Siyata Mobile (SYTA) 424B4Prospectus supplement with pricing info

Filed Pursuant to Rule 424(b)(4)
Registration No. 333-261644

PROSPECTUS

Siyata Mobile Inc.

7,215,652 Units

Each Unit Consisting of

One Common Share and

One Warrant to Purchase One Common Share

and

1,480,000 Pre-Funded Units

Each Pre-Funded Unit Consisting of

One Pre-Funded Warrant and

One Warrant to Purchase One Common Share

 Common Shares Underlying the Pre-funded Warrants and

Common Shares Underlying the Warrants

This prospectus relates to the offering of 7,215,652 units (the “Units”) of Siyata Mobile Inc., a British Columbia, Canada corporation, at an offering price of $2.30 per Unit. Each Unit consists of one common share, no par value, which we refer to as the “Common Shares” and one warrant (the “Warrant”) to purchase one Common Share at an exercise price of $2.30 per share (with an exercise price of 100% of the price of each Unit sold in this offering). The Units have no stand-alone rights and will not be certified or issued as stand-alone securities. The Common Shares and Warrants are immediately separable and will be issued separately in this offering. Each Warrant offered hereby is immediately exercisable on the date of issuance and will expire five years from the date of issuance.

We are also offering to those purchasers, if any, whose purchase of our Units in this offering would otherwise result in such purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% of our outstanding Common Shares immediately following the consummation of this offering, the opportunity, in lieu of purchasing Units, to purchase 1,480,000 Pre-Funded Units (each Pre-Funded Unit consisting of one pre-funded warrant to purchase one Common Share and one Warrant to purchase one Common Share) in lieu of Units that would otherwise result in the purchaser’s beneficial ownership exceeding 4.99% of our outstanding ordinary shares (or at the election of the purchaser, 9.99%). The purchase price of each Pre-Funded Unit will equal the price per Unit of $2.30 being sold to the public in this offering, minus $0.01, and the exercise price of each Pre-Funded Warrant will equal $0.01 per Common Share. For each Pre-Funded Unit purchased in this offering in lieu of Units, we will reduce the number of Units being sold in the offering by one. Pursuant to this prospectus, we are also offering the Common Shares issuable upon the exercise of the Warrants and Pre-Funded Warrants offered hereby.

Each Pre-Funded Warrant is exercisable for one Common Share (subject to adjustment as provided for therein) at an exercise price of $0.01 per Common Share at any time at the option of the holder until such Pre-Funded Warrant is exercised in full, provided that the holder will be prohibited from exercising Pre-Funded Warrants for our Common Shares if, as a result of such exercise, the holder, together with its affiliates, would own more than 4.99% of the total number of our Common Shares then issued and outstanding. However, any holder may increase such percentage to any other percentage not in excess of 9.99%, provided that any increase in such percentage shall not be effective until 61 days after such notice to us.

Our Common Shares and our warrants that were issued in connection with our initial public offering (“Prior Warrants”) were listed on the Nasdaq Capital Market under the symbols “SYTA” and “SYTAW,” respectively. The Common Shares offered hereby will trade on the Nasdaq Capital Market under the current symbol “SYTA.” On January 5, 2022, the last reported sales price of the Common Shares on Nasdaq was $3.21 and the last reported sales price of the Prior Warrants was $0.69. There is no established trading market for the Warrants or Pre-Funded Warrants and we do not expect a market to develop. In addition, we do not intend to apply for the listing of the Warrants or Pre-Funded Warrants on any national securities exchange or other trading market. Without an active trading market, the liquidity of the Warrants and the Pre-Funded Warrants will be limited.

You should read this prospectus, together with additional information described under the headings “Risk Factors” and “Where You Can Find More Information” carefully before you invest in any of our securities.

Investing in our securities involves a high degree of risk, including the risk of losing your entire investment. See “Risk Factors” beginning on page 13 to read about factors you should consider before buying our securities.

We are an “emerging growth company” as defined under the federal securities laws and may elect to comply with reduced public company reporting requirements. Please read “Implications of Our Being an Emerging Growth Company” beginning on page 6 of this prospectus for more information.

(1) The public offering price and underwriting discount in respect of the Units and the Pre-Funded Units corresponds to (i) a public offering price per Unit of $2.30, and (ii) a public offering price of $2.29 per Pre-Funded Unit. Each Unit consists of one Common Share and one Warrant and each Pre-Funded Unit consists of one Pre-Funded Warrant and one Warrant.

(2) We have also agreed to issue warrants to purchase Common Shares to the representative of the underwriters and to reimburse the representative of the underwriters for certain expenses. See “Underwriting” for additional information regarding total underwriter compensation.

(3) The amount of offering proceeds to us presented in this table does not give effect to any exercise of the warrants being issued to the representative of the underwriters in this offering.

Neither the Securities and Exchange Commission nor any state securities commission nor any other regulatory body has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

We have granted a 45-day option to the representative of the underwriters, exercisable one or more times in whole or in part, to purchase up to an additional 1,304,347 Common Shares and/or up to an additional 1,304,347 Warrants at an offering price of $2.29 per Common Share and $0.01 per Warrant, less, in each case, the underwriting discounts payable by us, solely to cover over-allotments, if any.

The underwriters expect to deliver the securities offered hereby against payment in New York, New York on or about January 11, 2022.

Sole Book-Running Manager

Maxim Group LLC

The date of this prospectus is January 6, 2022

TABLE OF CONTENTS

We have not authorized anyone to provide you with any information or to make any representations other than as contained in this prospectus or in any free writing prospectuses we have prepared. We take no responsibility for, and provide no assurance about the reliability of, any information that others may give you. This prospectus is an offer to sell only the securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so.

The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of the securities. Our business, financial condition, results of operations and prospects may have changed since that date.

Unless otherwise indicated, all references in this prospectus to “Siyata,” the “Company,” “we,” “our,” “us” or similar terms refer to Siyata Mobile Inc. and its subsidiaries.

No action is being taken in any jurisdiction outside the U.S. to permit an offering of our securities or possession or distribution of this prospectus in any such jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the U.S. are required to inform themselves about and to observe any restrictions about this offering and the distribution of this prospectus applicable to those jurisdictions.

We obtained statistical data, market data and other industry data and forecasts used in this prospectus from market research, publicly available information and industry publications. While we believe that the statistical data, industry data and forecasts and market research are reliable, we have not independently verified the data.

PRESENTATION OF FINANCIAL INFORMATION

The financial information contained in this prospectus derives from our audited consolidated financial statements as of December 31, 2019 and 2020 and our unaudited consolidated financial statements as of September 30, 2020 and 2021 and June 30, 2020 and 2021. These financial statements and related notes included elsewhere in this prospectus are collectively referred to as our audited consolidated financial statements herein or our unaudited consolidated financial statements herein and throughout this prospectus. Our audited consolidated financial statements are prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB. Our fiscal year ends on December 31 of each year, so all references to a particular fiscal year are to the applicable year ended December 31. We are required to file annual reports on Form 20-F with the Securities and Exchange Commission, or the SEC, under United States Securities Exchange Act of 1934, as amended, or the Exchange Act, and although not required under the Exchange Act, we expect to publish unaudited condensed consolidated interim financial statements on a quarterly basis.

RISK FACTORS

An investment in our securities involves a high degree of risk. Before deciding whether to invest in our securities, you should consider carefully the risks described below, together with all of the other information set forth in this prospectus, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operation” and our consolidated financial statements and related notes. If any of these risks actually occurs, our business, financial condition, results of operations or cash flow could be materially and adversely affected, which could cause the trading price of our securities to decline, resulting in a loss of all or part of your investment.

Risks Related to Our Business and Industry

We rely on our channel partners to generate a substantial majority of our revenues. If these channel partners fail to perform or if we cannot enter into agreements with channel partners on favorable terms, our operating results could be significantly harmed.

More than 60% of our revenues for the year ended December 31, 2020, were generated through sales by our channel partners, which are primarily wireless carriers who sell our devices through their sales channels. To the extent our channel partners are unsuccessful in selling or do not promote our products, or we are unable to obtain and retain a sufficient number of high-quality channel partners, our business and operating results could be significantly harmed. Our channel partners are wireless carriers who have direct and indirect sales channels which we are leveraging to get to their customers. Our wireless carrier channel partners currently include:

While these arrangements are typically long term, they generally do not contain any firm purchase volume commitments. As a result, our channel partners are not contractually obligated to purchase from us any minimum number of products. We are generally required to satisfy any and all purchase orders delivered to us within specified delivery windows, with limited exceptions (such as orders significantly in excess of forecasts). If we are unable to efficiently manage our supply and satisfy purchase orders on a timely basis to our channel partners, we may be in breach of our sales arrangements and lose potential sales. If a technical issue with any of our covered products exceeds certain present failure thresholds for the relevant performance standard or standards, the channel partner typically has the right to cease selling the product, cancel open purchase orders and levy certain monetary penalties. If our products suffer technical issues or failures following sales to our channel partners, we may be subject to significant monetary penalties and our channel partners may cease making purchase orders, which would significantly harm our business and results of operations. In addition, our channel partners retain sole discretion in which of their stocked products to offer their customers. While we may offer limited customer incentives, we generally have limited to no control over which products our channel partners decide to offer or promote, which directly impacts the number of products that our partners will purchase from us.

In addition, our channel partners may be unsuccessful in marketing, selling and supporting our solutions. They may also market, sell and support solutions that are somewhat competitive with ours, and may devote more resources to the marketing, sales and support of such products. They may have incentives to promote our competitors’ products in lieu of our products, particularly for our bigger competitors with larger volumes of orders, more diverse product offerings and a longer relationship with our generally large-scale channel partners. As a result, our channel partners may stop selling our products completely. While we employ a small direct sales force, our channel partners have significantly larger sales teams who are not contractually obligated to promote any of our devices and often have multiple competing devices in stock to offer their customers. In addition, downstream sales by our channel partners often succeed due to attractive device prices and monthly rate plans, which we do not control. In certain cases, we may promote our own devices through customer incentives, however, there can be no assurance that any such incentives would contribute to increased purchases of our products. Further, given the impact of attractive pricing on ultimate sales, we generally must offer increased promotional funding or price reductions for our more expensive products. This promotional funding or price reductions operate to reduce our margins and significantly impact our profitability.

New sales channel partners may take several months or more to achieve significant sales. Our channel partner sales structure could subject us to lawsuits, potential liability and reputational harm if, for example, any of our channel partners misrepresents the functionality of our products or services to their customers, or violate laws or our corporate policies.

If we fail to effectively manage our existing or future sales channel partners, our channel partners fail to promote our products effectively, we are unable to meet our obligations under our sales arrangements or future agreements that we may enter into with wireless carrier customers have terms that are more favorable to the customer, our business and results of operations would be harmed.

We are materially dependent on the adoption of our solutions by both the industrial enterprise and public sector markets, and if end customers in those markets do not purchase our solutions, our revenues will be adversely impacted, and we may not be able to expand into other markets.

Our revenues have been primarily in the industrial enterprise market, and we are materially dependent on the adoption of our solutions by both the industrial enterprise and public sector markets. End customers in the public sector market may remain, for reasons outside our control, tied to Land Mobile Radio, or LMR, solutions or other competitive alternatives to our devices. Sales of our products to these buyers may also be delayed or limited by these competitive conditions. If our products are not widely accepted by buyers in those markets, we may not be able to expand sales of our products into new markets, and our business, results of operations and financial condition may be adversely impacted.

We participate in a competitive industry, which may become more competitive. Competitors with greater resources and significant experience in high-volume product manufacturing may be able to respond more quickly and cost-effectively than we can to new or emerging technologies and changes in customer requirements.

We face significant competition in developing and selling our solutions. Our primary competitors in the non-rugged mobile device market include Apple Inc. and Samsung Electronics Co. Ltd. Our primary competitors in the rugged mobile device market include Sonim Technologies Inc., Bullitt Mobile Ltd., and Kyocera Corporation. We also face competition from large system integrators and manufacturers of private and public wireless network equipment and devices. Competitors in this space include Harris Corporation, JVC KENWOOD Corporation, a leading LMR vendor, or MSI, and Tait International Limited. Within the Cellular Booster category, we have several direct competitors, including Wilson Electronics, LLC, or Wilson Electronics, Nextivity, Inc. and SureCall Company.

We cannot assure you that we will be able to compete successfully against current or future competitors. Increased competition in mobile computing platforms, data capture products, or related accessories and software developments may result in price reductions, lower gross profit margins, and loss of market share, and could require increased spending on research and development, sales and marketing, and customer support. Some competitors may make strategic acquisitions or establish cooperative relationships with suppliers or companies that produce complementary products, which may create additional pressures on our competitive position in the marketplace.

Most of our competitors have longer operating histories, greater name recognition, larger customer bases and significantly greater financial, technical, sales, marketing and other resources and experience than we do. In addition, because of the higher volume of components that many of our competitors purchase from their suppliers, they are able to keep their supply costs relatively low and, as a result, may be able to recognize higher margins on their product sales than we do. Many of our competitors may also have existing relationships with the channel partners who we use to sell our products, or with our potential customers. This competition may result in reduced prices, reduced margins and longer sales cycles for our products. Our competitors may also be able to respond to new or emerging technologies and changes more quickly and cost-effectively in customer requirements. The combination of brand strength, extensive distribution channels and financial resources of the larger vendors could cause us to lose market share and could reduce our margins on our products. If any of our larger competitors were to commit greater technical, sales, marketing and other resources to our markets, our ability to compete would be adversely impacted. If we are unable to successfully compete with our competitors, our sales would suffer and as a result our financial condition will be adversely impacted.

Defects in our products could reduce demand for our products and result in a loss of sales, delay in market acceptance and injury to our reputation, which would adversely impact our business.

Complex software, as well as multiple components, displays, plastics and assemblies used in our products may contain undetected defects that are subsequently discovered at any point in the life of the product. Defects in our products may result in a loss of sales, product malfunction, delay in market acceptance and potential injuries to our customers which can bring to injury in our reputation and increased warranty costs.

Additionally, our software may contain undetected errors, defects or bugs. Although we have not suffered significant harm from any errors, defects or bugs to date, we may discover significant errors, defects, or bugs in the future that we may not be able to correct or correct in a timely manner. It is possible that errors, defects or bugs will be found in our existing or future software and/or hardware products and related services with the potential for delays in, or loss of market acceptance of, our products and services, diversion of our resources, injury to our reputation, increased service and warranty expenses, and payment of damages.

Further, errors, defects or bugs in our solutions could be exploited by hackers or could otherwise result in an actual or perceived breach of our information systems. Alleviating any of these problems could require significant expense and could cause interruptions, delays or cessation of our product licensing, which would reduce demand for our products and result in a loss of sales, delay in market acceptance and injure our reputation and could adversely impact our business, results of operations and financial condition.

If our business does not grow as we expect, or if we fail to manage our growth effectively, our operating results and business would suffer.

Our ability to successfully grow our business depends on a number of factors including our ability to:

As usage of our solutions grows, we will need to continue to make investments to develop and implement new or updated solutions, software, technologies, security features and cloud-based infrastructure operations. In addition, we will need to appropriately scale our internal business systems and our services organization, including the suppliers of our products and customer support services, to serve our growing customer base. Any failure of, or delay in, these efforts could impair the performance of our solutions and reduce customer satisfaction.

Further, our growth could increase quickly and place a strain on our managerial, operational, financial and other resources, and our future operating results depend to a large extent on our ability to successfully manage our anticipated expansion and growth. To manage our growth successfully, we will need to continue to invest in sales and marketing, research and development, and general and administrative functions and other areas. We are likely to recognize the costs associated with these investments earlier than receiving some of the anticipated benefits, and the return on these investments may be lower, or may develop more slowly, than we expect, which could adversely impact our operating results.

If we are unable to manage our growth effectively, we may not be able to take advantage of market opportunities or develop new solutions or upgrades to our existing solutions, satisfy customer requirements, maintain the quality and security of our solutions or execute on our business plan, any of which could harm our business, operating results and financial condition.

We may not be able to continue to develop solutions to address user needs effectively in an industry characterized by ongoing change and rapid technological advances.

To be successful, we must adapt to rapidly changing technological and application needs by continually improving our products, as well as introducing new products and services, to address user demands.

Our industry is characterized by:

Future success will depend on our ability to adapt in this evolving environment effectively and economically. We could incur substantial costs if we must modify our business to adapt to these changes, and may even be unable to adapt to these changes.

The markets for our devices and related accessories may not develop as quickly as we expect, or may not develop at all. Our dependence on our cellular carrier channel partners and their success in promoting Push to Talk over Cellular to their client base is key for the success of the business.

Our future success is substantially dependent upon continued adoption of devices and related accessories in the industrial enterprise and public sector markets, including the transition from LMR to Push to Talk over Cellular networks. These market developments and transitions may take longer than we expect or may not occur at all, and may not be as widespread as we expect. If the market does not develop as we expect, our business, operating results and financial condition would be significantly harmed.

Our future success is dependent on our ability to create independent brand awareness for our company and products with end customers, and our inability to achieve such brand awareness could limit our prospects.

We depend on wireless carriers to promote and distribute our products. While we intend to ramp up direct marketing and end-customer brand awareness initiatives in the future, our sales and marketing efforts have historically been predominantly focused on channel partners. To increase end-customer brand awareness, we intend to develop sales tools for key verticals within our target markets, increase usage of social media and expand product training efforts, among other things. As a result, we expect our sales and marketing expenses to increase in the future, primarily from increased sales personnel expenses, which will require us to cost-efficiently ramp up our sales and marketing capabilities and effectively target end customers. However, there can be no assurance that we will successfully increase our brand awareness or do so in a cost-efficient manner while maintaining market share within our existing sales channels. Our failure to establish stand-alone brand awareness with end customers of our products will leave us vulnerable to the marketing and selling success of others, including our channel partners, and these developments could have an adverse impact on our prospects. If we are unable to significantly increase the awareness of our brand and solutions with end customers in a cost-efficient manner, we will remain significantly dependent on our channel partners for sales of our products, and our business, financial condition and results of operations could be adversely impacted.

We are dependent on the continued services and performance of a concentrated group of senior management and other key personnel, the loss of any of whom could adversely impact our business.

Our future success depends in large part on the continued contributions of a concentrated group of senior management and other key personnel. In particular, the leadership of key management personnel is critical to the successful management of our company, the development of our solutions and our strategic direction. We also depend on the contributions of key technical personnel. Our senior management and key personnel are all employed on an at-will basis, which means that they could terminate their employment with us at any time, for any reason and without notice. The loss of any of our key personnel could significantly delay or prevent the achievement of our development and strategic objectives and harm our business.

We compete in a rapidly evolving market, and the failure to respond quickly and effectively to changing market requirements could cause our business and operating results to decline.

The mobile device market is characterized by rapidly changing technology, changing customer needs, evolving industry standards and frequent introductions of new products and services. In order to deliver a competitive mobile device, our solutions must be capable of operating in an increasingly complex network environment. As new wireless phones are introduced and standards in the mobile device market evolve, we may be required to modify our phones and services to make them compatible with these new products and standards. Likewise, if our competitors introduce new devices and services that compete with ours, we may be required to reposition our solutions or introduce new phones and solutions in response to such competitive pressure. We may not be successful in modifying our current devices or introducing new ones in a timely or appropriately responsive manner, or at all. If we fail to address these changes successfully, our business and operating results could be significantly harmed.

If we are unable to sell our solutions into new markets, our revenues may not grow.

Any new market into which we attempt to sell our solutions may not be receptive. Our ability to penetrate new markets depends on the quality of our solutions, the continued adoption of our public safety solution by first responders, the perceived value of our solutions as a risk management tool and our ability to design our solutions to meet the demands of our customers. If the markets for our solutions do not develop as we expect, our revenues may not grow.

Our ability to successfully face these challenges depends on several factors, including increasing the awareness of our solutions and their benefits, the effectiveness of our marketing programs, the costs of our solutions, our ability to attract, retain and effectively train sales and marketing personnel, and our ability to develop relationships with wireless carriers and other partners. If we are unsuccessful in developing and marketing our solutions into new markets, new markets for our solutions might not develop or might develop more slowly than we expect, either of which would harm our revenues and growth prospects.

If we are unable to attract, integrate and retain additional qualified personnel, including top technical talent, our business could be adversely impacted.

Our future success depends in part on our ability to identify, attract, integrate and retain highly skilled technical, managerial, sales and other personnel. We face intense competition for qualified individuals from numerous other companies, including other software and technology companies, many of whom have greater financial and other resources than we do. Some of these characteristics may be more appealing to high-quality candidates than those we have to offer. In addition, new hires often require significant training and, in many cases, take significant time before they achieve full productivity. We may incur significant costs to attract and retain qualified personnel, including significant expenditures related to salaries and benefits and compensation expenses related to equity awards, and we may lose new employees to our competitors or other companies before we realize the benefit of our investment in recruiting and training them. Moreover, new employees may not be or become as productive as we expect, as we may face challenges in adequately or appropriately integrating them into our workforce and culture. If we are unable to attract, integrate and retain suitably qualified individuals who are capable of meeting our growing technical, operational and managerial requirements on a timely basis or at all, our business will be adversely impacted.

Volatility or lack of positive performance in our stock price may also affect our ability to attract and retain our key employees. Many of our senior management personnel and other key employees have become, or will soon become, vested in a substantial amount of stock or stock options. Employees may be more likely to leave us if the shares they own or the shares underlying their vested options have significantly appreciated in value relative to the original purchase prices of the shares or the exercise prices of the options, or, conversely, if the exercise prices of the options that they hold are significantly above the market price of our Common Shares. If we are unable to appropriately incentivize and retain our employees through equity compensation, or if we need to increase our compensation expenses in order to appropriately incentivize and retain our employees, our business, operating results and financial condition would be adversely impacted.

A security breach or other significant disruption of our information technology (“IT”) systems or those of our partners, suppliers or manufacturers, caused by cyberattacks or other means, could have a negative impact on our operations, sales, and operating results.

All IT systems are potentially vulnerable to damage, unauthorized access or interruption from a variety of sources, including but not limited to, cyberattacks, cyber intrusions, computer viruses, security breaches, energy blackouts, natural disasters, terrorism, sabotage, war, insider trading and telecommunication failures. A cyberattack or other significant disruption involving our IT systems or those of our outsource partners, suppliers or manufacturers could result in the unauthorized release of proprietary, confidential or sensitive information of ours or result in virus and malware installation on our devices. Such unauthorized access to, or release of, this information or other security breaches could: (i) allow others to unfairly compete with us, (ii) compromise safety or security, (iii) subject us to claims for breach of contract, tort, and other civil claims, and (iv) damage our reputation. Any or all of the foregoing could have a negative impact on our business, financial condition and results of operations.

We experience lengthy sales cycles for our products and the delay of an expected large order could result in a significant unexpected revenue shortfall.

The purchase of our products is often an enterprise-wide decision for prospective customers, which requires us to engage in sales efforts over an extended period of time and provide a significant level of education to prospective customers regarding the uses and benefits of such devices. Prospective customers, especially the wireless carriers that sell our products, often undertake a prolonged evaluation process that may take from several months to several years in certain cases. Consequently, if our forecasted sales from a specific customer are not realized, we may not be able to generate revenues from alternative sources in time to compensate for the shortfall. The loss or delay of an expected large order could also result in a significant unexpected revenue shortfall. Moreover, to the extent we enter into and deliver our products pursuant to significant contracts earlier than we expected, our operating results for subsequent periods may fall below expectations. We may spend substantial time, effort and money on our sales and marketing efforts without any assurance that our efforts will produce any sales. If we are unable to succeed in closing sales with new and existing customers, our business, operating results and financial condition will be harmed.

