Siyata Mobile(SYTA) - 2025 Q2 - Quarterly Report

Management Discussion and Analysis This section provides management's perspective on the company's financial condition and operational performance Cautionary Note Regarding Forward-Looking Statements This section warns readers about forward-looking statements, emphasizing inherent risks and uncertainties that could cause actual results to differ materially Forward-Looking Statements This section advises that the report contains forward-looking statements about future events and performance, which are subject to significant risks and uncertainties - Forward-looking statements are identified by words like "may," "should," "expects," "anticipates," and similar expressions, relating to future events, financial performance, strategies, and competitive environment[2] - Such statements are not guarantees of future performance and are subject to significant risks and uncertainties that could cause actual results to differ materially[2] - Important factors causing differences include market size and growth, product acceptance, sales organization expansion, regulatory changes, competition, funding ability, and strategic partnerships[4] - The company undertakes no obligation to publicly update or revise any forward-looking statement, except as required by applicable laws or rules[6] Item 1. Identity of Directors, Senior Management and Advisers This section addresses the identity of directors, senior management, and advisers Not applicable Information regarding the identity of directors, senior management, and advisers is not applicable for this report Item 2. Offer Statistics and Expected Timetable This section covers offer statistics and the expected timetable for the report Not applicable Information on offer statistics and expected timetable is not applicable Item 3. Key Information This section presents key information relevant to the company's operations and financial standing A. [Reserved] This section is reserved and contains no information B. Capitalization and Indebtedness Information regarding capitalization and indebtedness is not applicable C. Reasons for the Offer and Use of Proceeds Information on reasons for the offer and use of proceeds is not applicable D. Risk Factors This section outlines various risks that could materially affect the company's business, financial condition, and securities price, covering financial, operational, and regulatory aspects - The risks described are not exhaustive, and additional unknown or currently immaterial risks may also adversely affect the business[14] - If any of these risks occur, the company's business and financial condition could suffer, and the price of its Common Shares and Warrants could decline[14] Summary of Risk Factors This section provides a concise overview of the primary risk factors affecting the company Risks Related to Our Financial Condition and Capital Requirements The company faces significant financial risks, including operating losses, going concern doubts, capital requirements, and material weaknesses in internal controls over financial reporting - The company has a history of operating losses, with an accumulated deficit of $123,573,435 as of June 30, 2025[28] - The independent registered public accounting firm has included a "going concern" explanatory paragraph, expressing substantial doubt about the company's ability to continue as an ongoing business for the next twelve months[29][31] - Material weaknesses in internal controls over financial reporting were identified in 2024, 2023, 2022, and 2021, related to revenue recognition, inventory controls, and capitalization of development costs, with remediation efforts only partially successful[32][33][35][36][39][40][43] Risks Related to Our Business and Industry The business is highly dependent on channel partners, faces intense competition, and is vulnerable to product defects, technological changes, and geopolitical conflicts - Over 72% of revenues for the three months ended June 30, 2025, were generated through channel partners, primarily wireless carriers, with no firm purchase volume commitments[48] - The company faces significant competition from larger, more experienced competitors with greater financial and technical resources in both non-rugged and rugged mobile device markets[55][57] - Defects in products or software could lead to loss of sales, delayed market acceptance, reputational damage, and increased warranty costs[58][59] - The Middle East War and the Russian invasion of Ukraine could adversely affect the company's financial condition, results of operations, and cash flows due to potential supply chain disruptions, increased commodity prices, and broader economic instability[80][81][82][83] Risks Related to our Reliance on Third Parties Operations heavily rely on third-party vendors and a concentrated customer base, posing risks of supply chain disruptions, demand forecasting