options, for a total of $150,000 (2023: $Nil).
NTG Clarity Networks Inc.
Annual Report 2024
68
The loan is due to 2729252 Ontario Inc, which is a private company owned by two directors of the Corporation.
See Note 16 (a) for more information. The Indebtedness held by the Corporation is secured by a General
Security Agreement over the assets of the Corporation. As of December 31, 2024, the loan amount is $5,970,635
(2023: $6,512,880). The Corporation recognized interest expense of $49,271 (2023: $68,875) in the statement
of profit and loss.
During the year, the company recognized income from the joint venture in the amount of $212,935 (2023:
$217,204), included in other income
25. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Corporation’s primary risk management objective is to protect the Corporation’s balance sheet and cash
flow.
The Corporation’s principal financial liabilities comprise of bank overdraft, long term debt and trade and other
payables. The main purpose of these financial liabilities is to raise finances for business development and
capital investment in intangible assets.
The Corporation is exposed to market risk, interest rate risk, foreign exchange risk, credit risk, and liquidity risk.
The Corporation’s senior management oversees the management of these risks. The Corporation’s senior
management is supported by a Committee that advises on financial risks and the appropriate financial risk
governance framework for the Corporation.
The Committee provides assurance to the Corporation’s senior management that the Corporation’s financial
risk-taking activities are governed by appropriate policies and procedures and that financial risks are identified,
measured, and managed in accordance with the Corporation’s policies and group risk appetite. All derivative
activities, if any, for risk management purposes are carried out by a team that has the appropriate skills,
experience, and supervision. It is the Corporation’s policy that no trading in derivatives for speculative purposes
shall be undertaken.
The Board of Directors reviews and agrees policies for managing each of these risks which are summarized
below.
Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because
of changes in market prices. Market prices comprise several types of risk: interest rate risk, currency risk,
commodity price risk, and other price risk, such as equity risk.
Interest rate risk
The Corporation’s exposure to interest rate fluctuations is primarily interest paid on its bank indebtedness and
long-term loans. The Corporation has performed sensitivity analysis on interest rates at December 31, 2024 to
determine how a change in interest rates would impact equity and net loss. During the year the Corporation paid
$435,332 (2023: $378,985) on its loans and liabilities. An increase or decrease of 100 basis points in the average
interest rate paid during the period would have adjusted net earnings by approximately $43,533 (2023: $37,899).
This analysis assumes that all other variables remain constant.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in foreign exchange rates. The Corporation’s exposure to the risk of changes in foreign
exchange rates relates primarily to the Corporation’s operating activities, when revenue or expense are
denominated in a different currency from the Corporation’s functional currency. The parent entity’s functional
currency is the Canadian dollar.
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Annual Report 2024
69
The Corporation does not hedge the risk related to fluctuations of the exchange rate between USA and
Canadian dollars from the date of the sales transactions to the collection date due to the short-term nature of
this exposure.
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in foreign exchange rates. The Corporation’s exposure to the risk of changes in foreign
exchange rates relates primarily to the Corporation’s operating activities, when revenue or expenses are
denominated in a different currency from the Corporation’s functional currency. The parent entity’s functional
currency is the Canadian dollar.
A 10% change in exchange rates on December 31, 2024 would have the following approximate impacts:
10% impact to:
U.S. Dollar
USD
Omani
Riyal
OMR
Kuwait
Dinar KWD
Saudi Riyal
SAR
Turkish
Lira TRY
Iraqi Dinar
IQD
Egyptian
Pound LE
P&L in CAD
$137,757
$6,645
$13,696
$1,391,491
$1,662
$Nil
$25,350
Equity in CAD
$101,251
$4,884
$10,067
$1,022,746
$1,222
$Nil
$18,632
A 10% change in exchange rates on December 31, 2023 would have the following approximate impacts:
10% impact to:
U.S. Dollar
USD
Omani
Riyal
OMR
Kuwait
Dinar KWD
Saudi Riyal
SAR
Turkish
Lira TRY
Iraqi Dinar
IQD
Egyptian
Pound LE
P&L in CAD
$63,360
$1,999
$19,027
$213,937
$1,238
$2,245
$31,501
Equity in CAD
$46,569
$1,469
$13,985
$157,244
$910
$1,650
$23,154
Commodity price risk
The Corporation is not subject to price risk from fluctuations in market prices of commodities.
Equity price risk
The Corporation has no exposure to equity price risk.
Credit risk
Credit risk is the risk of an unexpected loss if a customer or counterparty to a financial instrument fails to
meet its contractual obligation. The Corporation’s financial instruments that are exposed to credit risk consist
primarily of trade receivable. The Corporation’s exposure to credit risk is impacted by the economic conditions
for the industry which could affect the customers’ ability to satisfy their obligations.
In order to reduce risks, the Corporation performs periodic credit evaluations of the financial conditions of its
customers and typically does not require collateral from them. Management assesses the need for allowance
for potential credit losses by considering the credit risk of specific customers, historical trends and other
information.
The aging of trade accounts receivable are as follows:
Neither past due nor impaired
2024
2023
Current
$ 4,279,570
$ 2,983,147
31 – 60 days
4,490,862
2,111,346
61 – 90 days
2,146,019
203,030
91 – 180 days
1,521,256
337,372
Past due but not impaired
Greater than 180 days
145,215
212,760
$ 12,582,922
$ 5,847,655
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Annual Report 2024
70
The credit quality of all the accounts receivable of the Corporation that are neither past due nor impaired and
the age of accounts receivable that are past due but not impaired have been assessed on an individual basis
and determined to have a mitigated risk profile.