We have a limited history of high-volume commercial production of our devices, and we may face manufacturing capacity constraints.

We have limited history and experience in high-volume commercial production of our devices. Because of this limited production history, we face challenges in predicting our business and evaluating its prospects, which may result in breakdowns of our ability to timely supply our devices to our customers. Moreover, we face manufacturing capacity constraints that present further risks to our business. If overall demand of our devices increases in the future, we will need to expand our manufacturing capacity in a cost-efficient manner. Failing to meet customer demand due to our failure to successfully address these risks and challenges could adversely impact our reputation and future sales, which would significantly harm our business, results of operations and financial condition.

We face risks related to novel Coronavirus (COVID-19) which could significantly disrupt our research and development, operations, sales, supply chain and financial results.

Our business will be adversely impacted by the effects of the Novel Coronavirus (COVID-19). In addition to global macroeconomic effects, the novel Coronavirus (COVID-19) outbreak and any other related adverse public health developments will cause disruption to our operations, research and development, and sales activities. Our third-party manufacturers, third-party distributors, and our customers have been and will be disrupted by worker absenteeism, quarantines and restrictions on employees’ ability to work, office and factory closures, disruptions to ports and other shipping infrastructure, border closures, or other travel or health-related restrictions. Depending on the magnitude of such effects on our activities or the operations of our third-party manufacturers and third-party distributors, the supply of our products will be delayed, which could adversely affect our business, operations and customer relationships. In addition, the Novel Coronavirus (COVID-19) or other disease outbreak will in the short-run and may over the longer term adversely affect the economies and financial markets of many countries, resulting in an economic downturn that will affect demand for our products and impact our operating results. There can be no assurance that any decrease in sales resulting from the Novel Coronavirus (COVID-19) will be offset by increased sales in subsequent periods. Although the magnitude of the impact of the Novel Coronavirus (COVID-19) outbreak on our business and operations remains uncertain, the continued spread of the Novel Coronavirus (COVID-19) or the occurrence of other epidemics and the imposition of related public health measures and travel and business restrictions will adversely impact our business, financial condition, operating results and cash flows. In addition, we have experienced and will experience disruptions to our business operations resulting from quarantines, self-isolations, or other movement and restrictions on the ability of our employees to perform their jobs that may impact our ability to develop and design our products in a timely manner or meet required milestones or customer commitments.

Our business has not been experienced any material impact from supply chain disruptions brought about by the COVID-19 pandemic, however there is no certainty that this will continue into the future. Management is carefully monitoring the situation and is working with its partners, suppliers and manufacturers to ensure minimal impact on its business.

Risks Related to Government Regulation

We are subject to anti-corruption, anti-bribery, anti-money laundering, economic sanctions, export control, and similar laws. Non- compliance with such laws can subject us to criminal or civil liability and harm our business, revenues, financial condition and results of operations.

We are subject to the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, and other anti-bribery and anti-money laundering laws in the countries in which we conduct activities. Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are interpreted broadly to generally prohibit companies and their employees and third-party intermediaries from authorizing, offering, or providing, directly or indirectly, improper payments or benefits to recipients in the public or private sector. As we increase our international presence, we may engage with distributors and third-party intermediaries to market our solutions and to obtain necessary permits, licenses, and other regulatory approvals. In addition, we or our third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities. We can be held liable for the corrupt or other illegal activities of these third- party intermediaries, our employees, representatives, contractors, partners and agents, even if we do not explicitly authorize such activities.

The United States has imposed economic sanctions that affect transactions with designated foreign countries, nationals and others. In particular, the United States prohibits U.S. persons from engaging with individuals and entities identified as “Specially Designated Nationals,” such as terrorists and narcotics traffickers. These prohibitions are administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control, or OFAC. OFAC rules prohibit U.S. persons from engaging in, or facilitating a foreign person’s engagement in, transactions with or relating to the prohibited individual, entity or country, and require the blocking of assets in which the individual, entity or country has an interest. Blocked assets (e.g., property or bank deposits) cannot be paid out, withdrawn, set off or transferred in any manner without a license from OFAC. Other countries in which we operate, including Canada and the United Kingdom, also maintain economic and financial sanctions regimes.

Some of our solutions, including software updates and third-party accessories, may be subject to U.S. export control laws, including the Export Administration Regulations; however, the vast majority of our products are non-U.S.-origin items, developed and manufactured outside of the United States, and therefore not subject to these laws. For third-party accessories, we rely on manufactures to supply the appropriate export control classification numbers that determine our obligations under these laws.

We cannot assure you that our employees and agents will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible. As we increase our international presence, our risks under these laws, rules, and regulations may increase. Further, any change in the applicability or enforcement of these laws, rules, and regulations could adversely impact our business operations and financial results.

Detecting, investigating and resolving actual or alleged violations can require a significant diversion of time, resources, and attention from senior management. In addition, noncompliance with anti-corruption, anti-bribery, anti-money laundering, or economic sanctions laws, rules, and regulations could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, suspension and/or debarment from contracting with certain persons, the loss of export privileges, reputational harm, adverse media coverage, and other collateral consequences. If any subpoenas or investigations are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, revenues, financial condition, and results of operations would be significantly harmed. In addition, responding to any action will likely result in a significant diversion of management’s attention and resources and significant defense costs and other professional fees. Enforcement actions and sanctions could further harm our business, financial condition and results of operations.

We are subject to a wide range of product regulatory and safety, consumer, worker safety and environmental laws and regulations.

Our operations and the products we manufacture and/or sell are subject to a wide range of product regulatory and safety, consumer, worker safety and environmental laws and regulations. Compliance with such existing or future laws and regulations could subject us to future costs or liabilities, impact our production capabilities, constrict our ability to sell, expand or acquire facilities, restrict what solutions we can offer and generally impact our financial performance. Our products are designed for use in potentially explosive or hazardous environments. If our product design fails for any reason in such environments, we may be subject to product liabilities and future costs. In addition, some of these laws are environmental and relate to the use, disposal, remediation, emission and discharge of, and exposure to hazardous substances. These laws often impose liability and can require parties to fund remedial studies or actions regardless of fault. Environmental laws have tended to become more stringent over time and any new obligations under these laws could have a negative impact on our operations or financial performance.

Laws focused on the energy efficiency of electronic products and accessories, recycling of both electronic products and packaging, reducing or eliminating certain hazardous substances in electronic products, and the transportation of batteries continue to expand significantly. Laws pertaining to accessibility features of electronic products, standardization of connectors and power supplies, the transportation of lithium-ion batteries, and other aspects are also proliferating. There are also demanding and rapidly changing laws around the globe related to issues such as product safety, radio interference, radio frequency radiation exposure, medical related functionality, and consumer and social mandates pertaining to use of wireless or electronic equipment. These laws, and changes to these laws, could have a substantial impact on whether we can offer certain products, solutions, and services, and on what capabilities and characteristics our products or services can or must include.

These laws and regulations impact our products and could negatively impact our ability to manufacture and sell products competitively. In addition, we anticipate that we will see increased demand to meet voluntary criteria related to reduction or elimination of certain constituents from products, increasing energy efficiency and providing additional accessibility.

Changes in laws and regulations concerning the use of telecommunication bandwidth could increase our costs and adversely impact our business.

Our business depends on our ability to sell devices that use telecommunication bandwidth allocated to licensed and unlicensed wireless services, and that use of that bandwidth is subject to laws and regulations that are subject to change over time. Changes in the permitted uses of telecommunication bandwidth, reallocation of such bandwidth to different uses, and new or increased regulation of the capabilities, manufacture, importation, and use of devices that depend on such bandwidth could increase our costs, require costly modifications to our products before they are sold, or limit our ability to sell those products in to our target markets. In addition, we are subject to regulatory requirements for certification and testing of our products before they can be marketed or sold. Those requirements may be onerous and expensive. Changes to those requirements could result in significant additional costs and could adversely impact our ability to bring new products to market in a timely fashion.

We are subject to a wide range of privacy and data security laws, regulations and other legal obligations.

Personal privacy and information security are significant issues in the United States and the other jurisdictions in which we operate or make our products and applications available. The legislative and regulatory framework for privacy and security issues worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. Our handling of data is subject to a variety of laws and regulations, including regulation by various government agencies, including the U.S. Federal Trade Commission, or FTC, and various state, local and foreign agencies. We may collect personally identifiable information, or PII, and other data from our customers. We use this information to provide services to our customers and to support, expand and improve our business. We may also share customers’ PII with third parties as allowed by applicable law and agreements and authorized by the customer or as described in our privacy policy.

The U.S. federal and various state and foreign governments have adopted or proposed limitations on the collection, distribution, transfer, use and storage of PII. In the United States, the FTC and many state attorneys general are applying federal and state consumer protection laws as imposing standards for the online collection, use and dissemination of data. Many foreign countries and governmental bodies, including Canada, the European Union and other relevant jurisdictions, have laws and regulations concerning the collection and use of PII obtained from their residents or by businesses operating within their jurisdiction. These laws and regulations often are more restrictive than those in the United States. Laws and regulations in these jurisdictions apply broadly to the collection, use, storage, disclosure and security of data that identifies or may be used to identify or locate an individual, such as names, email addresses and, in some jurisdictions, Internet Protocol, or IP, addresses. Within the European Union, legislators have adopted the General Data Protection Regulation, or GDPR, effective May 2018 which may impose additional obligations and risk upon our business and which may increase substantially the penalties to which we could be subject in the event of any non-compliance. We may incur substantial expense in complying with the obligations imposed by the governments of the foreign jurisdictions in which we do business or seek to do business and we may be required to make significant changes in our business operations, all of which may adversely impact our revenues and our business overall.

Although we are working to comply with those federal, state, and foreign laws and regulations, industry standards, contractual obligations and other legal obligations that apply to us, those laws, regulations, standards and obligations are evolving and may be modified, interpreted and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another, other requirements or legal obligations, our practices or the features of our products or applications. At state level, lawmakers continue to pass new laws concerning privacy and data security. Particularly notable in this regard is the California Consumer Privacy Act, or CCPA, which became effective on January 1, 2020. The CCPA will introduce significant new disclosure obligations and provide California consumers with significant new privacy rights. Any failure or perceived failure by us to comply with federal, state or foreign laws or regulations, industry standards, contractual obligations or other legal obligations, or any actual or suspected security incident, whether or not resulting in unauthorized access to, or acquisition, release or transfer of PII or other data, may result in governmental enforcement actions and prosecutions, private litigation, fines and penalties or adverse publicity and could cause our customers to lose trust in us, which could have an adverse impact on our reputation and business. Any inability to adequately address privacy and security concerns, even if unfounded, or comply with applicable laws, regulations, policies, industry standards, contractual obligations, or other legal obligations could result in additional cost and liability to us, damage our reputation, inhibit sales and adversely impact our business.

We also expect that there will continue to be new proposed laws, regulations and industry standards concerning privacy, data protection and information security in the United States, the European Union and other jurisdictions, and we cannot yet determine the impact such future laws, regulations and standards may have on our business. New laws, amendments to or re-interpretations of existing laws and regulations, industry standards, contractual obligations and other obligations may require us to incur additional costs and restrict our business operations. Such laws and regulations may require companies to implement privacy and security policies, permit users to access, correct and delete personal information stored or maintained by such companies, inform individuals of security breaches that affect their personal information, and, in some cases, obtain individuals’ consent to use PII for certain purposes. In addition, a foreign government could require that any PII collected in a country not be disseminated outside of that country, and we are not currently equipped to comply with such a requirement.

The effects of the Tax Cuts and Jobs Act on our business have not yet been fully analyzed and could harm our results of operations.

On December 22, 2017, U.S. President Donald Trump signed into law the Tax Act that significantly reforms the Code. The Tax Act, among other things, includes changes to U.S. federal corporate income tax rate, imposes significant additional limitations on the deductibility of interest, allows for the accelerated expensing of capital expenditures, and puts into effect the migration from a “worldwide” system of taxation to a territorial system. We continue to analyze the impact that the Tax Act may have on our business. Notwithstanding the reduction in the U.S federal corporate income tax rate, the overall impact of the Tax Act is uncertain, and our business and financial condition could be harmed.

Risks Related to Our Intellectual Property

If we are unable to successfully protect our intellectual property, our competitive position may be harmed.

Our ability to compete is heavily affected by our ability to protect our intellectual property. We rely on a combination of patent licenses, confidentiality procedures and contractual provisions to protect our proprietary rights. We also enter, and plan to continue to enter, into confidentiality, invention assignment or license agreements with our employees, consultants and other parties with whom we contract, and control access to and distribution of our software, documentation and other proprietary information. The steps we take to protect our intellectual property may be inadequate, and it is possible that some or all of our confidentiality agreements will not be honored and certain contractual provisions may not be enforceable. Existing trade secret, trademark and copyright laws offer only limited protection. Unauthorized parties may attempt to copy aspects of our products or obtain and use information which we regard as proprietary. Policing unauthorized use of our products is difficult, time consuming and costly, particularly in foreign countries where the laws may not protect our proprietary rights as fully as in the United States. We cannot assure you that our means of protecting our proprietary rights will be adequate or that our competitors will not independently develop similar technology, the effect of either of which would harm our competitive position in the market. Furthermore, disputes can arise with our strategic partners, customers or others concerning the ownership of intellectual property.

Others may claim that we infringe on their intellectual property rights, which may result in costly and time-consuming litigation and could delay or otherwise impair the development and commercialization of our products.

In recent years, there has been a significant increase in litigation in the United States involving patents and other intellectual property rights, and because our products are comprised of complex technology, we are often involved in or impacted by assertions, including both requests to take licenses and litigation, regarding infringement of patent and other intellectual property rights of third parties. Third parties have asserted, and in the future may assert, intellectual property infringement claims against us and against our channel partners, end customers and suppliers. For example, we have been approached by Wilson Electronics about potential infringement of several of their patents involving cellphone boosters. Many of these assertions are brought by non-practicing entities whose principal business model is to secure patent licensing revenues from product manufacturing companies. Claims for alleged infringement and any resulting lawsuit, if successful, could subject us to significant liability for damages and invalidation of our intellectual property rights. Defending any such claims, with or without merit, including pursuant to indemnity obligations, could be time consuming, expensive, cause product shipment delays or require us to enter into a royalty or licensing agreement, any of which could delay the development and commercialization of our products or reduce our margins. If we are unable to obtain a required license, our ability to sell or use certain products may be impaired. In addition, if we fail to obtain a license, or if the terms of the license are burdensome to us, our operations could be significantly harmed.

Our use of open source software could subject us to possible litigation or otherwise impair the development of our products.

A portion of our technologies incorporates open source software, including open source operating systems such as Android, and we expect to continue to incorporate open source software into our platform in the future. Few of the licenses applicable to open source software have been interpreted by courts, and their application to the open source software integrated into our proprietary technology platform may be uncertain. If we fail to comply with these licenses, then pursuant to the terms of these licenses, we may be subject to certain requirements, including requirements that we make available the source code for our software that incorporates the open source software. We cannot assure you that we have not incorporated open source software in our software in a manner that is inconsistent with the terms of the applicable licenses or our current policies and procedures. If an author or other third party that distributes such open source software were to allege that we had not complied with the conditions of one or more of these licenses, we could incur significant legal expenses defending against such allegations. Litigation could be costly for us to defend, have a negative effect on our operating results and financial condition or require us to devote additional research and development resources to change our technology platform.

With respect to open source operating systems, if third parties cease continued development of such operating systems or restrict our access to such operating system, our business and financial results could be adversely impacted. We are dependent on third parties’ continued development of operating systems, software application ecosystem infrastructures, and such third parties’ approval of our implementations of their operating and system and associated applications. If such parties cease to continue development or support of such operating systems or restrict our access to such operating systems, we would be required to change our strategy for our devices. As a result, our financial results could be negatively impacted because a resulting shift away from the operating systems we currently use and the associated applications ecosystem could be costly and difficult.

Our inability to obtain and maintain any third-party license required to develop new products and product enhancements could seriously harm our business, financial condition and results of operations.

From time to time, we are required to license technology from third parties to develop new products or product enhancements. Third- party licenses may not be available to us on commercially reasonable terms, or at all. If we fail to renew any intellectual property license agreements on commercially reasonable terms, or any such license agreements otherwise expire or terminate, we may not be able to use the patents and technologies of these third parties in our products, which are critical to our success. We cannot assure you that we will be able to effectively control the level of licensing and royalty fees paid to third parties, and significant increase in such fees could have a significant and adverse impact on our future profitability. Seeking alternative patents and technologies may be difficult and time-consuming, and we may not be successful in finding alternative technologies or incorporating them into our products. Our inability to obtain any third-party license necessary to develop new products or product enhancements could require us to obtain substitute technology of lower quality or performance standards, or at greater cost, which could seriously harm our business, financial condition and results of operations.

Risks relating to our locations in Israel and Canada and our international operations

Conditions in Israel could materially and adversely affect our business.

A number of our officers and directors are residents of Israel. Accordingly, political, economic and military conditions in Israel and the surrounding region may directly affect our business and operations. Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and its neighboring countries, as well as terrorist acts committed within Israel by hostile elements. Any hostilities involving Israel or the interruption or curtailment of trade between Israel and its trading partners could adversely affect our operations and results of operations. During the summer of 2006, Israel was engaged in an armed conflict with Hezbollah, a Lebanese Islamist Shiite militia group and political party. In December 2008 and January 2009 there was an escalation in violence among Israel, Hamas, the Palestinian Authority and other groups, as well as extensive hostilities along Israel’s border with the Gaza Strip, which resulted in missiles being fired from the Gaza Strip into Southern Israel. During November 2012 and from July through August 2014, Israel was engaged in an armed conflict with a militia group and political party who controls the Gaza Strip, which resulted in missiles being fired from the Gaza Strip into Southern Israel, as well as at areas more centrally located near Tel Aviv and at areas surrounding Jerusalem. These conflicts involved missile strikes against civilian targets in various parts of Israel, including areas in which our employees and some of our consultants are located, and negatively affected business conditions in Israel. Since February 2011, Egypt has experienced political turbulence and an increase in terrorist activity in the Sinai Peninsula. Such political turbulence and violence may damage peaceful and diplomatic relations between Israel and Egypt, and could affect the region as a whole. Similar civil unrest and political turbulence has occurred in other countries in the region, including Syria, which shares a common border with Israel, and is affecting the political stability of those countries. Since April 2011, internal conflict in Syria has escalated and chemical weapons have been used in the region. Foreign actors have intervened and may continue to intervene in Syria. This instability and any intervention may lead to deterioration of the political and economic relationships that exist between the State of Israel and some of these countries and may lead to additional conflicts in the region. In addition, Iran has threatened to attack Israel and may be developing nuclear weapons. Iran also has a strong influence among extremist groups in the region, including Hamas in Gaza, Hezbollah in Lebanon and various rebel militia groups in Syria. These situations have escalated at various points in recent years and may escalate in the future to more violent events, which may affect Israel and us. Any armed conflicts, terrorist activities or political instability in the region could adversely affect business conditions and could harm our results of operations and could make it more difficult for us to raise capital. Parties with whom we do business have sometimes declined to travel to Israel during periods of heightened unrest or tension, forcing us to make alternative arrangements when necessary in order to meet our business partners face to face. In addition, the political and security situation in Israel may result in parties with whom we have agreements involving performance in Israel claiming that they are not obligated to perform their commitments under those agreements pursuant to force majeure provisions in such agreements.

Further, in the past, the State of Israel and Israeli companies have been subjected to economic boycotts. Several countries still restrict business with the State of Israel and with Israeli companies. These restrictive laws and policies may have an adverse impact on our operating results, financial condition or the expansion of our business. A campaign of boycotts, divestment and sanctions has been undertaken against Israel, which could also adversely impact our business.

In addition, many Israeli citizens are obligated to perform several days, and in some cases more, of annual military reserve duty each year until they reach the age of 40 (or older, for reservists who are military officers or who have certain occupations) and, in the event of a military conflict, may be called to active duty. In response to increases in terrorist activity, there have been periods of significant call-ups of military reservists. It is possible that there will be military reserve duty call-ups in the future. Our operations could be disrupted by such call-ups, which may include the call-up of members of our management. Such disruption could materially adversely affect our business, prospects, financial condition and results of operations.

It may be difficult to enforce a U.S. judgment against us, our officers and directors named in this prospectus in Israel or the United States, or to assert U.S. securities laws claims in Israel or serve process on our officers and directors.

Not all of our directors or officers are residents of the United States and most of their and our assets are located outside the United States. Service of process upon us or our non-U.S. resident directors and officers may be difficult to obtain within the United States. We have been informed by our legal counsel in Israel that it may be difficult to assert claims under U.S. securities laws in original actions instituted in Israel or obtain a judgment based on the civil liability provisions of U.S. federal securities laws. Israeli courts may refuse to hear a claim based on a violation of U.S. securities laws against us or our non-U.S. officers and directors because Israel may not be the most appropriate forum to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There is little binding case law in Israel addressing the matters described above. Additionally, Israeli courts might not enforce judgments obtained in the United States against us or our non-U.S. our directors and executive officers, which may make it difficult to collect on judgments rendered against us or our non-U.S. officers and directors.

Moreover, an Israeli court will not enforce a non-Israeli judgment if it was given in a state whose laws do not provide for the enforcement of judgments of Israeli courts (subject to exceptional cases), if its enforcement is likely to prejudice the sovereignty or security of the State of Israel, if it was obtained by fraud or in the absence of due process, if it is at variance with another valid judgment that was given in the same matter between the same parties, or if a suit in the same matter between the same parties was pending before a court or tribunal in Israel at the time the foreign action was brought. For more information, see “Enforceability of Civil Liabilities.”

Because we are a corporation incorporated in British Columbia and some of our directors and officers are resident in Canada, it may be difficult for investors in the United States to enforce civil liabilities against us based solely upon the federal securities laws of the United States. Similarly, it may be difficult for Canadian investors to enforce civil liabilities against our directors and officers residing outside of Canada.

We are a corporation incorporated under the laws of British Columbia with our principal place of business in Montreal, Canada. Some of our directors and officers and the auditors or other experts named herein are residents of Canada and all or a substantial portion of our assets and those of such persons are located outside the United States. Consequently, it may be difficult for U.S. investors to effect service of process within the United States upon us or our directors or officers or such auditors who are not residents of the United States, or to realize in the United States upon judgments of courts of the United States predicated upon civil liabilities under the Securities Act. Investors should not assume that Canadian courts: (1) would enforce judgments of U.S. courts obtained in actions against us or such persons predicated upon the civil liability provisions of the U.S. federal securities laws or the securities or blue sky laws of any state within the United States or (2) would enforce, in original actions, liabilities against us or such persons predicated upon the U.S. federal securities laws or any such state securities or blue sky laws.

Similarly, some of our directors and officers are residents of countries other than Canada and all or a substantial portion of the assets of such persons are located outside Canada. As a result, it may be difficult for Canadian investors to initiate a lawsuit within Canada against these non-Canadian residents. In addition, it may not be possible for Canadian investors to collect from these non-Canadian residents judgments obtained in courts in Canada predicated on the civil liability provisions of securities legislation of certain of the provinces and territories of Canada. It may also be difficult for Canadian investors to succeed in a lawsuit in the United States, based solely on violations of Canadian securities laws.

We have operations in China, which exposes us to risks inherent in doing business there.

We use multiple third-party suppliers and manufacturers based primarily in China. With the rapid development of the Chinese economy, the cost of labor has increased and may continue to increase in the future. Furthermore, pursuant to Chinese labor laws, employers in China are subject to various requirements when signing labor contracts, paying remuneration, determining the term of employees’ probation and unilaterally terminating labor contracts. Our results of operations will be materially and adversely affected if the labor costs of our third-party suppliers and manufacturers increase significantly. In addition, we and our manufacturers and suppliers may not be able to find a sufficient number of qualified workers due to the intensely competitive and fluid market for skilled labor in China.