inaccuracies, and reputational damage - Inaccurate demand forecasting for inventory and supply needs could lead to additional costs, manufacturing delays, reduced gross margins, or lost sales[86] - Dependence on third-party suppliers for key components creates risks of supply interruptions, reduced control over pricing, and potential inability to obtain adequate supplies, especially since many components are from single or limited sources[88] - For fiscal years ended December 31, 2024 and 2023, 64% and 52% of revenue, respectively, were derived from five customers/channel partners, making the company highly vulnerable to the loss of any of these relationships[91] - Risks associated with sourcing and manufacturing include reliance on a concentrated number of independent suppliers, potential product defects, and vulnerability to events affecting suppliers (e.g., financial instability, natural disasters, trade policies)[96][97][98][102] Risks Related to Government Regulation The company faces risks from evolving government regulations, including trade policies, anti-corruption laws, and product/data privacy regulations, which could increase costs and liabilities - Potential changes in customs, tariffs, and trade policies, particularly between the U.S. and China, could significantly increase import costs and adversely impact financial performance[120][121][130] - Non-compliance with anti-corruption, anti-bribery, anti-money laundering, economic sanctions, and export control laws can lead to criminal or civil liability, significant fines, reputational harm, and operational disruptions[131][135] - The company is subject to a wide range of product regulatory and safety, consumer, worker safety, and environmental laws, as well as evolving privacy and data security laws (e.g., GDPR, CCPA), which can increase compliance costs and restrict business operations[136][137][140][141][142] - Changes in telecommunication bandwidth laws and regulations could increase costs, require product modifications, or limit market access[139] Risks Related to Our Intellectual Property The company's competitive position is vulnerable to intellectual property infringement claims, challenges in protection, and risks associated with open-source software usage - Inability to successfully protect intellectual property through patents, confidentiality, and contractual provisions could harm the company's competitive position[145] - The company faces risks of intellectual property infringement claims from third parties, which could result in costly litigation, damages, product shipment delays, or the need for royalty/licensing agreements[146] - Use of open-source software, including Android, could subject the company to litigation if license terms are not complied with, or impair product development if third parties cease development or restrict access[147][148] - Failure to obtain and maintain necessary third-party licenses for new products or enhancements could seriously harm the business, financial condition, and results of operations[149] Risks Related to our Locations in Israel and Canada and Our International Operations Operating in Israel, Canada, and internationally exposes the company to geopolitical risks, enforcement challenges for U.S. judgments, and various operational complexities including currency fluctuations - Operations in Israel are directly affected by economic, political, geopolitical, and military conditions, including armed conflicts and terrorist activities, which can disrupt operations, supply chains, and employee availability (e.g., military reserve duty call-ups)[150][153][154][157][160][161][163] - Enforcing U.S. judgments against the company or its non-U.S. resident officers and directors in Israel or Canada may be difficult due to jurisdictional differences and legal complexities[164][166] - Operations in China expose the company to risks such as increasing labor costs, political and legal uncertainties, changes in trade regulations, and potential disclosure of confidential information or intellectual property by third-party suppliers[168][169] - General risks of international operations include managing distant operations, foreign currency fluctuations, volatility in foreign credit markets, violations of anti-corruption/privacy laws, and tax disputes[171] Risks Related to Ownership of Our Securities The company's securities face risks of illiquidity, price volatility, dilution from future issuances, and potential delisting due to non-compliance with Nasdaq requirements - An active, liquid, and orderly trading market for Common Shares or Warrants may not develop, making it difficult for investors to sell shares quickly or at market price[175] - The stock price is expected to fluctuate significantly due to market conditions, financial results, new products, sales of large blocks of stock, analyst reports, and geopolitical events[177][180] - The company does not anticipate