Siyata Mobile(SYTA) - 2025 Q1 - Quarterly Report

Management Discussion and Analysis This section analyzes the company's financial performance, liquidity, and future outlook, addressing key risks and corporate developments Cautionary Note Regarding Forward-Looking Statements This section cautions that forward-looking statements are subject to significant risks and uncertainties that may cause actual results to differ materially - The report includes forward-looking statements identified by words like "may," "expects," "plans," and are subject to risks that could cause material differences in actual results[2] - Key risk factors highlighted include market size and acceptance, ability to expand sales, regulatory impacts, competition, funding, strategic partnerships, and Nasdaq listing requirements[4][9] - The company undertakes no obligation to update these forward-looking statements, and readers are cautioned not to place undue reliance on them[6][8] Key Information This section outlines the substantial financial, operational, and geopolitical risks impacting the company's business and securities Risk Factors The company faces significant financial, operational, geopolitical, and intellectual property risks, alongside challenges related to its securities - The company has a history of operating losses and an accumulated deficit of $119.8 million as of March 31, 2025 Auditors have expressed substantial doubt about its ability to continue as a going concern[17][28][29] - Material weaknesses in internal controls over financial reporting were identified for fiscal years 2021, 2022, 2023, and 2024, related to revenue recognition, inventory controls, and R&D cost capitalization[17][32][33] - The company relies heavily on channel partners (e.g., AT&T, Verizon) for a majority of its revenue and is dependent on a small number of customers, with five customers accounting for 64% of revenue in FY2024[17][48][92] - Operations in Israel expose the company to risks from political and military instability, including the recent conflict with Hamas, which could disrupt operations and affect personnel[23][153][163] - The company faces risks from US-China trade policies and tariffs, as it manufactures mobile phones in Shenzhen, China, and imports products into the U.S[25][121][122] Information on the Company This section details Siyata Mobile Inc.'s corporate history, business operations, product offerings, market strategy, and pending merger with Core Gaming History and Development of the Company This section outlines the company's corporate evolution, including its reverse acquisition, Nasdaq listing, and ongoing "going concern" status - The company became Siyata Mobile Inc. on July 24, 2015, through a reverse acquisition of an Israel-based cellular technology company[209] - The company's shares were listed on the Nasdaq Capital Market on September 25, 2020, after delisting from the TSXV[211] - Auditors have included a "going concern" paragraph in the report for the fiscal year ended December 31, 2024, expressing doubt about the company's ability to continue as an ongoing business[212] Business Overview Siyata Mobile develops PoC devices and cellular boosters for enterprise and first responders, distributing through major carriers, and is merging with Core Gaming - Siyata is a B2B global developer of Push-To-Talk over Cellular (PoC) handsets and accessories for first responders and enterprise workers[217] - Key products include the SD7 rugged PTT handset, the VK7 in-vehicle kit, and Uniden cellular boosters[220][222][229] - The company sells through major U.S. carriers like AT&T, FirstNet, Verizon, and T-Mobile, as well as international carriers[218][232] - The company is merging with Core Gaming, Inc., a mobile gaming developer that uses AI tools to develop, distribute, and monetize casual games, reaching over 40 million active users monthly[254][255][300] Organizational Structure This section details the company's organizational structure, comprising Siyata Mobile Inc. and its eight wholly-owned subsidiaries across multiple countries Subsidiaries as of March 31, 2025 | Name of Subsidiary | Principal Activities | Place of Incorporation | Ownership | | :--- | :--- | :--- | :--- | | Queensgate Resources Corp | Inactive | British Columbia, Canada | 100% | | Queensgate Resources US Corp | Inactive | Nevada, USA | 100% | | Siyata Mobile (Canada) Inc. | Inactive | British Columbia, Canada | 100% | | Siyata Mobile Israel Ltd. | R&D and wholesale distribution | Israel | 100% | | Signifi Mobile Inc. | Wholesale distribution | Quebec, Canada | 100% | | ClearRf Nevada Ltd. | Inactive | Nevada, USA | 100% | | ClearRF LLC | Inactive | Washington, USA | 100% | | Siyata PTT | Inactive | Calyman Islands | 100% | Property, Plant and Equipment The company leases two warehouse and office facilities in Quebec, Canada, with both lease agreements expiring in May 2024 - The company leases its main warehouse and sales headquarters in Montreal, Quebec (5,616 sq. ft.) and additional warehouse space in Chateauguay, Quebec (2,837 sq. ft.)