Operating in China exposes us to political, legal and economic risks. In particular, the political, legal and economic climate in China, both nationally and regionally, is fluid and unpredictable. Our ability to operate in China may be adversely affected by changes in U.S. and Chinese laws and regulations such as those related to, among other things, taxation, import and export tariffs, environmental regulations, land use rights, intellectual property, currency controls, network security, employee benefits, hygiene supervision and other matters. In addition, we may not obtain or retain the requisite legal permits to continue to operate in China, and costs or operational limitations may be imposed in connection with obtaining and complying with such permits. In addition, Chinese trade regulations are in a state of flux, and we may become subject to other forms of taxation, tariffs and duties in China. Furthermore, the third parties we rely on in China may disclose our confidential information or intellectual property to competitors or third parties, which could result in the illegal distribution and sale of counterfeit versions of our products. If any of these events occur, our business, financial condition and results of operations could be materially and adversely affected.

The impact of potential changes in customs, tariffs, and trade policies in the United States and the potential corresponding actions by other countries, including recent trade initiatives announced by the U.S. presidential administration against China, in which we do business could adversely impact our financial performance

The U.S. government has made proposals that are intended to address trade imbalances, which include encouraging increased production in the United States. These proposals could result in increased customs duties and tariffs, and the renegotiation of some U.S. trade agreements. We import a significant percentage of our products into the United States, and an increase in customs duties and tariffs with respect to these imports could negatively impact our financial performance. If such customs duties and tariffs are implemented, it also may cause U.S. trading partners to take actions with respect to U.S. imports or U.S. investment activities in their respective countries. Any potential changes in trade policies in the United States and the potential corresponding actions by other countries in which we do business could adversely impact our financial performance. Given the level of uncertainty over which provisions will be enacted, we cannot predict with certainty the impact of the proposals.

For example, in 2018, the U.S. presidential administration and Chinese government imposed significant tariffs on exports between the two countries. This evolving policy dispute between China and the United States is likely to have significant impact on the industries in which we participate, directly and indirectly, and no assurance can be given that any individual customer or significant groups of companies or a particular industry, will not be adversely impacted by any governmental actions taken by either China or the United States. In addition, we manufacture our mobile phones at our facility in Shenzhen, China, which could result in significant additional costs to us when shipping our products to various customers in the United States. It is not possible to predict with any certainty the outcome of the trade dispute between the United States and China, and prolonged or increased tariffs on imports from China to the United States would adversely impact our business, results of operations and financial condition.

Operating outside of the United States presents specific risks to our business, and we have substantial operations outside of the United States.

Most of our employee base and operations are located outside the United States, primarily in Canada and Israel. Most of our software development, third-party contract manufacturing, and product assembly operations are conducted outside the United States.

Risks associated with operations outside the United States include:

Foreign currency fluctuations and local laws and practices may reduce our competitiveness and sales in foreign markets.

The relative change in currency values creates fluctuations in product pricing for international customers. These changes in foreign end-customer costs may result in lost orders and reduce the competitiveness of our products in certain foreign markets. These changes may also negatively impact the financial condition of some foreign customers and reduce or eliminate their future orders of our products. We also face adverse changes in, or uncertainty of, local business laws or practices, including the following:

Our failure to manage any of these risks successfully could harm our international operations and adversely impact our business, operating results and financial condition.

Risks Related to Ownership of Our Securities

We expect that our stock price will fluctuate significantly, and you may not be able to resell your shares at or above the public offering price you paid for your shares.

The trading price of our Common Shares is likely to be volatile and subject to wide price fluctuations in response to various factors, including:

These and other factors may cause the market price and demand for our Common Shares to fluctuate substantially, which may limit or prevent investors from readily selling their Common Shares and may otherwise negatively affect the liquidity of our Common Shares. If the market price of our Common Shares after this offering does not exceed the price you paid, you may not realize any return on your investment in us and may lose some or all of your investment. In addition, in the past, when the market price of a stock has been volatile, holders of that stock have often instituted securities class action litigation against the company that issued the stock. If any of our stockholders brought a lawsuit against us, we could incur substantial costs defending the lawsuit. Such a lawsuit could also divert the time and attention of our management from our business.

The conversion of the Lind Partner Note and the exercise of the Lind Partner Warrant or future sales of our Common Shares may further dilute the Common Shares and adversely impact the price of our Common Shares.

As of September 30, 2021, we had 4,821,191 Common Shares issued and outstanding. In addition, the up to an additional 2,862,857 Common Shares underlying the Lind Partner Note and the Lind Partner Warrant will be unrestricted and freely tradeable. If the holder of our free trading shares wanted to sell these shares, there might not be enough purchasers to maintain the market price of our Common Shares on the date of such sales. Any such sales, or the fear of such sales, could substantially decrease the market price of our Common Shares and the value of your investment.

If we are not able to comply with the applicable continued listing requirements or standards of Nasdaq, Nasdaq could delist our Common Shares

In order to maintain the listing of our Common Shares and Prior Warrants on the Nasdaq Capital Market, we must satisfy minimum financial and other continued listing requirements and standards, including those regarding director independence and independent committee requirements, minimum stockholders’ equity, minimum share price, and certain corporate governance requirements. There can be no assurances that we will be able to comply with such applicable listing standards.

Warrants are speculative in nature.

The Warrants and Pre-Funded Warrants offered in this offering do not confer any rights of Common Share ownership on their holders, such as voting rights or the right to receive dividends, but rather merely represent the right to acquire Common Shares at a fixed price for a limited period of time. Specifically, commencing on the date of issuance, holders of the Warrants may exercise their right to acquire the Common Shares and pay an exercise price of $2.30 per share (with an exercise price no less than 100% of the public offering price of a Unit), prior to five years from the date of issuance, after which date any unexercised warrants will expire and have no further value. Commencing on the date of issuance, holders of the Warrants may exercise their right to acquire the Common Shares and pay an exercise price of $0.01 per share. The Pre-Funded Warrants have no expiration date.

Holders of the Warrants and the Pre-Funded Warrants will have no rights as a Common Shareholder until they acquire our Common Shares.

Until holders of the Warrants and the Pre-Funded Warrants acquire Common Shares upon exercise of those warrants, the holders will have no rights with respect to the Common Shares issuable upon exercise of those warrants. Upon exercise of those warrants, the holder will be entitled to exercise the rights of a Common Shareholder as to the security exercised only as to matters for which the record date occurs after the exercise.

There is no public market for the Warrants to purchase our Common Shares or for the Pre-Funded Warrants being offered in this offering.

There is no established public trading market for the Warrants or Pre-Funded Warrants being offered in this offering, and we do not expect a market to develop. In addition, we do not intend to apply to list the Warrants or Pre-Funded Warrants on any national securities exchange or other nationally recognized trading system, including The Nasdaq Capital Market. Without an active trading market, the liquidity of the Warrants and Pre-Funded Warrants will be limited.

We will require additional capital to fund our business and support our growth, and our inability to generate and obtain such capital on acceptable terms, or at all, could harm our business, operating results, financial condition and prospects.

We intend to continue to make substantial investments to fund our business and support our growth. In addition, we may require additional funds to respond to business challenges, including the need to develop new features or enhance our solutions, improve our operating infrastructure or acquire or develop complementary businesses and technologies. As a result, in addition to the revenues we generate from our business, we may need to engage in additional equity or debt financings to provide the funds required for these and other business endeavors. If we raise additional funds through future issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our Common Shares. Any debt financing that we may secure in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. We may not be able to obtain such additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired, and our business may be adversely impacted. In addition, our inability to generate or obtain the financial resources needed may require us to delay, scale back, or eliminate some or all of our operations, which may have a significant adverse impact on our business, operating results and financial condition.

Because we are a foreign private issuer and are exempt from certain Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer.

Nasdaq Listing Rules require listed companies to have, among other things, a majority of its board members be independent. As a foreign private issuer, however, we are permitted to, and we may follow home country practice in lieu of the above requirements, or we may choose to comply with the above requirement within one year of listing. The corporate governance practice in our home country does not require a majority of our board to consist of independent directors. Thus, although a director must act in the best interests of the Company, it is possible that fewer board members will be exercising independent judgment and the level of board oversight on the management of our company may decrease as a result. In addition, Nasdaq Listing Rules also require foreign private issuers to have a compensation committee, a nominating/corporate governance committee composed entirely of independent directors, and an audit committee with a minimum of three members. We, as a foreign private issuer, are not subject to these requirements. Nasdaq Listing Rules may require shareholder approval for certain corporate matters, such as requiring that shareholders be given the opportunity to vote on all equity compensation plans and material revisions to those plans, certain common share issuances. We intend to comply with the requirements of Nasdaq Listing Rules in determining whether shareholder approval is required on such matters and to appoint a nominating and corporate governance committee. We may, however, consider following home country practice in lieu of the requirements under Nasdaq Listing Rules with respect to certain corporate governance standards which may afford less protection to investors.

Although as a Foreign Private Issuer we are exempt from certain corporate governance standards applicable to US issuers, if we cannot satisfy, or continue to satisfy, the listing requirements and other rules of the Nasdaq Capital Market, our securities may be delisted, which could negatively impact the price of our securities and your ability to sell them.

We cannot assure you that our securities will continue to be listed on the Nasdaq Capital Market.

In addition, in order to maintain our listing on the Nasdaq Capital Market, we are required to comply with certain rules of the Nasdaq Capital Market, including those regarding minimum shareholders’ equity, minimum share price, minimum market value of publicly held shares, and various additional requirements. Even if we initially meet the listing requirements and other applicable rules of the Nasdaq Capital Market, we may not be able to continue to satisfy these requirements and applicable rules. If we are unable to satisfy the Nasdaq Capital Market criteria for maintaining our listing, our securities could be subject to delisting.

If the Nasdaq Capital Market subsequently delists our securities from trading, we could face significant consequences, including:

If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements on a timely basis could be impaired.

After the closing of this offering, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, the Sarbanes-Oxley Act and the rules and regulations of Nasdaq. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal controls over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with accounting principles generally accepted in the U.S. We must perform system and process evaluation and testing of our internal controls over financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting in our Form 20-F filing for that year, as required by Section 404 of the Sarbanes-Oxley Act. This will require that we incur substantial additional professional fees and internal costs to expand our accounting and finance functions and that we expend significant management efforts.

During the evaluation and testing process of our internal controls, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective. We cannot assure you that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future. Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition or results of operations. If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our Common Shares could decline, and we could be subject to sanctions or investigations by Nasdaq, the Securities and Exchange Commission, or the SEC, or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.

We will continue to incur significant increased costs as a result of operating as a public company in the United States, and our management will be required to devote substantial time to new compliance initiatives.

As a public company in the United States, we incur significant legal, accounting and other expenses. We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, which requires, among other things, that we file with the SEC annual and current reports with respect to our business and financial condition. In addition, the Sarbanes-Oxley Act, as well as rules subsequently adopted by the SEC and Nasdaq to implement provisions of the Sarbanes-Oxley Act, impose significant requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. Further, in July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, was enacted. There are significant corporate governance and executive-compensation-related provisions in the Dodd-Frank Act that require the SEC to adopt additional rules and regulations in these areas. Recent legislation permits emerging growth companies to implement many of these requirements over a longer period and up to five years from the pricing of our public offering. We intend to take advantage of this new legislation, but cannot assure you that we will not be required to implement these requirements sooner than planned and thereby incur unexpected expenses. Stockholder activism, the current political environment and the current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact the manner in which we operate our business in ways we cannot currently anticipate.

The rules and regulations applicable to public companies substantially increase our legal and financial compliance costs and make some activities more time-consuming and costly. If these requirements divert the attention of our management and personnel from other business concerns, they could have a material adverse effect on our business, financial condition and results of operations. The increased costs will decrease our net income or increase our consolidated net loss, and may require us to reduce costs in other areas of our business or increase the prices of our products or services. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to incur substantial costs to maintain the same or similar coverage. We cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.

Our executive officers and directors, and their affiliated entities, along with our two other largest stockholders, own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval

As of the date of this registration statement, our executive officers and directors, together with entities affiliated with such individuals, along with our two other largest stockholders, beneficially own approximately 31.6% of our Common Shares. Accordingly, these stockholders may, as a practical matter, continue to be able to control the election of a majority of our directors and the determination of all corporate actions. This concentration of ownership could delay or prevent a change in control of the Company.

New investors in our securities will experience immediate and substantial dilution after this offering.

The public offering price of our Units will be substantially higher than the pro forma net tangible book value per share of the outstanding Common Shares immediately after this offering. Based on a public offering price of $2.30 per Unit and our net tangible book value as of September 30, 2021, if you purchase our Common Shares in this offering you will pay more for your shares than the amounts paid by our existing stockholders for their shares and you will suffer immediate dilution of approximately $0.85 per share in pro forma net tangible book value. As a result of this dilution, investors purchasing Common Shares in this offering may receive significantly less than the full purchase price that they paid for the shares purchased in this offering in the event of a liquidation.

Immediately prior to the consummation of this offering, we have no outstanding stock options to purchase our Common Shares with exercise prices that are below the public offering price of our Units offered hereby. To the extent that these options were equal to or below the offering price and are exercised, there would be further dilution to the purchasers of our Units.

If a substantial number of shares become available for sale and are sold in a short period of time, the market price of our Common Shares could decline.

If our existing stockholders sell substantial amounts of our Common Shares in the public market following this offering and the expiration of the lock-up agreements, the market price of our Common Shares could decrease significantly. The perception in the public market that our existing stockholders might sell Common Shares could also depress our market price. Upon whole or part exercise of the warrants or Prior Warrants, respectively, we could significantly increase our outstanding Common Shares.

In addition, the holders of Common Shares will have the right, subject to certain exceptions and conditions, to require us to register their Common Shares under the Securities Act, and they will have the right to participate in future registrations of securities by us. Registration of any of these outstanding Common Shares would result in such shares becoming freely tradable without compliance with Rule 144 upon effectiveness of the registration statement. A decline in the price of shares of our Common Shares might impede our ability to raise capital through the issuance of additional shares of our Common Shares or other equity securities.

Since we do not expect to pay any cash dividends for the foreseeable future, investors in this offering may be forced to sell their stock in order to obtain a return on their investment

We do not anticipate declaring or paying in the foreseeable future any cash dividends on our capital stock. Instead, we plan to retain any earnings to finance our operations and growth plans discussed elsewhere or incorporated by reference in this prospectus. Accordingly, investors must rely on sales of their Common Shares after price appreciation, which may never occur, as the only way to realize any return on their investment. As a result, investors seeking cash dividends should not purchase our Common Shares.

We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.

As discussed above, we are a foreign private issuer, and therefore, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act. In the future, we would lose our foreign private issuer status if (1) more than 50% of our outstanding voting securities are owned by U.S. residents and (2) a majority of our directors or executive officers are U.S. citizens or residents, or we fail to meet additional requirements necessary to avoid loss of foreign private issuer status. If we lose our foreign private issuer status, we will be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed and extensive than the forms available to a foreign private issuer. We will also have to mandatorily comply with U.S. federal proxy requirements, and our officers, directors and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. In addition, we will lose our ability to rely upon exemptions from certain corporate governance requirements under the listing rules of the Nasdaq. As a U.S. listed public company that is not a foreign private issuer, we will incur significant additional legal, accounting and other expenses that we will not incur as a foreign private issuer.

We have broad discretion in the use of the net proceeds from this offering and may not use them effectively.

Our management will have broad discretion in the application of the net proceeds from this offering, including for any of the purposes described in the section entitled “Use of Proceeds,” and you will not have the opportunity as part of your investment decision to assess whether the net proceeds will be used appropriately. Because of the number and variability of factors that will determine our use of the net proceeds from this offering, their ultimate use may vary substantially from their currently intended use. Our management might not apply our net proceeds in ways that ultimately increase the value of your investment. We currently intend to use the net proceeds from this offering to expand marketing and brand enhancement related to our products, to fund our ongoing research and development activities, for personnel development and training and for resource management software development.

Our expected use of net proceeds from this offering represents our current intentions based upon our present plans and business condition. As of the date of this prospectus, we cannot predict with certainty all of the particular uses for the net proceeds to be received upon the completion of this offering, or the amounts that we will actually spend on the uses set forth above. The amounts and timing of our actual use of the net proceeds will vary depending on numerous factors, including the commercial success of our systems and the costs of our research and development activities, as well as the amount of cash used in our operations. As a result, our management will have broad discretion in the application of the net proceeds, and investors will be relying on our judgment regarding the application of the net proceeds of this offering.

The failure by our management to apply these funds effectively could harm our business. Pending their use, we may invest the net proceeds from this offering in short-term, investment-grade, interest-bearing securities. These investments may not yield a favorable return to our stockholders. If we do not invest or apply the net proceeds from this offering in ways that enhance stockholder value, we may fail to achieve expected financial results, which could cause our stock price to decline.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our securities will depend in part on the research and reports that securities or industry analysts publish about us or our business. Securities and industry analysts do not currently, and may never, publish research on our company. If no securities or industry analysts commence coverage of our company, the trading price for our securities would likely be negatively impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts who covers us downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price may decline. If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our securities could decrease, which might cause our stock price and trading volume to decline.

A possible “short squeeze” due to a sudden increase in demand of our Common Shares that largely exceeds supply may lead to price volatility in our Common Shares.

Investors may purchase our Common Shares to hedge existing exposure in our Common Shares or to speculate on the price of our Common Shares. Speculation on the price of our Common Shares may involve long and short exposures. To the extent aggregate short exposure exceeds the number of our Common Shares available for purchase in the open market, investors with short exposure may have to pay a premium to repurchase our Common Shares for delivery to lenders of our Common Shares. Those repurchases may in turn, dramatically increase the price of our Common Shares until investors with short exposure are able to purchase additional Common Shares to cover their short position. This is often referred to as a “short squeeze.” A short squeeze could lead to volatile price movements in our Common Shares that are not directly correlated to the performance or prospects of our Common Shares and once investors purchase the Common Shares necessary to cover their short position the price of our Common Shares may decline.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that reflect our current expectations and views of future events, all of which are subject to risks and uncertainties. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. You can find many (but not all) of these statements by the use of words such as “approximates,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “will,” “would,” “should,” “could,” “may” or other similar expressions in this prospectus. These statements are likely to address our growth strategy, financial results and product and development programs. You must carefully consider any such statements and should understand that many factors could cause actual results to differ from our forward-looking statements. These factors may include inaccurate assumptions and a broad variety of other risks and uncertainties, including some that are known and some that are not. No forward-looking statement can be guaranteed and actual future results may vary materially. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

We describe certain material risks, uncertainties, and assumptions that could affect our business, including our financial condition and results of operations, under “Risk Factors.” We base our forward-looking statements on our management’s beliefs and assumptions based on information available to our management at the time the statements are made. We caution you that actual outcomes and results may, and are likely to, differ materially from what is expressed, implied or forecast by our forward-looking statements. Accordingly, you should be careful about relying on any forward-looking statements. Except as required under the federal securities laws, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this prospectus, whether as a result of new information, future events, changes in assumptions, or otherwise.

Industry Data and Forecasts

This prospectus contains data related to the vehicle communications industry in the United States. These industry data include projections that are based on a number of assumptions which have been derived from industry and government sources which we believe to be reasonable. The vehicle communications industry may not grow at the rate projected by industry data, or at all. The failure of the industry to grow as anticipated is likely to have a material adverse effect on our business and the market price of our Common Shares. In addition, the rapidly changing nature of the vehicle communications industry subjects any projections or estimates relating to the growth prospects or future condition of our industries to significant uncertainties. Furthermore, if any one or more of the assumptions underlying the industry data turns out to be incorrect, actual results may, and are likely to, differ from the projections based on these assumptions.

ENFORCEABILITY OF CIVIL LIABILITIES

 We are incorporated under the laws of British Columbia. Some of our directors and officers, and some of the experts named in this prospectus, are residents of Canada, Israel or otherwise reside outside of the United States, and all or a substantial portion of their assets, and all or a substantial portion of our assets, are located outside of the United States. We have appointed an agent for service of process in the United States, but it may be difficult for shareholders who reside in the United States to effect service within the United States upon those directors, officers and experts who are not residents of the United States. It may also be difficult for shareholders who reside in the United States to realize in the United States upon judgments of courts of the United States predicated upon our civil liability and the civil liability of our directors, officers and experts under the United States federal securities laws. Furthermore, because substantially all of our assets and substantially all of our directors and officers are located outside the United States, any judgment obtained in the United States against us or any of our directors and officers may not be collectible within the United States. There can be no assurance that U.S. investors will be able to enforce against us, members of our board of directors, officers or certain experts named herein who are residents of Canada, Israel or other countries outside the United States, any judgments in civil and commercial matters, including judgments under the federal securities laws.

Service of process upon directors and officers which reside in Israel may be difficult to obtain within the United States. Furthermore, because substantially all of our assets and substantially all of our Israeli directors and officers are located outside the United States, any judgment obtained in the United States against us or any of our Israeli directors and officers may not be collectible within the United States.

We have been informed by our legal counsel in Israel, Naschitz, Brandes, Amir & Co., Advocates, our legal counsel in Israel that it may be difficult to assert U.S. securities laws claims in original actions instituted in Israel. Israeli courts may refuse to hear a claim based on a violation of U.S. securities laws because Israel is not the most appropriate forum in which to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proven as a fact which can be a time-consuming and costly process. Matters of procedure will also be governed by Israeli law.

Subject to specified time limitations and legal procedures, Israeli courts may enforce a U.S. judgment in a civil matter which is non- appealable, provided that, among other things:

Even if such conditions are met, an Israeli court may not declare a foreign civil judgment enforceable if:

If a foreign judgment is enforced by an Israeli court, it generally will be payable in Israeli currency, which can then be converted into non-Israeli currency and transferred out of Israel. The usual practice in an action before an Israeli court to recover an amount in a non-Israeli currency is for the Israeli court to issue a judgment for the equivalent amount in Israeli currency at the rate of exchange in force on the date of the judgment, but the judgment debtor may make payment in foreign currency. Pending collection, the amount of the judgment of an Israeli court stated in Israeli currency ordinarily will be linked to the Israeli consumer price index plus interest at the annual statutory rate set by Israeli regulations prevailing at the time. Judgment creditors must bear the risk of unfavorable exchange rates.

USE OF PROCEEDS

Based upon an offering price of $2.30 per Unit (and assuming the sale of no Pre-Funded Units), we estimate that we will receive net proceeds from this offering, after deducting the underwriting discounts of $1,400,000, non-accountable expense allowance and the estimated offering expenses of $241,972 payable by us, of approximately $18,358,028 assuming the Underwriter does not exercise its over-allotment option. For each Pre-Funded Unit purchased in this offering in lieu of a Unit, we will reduce the number of Units being sold in the offering by one.

We plan to use the net proceeds we receive from this offering and any proceeds from the exercise of warrants to repay 20% of the Lind Partners Note (22%), for general corporate purposes including: working capital (33%), growth strategies (10%), research and development (15%) and sales and marketing (20%).

The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering. Our management, however, will have some flexibility and discretion to apply the net proceeds of this offering. If an unforeseen event occurs or business conditions change, we may use the proceeds of this offering differently than as described in this prospectus. To the extent that the net proceeds we receive from this offering are not immediately used for the above purposes, we intend to invest our net proceeds in short-term, interest-bearing bank deposits or debt instruments.