paying cash dividends, meaning investors must rely on stock price appreciation for returns[179] - Outstanding warrants and future sales of Common Shares may further dilute existing shareholders and adversely impact the stock price[181][182] - Failure to comply with Nasdaq continued listing requirements (e.g., minimum bid price) could result in delisting, leading to reduced liquidity and potential classification as a 'penny stock', despite reverse stock splits in August and December 2023 to regain compliance[183][184][185][186][188] General Risk Factors General risks include adverse litigation outcomes, negative analyst coverage, increased costs from losing foreign private issuer status, and the burdens of public company compliance - Unfavorable outcomes in future litigation, arbitration, or administrative actions could significantly impact financial condition or results of operations[195] - Lack of research coverage or unfavorable research by securities/industry analysts could negatively impact the stock price and trading volume[196] - Losing foreign private issuer status would require compliance with more extensive U.S. domestic issuer reporting requirements, leading to significant additional legal, accounting, and compliance costs[197] - Operating as a public company in the U.S. incurs significant increased costs and requires substantial management time for compliance initiatives (e.g., Sarbanes-Oxley Act, Dodd-Frank Act)[198][199] Item 4. Information on the Company This section provides comprehensive information about the company's history, business operations, and organizational structure A. History and Development of the Company This section details the company's corporate history, including name changes, acquisitions, Nasdaq listing, and auditor's going concern doubt - Incorporated on October 15, 1986, as Big Rock Gold Ltd., the company underwent several name changes, becoming Siyata Mobile Inc. on July 24, 2015, after acquiring an Israel-based cellular technology company[205][206] - Acquired Signifi Mobile Inc. on June 7, 2016, for CAD$200,000 cash and 1,000,000 Common Shares (6,897 shares after splits)[207] - Delisted from TSX Venture Exchange on October 19, 2020, and listed on the Nasdaq Capital Market on September 25, 2020[208] - The auditor's report for fiscal year ended December 31, 2024, includes a "going concern" explanatory paragraph, raising substantial doubt about the company's ability to continue as an ongoing business[209] B. Business Overview Siyata Mobile is a B2B PoC handset and accessory vendor for first responders and enterprises, recently diversifying into mobile gaming through a merger with Core Gaming, Inc - Siyata Mobile Inc. is a B2B global developer and vendor of next-generation Push-To-Talk over Cellular (PoC) handsets and accessories, including rugged PTT handsets, in-vehicle solutions, and cellular booster systems[214][215] - The company sells its products through leading U.S. cellular carriers and international carriers/distributors in Canada, Europe, Australia, and the Middle East[215] - Core Gaming, Inc., acquired in June 2024, is a mobile gaming developer and publisher focused on casual games, generating revenue through in-game ads and leveraging AI tools for content generation and marketing[255][256][257][265][266] - The mobile gaming industry is projected to reach $126 billion in 2025, with a 5.6% CAGR to $157 billion by 2029, and 2.4 billion users worldwide by 2029[258] Products Siyata Mobile offers rugged PoC smartphones, in-vehicle communication devices, and cellular boosters for enterprise and first responder markets - Siyata develops, markets, and sells rugged handheld PoC smartphone devices (e.g., SD7, SD7 Ultra) targeting enterprise customers and first responders, offering wide-area cellular coverage as an upgrade from traditional Land Mobile Radios (LMR)[216][217][225] - The VK7 Vehicle Kit, a patent-pending solution, integrates with the SD7 Handset for in-vehicle communication, providing features like a 10-watt speaker and external antenna connection[219] - Siyata Real Time View is a mobile DVR solution for monitoring first responder vehicles, offering video streaming from multiple cameras[222] - The company offers Uniden Cellular boosters and accessories for various markets, designed to improve cellular signal reception indoors and in vehicles, supporting multiple cellular technologies and carriers[229][231] Customers and Channels Siyata serves cellular network operators and distributors globally, with its SD7 Handset approved by major North American and international carriers, targeting a $19 billion market - Siyata's SD7 Handset has secured North American wireless carrier approvals from AT&T, FirstNet, Verizon, T-Mobile, USCellular, and Bell Mobility, and international approvals from Telstra (Australia) and KPN (Netherlands)[233] - As of August 2024, the SD7 Handset is "stocked" at AT&T, Verizon, USCellular, and