Liquidity risk
Liquidity risk is the risk that the Corporation will not be able to meet its financial obligations as they fall due. The
Corporation’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under normal and stressed conditions. The Corporation manages
liquidity risk by reviewing its capital requirements on an ongoing basis.
The Corporation continuously reviews both actual and forecasted cash flows to ensure that the Corporation has
appropriate capital capacity.
The following table summarizes the amount of contractual undiscounted future cash flow requirements for
financial instruments as at December 31, 2024:
Contractual obligations
2025
2026
2027
2028
and after
Total
Operating line of credit
$113,083
$ –
$ –
$ –
$ 113,083
Accounts payable and accrued liabilities
6,548,598
–
–
–
6,548,598
Operating lease and lease liability
502,905
275,426
50,817
–
829,148
Long-term debt
81,386
5,970,635
–
–
6,052,021
7,245,972
6,246,061
50,817
– 13,542,850
The Corporation accrues expenses when incurred. Accounts are deemed payable once an event occurs that
requires payment by a specific date. The contractual maturity of accounts payable is within one month.
The aging of trade accounts payable are as follows:
December 31,
2024
2023
Current
$ 174,829
$ 1,000,607
31 – 60 days
22,420
39,432
61 – 90 days
21,958
2,729
91 – 180 days
24,578
151,434
More than 180 days
180,994
674,993
$ 424,779
$ 1,869,195
Capital management
The Corporation manages its capital, which consists of cash provided from operations and long-term debt, with
the primary objective being safeguarding sufficient working capital to sustain operations. The Board of Directors
has not established capital benchmarks or other targets. As at December 31, 2024, the Corporation was
considering pursuing additional capital through the issuance of additional equity or debt financing. There can be
no guarantee that they will be successful in raising additional capital.
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71
There have been no changes in the Corporation’s approach to capital management during the year ending
December 31, 2024. Also, no changes were made in the objectives, policies, or processes during the year ending
December 31, 2024. The Corporation will continually assess the adequacy of its capital structure and capacity
and will make adjustments within the context of the Corporation’s strategy, economic conditions, and the risk
characteristics of the business.
The Corporation’s objectives when managing capital are to:
(i) safeguard the Corporation’s ability to continue as a going concern, so that it can provide adequate returns
for shareholders and benefits for other stakeholders;
(ii) fund capital projects for facilitation of business expansion provided there is sufficient liquidly of capital to
enable the internal financing; and
(iii) maintain a capital base to maintain investor, creditor, and market confidence.
The Corporation considers the items included in the consolidated statements of changes in shareholders’ equity
as capital. The Corporation manages the capital structure and makes adjustments to it in the light of changes
in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the
capital structure, the Corporation may issue new shares. The Corporation is not subject to externally imposed
capital requirements.
26. COMMITMENTS, CONTINGENCIES, AND GUARANTEES
Operating lease commitments – Corporation as lessee
The Corporation is committed under agreements for the rental of office spaces in Egypt and Saudi at a monthly
rate ranging from $272 to $1,955 for 2025.
December 31,
2024
2025
$ 109,231
Legal claim contingency
The Corporation is subject to a variety of claims and suits that arise from time to time in the ordinary course of
business. Although management currently believes that resolving claims against the Corporation, individually
or in aggregate, will not have a material adverse impact on the Corporation’s financial position, results of
operations, and cash flows. These matters are subject to inherent uncertainties and management’s view of
these matters may change in the future. To date, there are no claims or suits outstanding.
Guarantees
The Corporation indemnifies its directors and officers against claims reasonably incurred and resulting from the
performance of their services to the Corporation, and maintains liability insurance for its directors and officers.
As of June 7, 2024, the Corporation has Director’s and Officer’s Insurance.
27. COMPARATIVE FIGURES
Certain insignificant balances of the 2023 figures have been reclassified to conform with the current year’s
financial statement presentation.
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72
Annual Report 2024
Corporate Information
Board of Directors
Ashraf Zaghloul
Kristine Lewis
Mohamed Saleem Siddiqi
Syed Zeeshan Hasnain
Officers
Ashraf Zaghloul
Chair & Chief Executive Officer
Kristine Lewis
President & Chief Financial Officer
Registrar and Transfer Agent
Odyssey Trust Company
702 - 67 Yonge Street
Toronto, Ontario M5E 1J8
Telephone: 1-888-290-1175
https://odysseytrust.com
Auditors
NVS Chartered Accountants
Professional Corporation
100 Allstate Parkway, Suite 303
Markham ON L3R 6H3
Telephone: (905) 415-2511
Fax: (905) 415-2011
Legal Counsel
Borden Ladner Gervais
Centennial Place, East Tower
1900, 520 - 3rd Avenue S.W.
Calgary, Alberta T2P 0R3
Telephone: (403) 232-9500
Fax: (403) 266-1395
International Work
Stock Exchange Listing
The TSX Venture Exchange
Trading Symbol: NCI
Investor Relations
Adam Zaghloul
Vice President - Strategy & Planning
adam@ntgclarity.com
Corporate Office
NTG Clarity Networks Inc.
2820 Fourteenth Avenue, Suite 202
Markham, Ontario
Canada L3R 0S9
Telephone: (905) 305 1325
Toll-free (North America):
(800) 838-7894
Fax: (800) 838-7895
E-mail: info-ntg@ntgclarity.com
www.ntgclarity.com