DIVIDEND POLICY

We have never declared or paid any dividends on our Common Shares. We do not anticipate paying any dividends in the foreseeable future. We currently intend to retain any future earnings to fund business development and growth, and we do not expect to pay any dividends in the foreseeable future. Any future determination to declare cash dividends will be made at the discretion of our board of directors, subject to applicable laws, and will depend on a number of factors, including our financial condition, results of operations, capital requirements, contractual restrictions, general business conditions and other factors that our board of directors may deem relevant.

CAPITALIZATION

The following table sets forth our capitalization as of September 30, 2021:

You should read this capitalization table in conjunction with “Use of Proceeds,” “Selected Consolidated Financial and Operating Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the related notes appearing elsewhere in this prospectus.

The number of shares of our Common Shares to be outstanding after this offering is based on 13,972,347 Common Shares outstanding and excludes:

DILUTION

If you invest in our Units or Pre-Funded Units in this offering, your interest will be diluted to the extent of the difference between the public offering price per share of Common Shares that is part of the Unit and the pro-forma as adjusted net tangible book value per share of common share immediately after this offering.

Our historical net tangible book value as of September 30, 2021 was $148,093, or $0.03 per Common Share. Our historical net tangible book value is the amount of our total tangible assets (Total assets less Intangible Assets and Goodwill) less our liabilities. Historical net tangible book value per Common Share is our historical net tangible book value divided by the number of outstanding Common Shares as of September 30, 2021.

The pro forma net tangible book value of our Common Shares as of September 30, 2021 was $1,954,593, or $0.37 per Common Share. Pro forma net tangible book value per Common Share represents our total tangible assets less our total liabilities, divided by the number of outstanding Common Shares, after giving effect to the pro forma adjustments referenced under “Capitalization.”

After giving effect to the sale of 8,695,652 Units that we are offering (assuming the issuance of no Pre-Funded Units) at an offering price of $2.30 per Unit, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, our net tangible book value on a pro forma as adjusted basis as of September 30, 2021 would have been $1.45 per Common Share. This amount represents an immediate increase in net tangible book value of $1.08 per Common Share to our existing shareholders and an immediate dilution of $0.85 per Common Share to new investors purchasing Common Shares in this offering. We determine dilution by subtracting the pro forma as adjusted net tangible book value per share after this offering from the amount of cash that a new investor paid for a Common Share.

The following table illustrates this dilution:

A $1.00 increase (decrease) in the offering price of $2.30 per Unit, would increase the pro-forma as adjusted net tangible book value per share by $0.58, and increase dilution to new investors by $0.42 per share, in each case assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

The foregoing discussion and table do not take into account further dilution to new investors that could occur upon the exercise of all currently outstanding warrants having a per share exercise or conversion price less than the per share offering price to the public in this offering.

If the underwriters exercise in full their option to purchase additional Common Shares in this offering, the pro-forma as adjusted net tangible book value after the offering would be $1.51 per share, the increase in net tangible book value to existing shareholders would be $1.14 per share, and the dilution to new investors would be $0.79 per share, in each case at the offering price of $2.30 per share.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management Discussion and Analysis (“MD&A”) reports on the operating results, financial condition and business risks of Siyata Mobile Inc. (formerly Teslin River Resources Corp.) (“Siyata” or the “Company,” “we” or “us”) and is designed to help the reader understand the results of operations and financial condition of the Company for the three and nine months ended September 30, 2021, the three and six months ended June 30, 2021 and for the years ended December 31, 2021 and 2020. The management of the Company is responsible for the preparation of the unaudited consolidated interim financial statements contained elsewhere in this prospectus. The unaudited consolidated interim financial statements contained elsewhere in this prospectus have been prepared using accounting policies in compliance with International Financial Reporting Standards (“IFRS”) for the preparation of consolidated interim financial statements and are in accordance with IAS 34 – Interim Financial Reporting.

The Company’s auditor has not performed a review of these consolidated interim financial statements in accordance with the standards established by the Chartered Professional Accountants of Canada for a review of interim financial statements by an entity’s auditor.

Accordingly, this MD&A should be read in conjunction with the Company’s audited consolidated financial statements for the years ended December 31, 2020 and 2019 and the notes thereto (collectively the “Financial Statements”) which were prepared in accordance with I IFRS as issued by the International Accounting Standard Board (“IASB”). Other information contained in these documents has also been prepared by management and is consistent with the data contained in the Financial Statements. All dollar amounts referred to in this MD&A are expressed in US dollars except where indicated otherwise.

The Company’s certifying officers, based on their knowledge, having exercised reasonable diligence, are also responsible to ensure that these filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by these filings. These Financial Statements together with the other financial information included in these filings fairly present in all material respects the financial condition, results of operations and cash flows of the Company, as of the date of and for the years presented in this filing. The Board of Directors approves the Financial Statements and MD&A and ensures that management has discharged its financial responsibilities. The Board’s review is accomplished principally through the Audit Committee, which meets periodically to review all financial reports, prior to filing.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION

This MD&A includes “forward-looking statements,” within the meaning of applicable securities legislation, which are based on the opinions and estimates of management and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions, or other future performance suggested herein. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate,” “budget,” “plan,” “continue,” “estimate,” “expect,” “forecast,” “may,” “will”, “project,” “predict,” “potential,” “targeting,” “intend,” “could,” “might,” “should,” “believe” and similar words suggesting future outcomes or statements regarding an outlook. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. These forward looking statements include but are not limited to statements concerning:

Readers are cautioned that the preceding list of risks, uncertainties, assumptions and other factors are not exhaustive. Events or circumstances could cause actual results to differ materially from those estimated or projected and expressed in, or implied by, these forward-looking statements.

Corporate Overview

Siyata Mobile Inc. is a leading global developer of innovative cellular based communications solutions over advanced 4G/LTE mobile networks under the Uniden® Cellular and Siyata brands to global first responders and enterprise customers. Siyata’s three complementary product categories include in-vehicle communications solutions for commercial fleet vehicles, rugged handheld mobile devices for industrial workers, and cellular amplifiers to boost the cellular signal inside homes, buildings and vehicles.

On September 25, 2020 the Company listed on the Nasdaq Capital Markets (“NASDAQ”) under the symbol SYTA for its Common Shares and the Company’s Prior Warrants issued on September 29, 2020 at $6.85 are traded under the symbol SYTAW, and expire in 5 years from the date of issue.

The registered and records office is located at 2200 – 885 West Georgia Street, Vancouver, British Columbia V6C 3E8, Canada.

Products

Siyata’s flagship device, the Uniden® UV350 4G/LTE is a purpose built in-Vehicle communication device designed specifically for professional vehicles such as trucks, vans, buses, emergency service vehicles and other enterprise vehicles. The Company’s innovative platform is designed to facilitate replacement of the current in-vehicle, multi-device status quo with a single device that incorporates voice, Push-to-Talk over Cellular (“PoC”), data, fleet management solutions and other Android based professional applications. The UV350 also supports Band 14 for FirstNet compatibility which is the U.S. First Responders 4G/LTE network with PoC capabilities that aims to replace aging two-way radio systems currently in use. Siyata develops and sells multiple key accessories for the UV350 making it a robust solution for commercial vehicles.

In addition to its connected vehicle product portfolio, the Company develops, manufactures, markets, and sells 4G/LTE rugged handheld Push to Talk smartphone devices. These rugged B2B environments are focused toward similar enterprise customers that Siyata sells its connected vehicle devices and include enterprise customers, first responders, construction workers, security guards, government agencies and mobile workers in multiple industries.

In Q3 2021, Siyata unveiled its next generation rugged device, the SD7. The SD7 is Siyata’s first mission critical push-to-talk device (MCPTT) and is also the first rugged handset that Siyata will offer in North America, expected in the fourth quarter of 2021, then in Europe in 2022. With this device, Siyata expects to increase its MCPTT market share not only in the first responder market, but also in the utilities, transportation and waste management markets.

Siyata manufactures, markets, and sells Uniden® cellular signal boosters and accessories for homes, buildings, manufacturing facilities and vehicles with poor cell coverage across Canada and the United States. The vehicle vertical in this portfolio complements Siyata’s in-vehicle and rugged handheld smartphones as these sales can be bundled through the Company’s existing sales channels.

 Customers and Channels

Siyata launched its flagship 4G/LTE UV350 commercial vehicle smartphone device at Bell Mobility in late Q4 2018, at AT&T as well as at its first responder cellular network First Responder Network Authority (FirstNet) in late Q2 2019 and with Rogers Wireless and Verizon Wireless in Q4 2019. These are major milestones for the Company following Siyata’s seven years of experience perfecting in-vehicle cellular based technology, vehicle installations, software integration with various Push-to-Talk (PTT) solutions and intensive carrier certifications. 

Siyata’s customer base includes cellular network operators and their dealers, as well as commercial vehicle technology distributors for fleets of all sizes in the U.S., Canada, Europe, Australia, the Middle East and other international markets.

The North American Tier 1 cellular carriers that Siyata is working with have large scale distribution and sales channels. With an estimated 25 million commercial vehicles including 7.0 million first responder vehicles. The Company sees the North American market as its largest opportunity with a total addressable market over $19 billion USD. These Tier 1 cellular carriers have a keen interest in launching the UV350 as it allows for new SIM card activations in commercial vehicles and increased ARPU from existing customers with corporate and first responder fleets while targeting new customers with a unique, dedicated, multi-purpose in-vehicle IoT smartphone.

In addition, our rugged handsets will ultimately be targeted to approximately 47 million enterprise task and public sector workers across North America including construction, transport & logistics, manufacturing, energy & utility, public safety and federal government. The Company expects to launch its first rugged handset the SD7, in North America in Q4 2021.

The SD7 offers the benefits of Push-To-Talk over Cellular without any of the difficulties managing the current generation of rugged smart/feature phones and is ideally suited as a perfect upgrade from Land Mobile Radios (LMR). Used for generations, LMR has a significant number of limitations, including network incompatibility, limited coverage areas, and restricted functionality that leave a huge need for a unified network and platform. Siyata’s innovative product line, including the SD7, is helping to service the generational shift from LMR to PoC. According to VDC Research, the LMR market is growing at 5.9% compound annual growth rate, while the PoC market is growing at 13.6% CAGR and annual PoC shipments are expected to grow 40% from 1.9 million in 2018 to 2.7 million in 2023.

Source: VDC Research; American Security Council Foundation; Statistics Canada; Bureau of Transportation Statistics; Industry Research.

Cellular boosters are our third product category with approximately 30 million of these devices sold globally every year. Siyata manufactures and sells cellular boosters for enterprise, first responder and consumer customers with a focus on the North America markets. Cellular communication provides a robust, secure environment not just for remote workers, in-home and in-vehicles; but also for restaurant patrons who wish to download menus; for patients at pharmacies who need to verify identity and download scripts; for remote workers who require strong clear cellular signals; and for first responders where connectivity literally means the difference between life and death – just to name a few examples.

SIGNIFICANT HIGHLIGHTS

The following highlights and developments for the three month and nine-month period ended September 30, 2021 and to the date of this MD&A:

On August 5, 2021, Siyata unveiled its new MCPTT (Mission Critical Push-To-Talk) device, the SD7, at APCO (Association of Public Safety Communications Officials). The SD7 is an easy-to-use, PTT (Push-To-Talk)-only, ruggedized device that is LTE, Wi-Fi, and Bluetooth-enabled and uses the Android operating system. Its IP67 rating, resistance to water and dust, drop protection, and robust battery makes it well suited for use in harsh environments. Using the SD7, primary first responders (police, fire, ambulance) – which number over two million in the U.S. alone, as well as secondary support personnel – can quickly connect and coordinate on unified public cellular networks in North America and other international markets.

On August 24, 2021, Siyata received a $530,000 USD purchase order for a multinational defense contractor to supply its mobile Push-To-Talk (PTT) rugged handsets as well as its Uniden® UV350 commercial vehicle devices.

On August 26, 2021, Siyata announced it signed a reseller agreement with Silk Worldwide Inc. (“Silk”), parent company to SignalBoosters.com, to distribute its line of Uniden® cellular signal boosters. Silk, a leading online distributor and turn-key integrator of cellular boosters in North America, will resell the Company’s booster products on its SignalBoosters.com site and on the Amazon and Walmart marketplaces.

On September 8, 2021, Siyata announced it received a $400,000 USD purchase order from a large-scale distributor in the Middle East. The purchase order is for the Company’s UR7 rugged smartphone and CP250 all-in-one tablet-style fleet communications devices. These devices are targeted mainly at taxis and delivery companies looking to replace their traditional land mobile radios with Push-to-Talk over Cellular solutions.

On September 21, 2021, Siyata announced a new partnership with Esper, the leader in DevOps (“Development Operations”) for devices, that combines Siyata’s rugged Mission Critical Push-to-Talk (MCPTT) SD7 handsets with Esper’s full-stack solution of Android Enterprise Mobility Management (EMM) software. Siyata will embed Esper’s software into SD7 handsets running a custom version of the Android operating system. The combined offering unlocks new functionality that was not previously possible, including streamlined device onboarding and provisioning, as well as device customization while in the field.

OUTLOOK

Siyata has laid the foundation for greater distribution with expanded partnerships, key new sale hires and expanded product offerings into North America. The pandemic caused by COVID-19 slowed the company’s growth plans for 2021, however business has resumed in all three product categories. Management is hopeful that this momentum will continue, in particular, as it leverages its key sales channels, and with its expanded and refreshed product offerings.

Uniden® UV350 | Many large-scale programs were delayed due to the pandemic, therefore creating pent up demand for this disruptive solution. Active engagements including many customer trials have resumed in 2021 which should translate into robust growth in this product line.

Rugged Handsets | Siyata’s rugged handsets are targeted to the approximately 47 million enterprise task and public sector workers across North America including construction, transport & logistics, manufacturing, energy & utility, public safety and federal government. To date, Siyata has sold its rugged handsets only in international markets. Siyata will expand its footprint in this product category with the launch of the SD7 device, expected to launch in Q4 2021 in North America and in 2022 in Europe. The SD7 is a next generation device and Siyata’s first mission-critical push-to-talk (MCPTT) handset.

Cellular Boosters | The pandemic has helped fuel strong demand for Siyata’s boosters in 2020 and the first half of 2021. We believe this momentum will accelerate in 2021 with programs with existing customers and expanding opportunities in new verticals. For the first nine months of 2021, booster sales increased 152% in North America, specifically in the industrial marketplace, versus the same period in the prior year.

SUBSEQUENT EVENTS

On October 13, 2021, Siyata announced it received approval from Telstra, Australia’s leading cellular carrier, for the Company’s flagship Uniden®UV350 device. The UV350 is the world’s first 4G/LTE, all-in-one vehicle fleet communication device that delivers cellular voice calls, Push-to-Talk over Cellular (PoC), and data applications and was designed to optimize mobile communications while driving.

On October 27, 2021, we entered into a securities purchase agreement relating to the purchase and sale of a senior secured convertible note (the “Lind Partners Note”) for gross proceeds of USD$6,000,000 (the “Purchase Agreement”) with Lind Global Partners II, LP, an investment fund managed by The Lind Partners, a New York based institutional fund manager. Proceeds were used to repay and terminate existing convertible notes, as well as to pay certain fees and costs associated with the transaction. The Purchase Agreement provides for, among other things, the issuance of a USD$7,200,000 note with a 24-month maturity, 0% annual interest rate, and a fixed conversion price of USD$10.00 per share (“Conversion Price”) of our Common Shares. We are required to make principal payments in 18 equal monthly installments commencing 180 days after funding (“Repayment”). At our discretion, the Repayments can be made in: (i) cash; (ii) Common Shares (after Common Shares are registered) (the “Repayment Shares”); or a combination of both. Repayment Shares will be priced at 90% of the average of the five lowest daily volume weighted average prices (“VWAPs”) during the 20 trading days before the issuance of the Common Shares (the “Repayment Price”). Further, the Lind Partners Note provides for a pricing floor of $2.00 per Common Share (the “Repayment Share Price Floor”) such that Repayment Shares shall be priced at 90% of the average of the five lowest daily VWAPs during the 20 trading days before the issuance of the Common Shares, subject to the Repayment Share Floor Price provided, however, that the Repayment Share Price Floor shall not be applied once we obtain stockholder approval as required by the Nasdaq at our upcoming Annual General Meeting of shareholders. As of December 3, 2021, we incurred an event of default under the terms of the Lind Partners Note. Upon the occurrence and during the continuance of an “Event of Default,” the holder may at any time at its option: (1) declare that Interest Upon Default Amount (15%) has commenced and (2) exercise all other rights and remedies available to it under the transaction documents; provided, however, that upon the occurrence of an Event of Default described above, the holder, in its sole and absolute discretion, may: (a) from time-to-time demand that all or a portion of the outstanding principal amount be converted into Common Shares at the lower of (i) the then-current Conversion Price and (ii) 80% of the average of the 3 lowest daily Volume Weighted Average Prices during the 20 Trading Days prior to the delivery by the holder of the applicable notice of conversion or (b) exercise or otherwise enforce any one or more of the holder’s rights, powers, privileges, remedies and interests under the Lind Partners Note, the transaction documents or applicable law. No course of delay on the part of the holder shall operate as a waiver thereof or otherwise prejudice the rights of the holder. The event of default was cured on December 7, 2021 when the Company’s market capitalization increased to an amount over $20,000,000. If the Company issues any Equity Interests, other than Exempted Securities, for aggregate proceeds to the Company of greater than $10,000,000, excluding offering costs or other expenses, unless otherwise waived in writing by and at the discretion of Lind Partners, the Company will direct 20% of such proceeds to reduce the principal balance of the Lind Note. If the Company issues any equity interests issued, subject to certain exemptions, at an effective price per share that is less than the exercise price of the Lind Warrant then in effect or without consideration, then the exercise price of the Lind Warrants shall be reduced to a price equal to the consideration per share paid for such additional Common Shares. If the Company issues any equity interests, subject to certain exemptions, at an effective price per share that is less than the conversion price of the Lind Notes then in effect or without consideration, then the conversion price of the Lind Notes shall be reduced to a price equal to the consideration per share paid for such additional Common Shares. The conversion price is $10.00 per share and the shares issued upon conversion of the full $7,200,000 Lind Note would be 720,000.

Financing activities on October 28, 2021 provided gross cash of $1,027,500 USD from the exercise of 150,000 warrants at $6.85 USD, and on October 29, 2021 provided gross cash of $380,202 USD from the exercise of 55,504 warrants at $6.85 USD.

On October 6, 2021, Siyata Mobile completed a major milestone and entered into a working partnership with as global leading U.S. distributor (“Leading U.S. Distributor”) for its recently launched SD7 mission-critical push-to-talk (MCPTT) ruggedized handheld device. The companies signed an addendum to their MSA appointing the Leading U.S. Distributor as a non-exclusive SD7 marketing and distribution partner. The Leading U.S. Distributor, which is the leading global land mobile radio (LMR) vendor, will be marketing the SD7 both in North America as well as in international markets, selling both directly and in partnership with leading North American cellular carriers to mission critical personnel, first responders, blue-collar workers, and enterprise customers.

Siyata and the Leading U.S. Distributor engineering teams worked together for over 9 months on high level software integration of the Leading U.S. Distributor’s Push to Talk software embedded into SD7 and has delivered an exceptional solution that integrates flawlessly allowing a very good user experience on this device. SD7 will also interconnect with LMR devices already deployed via a dedicated gateway established by the Leading U.S. Distributor allowing customers the flexibility to work on both cellular and radio networks simultaneously. The SD7 form factor is based on simplicity, yet provides the robust capabilities of MCPTT, and coupled with the Company’s recently announced VK7 (Vehicle Kit 7), a first-of-its-kind, patent-pending in-vehicle cradle, the offering becomes highly attractive for users both in and out of their vehicles.

The VK7 is a first-of-its-kind, patent-pending car kit, a simple slide-in connection sleeve for the SD7, and an external antenna connection for connecting to a windshield or roof mount antenna to allow for an in-vehicle experience for users that is similar to that from a traditional LMR device. The VK7 has been uniquely designed to be used with the SD7, while connecting directly into the vehicle’s power and can also connect to a Uniden cellular amplifier for better cellular connectivity.

We expect that the Leading U.S. Distributor will be marketing the SD7 to its own customers, cellular carrier customers and to first responders both in North America as well as in International markets. The market for SD7 is potentially very large scale and sales will be focused to the tens of millions of mission critical personnel, first responders and enterprise customers looking for next generation Push-to-Talk-Over-Cellular (PoC) solutions. Siyata expects to see widespread adoption in the coming quarters and years of this unique product as customers recognize its value-proposition. Based on discussions with the Leading U.S. Distributor, multiple cellular carriers and numerous dealers, Siyata estimates these various channels could deliver potential SD7 volumes of 30,000 to 100,000 units per year plus accessories, once fully ramped into full production. This will translate into potentially $10-30mm in revenue for Siyata from 2022.

In addition, we have multiple additional opportunities via other channels both in the United States and in international markets.

SUMMARY OF QUARTERLY RESULTS

The following unaudited table sets out selected financial information for the Company on a consolidated basis for the last eight most recently completed quarters.

RESULTS OF OPERATIONS FOR NINE MONTHS ENDED SEPTEMBER 30, 2021

The following is an analysis of the Company’s operating results for the nine-months ended September 30, 2021, and includes a comparison against the nine months ended September 30, 2020.

Operations:

Revenues for the nine months ended September 30, 2021 were $5,607,829 compared to $6,676,761 for the nine months ended September 30, 2020. This negative variance of $1,068, 932 (16%) is due mainly to the merchandise return from a customer in Q2 2021 in the amount of $1,130,128. Without this return, year over year sales would have increased by 1% or $61,196. This increase relates to the 105% increase in booster sales in the United States specifically in the industrial marketplace offset by the decrease in sales of rugged handsets.

Cost of sales for the nine months ended September 30, 2021, were $3,904,544 compared to $4,507,661 for the same period in the prior year. The gross margin dollars for the nine months ended September 30, 2021 and 2020 was $1,703,285 (30.4% of sales) and $2,169,100 (32.5% of sales) respectively, a negative variance in gross margin by $465,815 (-1.1% in gross margin percentage). This relates to the return of merchandise at a higher gross margin was not sufficient to offset the increase in gross margin from the sale of the industrial boosters in the North American market.

Amortization and depreciation costs for the nine months ended September 30, 2021, and 2020 was $785,655 and $970,690, respectively, a positive variance of $185,035. This positive variance is due to the intangible impairment in 2021 that has reduced the intangible asset cost base eligible for amortization in the period.

Development expenses for the nine months ended September 30, 2021 and 2020 was $818,515 and $Nil, respectively. This negative variance is due to both the development costs incurred on the company’s UR5 rugged handset in the amount of $158,573 that did not meet the criteria for capitalization and management’s decision to expense $659,942 of development costs incurred in Q3 2021 on the SD7 to ensure that the net asset value will be greater than its replacement costs when the independent valuator prepares the annual intangible valuation congruent with the year end audit.

Selling and marketing costs for the nine months ended September 30, 2021 and 2020, were $3,457,375 and $2,574,577, respectively. This negative variance of $862,798 is due mainly to the increase in our U.S. sales team headcount of $1,024,388, a decrease in promotional costs of $16,993 mostly in Israel and a $124,597 decrease in travel expenses.

General and administrative costs for the nine months ended September 30, 2021 and 2020 were $3,257,857 and $1,481,555, respectively. This negative variance of $1,776,302 relates mainly to the increase in insurance of $650,000 and all costs related to moving and renting temporary space for warehouses space in Israel for $125,000, both included in office and general expenses, the increase in internal compliance testing of $35,000, additional investor relations, regulatory filing and communication costs of $347,662, an increase in consulting and director’s fees of $49,244 relating to the director’s fee alignment with NASDAQ companies, an increase in professional fees of $407,419, related to both the increase in fees for U.S. securities attorney, the additional costs for the annual PCAOB audit, the additional cost of a VP Corporate Development, offset by the decrease in management fees from $97,880 to $nil due to the decrease in office sharing arrangement at one of our offices.