Bell Mobility, allowing for marketing promotions and pricing subsidies[234] - The North American market for rugged handsets and in-vehicle solutions is estimated to be over $19 billion, targeting approximately 47 million enterprise task and public sector workers[236] Our Pricing Siyata sells to carriers and distributors who set retail prices, often subsidizing devices or bundling services to increase ARPU, with competitive MSRPs - Siyata sells products to wireless carriers and distributors, who determine the final retail price[237] - Carriers often subsidize device costs or bundle them with SIM card and PTT services to secure new activations and increase ARPU[237] - Siyata's unsubsidized MSRPs are competitive with LMR hardware, and subsidized/bundled pricing offers even greater capital and operational expense benefits[238] Competition Siyata competes in rugged handsets against Sonim, Kyocera, and Samsung, in-vehicle solutions against indirect alternatives, and in cellular boosters against Wilson, Nextivity, and SureCall - Direct competitors in rugged handsets include Sonim Technologies, Kyocera, and Samsung, but Siyata differentiates with its SD7 Handset's LMR upgrade focus and unique VK7 Vehicle Kit[239] - Indirect competition for handsets comes from low-cost Chinese PoC devices (not approved by North American carriers) and traditional two-way LMR radios, which PoC solutions aim to replace due to wider coverage and lower cost[240][241] - Siyata claims no direct competitors for its dedicated cellular-based in-vehicle devices approved by North American carriers, but faces indirect competition from third-party car kits, rugged tablets, and LMR radios[242][243][244][245][246] - Direct competitors in the Cellular Booster category include Wilson Electronics, LLC, Nextivity Inc., and SureCall Company[247] Intellectual Property Siyata Mobile owns two M2M cellular amplifier patents and holds licensing agreements for cellphone boosters, Android software, and LTE/4G network access, incurring royalty fees - Siyata owns two patents acquired from ClearRF: RF Passive Bypass technology (enables tethered devices to communicate even if amplifier loses power) and Auto Gain & Oscillation Control (self-adjusts output power for maximum signal strength)[252][253] - A licensing agreement with Wilson Electronics, LLC, grants the right to use cellphone booster-related patents in exchange for a 4.5% royalty fee on booster sales[249] - Two licensing agreements with Via Licensing Corporation allow the use of worldwide patents for Android software coding/decoding and LTE/4G network access, with quarterly royalty fees based on product sales[250] - An Asset Purchase Agreement with eWave Mobile Ltd. provides distribution rights for cellular devices in Israel, involving cash, common stock, and a share of net profits[251] Seasonality The company's business does not experience seasonality, as products are designed for all weather conditions, ensuring consistent sales patterns - The company does not experience seasonality in its business, as products are designed for all weather conditions, resulting in stable sales patterns[254] Core Gaming, Inc. Core Gaming, Inc. is a mobile gaming developer and publisher leveraging AI for casual game development and monetization, targeting a rapidly growing market - Core Gaming, Inc. was founded in 2024 and acquired Newbyera Technology Limited, reaching over 40 million active users monthly with over 600 million app downloads[256] - The company's mission is to become a leading casual mobile game developer and publisher, leveraging its expertise, industry relationships, and proprietary AI-driven BI platform[257][262][263] - The mobile gaming industry is projected to grow from $126 billion in 2025 to $157 billion by 2029, with 2.4 billion users worldwide[258] - Core Gaming's AI tools streamline mobile game production, reducing production time by over 40% and enhancing content quality, including AI Comic Video Generator, Portrait & Avatar Creator, and Automated Scene Design[264][270] Overview This section provides a general overview of Core Gaming, Inc.'s business and operations Industry and Market Opportunity This section describes the mobile gaming industry landscape and market opportunities for Core Gaming, Inc Competition This section outlines the competitive landscape within the mobile gaming industry for Core Gaming, Inc Competitive Advantages This section highlights Core Gaming, Inc.'s key competitive advantages in the mobile gaming market Business Model This section details Core Gaming, Inc.'s approach to generating revenue and operating its business Employees This section provides information regarding Core Gaming, Inc.'s employee structure and workforce Research and Development This section describes Core Gaming, Inc.'s research and development activities and strategies C. Organizational Structure The company's organizational structure includes