Financial Performance and Concerns - As of March 31, 2023, the accumulated deficit is $85,401,915, indicating a history of operating losses and uncertainty about achieving profitability[25]. - The independent registered public accountants expressed substantial doubt about the company's ability to continue as a going concern for the next twelve months[26]. - The company has identified three material weaknesses in internal controls over financial reporting, which could impact the accuracy of financial results[14]. - The company is under a cease trading order with the British Columbia Securities Commission due to late filing of financial statements for the three months ended March 31, 2023[29]. - The company received a notice from NASDAQ regarding default of maintaining a minimum bid price of $1.00 per share, with a deadline to rectify by August 21, 2023[29]. - The company may require additional capital to fund its business and support growth, which could lead to significant dilution for existing shareholders[27]. - The company has not yet experienced material supply chain disruptions from the COVID-19 pandemic, but future impacts remain uncertain[72]. - The auditor expressed substantial doubt about the company's ability to continue as a going concern for the next twelve months, indicating potential risks for shareholders[207]. - The company has not included any adjustments in its financial statements that may arise from the uncertainty regarding its ongoing viability[207]. Revenue Generation and Market Dependency - The company relies heavily on channel partners for revenue generation, making it vulnerable to their performance[15]. - The company generated more than 50% of its revenues for the three months ended March 31, 2023, through sales by channel partners, compared to 49% for the same period in 2022[39]. - The company is materially dependent on the adoption of its solutions by both the industrial enterprise and public sector markets, which significantly impacts revenue[45]. - The company relies on a small number of channel partners/customers for revenue, with 50% of revenue derived from five customers/channel partners for the three-month period ended March 31, 2023[82]. Operational Risks and Challenges - The company faces risks related to reliance on third-party suppliers for key components, which could delay product shipments and reduce sales[17]. - The company has a limited history of contracting with third-party manufacturers, which may lead to manufacturing capacity constraints[17]. - The company is exposed to risks associated with strategic acquisitions and investments, which could adversely impact its financial performance[17]. - The company faces lengthy sales cycles, with potential delays in large orders leading to unexpected revenue shortfalls[68]. - There is a risk of manufacturing capacity constraints due to limited experience with third-party manufacturers in Asia, which could impact timely supply to customers[69]. - The company faces challenges in managing operations that are distant from corporate headquarters, which may increase operating costs[150]. - Political, legal, and economic risks in China may adversely affect the company's ability to operate and maintain its supply chain[147]. Competition and Market Dynamics - The company faces significant competition from major players like LG, Apple, and Samsung, which may affect market share and profitability[46]. - The mobile device market is characterized by rapidly changing technology and customer needs, requiring the company to adapt its products and services accordingly[62]. - The application development ecosystem for the company's devices is new and evolving, which may limit demand if it does not develop as anticipated[84]. Compliance and Regulatory Risks - The company is subject to a variety of privacy and data security laws, including the U.S. Federal Trade Commission regulations and the California Consumer Privacy Act (CCPA), which became effective on January 1, 2020[128][129]. - The General Data Protection Regulation (GDPR) in the European Union may impose additional obligations and risks, potentially increasing penalties for non-compliance significantly[128]. - The company may incur substantial expenses to comply with privacy and data security laws in foreign jurisdictions, which could adversely impact revenues[128][130]. - Changes in telecommunications regulations could increase costs and limit market access for products[126]. Strategic Investments and Financial Activities - The company entered into a product technology licensing agreement with Wilson Electronics, resulting in a 4.5% licensing fee on revenues from every booster product sold[134]. - The company completed a private placement on January 2, 2021, raising aggregate gross proceeds of $12,945,000 USD by issuing 129,450 units at $100 per unit[186]. - In March 2021, the company acquired Clear RF LLC for a total of $700,000, consisting of approximately $389,970 in Common Shares and $310,030 in cash[188]. - The company entered into a securities purchase agreement for a senior secured convertible note with gross proceeds of $6,000,000 on October 27, 2021[192]. - The Company closed an underwritten public offering resulting in gross proceeds of approximately $20,000,000 on January 11, 2022[197]. Shareholder and Stock Information - The company has 62,911,417 Common Shares issued and outstanding as of March 31, 2023, with an additional 17,116,987 shares converted from cashless warrants[159]. - Total 17,015,084 Common Shares underlying outstanding warrants are registered with the SEC for resale and are unrestricted and freely tradable[159]. - Executive officers, directors, and their affiliated entities own approximately 13.0% of the Common Shares based on 80,028,404 shares outstanding as of May 24, 2023[170]. - The company does not expect to pay any cash dividends for the foreseeable future, relying on sales of Common Shares for returns on investment[158]. Risk Factors Related to Global Events - The Russian invasion of Ukraine has created global economic instability, which could adversely affect the company's operations and supply chain[73]. - Economic uncertainties or downturns could limit the availability of funds for customers, significantly adversely impacting the company's business[99]. - Natural or man-made disasters could disrupt operations and negatively impact financial results, as the company may not carry sufficient business insurance[102]. Internal Control and Governance - The company has taken steps to remediate identified material weaknesses in internal controls, but cannot guarantee that further weaknesses will not be discovered[181]. - The company incurred significant increased costs due to operating as a public company in the United States, which includes legal, accounting, and compliance expenses[176]. - The company may lose its foreign private issuer status if more than 50% of its voting securities are owned by U.S. residents, which would result in significant additional costs[175].
SIYATA MOBL.EQ.WARRT(SYTAW) - 2023 Q1 - Quarterly Report