Inventory Impairment costs for the nine months ended September 30, 2021 of $3,389,531 versus $Nil for the same period in the prior year relates to a provision for slow moving merchandise specifically $2,915,928 of truckphone devices and specific usage cellular boosters for $473,603. Included in the truckphone impairment includes the UV350 for $1,306,000 due to the return of a large quantity of UV350’s resulting from an overstock and required impairment as well as the write down of other rugged devices of $1,609,928 for the EMEA market.

Bad debts for the nine months ended September 30, 2021 of $548,403 versus $Nil for the same period in the prior year, relates to the reversal of the bad debt provision to a large customer that returned merchandise in June 2021 amounted to $568,224, offset by the increase in bad debts of $1,113,311 related to aged receivables in EMEA and North America that had minimal activity in the amount of $644,943 and $468,368 bad debts related for the provision on sales taxes receivable that may not be collectible.

Intangible Impairment for the nine months ended September 30, 2021 of $4,322,799 versus $Nil for the same period in the prior year, relates to the impairment of the remaining unamortized intangible cost of $2,956,896 for UV350s, $335,147 related to the cost of the UM35 smart watch that was not ready for sale and the project has been put on hold, as well as a $1,030,756 impairment of 100% of the intangible costs of the UR5. These impairments are in management’s opinion an extremely conservative approach.

Goodwill Impairment for the nine months ended September 30, 2021 of $819,454 versus $Nil for the same period in the prior year, relates to management’s decision to fully impair goodwill in its entirety. This goodwill arose upon the acquisition of Signifi Mobile Inc. (acquired in 2016) and due to recurring losses, management was of the opinion that it was necessary to completely impair the goodwill related to this acquisition.

Share-based compensation costs for the nine months ended September 30, 2021 was $1,185,205 versus $202,576 for the same period in the prior year representing an increase of $982,629. The increase in share-based compensation relates to the valuation of stock options vested during the period due to the issuance of 376,500 stock options to employees, management and directors.

Finance expenses for the nine months ended September 30, 2021 was $1,476,335 compared to an expense of $1,396,799 in the same period in the prior year, a negative variance of $79,536. This variance consists mainly of the increase in accretive interest on the 12% $5.6MM debenture as the amount of interest increases as it is closer to maturity.

Foreign exchange loss (income) for the nine months ended September 30, 2021 was of $208,968 compared to income of ($777,940) for the same period in the prior year, a negative variance of $996,908. This variance resulted from foreign currency fluctuations in the period.

Transaction costs for the nine months ended September 30, 2021 of $79,069 compared to an expense of $Nil for the same period in the prior year. This expense relates to the acquisition of Clear RF in the period that it was acquired and are not capitalized since the acquisition was treated as a business combination using the acquisition method of accounting. The costs included are legal fees, due diligence fees and other professional fees.

Net loss for the period

The Company experienced a net loss for the nine months ended September 30, 2021 of ($16,645,881) as compared to net loss of ($3,679,157) for the same period in the prior year, a negative variance of ($14,966,724.) This negative variance was due mainly to, gross margin decrease by $465,815, intangible impairment of $4,322,799, inventory impairment of $3,389,531, increase in development expenses by $818,515, increase in share based payments of $982,629, increase in selling expenses of $882,798, increase in G&A expenses of $1,776,302, increase in foreign exchange of $986,908, increase in finance expenses of $79,536, increase in bad debts of $548,403 and transactions costs of $79,069 and offset by a decrease in amortization of $185,035.

Loss and comprehensive loss for the period

As a result of the activities discussed above, the Company experienced a comprehensive loss for the nine months ended September 30, 2021 of ($16,652,963) as compared to a comprehensive loss of ($4,341,114) for the same period in the prior year, representing a negative variance of $14,311,869.

Adjusted EBITDA

For the nine months ended September 30, 2021 the adjusted EBITDA is negative ($9,768,3962) versus negative ($1,887,032) for the same period in the prior year, a negative variance of $7,881,364. Adjusted EBITDA is defined as the net operating loss excluding depreciation and amortization, intangible impairment, goodwill impairment and share-based compensation expense.

RESULTS OF OPERATIONS FOR THREE MONTHS ENDED SEPTEMBER 30, 2021

The following is an analysis of the Company’s operating results for the three-months ended September 30, 2021, and includes a comparison against the three months ended September 30, 2020.

Operations:

Revenues for the three months ended September 30, 2021 and 2020 were $1,218,875 and $2,262,730, respectively. This negative variance of $1,043,855 (-46%) is due mainly to the increase in sales of boosters by $260,000, a 34% quarter over prior year’s quarter increase offset by the decrease in sales of rugged devices in both North America and EMEA of $1.3MM quarter over prior year quarter.

Cost of sales for the three months ended September 30, 2021 and 2020 was $789,362 and $1,536,994, respectively. The gross margin dollars for the three months ended 2021 and 2020 was $429,513 (35.2% of sales) and $725,736 (32.1% of sales), respectively, a negative variance in gross margin dollars of $296,223. This variance relates to the negative variance in sales offset by the proportion of sales in North America with higher margins than international markets.

Amortization and depreciation costs for the three months ended September 30, 2021 and 2020 was $117,035 and $342,329, respectively, a positive variance of $225,294. This positive variance is due to the intangible impairment in 2021 that has reduced the intangible asset cost base eligible for amortization in the period.

Development expenses for the three months ended September 30, 2021 and 2020 was $659,942 and $Nil, respectively. This negative variance is due to management’s decision to expense $659,942 of development costs incurred in Q3 2021 on the SD7 to ensure that the net asset value will be greater than its replacement costs when the independent valuator prepares the annual intangible valuation congruent with the year end audit.

Selling and marketing costs for the three months ended September 30, 2021 and 2020 was $1,263,195 and $1,026,492 respectively. This negative variance of $236,703 is due mainly to the increase in our U.S. sales team headcount of $375,045, an increase of $10,797 in travel expenses offset by a decrease in promotional costs of $149,139 as part of our NASDAQ listing.

General and administrative costs for the three months ended September 30, 2021 and 2020 of $1,051,846 and $584,453, respectively. This negative variance of $467,393 relates mainly to the increase in insurance for the period of $258,284, increase in internal compliance testing of $35,000, increase in shareholders’ relations and regulatory filing fees of $145,171 related to the additional investor relations for both Canada and U.S. markets, a decrease in consulting and director’s fees of $196,651 relates to the director’s fee alignment with NASDAQ companies, an increase in professional fees of $178,485 related to both the increase in fees for U.S. securities attorney, the additional costs for the annual PCAOB audit, the additional cost of a VP Corporate Development included in salaries of $83,047, offset by the decrease in management fees from $9,841 to $Nil in the prior year period due to the decrease in office sharing arrangement at one of our offices.

Inventory Impairment costs for the three months ended September 30, 2021 and 2020 were $1,550,873 and $Nil, respectively. In Q3 2021, $1,077,269 in EMEA related to the slow moving rugged devices was impaired and $473,603 of a specific booster product that has been slow-moving.

Bad debts for the three months ended September 30, 2021 and 2020 of $772,960 versus $Nil in the prior year period, relates to the bad debt provision of sales taxes receivable in the amount of $468,368, increase in bad debts provision for aged receivables in the EMEA of $360,687 and $55,248 in North America offset by collection of old receivables previously written down in the amount of $111,343.

Intangible Impairment for the three months ended September 30, 2021 and 2020 of $Nil and $Nil, respectively.

Goodwill Impairment for the three months ended September 30, 2021 and 2020 of $Nil and $Nil, respectively.

Share-based compensation costs for the three months ended September 30, 2021 and 2020 was $235,414 and $46,143 respectively, an increase of $189,271. The increase in share-based compensation relates to the valuation of stock options vested during the period due to the issuance of a total of 376,500 stock options to employees, management and directors.

Finance expenses for the three months ended September 30, 2021 and 2020 was $493,647 and $484,739, respectively, a negative variance of $8,908. This variance consists mainly of the increase in accretive interest on the 12% $5.6MM debenture as the amount of interest increases as it is closer to maturity, offset by the decrease in finance expense on long term debt as the principal balance decreases closer to maturity.

Foreign exchange loss (income) for the three months ended September 30, 2021 and 2020 was income of ($47,462) and a loss of $123,561, respectively. This positive variance of $171,023 resulted from foreign currency fluctuations in the period.

Net loss for the period

The Company experienced a net loss for the three months ended September 30, 2021 and 2020 of ($5,667,937) and ($1,881,981), respectively, a negative variance of ($3,785,956). This negative variance was due mainly to a decrease in gross profit of $296,223, development expenses of $659,942, increase in share based payments of $189,271, increase in selling expenses of $236,703, increase in G&A expenses of $467,393, increase in finance expenses of $8,908, increase in bad debts of $772,960, offset by positive variances in foreign exchange of $171,023 and amortization of $225,294.

Loss and comprehensive loss for the period

As a result of the activities discussed above, the Company experienced a comprehensive loss for the three months ended September 30, 2021 and 2021 of ($5,677,274) and ($1,870,348), respectively, representing a negative variance of $3,806,926.

Adjusted EBITDA

For the three months ended September 30, 2021 and 2020 the adjusted EBITDA is negative ($4,869,303) and negative ($885,209), respectively, a negative variance of $3,984,094. Adjusted EBITDA is defined as the net operating loss excluding depreciation and amortization, intangible impairment, goodwill impairment and share-based compensation expense.

LIQUIDITY AND CAPITAL RESOURCES

The Company defines capital as consisting of shareholder’s equity (comprised of issued share capital, reserves, accumulated translation differences and deficit). The Company manages its capital structure to maximize its financial flexibility making adjustments to it in response to changes in economic conditions and the risk characteristics of the underlying assets and business opportunities. The Company does not presently utilize any quantitative measures to monitor its capital, but rather relies on the expertise of the Company’s management to sustain the future development of the business. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. As at September 30, 2021, the Company is subject to externally imposed capital requirements arising from the quarterly payments of interest on the debenture as described in Note 12 to the Financial Statements for the Three and Nine Months Ended September 30, 2021, and the monthly principal and interest payments from the BDC loan described in Note 13. The Company is also subject to a debt covenant in relation to the factoring agreement described in Note 6 for the Three and Nine Months Ended September 30, 2021 and the bank demand line of credit described in Note 12.

Siyata Mobile Israel has a factoring facility with Israeli banks whereby the Bank advances funds to Siyata Mobile Israel and charges a fluctuating interest rate on the advanced funds until it is repaid by the borrowers’ customers. The Bank has a lien on these receivables. The factored receivables are all required to be insured in case of customer default with a financial institution.

The Company’s objective in managing liquidity risk is to maintain sufficient liquidity in order to meet operational and investing requirements at any point in time. The Company has historically financed its operations primarily through a combination of demand loans and the sale of share capital by way of private placements.

As at September 30, 2021 the Company had a cash balance $3,424,541 including restricted cash (December 31, 2020-$16,464,266). The Company had an accumulated deficit of $57,539,751 (December 31, 2020-$38,893,870) and working capital of $4,680 (December 31, 2020-$13,689,663).

Net cash flows related to operating activities used in the nine months ended September 30, 2021 and 2020 were negative ($9,944,537) and negative ($2,467,608), respectively. The increase in cash used of $7,476,929 was primarily due to the increase in the net loss by $14,966,724 offset by the following non-cash expenses: inventory impairments of $3,389,530, intangible impairments of $4,322,799, goodwill impairment of $819,454 and bad debts of $548,404, decrease in amortization of $185,035, increase of share-based payments of $982,629 and accretive interest of $218,970, as well as the increase in the non-cash working capital items by $2,606,956.

The non-cash working capital variances consisting of an increase in accounts payable and accrued liabilities of $2,219,449, increase in inventory before impairment of $4,197,038, and due to related party of $16,940 offset by decrease in trade and other receivables, prepaids, and advances to suppliers of $3,792,591.

Net cash flows used in investing activities for the nine months ended September 30, 2021 and 2020 was negative ($2,450,523) and negative ($1,292,833), respectively, a negative variance of $1,157,690. This variance relates primarily to increase in additions to intangibles of $1,212,165, the acquisition of ClearRF of $122,014, the increase in equipment by $113,043 offset by the reduction in right of use asset additions of $289,532.

Net cash provided by financing activities for the nine months ended September 30, 2021 and 2020 was negative ($599,309) and positive $12,436,384, respectively. This negative variance of $13,035,693 is mainly due to the shares issued as part of the IPO in the prior year in the amount of $11,595,506 versus $645,091 of shares issued for cash of $609,041 and shares issued for debt of $36,050 in 2021, a negative variance of $10,950,415, the early repayment in 2021 of $1,177,786 of the 10% debenture due September 30, 2021 compared to a 2020 debenture rollover for proceeds of $99,815, for a negative variance of $1,277,601, a decrease in the bank loan period over period for a negative variance of $654,059, a negative variance on the net increase in payments on leases of $287,327, negative variance on the repayment of the long term debt of $80,727, offset by the repayment of the director’s loan in the amount of $214,456.

The future success of the Company is dependent on the continued success of its vehicle mounted communications products, its mobile rugged phones and its booster products together with the ability to finance the necessary working capital, at agreeable terms, to support the growth of the business.

The Company’s consolidated unaudited interim audited financial statements have been prepared in accordance with IFRS under the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business rather than a process of forced liquidation. The consolidated audited financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.

Lind Global Partners II, L.P. Transaction

On October 27, 2021, the Company entered into a securities purchase agreement relating to the purchase and sale of a senior secured convertible note (the “Lind Partners Note”) for gross proceeds of USD$6,000,000 (the “Purchase Agreement”) with the Lind Global Partners II, LP, an investment fund managed by The Lind Partners, a New York based institutional fund manager (“Lind”). The following is a description of the transaction with Lind. Certain capitalized terms are set forth in the transaction documents which have been filed as exhibits to the registration statement of which this prospectus is a part.

Proceeds from the Lind Partners Note were used to repay and terminate existing convertible notes, as well as to pay certain fees and costs associated with the transaction. The Purchase Agreement provides for, among other things, the issuance of a USD$7,200,000 Lind Partners Note with a 24-month maturity, 0% annual interest rate, and a fixed conversion price of USD$ 10.00 per share (“Conversion Price”) of the Company’s Common Shares. The Company is required to make principal payments in 18 equal monthly installments commencing 180 days after funding (“Repayment”). At the discretion of the Company, the Repayments can be made in: (i) cash; (ii) Common Shares (after Common Shares are registered) (the “Repayment Shares”); or a combination of both. Repayment Shares will be priced at 90% of the average of the five lowest daily volume weighted average prices (“VWAPs”) during the 20 trading days before the issuance of the Common Shares (the “Repayment Price”). Further, the Lind Partners Note provides for a pricing floor of $2.00 per Common Share (the “Repayment Share Price Floor”) such that Repayment Shares shall be priced at 90% of the average of the five lowest daily VWAPs during the 20 trading days before the issuance of the Common Shares, subject to the Repayment Share Floor Price provided, however, that the Repayment Share Price Floor shall not be applied once that the Company receives Stockholder Approval as required by the Trading Market.

The Company will have the right to buy-back the outstanding face value of the Lind Partners Note at any time with no penalty (“Buy-Back Right”). Should the Company exercise its Buy-Back Right, Lind will have the option to convert up to 25% of the face value of the Lind Partners Note at the lesser of the Conversion Price or Repayment Price. Additionally, the Lind Partners Note ranks senior to other Company debt, excluding certain debt facilities, and is secured over Company assets, as more fully detailed in the Purchase Agreement and Note.

Further, the Purchase Agreement provides that Lind will also receive a common shares purchase warrant to purchase up to 2,142,857 shares of the Company’s Common Shares (“Lind Partners Warrant”). The Lind Partners Warrant may be exercisable with cash payment for 60 months with an exercise price of USD$4.00 per Common Share and may be exercised on a cashless basis in the event that a registration statement covering the underlying Common Shares is not deemed effective. Additionally, in the event that, on any day following the date that is 120 calendar days after the Issue Date, the holder is not able to exercise all or any portion of the Lind Partners Warrant, the Company shall, at the holder’s election, within 90 calendar days following receipt of a written notice from the holder (the “Alternate Issuance Notice”) be required, with respect to all or any portion of the Lind Partners Warrant, as applicable, that cannot be exercised, to pay to the holder an amount of cash equal to the Alternate Issuance Value (as defined below) of the portion of the Lind Partners Warrant that is not exercisable due to the Issuance Cap (as defined below) on the date of such Alternate Issuance Notice (the “Alternate Issuance Shares”). In the event of any Alternate Issuance, the Exercise Shares shall be reduced by the amount of Alternate Issuance Shares. As defined in the Lind Partners Warrant, the “Alternate Issuance Value” means a value equal to the number of Common Shares as to which the Lind Partners Warrant is sought to be exercised (as indicated on the Exercise Notice), multiplied by a per share price equal to the VWAP for the Trading Day immediately preceding the intended date of exercise minus the Exercise Price.

If the Company issues any Equity Interests, other than Exempted Securities, for aggregate proceeds to the Company of greater than $10,000,000, excluding offering costs or other expenses, unless otherwise waived in writing by and at the discretion of Lind Partners, the Company will direct 20% of such proceeds to reduce the principal balance of the Lind Note. Based on the $20,000,000 offering, 20% of said proceeds, or $4,000,000, will be used by the Company to reduce the principal balance of the Lind Note. If the Company issues any equity interests, subject to certain exemptions, at an effective price per share that is less than the exercise price of the Lind Warrant then in effect or without consideration, then the exercise price of the Lind Warrants shall be reduced to a price equal to the consideration per share paid for such additional Common Shares. Based on this capital raise at $2.30 per share, the Lind Warrants would be repriced to $2.30. Prior to this offering, the exercise price of the Lind Warrants is $4.00 per share. If the Company issues any equity interests issued, subject to certain exemptions, at an effective price per share that is less than the conversion price of the Lind Notes then in effect or without consideration, then the conversion price of the Lind Notes shall be reduced to a price equal to the consideration per share paid for such additional Common Shares. Based on this offering at $2.30 per Common Share, the conversion price of the Lind Note would be repriced to $2.30, which would result in 3,130,435 shares to be issued upon conversion of the full $7,200,000 Lind Note. Prior to this offering, the conversion price is $10.00 per share and the shares issued upon conversion of the full $7,200,000 Lind Note would be 720,000.

Both the Lind Partners Note and the Lind Partners Warrant contain certain anti-dilution protection in certain circumstances. The Company is obligated to, and did file a registration statement covering the Common Shares underlying the Lind Partners Note and Lind Partners Warrant which was declared effective by the SEC on December 3, 2021. The Lind Partners Note and Lind Partners Warrant also include a Common Share issuance cap preventing the Company from issuing Conversion Shares or Warrant Shares, as the case may be, in the event that any such issuance would violate any issuance restrictions of the Trading Market, after taking into account all of the Investor Shares (the “Issuance Cap”), as more fully detailed in the Lind Partners Note and Lind Partners Warrant.

Concurrently with the execution of the Purchase Agreement, the Company, its subsidiaries and Lind entered into certain security agreements and guarantees as more fully detailed in the Purchase Agreement.

The Securities Agreement requires that the Company shall hold a special meeting of shareholders (which may also be at the annual meeting of shareholders) on or before the January 27, 2022 the date hereof for the purpose of obtaining the Shareholder Approval; provided, however, such date may be extended to February 27, 2022 in the event the Company receives comments to its proxy statement from the SEC, with the recommendation of the Board of Directors that such proposal be approved, and the Company shall solicit proxies from its shareholders in connection therewith in the same manner as all other management proposals in such proxy statement and all management-appointed proxyholders shall vote their proxies in favor of such proposal. If the Company does not obtain shareholder approval at the first meeting, the Company shall call a meeting every four months thereafter to seek shareholder approval until the date the shareholder approval is obtained. Prior to any such shareholder meeting, the Company shall timely file a proxy circular pursuant to NI 51-102 in compliance in all material respects with the provisions of the Company’s constating documents and all applicable law.

The Purchase Agreement contains customary representations and warranties of the Company and Lind. In addition, the Lind Partners Note contains restrictive covenants and event of default provisions that are customary for transactions of this type.

Off-Balance Sheet Arrangements

We do not have any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. We do not engage in off-balance sheet financing arrangements. In addition, we do not engage in trading activities involving non-exchange traded contracts.

Contractual Obligations

Our primary contractual obligations are our lease obligations as of September 30, 2021, as follows:

Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our current investment policy is to invest available cash in bank deposits with banks that have a credit rating of at least A-minus. Accordingly, some of our cash and cash equivalents is held in deposits that bear interest. Given the current low rates of interest we receive, we will not be adversely affected if such rates are reduced. Our market risk exposure is primarily a result of U.S. dollar/Canadian dollar exchange rates, which is discussed herein and in our financial statements.

Foreign Exchange Risk

Our results of operations and cash flow are subject to fluctuations due to changes in U.S. dollar/Canadian dollar currency exchange rates. A certain portion of our liquid assets is held in U.S. dollars, and the vast majority of our sales and expenses is denominated in U.S. dollars. Currently, we do not hedge our foreign currency exchange risk. In the future, we may enter into formal currency hedging transactions to decrease the risk of financial exposure from fluctuations in the exchange rates of our principal operating currencies. These measures, however, may not adequately protect us from the material adverse effects of such fluctuations.

SIGNIFICANT HIGHLIGHTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021

The following highlights and developments for the three month and six-month period ended June 30, 2021 and to the date of this MD&A:

ACQUISITION OF CLEAR RF LLC

On March 31, 2021, the Company acquired all of the issued and outstanding units of Clear RF LLC (“ClearRF”). In consideration, the Company paid cash of $155,015 and issued 23,949 common shares at a value of $194,985.

As further consideration, the Company is required to make the additional following payments:

This transaction qualifies as a business combination and was accounted for using the acquisition method of accounting. To account for the transaction, the Company has determined the fair value of the assets and liabilities of ClearRF at the date of the acquisition and a purchase price allocation. These fair value assessments require management to make significant estimates and assumptions as well as applying judgment in selecting the appropriate valuation techniques.

The acquisition of ClearRF is consistent with the Company’s corporate growth strategy to continue to acquire complementary, innovative, patented products. The Company plans to leverage ClearRF’s machine to machine booster technology in order to build relationships and facilitate sales of the cellular booster suite of products.

The aggregate amount of the total acquisition consideration is $700,000, comprised as follows:

The purchase price was allocated as follows:

The above acquisition price allocation is considered preliminary and may change before being considered final.

The Company incurred costs related to the acquisition totaling $79,069 to complete the acquisition which were recorded in the statement of loss and comprehensive loss.

Siyata has laid the foundation for greater distribution with expanded partnerships, key new sale hires and expanded product offerings into North America. The pandemic caused by COVID-19 slowed the company’s growth plans for 2021, however business has resumed in all three product categories. Management is hopeful that this momentum will continue, in particular, as it leverages its key sales channels, and with its expanded and refreshed product offerings.

Uniden® UV350 | Many large-scale programs were delayed due to the pandemic, therefore creating pent up demand for this disruptive solution. Active engagements including many customer trials have resumed in 2021 which should translate into robust growth in this product line.