active subsidiaries for R&D and distribution, alongside several inactive entities Subsidiaries as of June 30, 2025 | Name of Subsidiary | Principal Activities | Place of Incorporation | | :----------------- | :------------------- | :--------------------- | | Queensgate Resources Corp | Inactive | British Columbia, Canada | | Queensgate Resources US Corp | Inactive | Nevada, USA | | Siyata Mobile (Canada) Inc. | Inactive | British Columbia, Canada | | Siyata Mobile Israel Ltd. | R&D and wholesale distribution | Israel | | Signifi Mobile Inc. | Wholesale distribution | Quebec, Canada | | ClearRf Nevada Ltd. | Inactive | Nevada, USA | | ClearRF LLC | Inactive | Washington, USA | | Siyata PTT | Inactive | Calyman Islands | D. Property, Plant and Equipment The company leases Canadian sales headquarters and warehouse facilities in Quebec, totaling 8,453 square feet, with leases expiring May 31, 2024 - Canadian sales headquarters and warehouse in Montreal, Quebec: 5,616 sq ft, leased until May 31, 2024, at $2.00/sq ft/annum[286] - Additional warehouse space in Chateauguay, Quebec: 2,837 sq ft, leased until May 31, 2024, at $11.50/sq ft/annum[286] - Existing facilities are deemed adequate, with suitable additional space expected to be available for future expansion[287] Item 4A. Unresolved Staff Comments This section addresses any unresolved comments from the staff regarding the report None There are no unresolved staff comments to report Item 5. Operating and Financial Review and Prospects This section provides a detailed review of the company's operating results, financial condition, and future prospects A. Operating Results This section reviews operating results for Q2 and H1 2025, noting revenue growth, improved gross margin for Q2, reduced net loss, and negative Adjusted EBITDA - The company develops, markets, and sells rugged handheld Push-to-Talk over Cellular (PoC) smartphone devices for B2B environments, including first responders and various industries[290] - Significant highlights include Core Gaming's launch of the AI COMIC app and Nowifi, a strategic partnership with Guangzhou WeiXuan, and Siyata's SD7 handset earning "Verizon Frontline Verified" designation[295][296][297][298][299] - A definitive merger agreement was signed with Core Gaming, Inc., involving a share exchange based on a calculated exchange ratio[294][302] Overview This section provides a general overview of the company's operating performance and key financial highlights Significant Highlights This section outlines the most important achievements and developments during the reporting period Merger This section details the recent merger activity and its implications for the company Summary Of Quarterly Results This section presents a summary of the company's financial performance on a quarterly basis Quarterly Financial Performance This section provides detailed financial performance data for recent quarters | Quarter Ended | June 30, 2025 ($) | March 31, 2025 ($) | Dec 31, 2024 ($) | Sep 30, 2024 ($) | June 30, 2024 ($) | March 31, 2024 ($) | Dec 31, 2023 ($) | Sep 30, 2023 ($) | | :-------------- | :---------------- | :----------------- | :--------------- | :--------------- | :---------------- | :----------------- | :--------------- | :--------------- | | Income (loss) and Comprehensive loss for the period | $(3,808,196) | $(3,789,068) | $(8,923,245) | $(626,329) | $(12,924,120) | $(2,797,020) | $(3,865,005) | $(1,855,173) | | Loss per share | $(0.62) | $(2.35) | $(18.55) | $(3.96) | $(1,161.93) | $(882.62) | $(1,501.56) | $(1,303.71) | Results of Operations for the Three Month Period Ended June 30, 2025 Q2 2025 revenues grew 7.6% to $2,034,779, with gross margin improving to 14.6%, and net loss significantly reduced by $9,115,924 YoY, despite negative Adjusted EBITDA Key Financials (Three Months Ended June 30) | Metric | 2025 ($) | 2024 ($) | Change ($) | Change (%) | | :---------------------------------- | :----------- | :----------- | :----------- | :--------- | | Revenues | $2,034,779 | $1,890,968 | $143,811 | 7.6% | | Cost of sales | $1,737,451 | $1,694,154 | $43,297 | 2.6% | | Gross margin dollars | $297,328 | $196,814 | $100,514 | 51.1% | | Gross margin percentage | 14.6% | 10.4% | 4.2% pts | - | | Amortization and depreciation costs | $416,822 | $433,129 | $(16,307) | -3.8% | | Development expenses | $165,000 | $NIL | $165,000 | - | | Selling and marketing costs | $1,099,592 | $954,388 | $145,204 | 15.2% | | Equity promotion and marketing costs | $455,500 | $2,000,000 | $(1,544,500) | -77.2% | | General and administrative costs | $1,369,049 | $1,033,301 | $335,748 | 32.5% | | Bad debts | $59,308 | $NIL | $59,308 | - | | Share-based compensation costs | $NIL | $83,762 | $(83,762) | -100% | | Finance expenses | $646,242 | $942,283 | $(296,041) | -31.4% | | Foreign exchange loss (gain) | $148,011 | $(1,706) | $149,717 | - | | Change in reserve for claims | $254,000 | $NIL | $254,000 | - | | Loss on issuance | $NIL | $6,129,282 | $(6,129,282) | -100% | | Loss on extinguishment of financial liability | $NIL | $601,163 | $(601,163) | -100% | | Change in fair value of warrant/preferred share liability | $NIL | $31,986 | $(31,986) | -100% | | Transaction costs | $NIL | $977,318 | $(977,318) | -100% | | Net loss and comprehensive loss | $(3,808,196) | $(12,924,120) | $9,115,924 | -70.5% | | Adjusted EBITDA | $(2,851,121) | $(3,790,875) | $(939,756) | -24.8% | Results of Operations for the Six Month Period Ended June 30, 2025 H1 2025 revenues increased 6.0% to $4,503,110, gross margin declined to 18.4%, and net loss significantly decreased by $8,123,876 YoY, with negative Adjusted EBITDA Key Financials (Six Months Ended June 30) | Metric | 2025 ($) | 2024 ($) | Change ($) | Change (%) | | :---------------------------------- | :----------- | :----------- | :----------- | :--------- | | Revenues | $4,503,110 | $4,248,847 | $254,263 | 6.0% | | Cost of sales | $3,675,546 | $3,188,616 | $486,930 | 15.3% | | Gross margin dollars | $827,564 | $1,060,231 | $(232,667) | -21.9% | | Gross margin percentage | 18.4% | 25.0% | -6.6% pts | - | | Amortization and depreciation costs | $831,802 | $837,787 | $(5,985) | -0.7% | | Development expenses | $331,600 | $35,000 | $296,600 | 847.4% | | Selling and marketing costs | $2,238,228 | $2,102,406 | $135,822 | 6.5% | | Equity promotion and marketing costs | $938,750 | $2,150,000 | $(1,211,250) | -56.3% | | General and administrative costs | $2,640,496 | $2,071,853 | $568,643 | 27.4% | | Bad debts | $68,499 | $18,858 | $49,641 | 263.2% | | Share-based compensation costs | $NIL | $200,886 | $(200,886) | -100% | | Finance expenses | $1,763,864 | $1,722,039 | $41,825 | 2.4% | | Foreign exchange loss (gain) | $95,880 | $(10,651) | $106,531 | - | | Change in reserve for claims | $484,609 | $NIL | $484,609 | - | | Loss on issuance | $NIL | $6,129,282 | $(6,129,282) | -100% | | Loss on extinguishment of financial liability | $NIL | $601,163 | $(601,163) | -100% | | Change in fair value of warrant/preferred share liability | $NIL | $54,570 | $(54,570) | -100% | | Transaction costs | $NIL | $977,318 | $(977,318) | -100% | | Net loss and comprehensive loss | $(7,597,264) | $(15,723,140) | $8,123,876 | -51.7% | | Adjusted EBITDA | $(5,427,209) | $(5,317,886) | $(109,323) | 2.1% | B. Liquidity and Capital Resources The company's liquidity improved significantly by June 30, 2025, with increased cash and positive working capital, driven by financing activities, despite ongoing going concern doubts - As of June 30, 2025, the company had a cash balance of $6,483,881 (vs. $181,730 at Dec 31, 2024) and positive working capital of $7,212,633 (vs. negative $4,947,281 at Dec 31, 2024)[345] - Net cash used in operating activities for the six months ended June 30, 2025, decreased to negative $7,930,660 (vs. negative $8,452,619 in 2024)[346] - Net cash from financing activities for the six months ended June 30, 2025, was $15,651,032 (vs. $10,806,179 in 2024), primarily due to $19,301,987 from shares issued under an equity line of credit[349] - The company's financial statements are prepared under the going concern assumption, despite the auditor's expression of substantial doubt about its ability to continue in existence[351] Share Capital The company's share capital increased significantly by June 30, 2025, due to equity line issuances and preferred share conversions, following multiple reverse stock splits Common Share Activity (January 1, 2025 - June 30, 2025) | | of shares | $ ($) | | :--------------------------------------- | :---------- | :---------- | | Opening Balance January 1, 2025 | 787,733 | 104,916,073 | | Shares issued under the Equity Line of credit | 10,467,140 | 22,998,716 | | Conversion of Class C preferred shares into common shares | 811,743 | 1,206,355 | | Closing Balance June 30, 2025 | 12,066,616 | 129,121,144 | Common Share Activity (After June 30, 2025) | | of shares | $ ($) | | :--------------------------------------- | :---------- | :---------- | | Opening Balance July 1, 2025 | 12,066,616 | 129,121,144 | | Shares issued under the Equity Line of credit | 12,364 | 34,245 | | Conversion of Class C preferred shares into common shares | 308,243 | 252,941 | | Closing Balance at the date of the MD&A | 12,387,223 | 129,408,330 | - The company has undergone several reverse stock splits: 10-for-1 on Dec 27, 2024; 18-for-1 on Aug 2, 2024; 7-for-1 on Dec 4, 2023; 100-for-1 on Aug 3, 2023; and 145-for-1 on Sep 24, 2020[357][358][359][360] Class C Preferred Share Activity (January 1, 2025 - June 30, 2025) | | of Units | $ Pref Share Liability ($) | | :-------------------------- | :--------- | :------------------------- | | Opening Balance January 1, 2025 | 909 | $1,069,413 | | Issuance | 540 | 635,294 | | Redemptions-conversions | (1,234) | (1,452,571) | | Closing Balance-June 30, 2025 | 215 | $252,136 | - As of the MD&A date, all 