[286] - Both lease agreements were set to expire on May 31, 2024[286] Operating and Financial Review and Prospects This section analyzes the company's Q1 2025 operating results, liquidity, capital resources, R&D, critical accounting estimates, and related party transactions Operating Results Q1 2025 saw a slight revenue increase to $2.47 million, but gross margin declined significantly, leading to a wider net loss of $3.79 million Q1 2025 vs Q1 2024 Financial Performance | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues | $2,468,331 | $2,357,879 | +4.7% | | Gross Profit | $530,236 | $863,417 | -38.6% | | Gross Margin | 21.5% | 36.6% | -15.1pp | | Net Loss | $(3,789,068) | $(2,797,020) | +35.5% | | Adjusted EBITDA | $(2,576,088) | $(1,527,011) | +68.7% | - The decrease in gross margin was primarily due to a lower proportion of high-margin sales in the EMEA region and liquidation of booster inventory at reduced prices[313] - Significant events in Q1 2025 include entering into a merger agreement with Core Gaming Inc., securing new orders for SD7 handsets, and signing a development agreement with a Fortune 100 U.S. telecom company for up to $1 million[297][300][306] Liquidity and Capital Resources The company faces a significant working capital deficit and accumulated deficit, relying on financing activities to sustain operations and address going concern issues Financial Position as of March 31, 2025 | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash Balance | $547,254 | $181,730 | | Accumulated Deficit | $(119,810,239) | $(116,021,171) | | Working Capital | $(3,184,282) | $(4,947,281) | - Net cash from financing activities was $3.06 million in Q1 2025, largely due to $5.23 million raised from an equity line of credit, which was offset by redemption of preferred shares and a decrease in bank loans[335] - The company has conducted multiple reverse stock splits, including a 100-for-1 split in August 2023 and a 7-for-1 split in December 2023[341][342] - As of March 31, 2025, there were 3,016,519 common shares and 622 Class C preferred shares issued and outstanding[338][343] Research and Development, Patents and Licenses This section details the company's R&D activities, owned patents for cellular amplifier technology, and key licensing agreements for Android, LTE/4G, and booster products - The company owns two patents for cellular amplifier technology (RF Passive Bypass and Auto Gain & Oscillation Control) acquired through the ClearRF acquisition in March 2021[368][369] - Siyata has a licensing agreement with Via Licensing Corporation for worldwide patents related to Android software and LTE/4G network access[370] - A royalty agreement with Wilson Electronics, LLC requires Siyata to pay a 4.5% royalty on the sales of its booster products in exchange for using Wilson's patents[371] Critical Accounting Estimates Management's critical accounting estimates and judgments impact financial statements, covering areas like fair value, inventory, impairment, and going concern assumptions - Critical accounting estimates include fair value of stock options, capitalization of development costs, inventory valuation, and impairment assessments[373] - Critical accounting judgments include determining the useful life of intangible assets, assessing deferred income taxes, defining the functional currency for subsidiaries, and the going concern assumption[375] Related Party Transactions This section outlines the compensation paid to key management personnel, including executive and non-executive board members and corporate officers Key Management Personnel Compensation (Q1 2025 vs Q1 2024) | Compensation Type | 2025 | 2024 | | :--- | :--- | :--- | | Salaries, consulting and directors' fees | $342,025 | $343,172 | | Share-based payments | $0 | $89,560 | | Total | $342,025 | $432,732 |