Rugged Handsets | Siyata’s rugged handsets are targeted to the approximately 47 million enterprise task and public sector workers across North America including construction, transport & logistics, manufacturing, energy & utility, public safety and federal government. To date, Siyata has sold its rugged handsets only in international markets. Siyata will expand its footprint in this product category with the launch of the SD7 device, expected to launch in Q4 2021 in North America and in 2022 in Europe. The SD7 is a next generation device and Siyata’s first mission-critical push-to-talk (MCPTT) handset.

Cellular Boosters | The pandemic has helped fuel strong demand for Siyata’s boosters in 2020 and the first half of 2021. We believe this momentum will accelerate in 2021 with programs with existing customers and expanding opportunities in new verticals. For the first six months of 2021, booster sales increased 152% in the United States, specifically in the industrial marketplace, versus the same period in the prior year.

SUBSEQUENT EVENTS

Subsequent to June 30^th, 2021:

On July 21, 2021, the Company issued 5,000 common shares as part of the contractual obligations owed to one of its suppliers.

The following unaudited table sets out selected financial information for the Company on a consolidated basis for the last eight most recently completed quarters. 

RESULTS OF OPERATIONS FOR SIX MONTHS ENDED JUNE 30, 2021

The following is an analysis of the Company’s operating results for the six-months ended June 30, 2021, and includes a comparison against the six months ended June 30, 2020.

Operations:

Revenues for the six months ended June 30, 2021 were $4,388,954 compared to $4,414,031 for the six months ended June 30, 2020. This negative variance of $25,077 (1%) is due mainly to the merchandise return from a customer in Q2 2021 in the amount of $1,130,128. Without this return, year over year sales would have increased by 25% or $1,105,051. This increase relates to the 152% increase in booster sales in the United States specifically in the industrial marketplace offset by the decrease in sales of rugged handsets.

Cost of sales for the six months ended June 30, 2021, were $3,115,182 compared to $2,970,667 for the six months ended June 30, 2020. The gross margin dollars for the six months ended June 30, 2021 was $1,273,772 (29% of sales) versus $1,443,364 (32.7% of sales) for the same period in the previous year, a negative variance in gross margin percentage points by 3.7%. This relates to the return of merchandise at a higher gross margin was not sufficient to offset the increase in gross margin from the sale of the industrial boosters.

Amortization and depreciation costs for the six months ended June 30, 2021 was $668,620 versus $628,361 for the same period in the prior year, a negative variance of $40,259.

Development expenses for the six months ended June 30, 2021 was $158,573 versus $Nil for the same period in the prior year which relates to development costs incurred on the company’s UR5 rugged handset that did not meet the criteria for capitalization.

Selling and marketing costs for the six months ended June 30, 2021, were $2,194,180 compared to $1,548,085 for the same period in the prior year. This negative variance of $646,095 is due mainly to the increase in our U.S. sales team headcount of $649,343, an increase in promotional costs of $132,146 as part of our NASDAQ listing and offset by a $135,394 decrease in travel expenses.

General and administrative costs for the six months ended June 30, 2021were $2,206,011 compared to $897,102 for the same period in the prior year. This negative variance of $1,308,909 relates mainly to the increase in insurance of $500,000, the increase in internal compliance testing of $35,000, additional investor relations and communication costs of $204,646, an increase in consulting and director’s fees of $245,895 relating to the director’s fee alignment with NASDAQ companies, an increase in professional fees of $228,934, related to both the increase in fees for U.S. securities attorney, the additional costs for a PCAOB audit, the additional cost of a VP Corporate Development, offset by the decrease in management fees from $88,039 to $nil due to the decrease in office sharing arrangement at one of our offices.

Inventory Impairment costs for the six months ended June 30, 2021 of $1,838,658 versus $Nil for the same period in the prior year relates to a provision for slow moving merchandise specifically $1,838,658 of truckfone devices including the UV350 for $1,306,000 due to the return of a large quantity of UV350’s resulting from an overstock and required impairment as well as the write down of other rugged devices of $562,658.

Bad debts recovered for the six months ended June 30, 2021 of $224,557 versus $Nil for the same period in the prior year, relates to the reversal of the bad debt provision to a large customer that returned merchandise in June 2021 amounted to $552,626, offset by the increase in bad debts of $328,069.

Intangible Impairment for the six months ended June 30, 2021 of $4,322,799 versus $Nil for the same period in the prior year, relates to the impairment of the remaining unamortized intangible cost of $2,956,896 for UV350s, $335,147 related to the cost of the UM35 smart watch that was not ready for sale and the project has been put on hold, as well as a $1,030,756 impairment of 100% of the intangible costs of the UR5. These impairments are in management’s opinion an extremely conservative approach.

Goodwill Impairment for the six months ended June 30, 2021 of $819,454 versus $Nil for the same period in the prior year, relates to management’s decision to fully impair goodwill in its entirety. This goodwill arose upon the acquisition of Signifi Mobile Inc. (acquired in 2016) and due to recurring losses, management was of the opinion that it was necessary to completely impair the goodwill related to this acquisition.

Share-based compensation costs for the six months ended June 30, 2021 was $949,791 versus $156,433 for the same period in the prior year representing an increase of $793,358. The increase in share-based compensation relates to the valuation of stock options vested during the period due to the issuance of 376,500 stock options to employees, management and directors.

Finance expenses for the six months ended June 30, 2021 was $982,688 compared to an expense of $912,060 in the same period in 2020, a negative variance of $70,628. This variance consists mainly of the increase in accretive interest on the 12% $5.6MM debenture as the amount of interest increases as it is closer to maturity.

Foreign exchange loss (income) for the six months ended June 30, 2021 was of $256,430 compared to income of ($901,501) for the same period in the prior year, a negative variance of $1,157,931. This variance resulted from foreign currency fluctuations in the period.

Transaction costs for the six months ended June 30, 2021 of $79,069 compared to an expense of $Nil for the same period in the prior year. This expense relates to the acquisition of Clear RF in the period that it was acquired and are not capitalized since the acquisition was treated as a business combination using the acquisition method of accounting. The costs included are legal fees, due diligence fees and other professional fees.

Net loss for the period

The Company experienced a net loss for the six months ended June 30, 2021 of ($12,977,944) as compared to net loss of ($1,797,176) for the same period in the prior year, a negative variance of ($11,180,768.) This negative variance was due mainly to, intangible impairment of $4,322,799, inventory impairment of $1,838,658, share based payments of $793,358, selling expenses of $646,095, G&A expenses of $1,308,909, foreign exchange of $1,157,931, finance expenses of $70,628 and transactions costs of $79,069 and amortization of $40,259.

Loss and comprehensive loss for the period

As a result of the activities discussed above, the Company experienced a comprehensive loss for the six months ended June 30, 2021 of ($12,975,709) as compared to a comprehensive loss of ($2,470,766) for the same period in the prior year, representing a negative variance of $10,504,943.

Adjusted EBITDA

For the six months ended June 30, 2021 the adjusted EBITDA is negative ($4,899,093) versus negative ($1,001,823) for the same period in the prior year, a negative variance of $3,897,270. Adjusted EBITDA is defined as the net operating loss excluding depreciation and amortization, intangible impairment, goodwill impairment and share-based compensation expense.

The following is an analysis of the Company’s operating results for the three-months ended June 30, 2021, and includes a comparison against the three months ended June 30, 2020.

Operations:

Revenues for the three months ended June 30, 2021 were $356,979 compared to $2,130,981 in the prior year period. This negative variance of $1,774,002 (-83%) is due mainly to the merchandise return from a customer in Q2 2021 in the amount of $1,130,128. Without this return, year over year sales would have decreased by 30.2% or $643,874.

Cost of sales for the three months ended June 30, 2021, was $823,298 compared to $1,427,342 in the prior year period. The gross margin dollars for the three months ended 2021 was negative $466,319 versus $703,639 (33.0% of sales), a negative variance in gross margin dollars of $1,169,958. This relates to the return of merchandise at a higher gross margin which was not sufficient to offset the increase in gross margin from the sale of the industrial boosters in the quarter.

Amortization and depreciation costs for the three months ended June 30, 2021 was $347,603 versus $304,165 in the prior year period, a negative variance of $43,438.

Development expenses for the three months ended June 30, 2021 was $158,573 versus $Nil in the prior year period relates to development costs incurred on the UR5 that did not meet the criteria for capitalization.

Selling and marketing costs for the three months ended June 30, 2021, were $1,221,221 compared to $753,084 in the prior year period. This negative variance of $468,137 is due mainly to the increase in our U.S. sales team headcount of $399,842, an increase in promotional costs of $114,741 as part of our NASDAQ listing and offset by a $46,446 decrease in travel expenses.

General and administrative costs for the three months ended June 30, 2021, of $1,147,533 compared to $492,276 in the prior year period. This negative variance of $655,257 relates mainly to the increase in insurance for the period of $267,116, increase in internal compliance testing of $35,000, increase in shareholders’ relations of $100,557 related to the additional investor relations for both Canada and U.S. markets, an increase in consulting and director’s fees of $108,300 relates to the director’s fee alignment with NASDAQ companies, an increase in professional fees of $117,475 related to both the increase in fees for U.S. securities attorney, the additional costs for a PCAOB audit, the additional cost of a VP Corporate Development included in salaries of $99,095, offset by the decrease in management fees from $55,240 to $Nil in the prior year period due to the decrease in office sharing arrangement at one of our offices.

Inventory Impairment costs for the three months ended June 30, 2021 of $1,838,658 versus $Nil in the prior year period relates to a provision for slow moving merchandise specifically $1,838,658 of truckfone devices including the UV350 for $1,306,000 due to the return of a large quantity of UV350’s resulting from an overstock and required impairment as well as the write down of other rugged devices of $562,658.

Bad debts recovered for the three months ended June 30, 2021 of $224,557 versus $Nil in the prior year period, relates to the reversal of the bad debt provision to a large customer that returned the merchandise in June 2021 amounted to $568,224, offset by the increase in bad debts of $343,667.

Intangible Impairment for the three months ended June 30, 2021 of $4,322,799 versus $Nil in the prior year period, relates to the impairment of the remaining unamortized intangible cost of the UV350, $2,956,896, $335,147 related to the cost of the UM35 smart watch that was not ready for sale and the project has been put on hold, as well as a $1,030,756 impairment of 100% of the intangible costs of the UR5. These impairments are in management’s opinion an extremely conservative approach.

Goodwill Impairment for the three months ended June 30, 2021 of $819,454 versus $Nil in the prior year period, relates to management’s decision to fully impair goodwill in its entirety. This goodwill arose upon the acquisition of Signifi Mobile Inc. (acquired in 2016) and due to recurring losses, management was of the opinion that it was necessary to completely impair the goodwill related to this acquisition.

Share-based compensation costs for the three months ended June 30, 2021 was $356,999 versus $61,824 in the prior year period, an increase of $295,175. The increase in share-based compensation relates to the valuation of stock options vested during the period due to the issuance of a total of 376,500 stock options to employees, management and directors.

Finance expenses for the three months ended June 30, 2021 was $591,827 compared to an expense of $479,519 in the prior year period, a negative variance of $112,308. This variance consists mainly of the increase in accretive interest on the 12% $5.6MM debenture as the amount of interest increases as it is closer to maturity offset by the decrease in finance expense on long term debt as the principal balance decreases closer to maturity.

Foreign exchange loss (income) for the three months ended June 30, 2021 was income of ($183,891) compared to income of ($760,225) in the prior year period, a negative variance of $576,334. This variance resulted from foreign currency fluctuations in the period.

Net loss for the period

The Company experienced a net loss for the three months ended June 30, 2021 of ($10,862,538) compared to net loss of ($627,004) in the prior year period, a negative variance of ($10,235,534.) This negative variance was due mainly to negative, intangible impairment of $4,322,799, inventory impairment of $1,838,658, share based payments of $295,175, selling expenses of $468,137, G&A expenses of $655,257, foreign exchange of $576,334, finance expenses of $112,308 and amortization of $43,438.

Loss and comprehensive loss for the period

As a result of the activities discussed above, the Company experienced a comprehensive loss for the three months ended June 30, 2021 of ($10,927,718) compared to a comprehensive loss of ($1,016,568) in the prior year period, representing a negative variance of $9,911,150.

Adjusted EBITDA

For the three months ended June 30, 2021 the adjusted EBITDA is negative ($4,607,747) versus negative ($541,721) in the prior year period, a negative variance of $4,066,026. Adjusted EBITDA is defined as the net operating loss excluding depreciation and amortization, intangible impairment, goodwill impairment and share-based compensation expense.

LIQUIDITY AND CAPITAL RESOURCES

The Company defines capital as consisting of shareholder’s equity (comprised of issued share capital, reserves, accumulated translation differences and deficit). The Company manages its capital structure to maximize its financial flexibility making adjustments to it in response to changes in economic conditions and the risk characteristics of the underlying assets and business opportunities. The Company does not presently utilize any quantitative measures to monitor its capital, but rather relies on the expertise of the Company’s management to sustain the future development of the business. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. As at June 30, 2021, the Company is subject to externally imposed capital requirements arising from the quarterly payments of interest on the debenture as described in Note 12, and the monthly principal and interest payments from the BDC loan described in Note 13. The Company is also subject to a debt covenant in relation to the factoring agreement described in Note 6 and the bank demand line of credit described in Note 12.

Siyata Mobile Israel has a factoring facility with Israeli banks whereby the Bank advances funds to Siyata Mobile Israel and charges a fluctuating interest rate on the advanced funds until it is repaid by the borrowers’ customers. The Bank has a lien on these receivables. The factored receivables are all required to be insured in case of customer default with a financial institution.

The Company’s objective in managing liquidity risk is to maintain sufficient liquidity in order to meet operational and investing requirements at any point in time. The Company has historically financed its operations primarily through a combination of demand loans and the sale of share capital by way of private placements.

As at June 30, 2021 the Company had a cash balance $5,819,387 including restricted cash (Dec 31, 2020-$16,464,266). The Company had an accumulated deficit of $51,871,814 (Dec 31, 2020-$38,893,870) and working capital of $5,355,098 (December 31, 2020-$16,781,351).

Net cash flows related to operating activities used in the six months ended June 30, 2021 were ($7,992,781) (YTD 2020-($1,584,094). The increase in cash used of $6,408,687 was primarily due to the increase in the net loss by $11,180,768 net of both the increase in share based payments of $793,358 and accretive interest of $122,146, amortization of $40,259, as well as the increase in the non-cash working capital items by $2,940,036. The non-cash working capital variances consisting of an increase in accounts payable and accrued liabilities of $1,067,967, increase in inventory before impairment of $3,597,858, and due to related party of $16,097 offset by decrease in trade and other receivables, prepaids, and advances to suppliers of $1,741,886.

Net cash flows used in investing activities for the six months ended June 30, 2021 was negative $2,387,399 (2020-negative $1,545,923), a negative variance of $841,476. This variance relates primarily to increase in additions to intangibles of $670,326, the acquisition of ClearRF of $122,014 and the increase in equipment by $49,136.

Net cash provided by financing activities for the six months ended June 30, 2021 was negative ($393,236) (2020 negative $48,977). This negative variance of $344,259 relates mainly to the early repayment of $1,177,786 of the 10% debenture due June 30, 2021 and the increase in payments on leases and long term debt of $57,122 offset by the increase in the bank loan of $67,152, offset by the shares issued for cash of $609,041 and the repayment of the director’s loan in the amount of $214,456.

The future success of the Company is dependent on the continued success of its vehicle mounted communications products, its mobile rugged phones and its booster products together with the ability to finance the necessary working capital, at agreeable terms, to support the growth of the business.

The Company’s consolidated unaudited interim audited financial statements have been prepared in accordance with IFRS under the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business rather than a process of forced liquidation. The consolidated audited financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.

Share Capital

Issued and outstanding:

As at June 30, 2021, the Company had 4,816,191 common shares issued and outstanding.

As at December 31, 2020, the Company had 4,663,331 common shares issued and outstanding and 40,000 shares to be issued to a consultant for service rendered as part of the share issue costs that were accrued in 2020 and issued in February 2021.

On September 24, 2020, the Company consolidated its common shares (“Shares”) on the basis of 145 pre-consolidation Shares for one (1) post-consolidation Share. Share amounts have been retrospectively restated to reflect the post consolidation number of shares.

2021 Capital Transactions:

Stock Options:

The Company has a shareholder approved “rolling” stock option plan (the “Plan”) in compliance with TSX-V policies. Under the Plan the maximum number of shares reserved for issuance may not exceed 10% of the total number of issued and outstanding common shares at the time of granting. The exercise price of each stock option shall not be less than the market price of the Company’s stock at the date of grant, less a discount of up to 25%. Options can have a maximum term of ten years and typically terminate 90 days following the termination of the optionee’s employment or engagement, except in the case of retirement or death. Vesting of options is at the discretion of the Board of Directors at the time the options are granted.

A summary of the Company’s stock option activity is as follows:

Transactions from January 1, 2021 to the date of this MD&A are as follows:

In January 2021, the Company issued 100,500 stock options at $11.50 to employees, consultants, directors and management.

Stock options outstanding at June 30, 2021 and the date of this MD&A are as follows:

Agent’s options

A summary of the Company’s agents’ options activity is as follows:

No Transactions from January 1, 2021 until the date of this MD&A are as follows:

At June 30, 2021 and the date of this MD&A agents’ options outstanding are as follows:

Share Purchase Warrants:

A summary of the Company’s warrant activity is as follows:

Transactions from January 1, 2021 until both June 30, 2021 and the date of the MD&A are as follows:

In February 2021, 88,911 share purchase warrants at $6.85 were exercised for net proceeds of $609,041 and 10,897 share purchase warrants expired.

Share purchase warrant activity was as follows:

At June 30, 2021, share purchase warrants outstanding and exercisable are as follows:

On August 29, 2021, 25,863 share purchase warrants expired.

FINANCIAL INSTRUMENTS

Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values.

Financial instruments measured at fair value are classified into three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly;

Level 3 – Inputs that are not based on observable market data.

The fair values of the Company’s cash, trade and other receivables, due from related party, and accounts payable and accrued liabilities approximate carrying value, which is the amount recorded on the consolidated statement of financial position.

The Company is exposed to varying degrees to a variety of financial instrument related risks:

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. The Company places its cash with institutions of high credit worthiness. Management has assessed there to be a low level of credit risk associated with its cash balances.

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the demographics of the Company’s customer base, including the default risk of the industry and country in which customers operate, as these factors may have an influence on credit risk. Approximately 31% of the Company’s revenues for the three months’ ended September 30, 2020 (2019- 29%) are attributable to sales transactions with a single customer.

The Company has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company’s standard payment and delivery terms and conditions are offered. The Company’s review includes external ratings, when available, and in some cases bank references. Purchase limits are established for each customer, which represent the maximum open amount without requiring approval from the Risk Management Committee; these limits are reviewed quarterly. Customers that fail to meet the Company’s benchmark creditworthiness may transact with the Company only on a prepayment basis.

More than 80% of the Company’s customers have been active with the Company for over four years, and no impairment loss has been recognized against these customers. In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are an individual or legal entity, whether they are a wholesale, retail or end-user customer, geographic location, industry, aging profile, maturity and existence of previous financial difficulties. Trade and other receivables relate mainly to the Company’s wholesale customers. Customers that are graded as “high risk” are placed on a restricted customer list and monitored by the Company, and future sales are made on a prepayment basis.

The carrying amount of financial assets represents the maximum credit exposure, notwithstanding the carrying amount of security or any other credit enhancements.

The maximum exposure to credit risk for trade and other receivables at the reporting date by geographic region was as follows:

Credit risk

The maximum exposure to credit risk for trade and other receivables at the reporting date by geographic region was as follows:

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’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 both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

The Company examines current forecasts of its liquidity requirements so as to make certain that there is sufficient cash for its operating needs, and it is careful at all times to have enough unused credit facilities so that the Company does not exceed its credit limits and is in compliance with its financial covenants (if any). These forecasts take into consideration matters such as the Company’s plan to use debt for financing its activity, compliance with required financial covenants, compliance with certain liquidity ratios, and compliance with external requirements such as laws or regulation.

The Company uses activity-based costing to cost its products and services, which assists it in monitoring cash flow requirements and optimizing its cash return on investments. Typically, the Company ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 90 days, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.

The Company has a factoring agreement with external funding (Note 6).

With the exception of employee benefits, the Company’s accounts payable and accrued liabilities have contractual terms of 90 days. The employment benefits included in accrued liabilities have variable maturities within the coming year.

Market risk

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 functional currency of the Company is the USD as of October 1, 2020 as discussed in Note 2. As at June 30, 2021 the Company’s exposure to foreign currency risk with respect to financial instruments is as follows:

Interest rate risk is the risk that the fair value of future cash flows will fluctuate as a result of changes in interest rates. The Company’s sensitively to interest rates is currently immaterial as the Company’s debt bears interest at fixed rates.

The Company is exposed to price risk with respect to equity prices. Equity price risk is defined as the potential adverse impact on the Company’s earnings due to movements in individual equity prices or general movements in the level of the stock market. The Company closely monitors individual equity movements, and the stock market to determine the appropriate course of action to be taken by the Company.

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of the consolidated financial statements in conformity with IFRS requires management to make estimates, judgments and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates:

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Information about critical estimates in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements are, but not limited to the following:

Information about critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements are, but are not limited to, the following:

RECENT ACCOUNTING PRONOUNCEMENTS

None than specifically apply to the Company as evaluated by management.

Related Party Transactions

Key Personnel Compensation

Key management personnel include those persons having authority and responsibility for planning, directing and controlling the activities of the Company as a whole. The Company has determined that key management personnel consists of executive and non-executive members of the Company’s Board of Directors and corporate officers. The remuneration of directors and key management personnel for the six months ended June 30, 2021 and 2020 are as follows:

Other related party transactions are as follows:

Loan to Director

On April 1, 2019 the Company loaned to a Director $200,000 USD. This loan is for a term of 5 years with interest charged at rate of 7% per annum payable quarterly. As of January 1, 2020, the interest rate on the loan has been increased to 12% per annum. There are no capital repayment requirements until the end of the term when a balloon payment of the principal balance is required. The director repaid the loan on May 23, 2021.

OFF-BALANCE SHEET ARRANGEMENTS

The Company had no off-balance sheet arrangements.

SIGNIFICANT HIGHLIGHTS FOR THE YEAR ENDED DECEMBER 31, 2020

The following are highlights and developments for the year ended December 31, 2020:

Q1 2020

Q2 2020

Q3 2020

Q4 2020

OUTLOOK

Leading up to and including the year 2020, Siyata has laid the foundation for greater distribution with expanded partnerships, key new sale hires and expanded product offerings into North America. The pandemic slowed the company’s growth plans for 2020, however business has resumed aggressively in all three product categories beginning in 2021. Management is hopeful that this momentum will continue, in particular, as it leverages its key sales channels, and with its expanded and refreshed product offerings.

Uniden® UV350 | Many large-scale programs were delayed due to the pandemic, therefore creating pent up demand for this disruptive solution. Active engagements including many customer trials have resumed in 2021 which should translate into robust growth in this product line.

Rugged Handsets | To date, Siyata has sold its rugged handsets only in international markets. With the previously announced partnership with Softil’s BEEHD technology (March 16, 2021), management is hopeful the launch of this new product, our first mission-critical push to talk (MCPTT) handset, will expand our footprint in this product category in North America beginning in the second half of 2021.

Cellular Boosters | The pandemic helped drive record demand for Siyata’s boosters in 2020. We believe this momentum will accelerate in 2021 with programs with existing customers and expanding opportunities in new verticals.

RESULTS OF OPERATIONS FOR YEAR ENDED DECEMBER 31, 2020

The following is an analysis of the Company’s operating results for the year ended December 31, 2020 and includes a comparison against the year ended December 31, 2019.