215 outstanding Class "C" preferred shares were converted into 308,243 common shares, resulting in NIL Class "C" preferred shares outstanding[363][364] Stock Options The company's stock option plan reserves up to 15% of fully diluted common shares, with 11 options outstanding as of June 30, 2025, at a weighted average exercise price of $250,854.55 - The stock option plan reserves up to 15% of total issued and outstanding Common Shares (fully diluted) for issuance, with exercise prices not less than market price less a discount of up to 25%[365] Stock Option Activity (December 31, 2023 - June 30, 2025) | | Number of Stock Options | Weighted Average Exercise Price ($) | | :-------------------------- | :---------------------- | :-------------------------------- | | Outstanding options, December 31, 2023 | 12 | $38,903.00 | | Expired/Cancelled | (1) | $2,268.44 | | Outstanding options, December 31, 2024 | 11 | $250,854.55 | | Granted | - | - | | Expired/Cancelled | - | - | | Outstanding options, June 30, 2025 | 11 | $250,854.55 | Stock Options Outstanding as at June 30, 2025 | Grant Date | Number of options outstanding | Number of options exercisable | Weighted Average Exercise Price ($) | Expiry date | Remaining contractual life (years) | | :--------- | :---------------------------- | :---------------------------- | :-------------------------------- | :---------- | :------------------------------- | | 15-Nov-20 | 1 | 1 | 756,000.00 | 15-Nov-30 | 5.38 | | 15-Nov-20 | 1 | 1 | 756,000.00 | 15-Nov-25 | 0.38 | | 13-Apr-22 | 6 | 6 | 138,600.00 | 13-Apr-27 | 1.79 | | 12-Jul-22 | 3 | 3 | 138,600.00 | 12-Jul-25 | 0.03 | | Total | 11 | 11 | $250,854.55 | | 1.51 | Restricted Share Units ("RSUs") The company's equity incentive plan includes RSUs, with 24 outstanding as of June 30, 2025, at a weighted average issue price of $132,352.50 - The company's equity incentive plan, amended on February 14, 2022, permits the issuance of restricted share units (RSUs)[368] Restricted Share Unit Activity (December 31, 2023 - June 30, 2025) | | Number of RSU's | Weighted Average Issue Price ($) | | :-------------------------- | :-------------- | :--------------------------- | | Outstanding RSU, December 31, 2023 | 24 | $132,063.75 | | Granted | - | - | | Exercised/cancelled | - | - | | Outstanding RSU, December 31, 2024 | 24 | $132,352.50 | | Granted | - | - | | Exercised/cancelled | - | - | | Outstanding RSU, June 30, 2025 | 24 | $132,352.50 | Restricted Share Units Outstanding as at June 30, 2025 | Grant Date | Number of RSU's outstanding | Number of RSU's exercisable | Weighted Average Issue Price ($) | | :--------- | :-------------------------- | :-------------------------- | :--------------------------- | | 9-Mar-22 | 17 | 17 | $129,780.00 | | 13-Apr-22 | 7 | 7 | $138,600.00 | | Outstanding RSU, June 30, 2025 | 24 | 24 | $132,352.50 | Agent's options As of June 30, 2025, 101 agent's options were outstanding and exercisable, with a weighted average exercise price of $35,640.85 Agent's Options Activity (December 31, 2023 - June 30, 2025) | | Number of options | Weighted average exercise price ($) | | :------------------------------ | :---------------- | :-------------------------------- | | Outstanding agent options, December 31, 2023 | 103 | $4,986.08 | | Expired | (2) | $144,900.00 | | Outstanding agent options, December 31, 2024 | 101 | $35,640.85 | | Expired | - | - | | Outstanding agent options, June 30, 2025 | 101 | $35,640.85 | Agent's Options Outstanding and Exercisable as at June 30, 2025 | Grant Date | Number of options outstanding | Number of options exercisable | Weighted Average Exercise Price ($) | Expiry date | Remaining contractual life (years) | | :--------- | :---------------------------- | :---------------------------- | :-------------------------------- | :---------- | :------------------------------- | | 29-Sep-20 | 1 | 1 | $831,600.00 | 28-Sep-25 | 0.25 | | 29-Sep-20 | 2 | 2 | $863,100.00 | 28-Sep-25 | 0.25 | | 11-Jan-22 | 3 | 3 | $318,780.00 | 11-Jan-27 | 1.53 | | 31-Oct-23 | 95 | 95 | $900.90 | 31-Oct-28 | 3.34 | | Total Agent options at June 30, 2025 | 101 | 101 | $35,640.85 | | 3.19 | Share Purchase Warrants As of June 30, 2025, 150 share purchase warrants were outstanding and exercisable, with a weighted average exercise price of $235,120.70 Share Purchase Warrant Activity (January 1, 2025 - June 30, 2025) | | Number of Warrants | Weighted average exercise price ($) | | :-------------------------- | :----------------- | :-------------------------------- | | Outstanding, December 31, 2023 | 310 | $162,219.95 | | Granted | 300,681 | $1,231.33 | | Expired | (10) | $(1,449,000.00) | | Exercised/Exchanged | (300,831) | $(640.06) | | Outstanding, Dec 31, 2024 | 150 | $235,120.70 | | Granted | - | - | | Expired | - | - | | Outstanding, June 30, 2025 and date of MD&A | 150 | $235,120.70 | Share Purchase Warrants Outstanding and Exercisable as of June 30, 2025 | Grant Date | Number of Warrants outstanding and exercisable | Exercise Price ($) | Expiry date | | :--------- | :--------------------------------------------- | :----------------- | :---------- | | 29-Sep-20 | 14 | $863,100.00 | 28-Sep-25 | | 11-Jan-22 | 80 | $289,800.00 | 10-Jan-27 | | 31-Oct-23 | 56 | $12.60 | none | | Total | 150 | $235,120.70 | | Financial Instruments The company manages financial instrument fair values, monitors credit risk from customer concentration, maintains liquidity for 90 days, and actively monitors currency and equity price risks - Fair values of cash, trade and other receivables, accounts payable, accrued liabilities, and long-term debt approximate their carrying values[373] - Credit risk on cash balances is low. However, 38% of Q2 2025 revenue (vs. 19% in Q2 2024) was from a single customer, indicating concentration risk[375] - Liquidity risk is managed by ensuring sufficient cash and unused credit facilities to meet operational expenses for 90 days, excluding extreme circumstances[379][381] - The company is exposed to currency risk from foreign exchange rate fluctuations and equity price risk from stock market movements, which are actively monitored[383][384] C. Research and Development, Patents and Licenses, etc. The company conducts R&D, holds two M2M cellular amplifier patents, and maintains licensing agreements for Android/LTE/4G and cellphone booster technologies - The company conducts R&D internally with Israeli engineering teams and uses subcontractors for hardware and software development, focusing on market trends and emerging wireless technologies[385] - The company owns two patents acquired from ClearRF, related to M2M cellular amplifiers, specifically RF Passive Bypass technology and Auto Gain & Oscillation Control[386][387] - Licensing agreements include Via Licensing Corporation for Android software and LTE/4G network patents (percentage-based royalty on sales) and Wilson Electronics, LLC for cellphone booster patents (4.5% royalty on booster sales)[388][390] Research and development This section describes the company's research and development activities and strategic focus Patents This section details the patents held by the company and their significance Licensing Agreements This section outlines the company's various licensing agreements and their terms D. Trend Information Trend information is referenced to Subsection A. "Outlook" within Item 5 of the report - Trend information is referenced to Item 5.A. "Outlook" within the report[391] E. Critical Accounting Estimates Financial statement preparation involves critical accounting estimates and judgments regarding income taxes, fair values, development costs, inventory, and the going concern assumption - Critical accounting estimates include income taxes, fair value of stock options and warrants, capitalization and amortization of development costs, inventory valuation, estimated product returns, and impairment of non-financial assets[392] - Critical accounting judgments involve the useful life of intangible assets, future purchase consideration, deferred income taxes, functional currency determination, and the going concern assumption[394] - Changes in estimates or underlying assumptions can significantly affect reported financial performance[392] Critical accounting estimates This section details the key accounting estimates that require significant management judgment Critical accounting judgments This section outlines the critical accounting judgments made in preparing the financial statements Recent Accounting Pronouncements This section discusses recent accounting pronouncements and their potential impact on the company Related Party Transactions Key management personnel received $572,215 in salaries and fees for Q2 2025, an increase from the prior year, with no share-based payments Key Personnel Compensation (Three Months Ended June 30) | Payments to key management personnel: | 2025 ($) | 2024 ($) | | :------------------------------------ | :------- | :------- | | Salaries, consulting and directors' fees | $572,215 | $401,653 | | Share-based payments | - | $63,680 | | Total | $572,215 | $465,333 | Key Personnel Compensation by Type of Service (Three Months Ended June 30) | Type of Service | Nature of Relationship | 2025 ($) | 2024 ($) | | :-------------------------- | :--------------------- | :------- | :------- | | Selling and marketing expenses | VP Technology/VP Sales International | $109 | $148 | | General and administrative expense | Companies controlled by the CEO, CFO and Directors | $463 | $254 | C. Off-Balance Sheet Arrangements The company currently has no off-balance sheet arrangements - The company currently has no off-balance sheet arrangements[396] Additional Information Additional company information is available on SEDAR at www.sedar.com - Additional information about the company is available on SEDAR at www.sedar.com[397](index=397&type=chunk)