Operations:

Revenues for the year ended December 31, 2020 were $5,989,772 compared to $9,812,188 for the year ended December 31, 2019. This negative variance of $3,822,416 (-39%) is due mainly to the decrease in sales in EMEA of $4.7 million, year over year, offset by the increase in North American and Australian revenues of $0.8 million and $0.1 million, respectively.

This decline in revenues in EMEA was due to the Company making accommodations to customers, that could not install the mobile units. The installation issue arose as a result of Covid-19 and government agency contract delays due to country’s fiscal budgets were not approved. In order to maintain these key customer relationships, the Company made the business decision to accept these returns.

Booster sales increased by 32% in 2020 over 2019. The decrease in sales in the EMEA region is due to delays in government contract tenders. As a result, geographic mix of North American sales was 73% of total revenues in 2020 versus 36% in 2019.

Cost of sales for the year ended December 31, 2020 were $4,409,655 compared to $7,122,823 for the year ended December 31, 2019. The gross margin dollars for 2020 was $1,580,117 (26.4% of sales) compared to $2,689,365 (27.4% of sales in the previous year) a negative variance in gross margin percentage by 1.0% and a negative variance of $1,109,248 in gross margin dollars year over year. The decrease in gross margin dollars is attributable to the negative sales variance of 39% as well as the returns of merchandise by customers on sales to the EMEA totaling $1.7MM.

Amortization and depreciation costs for the year ended December 31, 2020 was $1,280,122 compared to $1,168,594 for the year ended December 31, 2019. The negative variance of $111,528 relates mainly due to increase in amortization of the UV350 included in the intangible assets for the full year in 2020 compared to a partial year in 2019.

Development expenses for the year ended December 31, 2020 were $560,236 compared to $757,404 for the year ended December 31, 2019, a positive variance of $197,168 This expense is for development expenses related to the UR5 ruggedized device that did not meet the criteria for capitalization.

Selling and marketing costs for the year ended December 31, 2020 were $3,691,844 compared to $3,559,602 for the year ended December 31, 2019. This negative variance of $132,242 is due mainly to the reduction in advertising and marketing costs by leveraging carrier sales staff in the amount of $275,510, the decrease in travel and tradeshow expenses of $148,168, offset by the $555,920 increase in our US sales team headcount in the year.

General and administrative costs for the year ended December 31, 2020 of $2,857,550 compared to $2,322,681 for the year ended December 31, 2019. This negative variance of $534,869 relates mainly to the increase in consulting and professional fees for the IPO of $0.5 million, the increase in office and general expenses of $0.3 million due to increased liability insurance, offset by the decrease in management fees by $0.2 million due to the decrease in office sharing arrangement at one of our offices and the decrease in travel expenses of $37,353.

Bad debts for the year ended December 31, 2020, was $1,530,667 compared to zero in the previous year. The bad debt provision taken in Q4 2020 is a result of the Company’s policy to take a bad debt provision on any customer that has overdue receivables. Due to Covid-19 global impact and government tender delays in the EMEA, the Company provided extended payment terms to key customers which was expected to allow sufficient lead time for collections of these receivables which did not materialize. Therefore, the corresponding provision for bad debts of $775,092 was provided for Israeli accounts and $755,575 for North America customers.

Inventory impairment for the year ended December 31, 2020, was $1,571,649 compared to $212,000 in Q4 2019, a negative variance of $1,359,649. The Q4 2020 inventory impairment results from, (i) an impairment of $530,000 on the aging of the inventory returns from key customers resulting in excess inventory of like items in Q4 2020, as discussed in the revenues section above, (ii) an impairment of $725,806 for finished goods merchandise on excess of inventory resulting from the returns of the same product, and (iii) an impairment totaling $316,000 on spare parts obsolescence.

Impairment of intangible assets for the year ended December 31, 2020 was $293,000 compared to $111,521 in 2019, a negative variance of $181,479. These impairments in 2020 were for the write off of the remaining balance of intangibles that had been capitalized for both a vehicle phone, specifically for the EMEA market, that is near the end of its sales cycle in the amount of $184,000, and $109,869 for a rugged hand-held device for the EMEA market that is near the end of its sales cycle. In Q4 2019 the $111,521 impairment related to the reduction in future value of the E-Wave exclusive supplier and sales agreement. The Company engaged a professional evaluator which supported management’s impairment conclusions.

Share-based payments for the year ended December 31, 2020 was $517,678 compared to $1,123,154 for the year ended December 31, 2019, a positive variance of $605,476. This variance relates to the valuation of stock options vested during the period.

Finance expenses for the year ended December 31, 2020 was $1,744,273 compared to an expense of $962,263 for the year ended December 31, 2019 for a negative variance of $782,010. This variance consists mainly of the increase in the interest and accretive interest on the debenture debt of $1,050,408, the increase in interest on lease obligations of $2,639, offset by the decrease in other bank loan interest of $217,200, the gain on conversion of the debenture of $16,712, the decrease in interest on long term-debt of $4,307, and other interest and bank charge decrease of $19,818.

Foreign exchange loss (income) for the year ended December 31, 2020 was income of ($290,401) compared to an expense of $106,745 for the year ended December 31, 2019 for a positive variance of $397,146. This variance resulted from foreign currency fluctuations in the period.

Transaction costs for the year ended December 31, 2020 of $1,414,616 compared to an expense of nil in 2019. This variance resulted from the portion of expense related to the uplisting to NASDAQ that could not be capitalized including legal fees of $358,000, accounting fees of $38,000, consulting fees of $692,000, filing fees of $179,000 and marketing expenses of $147,000.

Accretion and change in value of future contingent consideration resulted in an expense for the year ended December 31, 2020 of Nil versus an expense of $22,609 for the year ended December 31, 2019. This is due to 2020 the future purchase considerations was fully extinguished.

Net loss for the year

The Company experienced a net loss for the year ended December 31, 2020 of ($13,591,117) as compared to net loss of ($7,657,208) for the year ended December 31, 2019, a negative variance of ($5,933,909.) This negative variance is due mainly to negative variances in gross margin of $1.1MM, amortization of $0.1MM, selling expenses of $0.1MM, G&A expenses of $0.5MM, bad debts of $1.5MM, inventory impairment of $1.4MM, impairment in intangible assets in the year of $0.2MM, finance expenses of $0.8MM, transaction costs of $1.4MM, offset by positive variances in development expenses of $0.2MM, share based compensation of $0.6MM, foreign exchange of $0.4MM.

Loss and comprehensive loss for the year

As a result of the activities discussed above, the Company experienced a comprehensive loss for the year ended December 31, 2020 of ($13,588,230) as compared to a comprehensive loss of ($7,665,708) for the year ended December 31, 2019, representing a negative variance of $5,922,522.

Adjusted EBITDA

For the year ended December 31, 2020, the adjusted EBITDA is negative ($7,101,162) versus negative ($4,162,322) in 2019, a negative variance of $2,938, 840. Adjusted EBITDA is defined as the net operating loss excluding depreciation and amortization, share-based compensation expense, bad debts and impairment in intangible assets.

RESULTS OF OPERATIONS FOR YEAR ENDED DECEMBER 31, 2019

The following is an analysis of the Company’s operating results for the year ended December 31, 2019 and includes a comparison against the year ended December 31, 2018.

Operations:

Revenues for the year ended December 31, 2019 were $9,812,188 compared to $10,981,114 in 2018, a negative variance of $1,168,926, (-10.6%) is due mainly to the $796,000 increase of sales in North America (representing a year over year increase of 29%) resulting from initial demand for our Uniden® UV350 4G In-vehicle product in North America in 2019 as a direct result of certification with Tier One mobile operators offset by the $1,936,000 decrease in sales in Europe and the Middle East, representing a 23% decrease year over year of Siyata’s 3G legacy products.

Cost of sales for the year ended December 31, 2019 were $7,122,823 compared to $9,390,768 in 2018. The gross margin dollars for 2019 was $2,689,365 (27.4% of sales) compared to $1,590,346 (14.5% of sales), a positive variance in gross margin percentage by 12.9% and a positive variance of $1,099,019 in gross margin dollars year over year. The increase in gross margin dollars is due to the higher overall margins in the North American marketplace a result of sales of the Uniden® UV350 4G In-vehicle sold in 2019 offset by the lower sales volume of 10.6%.

Amortization and depreciation costs for the year ended December 31, 2019 was $1,168,594 compared to $544,208 in 2018, a negative variance of $624,386 relates mainly due to the amortization required under IFRS 16 of $103,207 in 2019, not applied prior to 2019, as well as the increase in depreciation in the year in the UV350 on the new portfolio of 4G as well as the increase in amortization of the 3G remaining products in the amount of $66,323.

Development expenses for the year ended December 31, 2019 was $757,404 compared to Nil in 2018. This expense is for development expenses related to the UR5 ruggedized device that did not meet the criteria for capitalization.

Selling and marketing costs for the year ended December 31, 2019 were $3,559,602 compared to $4,207,746 in 2018, a positive variance of $648,144 and is due mainly to an increase in selling salaries and commissions on the suite of new products in the amount of $381,752, the decrease in additional advertising and marketing costs of $1,037,328 due to the engaging of salaried employees to promote the new products in North America and globally including trial samples, tradeshows and targeted promotional activities and a marginal increase of $7,432 in travel related costs.

General and administrative costs for the year ended December 31, 2019 of $2,322,681 compared to $2,261,990 in 2018, a negative variance of $60,691 relates mainly to the negative variance in salaries in the year of $170,753 related to the increase in direct hires, offset by the positive variance in lower management fees of $123,284, a negative variance in the increase in director and consulting fees of $135,895 in the year for management salaries and increase in the number of Directors, the positive variance in professional services of $104,435 relating to less consultants in the year, the slight negative variance in G&A travel of $7,077, the positive variance in office and general of $6,666 related to cost rationalization, a negative variance in regulatory and filing fees of $27,494 related to costs for both TSX.V and OTCQX additional fees, and a positive variance of $59,475 related to shareholder relations resulting from costs rationalization.

Inventory impairment for the year ended December 31, 2019 was $212,000 compared to Nil in 2018. The inventory impairment results from the provision for inventory of products at the end of their lifecycle.

Impairment of intangible assets for the year ended December 31, 2019 was $111,521 compared to 1,508,880 in 2018, a positive variance of $1,397,359. Impairment in 2019 was on the E-wave license as compared to the write down of the CP-200 rugged phone.

Share-based payments for the year ended December 31, 2019 was $1,123,154 compared to $850,747 in 2018, a negative variance of $272,407. This variance relates to the valuation of stock options vested during the period.

Finance expenses for the year ended December 31, 2019 was $962,263 compared to $753,257 in 2018, a negative variance of $209,006. This variance consists mainly of the loss of $133,195 on the rollover of the 10.5% debenture, included in finance expenses, as well as the additional accrual in Q4 2019 on the 12% debenture of $49,751, the interest on the lease obligations in 2019 of $11,406 and the increase in other interest and bank charges of $14,654.

Foreign exchange loss (income) for the year ended December 31, 2019 was $106,745 compared to income of $40,261 in 2018, a negative variance of $147,006. This variance resulted from foreign currency fluctuations in the period.

Accretion and change in value of future contingent consideration resulted in an expense for the year ended December 31, 2019 of $22,609 versus an expense of $400,886 in 2018, a positive variance of $378,277 and is due to, at of the end of Q2 2019, the Company did not have any contingent consideration and therefore had no accretion expense compared to a large accretion expense due to a fluctuating stock price in 2018 required for the future purchase consideration.

Net loss for the year

The Company experienced a net loss for the year ended December 31, 2019 of ($7,657,208) as compared to ($8,897,107) in 2018, a positive variance of $1,239,899. This positive variance is due mainly to a positive variance of $1,099,019 in gross margin dollars, a positive variance of $648,144 in selling and marketing expenses, a positive variance of $1,397,359 in impairment of intangible assets, a positive variance of $378,277 in accretion and change in value of future contingent consideration, offset by a negative variance of $624,386 in amortization and depreciation, a negative variance of $757,404 in development expenses, a negative variance of $60,691 in general and administrative expenses, inventory impairment variance of $212,000, a negative variance of $272,407 in share based compensation, a negative variance of $209,006 in finance expenses, a negative variance of $147,006 in foreign exchange.

Loss and comprehensive loss for the year

As a result of the activities discussed above, the Company experienced a comprehensive loss for the year ended December 31, 2019 of ($7,665,708) as compared to ($8,864,436) for 2018, representing a positive variance of $1,198,728.

Adjusted EBITDA

For the year ended December 31, 2019 the adjusted EBITDA is negative ($4,162,322) versus negative ($4,879,390) in 2018, a positive variance of $717,068. Adjusted EBITDA is defined as the net operating loss excluding amortization and depreciation, share-based compensation expense, bad debts impairment and impairment in intangible assets.

LIQUIDITY AND CAPITAL RESOURCES

The Company defines capital as consisting of shareholder’s equity (comprised of issued share capital, reserves, accumulated translation differences and deficit). The Company manages its capital structure to maximize its financial flexibility making adjustments to it in response to changes in economic conditions and the risk characteristics of the underlying assets and business opportunities. The Company does not presently utilize any quantitative measures to monitor its capital, but rather relies on the expertise of the Company’s management to sustain the future development of the business. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. As at December 31, 2020, the Company is only subject to externally imposed capital requirements arising from the quarterly payments of interest on the debenture as described in Note 11 of the Financial Statements for the year ended December 31, 2020, and the monthly principal and interest payments from the BDC loan described in Note 10. The Company is also subject to a debt covenant in relation to the factoring agreement described in Note 4 of the Financial Statements for the year ended December 31, 2020 and the bank demand line of credit described in Note 11.

Siyata Mobile Israel has a factoring facility with Israeli banks whereby the Bank advances funds to Siyata Mobile Israel and charges a fluctuating interest rate on the advanced funds until it is repaid by the borrowers’ customers. The Bank has a lien on these receivables. The factored receivables are all required to be insured in case of customer default with a financial institution.

The Company’s objective in managing liquidity risk is to maintain sufficient liquidity in order to meet operational and investing requirements at any point in time. The Company has historically financed its operations primarily through a combination of demand loans and the sale of share capital by way of private placements.

For the year ended December 31, 2020 compared to the year ended December 31, 2019:

As at December 31, 2020 the Company had a cash balance including restricted cash of $16,465,266 (December 31, 2019: $2,661,575,). The Company had an accumulated deficit of $38,893,870 in 2020, (2019 a deficit of $25,302,753) and working capital of $13,689,663 (December 31, 2019: $5,149,500,).

Net cash flows and restricted cash used, related to operating activities in 2020 were ($9,989,856) compared to cash used of ($6,726,135) in 2019). The increase in cash used of $3,263,721 was primarily due to the increase in the net loss by $5,933,909, offset by, the increase in amortization of $111,528 (related to the UV350 and the right of use lease amortization), the bad debt provision of $1,530,667, the inventory impairment of $1,359,649, the increase in intangible impairment of $181,479, an increase in accretive net finance fees of $571,394, foreign exchange of $138,691, the loss on debt conversion of $16,712 offset by the decrease in amortization of share based payments of $605,476, and the decrease in the non-cash working capital items by $634,456. The non-cash working capital variances consisting of an increase in accounts payable and accrued liabilities of $2,259,958, decrease in inventory of $667,057, decrease due to related party of $8,092 offset by a decrease in trade and other receivables, prepaids, and advances to suppliers of $2,219,265.

Net cash flows used in investing activities for the year ended December 31, 2020 was $1,534,706 compared with $2,380,196 in the year ended December 31, 2019, a positive variance of $845,490. This variance relates primarily to reduction in multiple carrier device approval certification costs incurred in 2019 that did not recur in this year in the amount of $866,626 offset by the increase in equipment by $21,136.

Net cash provided by financing activities for the year ended December 31, 2020 was $25,348,649 compared to $9,505,541 in2019. This positive variance of $15,843,108 relates mainly to the initial public offering on NASDAQ and the private placements that had proceeds net of share issuance costs of $25,035,382 in 2020 versus $2,270,831 in 2019 for a net positive variance of $22,764,551, a positive variance on the bank loan by $437,848, the positive variance due to the prior years’ loan to director of $200,000, the negative variance from the exercise of warrants and agents’ options in the prior year totaling 5,777,622 (exercise of 80,865 share purchase warrants for proceeds of $5,529,858 in the prior year plus the exercise of 5,668 agents’ options for proceeds of $247,764 in the prior year), negative variance in proceeds from debenture financing in 2019 over 2020 by $1,586,418, negative variance on the increase in lease liability payments by $10,534, and negative variance on the long term debt-BDC- principal payment increase of $19,376 over the prior year.

The future success of the Company is now dependent on the continued success of its vehicle mounted communications products, its mobile rugged phones and its Booster systems in the market together with the ability to finance the necessary working capital, at agreeable terms, to support the growth of the business.

CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

The preparation of the consolidated financial statements in conformity with IFRS requires management to make estimates, judgments and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates:

Critical accounting estimates

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Information about critical estimates in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements are, but not limited to the following:

Critical accounting judgments

Information about critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements are, but are not limited to, the following:

RECENT ACCOUNTING PRONOUNCEMENTS

Management does not believe that any recent accounting pronouncement apply specifically to the Company.

BUSINESS

The Problem

Businesses and organizations that rely on commercial vehicle fleets to carry out critical business functions and operations have historically used two-way radios (“Land Mobile Radios” or “LMR”) to communicate between drivers and headquarters. LMR communication devices have historically encountered several challenges. These devices are typically expensive, generally consisting of older and outdated technology. LMR devices are also limited in their range of communication, as local radio bandwidth is limited. Most devices are restricted to communications in one metro areas with limited connectivity with neighboring areas, agencies or companies, hindering headquarters’ ability to communicate with their vehicles. Occasionally, vehicles communicating through LMR will often encounter a communication “dead zone,” thus hindering these vehicles’ abilities to communicate during times of emergencies. They are single-purpose devices, allowing for communications through “push-to-talk” (“PTT”) broadcasting with limited additional features.

UV350 In-Vehicle Solution

The Uniden® UV350 (the “UV350”) is the world’s first and only smartphone with 4G/LTE capabilities specifically designed for in- vehicle usage, optimizing mobile communications for on the road commercial fleet vehicles. Unlike existing Land Mobile Radio (LMR) technology, that operates over radio signals, the UV350 operates over standard 4G cellular networks. The UV350 received United States Federal Communications Commission’s approval as a cellular device, Industry Canada’s approval, certification of PCS Type Certification Review Board (“PTCRB”), Google GMS certification, and Conformité Européenne (“CE”) and Emark certification. The UV350 and has been certified or approved for manufacturing or sale by several North American wireless carriers, or our “channel partners,” including AT&T, Bell Mobility, Rogers, Verizon and by several international wireless carriers. The UV350’s reputation and approvals from industry leaders represent a barrier to entry for potential direct competitive devices, with North American carrier for in-vehicle devices for fleet communication.

AT&T, our largest channel partner, represented 14% of our revenues in 2020. AT&T did not enter into a master services agreement with the Company, but rather, enters into standard purchase order forms on a per order basis. We do does not obligate AT&T to fulfill any required minimum purchase orders. Our typical purchase order contracts with AT&T involve standard warranties and indemnification, insurance requirement and delivery terms. Each separate purchase order agreement can be terminated by AT&T within 10 days’ notice upon notice of and failure to cure any breach by the Company of such agreement. 

The UV350 contains several unique features, including:

Our Rugged Handheld Solution

Siyata has entered into supply agreements with several North American wireless carriers. The Company believes that additional complementary PTT devices can be offered by Siyata to these wireless carriers. The rugged handheld market, smartphones designed specifically to withstand hardship and exposure, have relatively few competitors, and wireless carriers appear poised to expand their offerings in this category.

Siyata currently offers a rugged handheld clamshell device (UR7) outside of North America for customers who demand a cost-effective high performing PTT device. Another rugged handheld device (UR5) is intended to complement our commercial vehicle devices for international markets and will support popular Push-to-Talk apps. Key vertical markets for rugged handheld devices are construction job sites, warehouses, factories, hotels, retail stores, schools, landscaping crews, special events. Customers who would consider our rugged handheld devices are looking to increase the worker’s productivity, and to reduce their total cost of ownership compared to other devices.

In Q3 2021, Siyata unveiled its next generation rugged device, the SD7. The SD7 is Siyata’s first mission critical push-to-talk device (MCPTT) and is also the first rugged handset that Siyata will offer in North America, expected in the second half of 2021, then in Europe in 2022. With this device, Siyata expects to increase its MCPTT market share not only in the first responder market, but also in the utilities, transportation and waste management markets.

Our Cellular Booster Solution

We offer a full line of cellular boosters, a device intended to form a wireless system to boost cellular reception, under the brand name Uniden®. We have entered into a partnership whereby Uniden America Corporation has granted the exclusive license to Siyata Mobile to market cellular signal boosters under the Uniden® brand name within the U.S. and Canada. As a world-wide leader in wireless communications, Uniden America Corporation, the North American subsidiary of Japan-based Uniden Corporation, manufactures and markets wireless consumer electronic products. Based in Fort Worth, Texas, Uniden sells its products through dealers and distributors throughout North, Central and South America. Uniden Cellular booster kits solve issues of poor reception, dropped calls, lost data and transmission quality issues that users routinely experience on every cellular network. These easy-to-install cellular booster kits are designed for homes, cabins, offices, and buildings to improve the cellular signal reception indoors, allowing people to use their cellular phones indoors where they previously could not do so. We also offer models designed for vehicles, both wired and wireless boosters, to improve the cellular reception inside a vehicle that is driving in a weak cellular signal area. Uniden cellular signal boosters offer kits designed to offer cellphone coverage for difference distances, including kits for a small area of 1 or 2 rooms, and more expansive solutions that will cover over 100,000 sq. ft. Our cellular signal boosters are carrier agnostic to ensure the best signal integrity, supporting 2G, 3G, 4G and soon 5G (in development) technologies on all carriers operating in North America.

The Uniden® U60C 4G Cellular Booster and Uniden® U65C 4G Cellular Booster are user friendly devices that simply require plugging it into a power source and turning it on. The device will automatically adjust to provide the user with a boosted cellular signal in their trouble zone. These devices range in price starting from a retail price of $347 USD and up. The Uniden® U60P Cellular Booster, Uniden® U65P Cellular Booster, and Uniden® U70P Cellular Booster and available in 3G and 4G versions. These devices are just as easy to install as the consumer boosters but include additional features, such as manual gain control override, LCD status display and input signal display.

The Uniden® Link 4G Cradle Style Cellular Booster is used for single use case, Uniden® UM50 4G Cellular Booster works great in cars, vans, first responders, and any situation on the go where you need to expand your coverage zone. The Uniden® UM2M 4G Cellular Booster is our direct connect unit that works in vehicles connected to your in-vehicle phone or your cellular modem. These devices range in price starting from a retail price of $197 USD and up.

The Uniden® UM2M 4G Cellular Booster is our newest product in our line up and one of the most promising. We are very excited to launch this item as it is not only great for machine-to-machine application such as in vending and ATM machines, but this booster perfectly complements the company’s Uniden® UV350 In Vehicle Smartphone. This booster connects directly to the Uniden® UV350 In Vehicle Smartphone giving the device a much-expanded coverage zone. This is a complete solution that many customers need. The combination of Uniden® UV350 and Uniden® M2M 4G Cellular Booster gives our customer the ultimate enterprise class solution to enjoy crystal clear phone calls and lightning fast data speeds.

Industry

Communication, productivity and safety among task workers are the central requirements in business-critical and mission-critical environments. Organizations with remote and disparate workers—from police and firefighters to construction, oil rigs and manufacturing workers—require extremely durable communication solutions that provide reliable and secure voice, data and workflow applications.

The types of vehicles that we provide communication solutions to include school buses, utilities, oil and gas, waste management, snow plows, transportation, construction vehicles, and first responder vehicles. In North America there are, according to the United States Department of Transportation, over 20 million of such vehicles, representing a significant potential customer base for Siyata. Each of these types of vehicles demands superior in-vehicle communications solutions.

A cost-effective solution is essential for both government fleets, such as first responder police vehicles, and commercial enterprises, including construction companies. These industries are concerned with managing and controlling their capital expenditures and operating expenses and they adopt such mindset with their selection of communication devices for their staff and fleets.

These industries are also required to adhere to the current safety and operational requirements, while maintaining the flexibility to adjust to meet future relevant requirements. For example, currently, the fleet managers may only require PTT communications with the drivers, and the ability to track the location of their vehicles. However, latest industry trends require that drivers possess a driver emergency safety app or a workforce automation solution. A communications solution based on the UV350 contains built-in flexibility to adapt with customer demand. The UV350 is a highly connected Internet of Things (IoT) platform which supports downloadable Android apps for future functionality.

There is a demand within our targeted vertical markets to be connected with the First Responder Network Authority (“FirstNet Authority” or “FirstNet”). FirstNet is a nationwide high-speed broadband wireless network providing a single interoperable platform for law enforcement, firefighters, paramedics and other public safety officials in every state, county, locality and tribal area. AT&T has developed a 4G network for organizations or agencies in times of emergencies to communicate and coordinate response efforts. AT&T’s FirstNet network is reserved for “primary” first responder users such as police, fire, and ambulance, and it includes “extended primary” users such as utilities, snow plows, and yellow school buses, who are occasionally summoned for emergencies. The United States Government is increasingly encouraging first-responder organizations and agencies to transition to a FirstNet-based communications network to facilitate communications and coordination during emergencies.

According to the Smithsonian Institute, there approximately 500,000 yellow school buses in the United States. School buses primarily communicate through the existing legacy technology of two-way radios (LMR). Many county school districts own both their own fleet of buses and their own radio towers with two-way radio service coverage that is restricted to within in their county. However, occasionally, when school buses transport students outside their county for field trips and sports events, the drivers are unable to communicate with their dispatchers. The UV350 device addresses this problem since it uses the nationwide cellular networks. Moving from a solely PTT to a cellular-based system also precludes the necessity for counties and school districts to maintain older radio towers.

Our Strategy

Siyata’s primary focus is to increase sales of our UV350 In-Vehicle device, rugged handhelds and cellular boosters in North America and other international markets. With approximately 20 million potential commercial vehicles to pursue in North America, per the United States Department of Transportation, Siyata believes there is large growth potential in this market. Our strategy is to continue to partner with North American and other international wireless carriers in order to interface with new potential customers and expand our customer base. Siyata sales are B2B and we will sell the hardware to the wireless carrier (or their distributors), who will in turn sell the hardware to the fleet vehicle customer.

Siyata already has established distribution relationships with several North American and international carriers and is generating revenue from selected countries outside of North America. Siyata will continue to be strategic in selecting geographic markets with strong demand for our existing solutions. We will identify key distributors in those new markets who can assist us with establishing a market presence.

Siyata is also willing to consider strategic moves such as acquiring a complementary company if the right opportunity presents itself.

Our Pricing

For wireless carriers, they are free to price the device how they choose. In most cases for significant sales opportunities the carriers are willing to subsidize the cost of the device in order to secure the new activations with the associated monthly Average Revenue Per User (ARPU).

Even our unsubsidized full price is competitive compared to other hardware solutions, but when our device is subsidized, the capital and operational expense benefits to customers compared to other solutions are even greater.

Target Markets

Yellow School Buses

There are currently approximately 500,000 active yellow school buses in North America, per the Smithsonian Institute. The majority of these use a two-way LMR radio for voice communications between their dispatchers and the bus drivers. A small percentage of yellow school buses also use a tracking system so that the fleet manager at the local school district headquarters can identify where the buses are at any time. Challenges for school districts include controlling costs, maintaining legacy two-way radio devices and networks, and also the lack of communication with their drivers when buses are beyond the county borders for field trips and sports events. The US Government is also encouraging school districts to incorporate technology that is compatible with FirstNet. Siyata believes that UV350 In-Vehicle device with a Push-to-Talk over Cellular app, a Mobile Device Management (MDM) app, and an emergency response app such as CrisisGo, combined with Siyata’s Wired Palm Mic, Roof Mounted Antenna and In-line Cellular Booster provides a solution to these school districts. This will result in lower Capex and Opex, as well as increased driver safety, increased functionality, and much improved cellular coverage. If the School District selects FirstNet as its wireless carrier partner, then drivers can be assured of communicating with their dispatchers and with neighboring agencies in times of emergencies. This availability of the new FirstNet network is causing many school districts to reconsider their communications solutions, which will benefit Siyata. Siyata is conducting multiple trials and has already commenced sales in this sector.

Utility ‘Bucket Trucks’

Utility businesses in North America operate hundreds of thousands of vehicles, including bucket trucks used by workers to fix or install hydro-lines on utility poles. These trucks require the ability for their dispatchers to communicate with the workers in the truck. These trucks currently primarily incorporate a mix of two-way LMR radio and Push-to-Talk over Cellular (PoC) to communicate. Many bucket trucks also utilize a second weatherproof speaker mounted in the back of the truck in order for dispatchers to communicate with elevated workers operating on hydro lines. Communicating with and relaying important information to workers operating on hydro lines can be challenging. Siyata has developed a custom solution for dispatchers to communicate with the truck, and also an extra amplifier which can power the Utility’s pre-installed second speaker, connected by a simple toggle switch. Siyata has conducted trials with this product with several utility trucks.

First Responder Vehicles

According to the Smithsonian Institute, there are approximately 3 million active First Responder vehicles in the US. Most police vehicles contain “P25” two-way radio devices for PTT voice communication. P25 devices are expensive, with each device costing thousands of USD, along with a ruggedized laptop computer for database lookups which can cost over $2,000 USD. The opportunity for Siyata in the near term is to augment, rather than to replace the P25 in vehicle two-way radio. Police agencies are traditionally less willing to abandon their legacy two-way radio technology. With the launch and growth of FirstNet, police agencies are beginning to adopt FirstNet compatible PTT over cellular devices to enable neighboring agencies to communicate during emergencies. While it is possible to enable P25 two-way radios to talk with PTT over cellular devices, the UV350 is a dedicated PTT over cellular solution which delivers strong audio quality and dependability for first responders. Siyata recognizes opportunities with police agencies in smaller rural communities where two-way radio coverage is more challenging. With Siyata’s roof mounted antenna and in-line cellular booster, the UV350 device can be the solution that allows rural police vehicles to communicate efficiently. Siyata is also currently conducting trials with several ambulance agencies.

Construction Vehicles

Construction companies present a strong customer base for Siyata’s suite of products. Companies operating trucks that deliver gravel or remove soil from construction sites traditionally have used commercial grade two-way LMR radios for voice communication. These vehicles occasionally also integrate technologies such as Automatic Vehicle Location devices so that headquarters can monitor the locations of their trucks. For metro-wide two-way radio coverage, these construction companies are typically paying a small two-way radio company between $20 and $40 USD per month per truck for the use of their towers and repeaters for voice communications between headquarters and their drivers. If the trucks need to travel outside the metro region then they are unable to communicate. The UV350 device delivers loud and clear audio communications while its relatively small footprint fits securely in vehicles. The UV350 can replace the two-way radio devices used in construction company vehicles to make driving simpler and safer. Siyata is currently conducting trials with several construction companies and has already begun sales in this vertical.

Competition

We do not believe that we have any direct competitors within the in-vehicle market category and we believe that no other Company offers an In-Vehicle Smartphone that is approved for sale in North America by wireless carriers. To date, we are not aware of any directly competing devices that are in development.

We have several indirect competitors. Customers could choose a handheld phone along with a professionally installed third party car kit. There are car kit providers who attempt to make their car kits compatible with popular handheld phone models. By comparison, the UV350 device offers enhanced audio quality, safety, and reception. Furthermore, the UV350 is always active and can be used in temperature extremes. Furthermore, the UV350 kit is one complete solution from one supplier, as opposed to buying separately from two different companies and assembling a phone and a car kit that offers no proven compatibility.

Our second indirect competitor are rugged tablets that can be placed in a mount. The UV350 device offers better audio quality, better safety, better cellular reception, and it is always on and ready to be used. Also, compared to a tablet, the UV350 can also make cellular calls including emergency 911 calls whereas the tablet cannot as it is a data only device.

Our third indirect competitor is an In-Vehicle Two-way Radio (LMR). Not only can the UV350 make phone calls which the LMR radio cannot, but the UV350 offers much better coverage due to using the cellular network as opposed to a limited two-way radio network. And the UV350 can support downloadable Android apps and can serve as a modem for IoT devices and as a Wi-Fi hotspot for further connectivity options and more.

Our fourth indirect competition is that global leading LMR vendor has recently announced the TLK 150 In-Vehicle device which is a Push to Talk over Cellular device, compatible only with its own Wave PTT application and does not feature any downloadable apps (fleet management, GPS tracking, live video feed, etc.) nor the ability to make a phone call over the wireless network. This leading LMR vendor sells the TLK 150 In-Vehicle devices directly to customers and through its dealer channel, but not through wireless carriers.

Within the Ruggedized handheld phone category, we have a few direct competitors, including Sonim Technologies, Inc., Kyocera Corporation and Bullet Mobile using the CAT brand who produce rugged handheld devices. Samsung Electronics Co. Ltd. also offer some of their consumer cellular devices in a more rugged form factor. There are also several Chinese companies who manufacture rugged devices but are less active in the North American markets.

Within the Cellular Booster category, we have several direct competitors, including Wilson Electronics, LLC, Nextivity Inc., and SureCall Company.

Employees

As of September 30, 2021, we had 27 full-time employees and no part-time employees. Ten of our employees are located in Israel, with three performing sales functions, four performing research and development functions, and four performing operations. Of the remaining 17 employees, 13 are located in Canada, with six performing sales functions and nine performing operational functions and 4 are located in the USA, all performing sales functions.

As of December 31, 2020, we had 27 full-time employees and no part-time employees. Ten of our employees are located in Israel, with three performing sales functions, four performing research and development functions, and four performing operations. Of the remaining 17 employees, 13 are located in Canada, with six performing sales functions and nine performing operational functions and 4 are located in the U.S.A., all performing sales functions.

As of December 31, 2019, we had 20 full-time employees and no part-time employees. Ten of our employees are located in Israel, with three performing sales functions, four performing research and development functions, and four performing operations. The other 10 employees are located in Canada, with six performing sales functions and four performing operations functions.

Intellectual Property

We own two patents that we acquired from ClearRF, as discussed below, and we have entered into several licensing agreements for the use of a trademark and certain patents.

Uniden America Corporation

In December 2012, Signifi Mobile, the Company’s wholly-owned subsidiary entered into a license agreement with Uniden America Corporation, as amended (the “Uniden Agreement”). The Uniden Agreement provides for the Company to use the trademark “Uniden®,” along with associated designs and trade dress to distribute, market and sell its In-Vehicle device, cellular signal booster and accessories during its term in North America. The agreement includes renewal options up to December 31,2022 and is subject to certain minimum royalties. The license agreement is amortized on a straight-line basis over its five-year term.

Wilson Electronics LLC

Effective January 1, 2018, Signifi Mobile Inc., the Company’s wholly-owned subsidiary, entered into an agreement with Wilson Electronics, LLC to permit the Company to utilize several of Wilson Electronics’ patents related to cellphone boosters (the “Wilson Agreement”). The Wilson Agreement grants the Company an indefinite right to utilize its cellphone booster-related patents in exchange for paying Wilson Electronics, LLC a royalty fee for boosters sold by the Company. The Wilson Agreement remains in force until the Wilson patents on the Booster products expire.

Via Licensing Corporation

Effective June 8, 2018, the Company entered into two separate licensing agreements with Via Licensing Corporation to utilize worldwide patents related to the coding and decoding of “android” software as well as access and download within the “LTE/ 4G” network. This patent is for an initial period of 5 years and can be extended for a further 5-year term. The Company has the right at any time during the term on any extension hereof, to terminate these agreements upon providing 60 days advanced notice of termination. The quarterly royalty fees are based solely on product sales and is a percentage formula based upon the number of units sold, the country manufactured and the country location of the end customer. There are no minimum royalty fees payable according to the agreement.

e Wave Mobile Ltd.

Effective October 1, 2017, the Company entered into an Asset Purchase Agreement with eWave Mobile Ltd. (“eWave”) for the purchase of certain distribution rights and contracts in connection with the right to sell and distribute in Israel certain cellular devices for the push to talk market (the “eWave Supplies”) in exchange for $700,000 and the Company issuing an amount equal to USD$700,000 to the Company. Additionally, the Company shall pay eWave 50% of the net profit from all sales the Company earns from the eWave Supplies from 2017 – 2018, and then 25% thereafter. 

Clear RF, LLC

On March 31, 2021, the Company’s indirectly and wholly-owned subsidiary ClearRF Nevada Inc. acquired all of the issued and outstanding interests of Clear RF, LLC, or ClearRF, a Washington State limited liability company, for a total purchase price of $700,000 in a combination of cash and Common Shares. ClearRF produces M2M (machine-to-machine) cellular amplifiers for commercial and industrial M2M applications and offers patented direct connect cellular amplifiers and patented auto gain & oscillation control designed for M2M and “internet-of-things” (IoT) applications. Two patents (described below) held by ClearRF were subsequently transferred and assigned to Signifi Mobile Inc. following the closing of this acquisition.

Seasonality

The Company does not experience any effects of seasonality it its business. Our products are designed to function at full capacity under all weather conditions and therefore, we do not experience any shifts in our sales patterns.

Facilities

The Company’s headquarters are located at 1001 Lenoir Street, Suite A-414, Montreal, QC H4C 2Z6, with approximately 4,472 square feet of space. The Company entered into a lease agreement for its property for a five-year term, beginning on July 1, 2020 (the “Lease”). The Lease is set to expire on May 31, 2024. Under the Lease, the Company pays Net Rent of $12.00 per square foot per annum, approximately $53,664 annum, payable in monthly equal installments.

Legal Proceedings

From time to time, we are involved in litigation or other legal proceedings incidental to our business. We are not currently a party to any litigation the outcome of which, if determined adversely to us, would individually or in the aggregate be reasonably expected to have a material adverse effect on our business, operating results, cash flows or financial condition.

MANAGEMENT

Set forth below is information concerning our directors, executive officers, and other key employees.

Marc Seelenfreund

Marc Seelenfreund is the Founder and CEO of Siyata Mobile Inc. since July 2015, when the reverse takeover of Teslin Resources created Siyata Mobile Inc. Marc Seelenfreund has over 20 years’ experience in the telecom and cellular arena as founder of a leading telecom distribution company representing multiple global telecom vendors. From August 2004 to July 2015, he was the CEO of Accel Telecom Inc. a key importer and integrator of advanced telecom equipment into the Israeli telecom market. Accel Telecom Inc’s products and services included importing and distribution of mobile devices, including smartphones and feature phones, integration of cloud software, and distribution and integration of networking equipment including routers and mobile broadband solutions. Marc Seelenfreund received a law degree from Bar Ilan University and is Chairman of Ono College.

Gerald Bernstein

Gerald Bernstein has been CFO of the Company since July 2016. Mr. Bernstein was previously the VP Finance of an international real estate development and management company as well as a fulfillment logistics provider. From September 2003 until July 2015, Mr. Bernstein was a self-employed certified public accountant consultant, working on various mandates in mortgage financing, tax planning, turnaround, process re-engineering and private equity due diligence. Mr. Bernstein holds a Bachelor of Commerce Degree and a Graduate Diploma in Public Accountancy from McGill University. Mr. Bernstein has been a member of the Canadian Institute of Chartered Professional Accountants since 1987.

Glenn Kennedy

Mr. Kennedy has over 25 years of sales experience in the telecommunications industry where he has managed sales nationally for Motorola Canada, HTC Communications Canada and Sonim Technologies; Glenn Kennedy is the VP Sales of Siyata Mobile Inc. since January 2017 including product certification, sales training and education to the marketplace. Previously Mr. Kennedy severed as the Director of Carrier Sales for Sonim Technologies working exclusively on the Rogers Wireless account from October 2015 until December 2016. Mr. Kennedy was the National Account Manager for HTC Communications Canada, working exclusively on the Bell Mobility account from August 2011 until August 2015. From April 2003 until May 2011, Mr. Kennedy was the National Account Manager for Motorola Mobility, working specifically on the Telus account. Mr. Kennedy has earned a Bachelor of Arts in Honors Business Administration from the Richard Ivey School of Business at the University of Western Ontario.

Gidi Bracha

Mr. Bracha has served as VP of Technology since 2011 and has spearheaded the development of Siyata’s various cellular products. Mr. Bracha has over 15 years of technological experience in the telecommunications industry. Mr. Bracha has served in various key positions at Cellcom, Israel’s leading cellular provider, including Head of Car Mobility Products and as a Director of Type Approvals. Mr. Bracha has served as an engineer in the Anti-Aircraft division of the air force in the IDF. Mr. Bracha holds a Bachelor’s degree in Engineering and Business Management from the University of Derby.

Michael Kron

Michael Kron combines over twelve years in the communications industry. Mr. Krin has been the director of the Company since July 27,2015. Since May 2017, Mr. Kron has been the Chairman and CEO of AnywhereCommerce Inc, where he works closely with technology start-ups serving as an incubator. Previously, he held the role of CFO at Anywhere Commerce Inc. since June 2008. He is also Chair of the audit committee of Digimax Global Inc. He currently holds two public company board seats including Siyata. He is a Chartered Professional Accountant and has a B.Com. from Concordia University.

Stephen Ospalak

Mr. Stephen Ospalak combines over twenty-one years of experience in the communications industry. Mr. Ospalak has been the director of the Company since July 27, 2015. Mr. Ospalak has been a Managing Director of Breen Management Group, Inc. (BMG) since January 2009. Previously, Mr. Ospalak was the Vice President of Products and Service Marketing at TELUS Communications Inc. from September 1999 until November 2008. Mr. Ospalak received a Bachelor of Science from the University of Toronto and an Honors Bachelor of Commerce from the University of Windsor.

Luisa Ingargiola

Ms. Ingargiola resigned from the Board on October 29, 2021. She has over 20 years of experience in finance, accounting and public markets. She currently serves as chief financial officer of Avalon Globocare, a position she assumed in 2017. Ms. Ingargiola also serves as a board member and audit chair of Electra Meccanica, AgEagle Aerial Systems, BioCorRx, Inc., Vision Marine Technologies Inc., and as a director of Progress Acquisition Corporation, a special purpose acquisition corporation (SPAC). She previously served as a board member and audit chair of Globe Photos, Inc. (2018-2019), FTE Networks Inc (2016-2019), CopSync (2016-2017), and as a director of The JBF Foundation Worldwide, a non for profit (2015-2017). From 2007 to 2018 she served as chief financial officer of MagneGas Corporation. Ms. Ingargiola has significant experience in public markets, financing transactions, compliance, corporate governance, internal controls and mergers and acquisitions. She received her undergraduate degree in Business Administration from Boston University Questrom School of Business and her master’s degree from University of S. Florida.

Peter Goldstein

Mr. Goldstein has over 30 years of diverse and global entrepreneurial, client advisory and capital market experience and a successful track record in leading and building companies in the capital markets. Mr. Goldstein is experienced with mergers and acquisitions, strategic planning and transaction structuring. In 2006, Mr. Goldstein founded Grandview Capital Partners, Inc. where he continues to serve as chairman and chief executive officer to this date. He is the and chief executive officer of Exchange Listing, LLC, which he founded in 2019. He currently serves as a member of the board of directors of Cosmos Holdings, Inc. From 2013 to 2015 he served in various roles, including as a director, interim president and chief financial officer of American Patriot Brands, Inc. In 2012 he co-founded Staffing 360 Solutions, Inc., where he served in various roles, including chairman of the board of directors and principal financial officer until 2014. He received his master’s degree in international business from the University of Miami.

Lourdes Felix

Lourdes Felix is a corporate finance executive offering over fifteen years of combined experience in public accounting and in the private sector in building, leading, and advising corporations through complex restructurings. Ms. Felix has been instrumental in assisting in capital procurement and implementing an audit committee. She is thoroughly experienced in guiding troubled companies to greater efficiency and profitability. Ms. Felix has acquired expertise in securities laws and knowledge of SOX requirements. She has worked with private and public SEC reporting companies. Ms. Felix was previously the controller for a mid-size public accounting firm for over seven years and was responsible for the operations and financial management of regional offices. Her experience includes a wide variety of industries including advertising, marketing, non-profit organizations, medical practices, mortgage banking, manufacturing and SEC reporting companies. She has assisted companies with documented contributions leading to improved financial performance, heightened productivity, and enhanced internal controls. Ms. Felix has been a Director of BioCorRx Inc. since March 7, 2013. Ms. Felix was appointed Chief Executive Officer of BioCorRx on November 9, 2020 and became Chief Financial Officer of BioCorRx on October 1, 2012. Ms. Felix was President of BioCorRx from February 26, 2020 until she resigned upon her appointment as CEO on November 9, 2020. Ms. Felix is very active in the Hispanic community and speaks fluent Spanish. Ms. Felix holds a Bachelor of Science degree in Business Management and Accounting from University of Phoenix.

Family Relationships

None of our directors or executive officers has a family relationship as defined in Item 401 of Regulation S-K.

Involvement in Certain Legal Proceedings

To the best of our knowledge, none of our directors or executive officers has, during the past 10 years, been involved in any legal proceedings described in subparagraph (f) of Item 401 of Regulation S-K.

Board of Directors

Our board of directors currently consists of five directors, three of whom shall be “independent” within the meaning of Section 5605(a)(2) of the NASDAQ Listing Rules and will meet the criteria for independence set forth in Rule 10A-3 of the Exchange Act.

Terms of Directors and Executive Officers

Each of our directors holds office until a successor has been duly elected and qualified unless the director was appointed by the board of directors, in which case such director holds office until the next following annual meeting of shareholders at which time such director is eligible for re-election. All of our executive officers are appointed by and serve at the discretion of our board of directors.

Qualification

There is currently no shareholding qualification for directors, although a shareholding qualification for directors may be fixed by our shareholders by ordinary resolution.

Insider Participation Concerning Executive Compensation

Marc Seelenfreund has been involved in all determinations regarding executive officer compensation since the inception of the Company. He will continue to make such decisions until the Compensation Committee is established immediately prior to the consummation of this offering.

Committees of the Board of Directors

We have established three committees under the board of directors: an audit committee, a compensation committee, and a nominating and corporate governance committee. We will adopt a formal charter for each of the three committees prior to the closing of this offering. We have determined that Stephen Ospalak, Michael Kron, and Lourdes Felix will satisfy the “independence” requirements of Section 5605(a)(2) of the Nasdaq Listing Rules and Rule 10A-3 under the Securities Exchange Act. Each committee’s members and functions are described below.

Audit Committee. Our audit committee consists of Stephen Ospalak, Michael Kron and Lourdes Felix. Michael Kron is the chairperson of our audit committee. Our board also has determined that Michael Kron qualifies as an audit committee financial expert within the meaning of the SEC rules or possesses financial sophistication within the meaning of the Nasdaq Listing Rules. The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company. The audit committee is responsible for, among other things:

Compensation Committee. Our compensation committee consists of Stephen Ospalak, Michael Kron and Peter Goldstein. Peter Goldstein is the chairperson of our compensation committee. The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated. The compensation committee is responsible for, among other things: