Notes
to the Consolidated Financial Statements
(Expressed
in US dollars)
As
at and for the years ended December 31, 2020, 2019 and 2018
1.
|
NATURE
OF OPERATIONS AND GOING CONCERN
|
Siyata
Mobile Inc. (“Siyata” or the “Company”) was incorporated under the Business Corporations Act, British Columbia
on October 15, 1986. The Company’s shares are listed on NASDAQ under the symbol SYTA and warrants issued on September 29, 2020
are traded under the symbol SYTAW. As at December 31, 2020, the Company’s principal activity is the sale of vehicle mounted, cellular
based communications platforms over advanced 4G mobile networks and cellular booster systems. The registered and records office is located
at 2200 - 885 West Georgia Street, Vancouver, BC V6C 3E8.
These
consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”)
with 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. These consolidated 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 as a going concern.
The
Company incurred a net loss of $13,591,117 during the year ended December 31, 2020 (2019- net loss of $7,657,208), (2018-net loss $8,897,107)
and, as of that date, the Company’s total deficit was $38,893,870. The Company’s continuation as a going concern is dependent
upon the success of the Company’s sale of inventory, the existing cash flows, and the ability of the Company to obtain additional
debt or equity financing, all of which are uncertain. The Company faces risks related to COVID-19 which could significantly disrupt research
and development, operations, sales, and financial results. Our products are commonly used in industries which have been subject to disruption
due to global lockdowns, and therefore demand and credit quality of our customers has been negatively impacted. It is not possible to
predict the ultimate impact or duration of COVID-19 on our business.
These
material uncertainties may cast significant doubt on the Company’s ability to continue as a going concern.
Statement
of compliance
These
consolidated financial statements, including comparatives, have been prepared in accordance with International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and Interpretations of the International
Financial Reporting Interpretations Committee (“IFRIC”).
Change
of functional currency
Effective
October 1, 2020, management determined that the Company’s functional currency changed from Canadian dollars to United States dollars
(“USD”). The change in the functional currency has been accounted for on a prospective basis and is primarily based on the
fact that the Company’s securities are listed on the Nasdaq exchange and as a result the future financing of the Company and cash
flows of the entities will be in USD.
In
accordance with Company’s existing policy, the Company did not reassess the classification of financials instruments as liabilities
or equity as a result of the change in functional currency. As a result, warrants remain classified as equity and are not revalued at
fair value. For the same reason, the change in functional currency did not give rise to an embedded derivative related to the Company’s
previously outstanding convertible debt with a conversion price denominated in Canadian dollars.
Siyata
Mobile Inc.
Notes
to the Consolidated Financial Statements
(Expressed
in US dollars)
As
at and for the years ended December 31, 2020, 2019 and 2018
|
2.
|
BASIS
OF PREPARATION (cont’d)
|
Change
of presentation currency
As
a result of the USD financing and the majority of cash flows denominated in US dollars, the Company changed its presentation currency
from Canadian dollars to “USD” effective October 1, 2020. The change in the financial statement presentation currency is
an accounting policy change and has been accounted for retrospectively. The balance sheets for each period presented have been translated
from the related subsidiary’s functional currency to the new “USD” presentation currency at the rate of exchange prevailing
at the respective balance sheet date except for equity items, which have been translated at accumulated historical rates from the related
subsidiary’s date of incorporation. The statements of loss and comprehensive loss were translated at the average exchange rates
for the reporting period, or at the exchange rate prevailing at the date of transactions. Exchange differences arising in 2018 on translation
from the related subsidiary’s functional currency to the “USD” presentation currency have been recognized in other
comprehensive income and accumulated as a separate component of equity.
With the retrospective application
of the change in presentation currency from the Canadian dollar to the US dollar, the Accumulated Other Comprehensive Income (“AOCI”)
related to the translation of “USD” functional currency subsidiaries was eliminated except for the wholly-owned subsidiary,
Signifi Mobile Inc. whose functional currency is in Canadian dollars. However, with the retrospective application of the change in presentation
currency to the “USD,” the Company’s corporate office, which had a Canadian dollar functional currency, resulted in
an AOCI balance. The AOCI balance generated by the Canadian dollar entities has been adjusted since it now reflects the translation into
the new “USD” presentation currency.
Basis
of consolidation and presentation
These
consolidated financial statements of the Company have been prepared on the historical cost basis, except for financial instruments classified
as financial instruments at fair value through profit and loss, which are stated at their fair value. In addition, the consolidated financial
statements have been prepared using the accrual basis of accounting, except for the statement of cash flows.
These
consolidated financial statements incorporate the financial statements of the Company and its wholly controlled subsidiaries. Control
exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain
benefits from its activities. These consolidated financial statements include the accounts of the Company and its direct wholly-owned
subsidiaries. All intercompany transactions and balances have been eliminated.
The
consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries:
Name
of Subsidiary
|
|
Place
of Incorporation
|
|
Ownership
|
|
Queensgate
Resources Corp.
|
|
British
Columbia, Canada
|
|
|
100
|
%
|
Queensgate
Resources US Corp.
|
|
Nevada,
USA
|
|
|
100
|
%
|
Siyata
Mobile (Canada) Inc.
|
|
British
Columbia, Canada
|
|
|
100
|
%
|
Siyata
Mobile Israel Ltd.
|
|
Israel
|
|
|
100
|
%
|
Signifi
Mobile Inc.
|
|
Quebec,
Canada
|
|
|
100
|
%
|
Siyata
Mobile Inc.
Notes
to the Consolidated Financial Statements
(Expressed
in US dollars)
As
at and for the years ended December 31, 2020, 2019 and 2018
|
2.
|
BASIS
OF PREPARATION (cont’d)
|
Foreign
currency translation
Items
included in the financial statements of each entity in the Company are measured using the currency of the primary economic environment
in which the entity operates (the “functional currency”) and has been determined for each entity within the Company. The
functional currency of Siyata Mobile Inc. is the USD which is also the functional currency of all its subsidiaries except Signifi Mobile
Inc. whose functional currency is Canadian dollars. The functional currency determinations were conducted through an analysis of the
consideration factors identified in International Accounting Standards (“IAS”) 21, The Effects of Changes in Foreign Exchange
Rates.
Assets
and liabilities of entities with a functional currency other than the USD are translated into USD at period end exchange rates. Income
and expenses, and cash flows are translated into USD using the average exchange rate.
Transactions
in currencies other than the entity’s functional currency are translated at the exchange rates in effect on the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange in effect as at the statement
of financial position date. Non-monetary assets and liabilities denominated in foreign currencies are translated at the exchange rates
prevailing at the time of the acquisition of the assets or assumption of the liabilities. Foreign currency differences arising on translation
are recognized in the statement of loss and comprehensive loss.
Restatement
of previously reported financial information due to change in presentation currency
For
comparative purposes, the consolidated balance sheets as at December 31, 2019 and January 1, 2019 include adjustments to reflect the
change in the presentation currency to the USD, which is a change in accounting policy. The balance sheet as at January 1, 2019 has been
derived from the balance sheet at December 31, 2018 (not presented herein). The exchange rates used to translate the amounts previously
reported into Canadian dollars at December 31, 2019 were 1.302 CAD to $1USD, and at January 1, 2019 were 1.362 CAD to $1USD.
For
comparative purposes, the consolidated statement of loss and comprehensive loss for the years ended December 31, 2019 and 2018 includes
adjustments to reflect the change in the presentation currency to the USD, which is a change in accounting policy. The exchange rates
used to translate the amounts previously reported into USD for the years ended December 31, 2019 and 2018 were 1.3269 CAD to $1USD, and
$1.362 CAD to $1USD respectively, which were the average exchange rates for the period.
Use
of 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.
|
i)
|
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:
|
●
|
Income
taxes - Tax provisions are based on enacted or substantively enacted laws. Changes in those laws could affect amounts recognized
in profit or loss both in the period of change, which would include any impact on cumulative provisions, and future periods. Deferred
tax assets, if any, are recognized to the extent it is considered probable that those assets will be recoverable. This involves an
assessment of when those deferred tax assets are likely to reverse.
|
Siyata
Mobile Inc.
Notes
to the Consolidated Financial Statements
(Expressed
in US dollars)
As
at and for the years ended December 31, 2020, 2019 and 2018
2.
|
BASIS
OF PREPARATION (cont’d)
|
Use
of estimates and judgements (cont’d)
|
●
|
Fair
value of stock options and warrants - Determining the fair value of warrants and stock options requires judgments related to the
choice of a pricing model, the estimation of stock price volatility, the expected forfeiture rate and the expected term of the underlying
instruments. Any changes in the estimates or inputs utilized to determine fair value could have a significant impact on the Company’s
future operating results or on other components of shareholders’ equity.
|
|
●
|
Capitalization
of development costs and their amortization rate – Development costs are capitalized in accordance with the accounting policy.
To determine the amounts earmarked for capitalization, management estimates the cash flows which are expected to be derived from
the asset for which the development is carried out and the expected benefit period.
|
|
●
|
Inventory
- Inventory is valued at the lower of cost and net realizable value. Cost of inventory includes cost of purchase (purchase price,
import duties, transport, handling, and other costs directly attributable to the acquisition of inventories), cost of conversion,
and other costs incurred in bringing the inventories to their present location and condition. Net realizable value for inventories
is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs
necessary to make the sale. Provisions are made in profit or loss of the current period on any difference between book value and
net realizable value.
|
|
●
|
Estimated
product returns - Revenue from product sales is recognized net of estimated sales discounts, credits, returns, rebates and allowances.
The return allowance is determined based on an analysis of the historical rate of returns, industry return data, and current market
conditions, which is applied directly against sales.
|
|
●
|
Impairment
of non-financial assets - The Company assesses impairment at each reporting date by evaluating conditions specific to the Company
that may lead to asset impairment. The recoverable amount of an asset or a cash-generating unit (“CGU”) is determined
using the greater of fair value less costs to sell and value in use which requires the use of various judgments, estimates, and assumptions.
The Company identifies CGUs as identifiable groups of assets that are largely independent of the cash inflows from other assets or
groups of assets. Value in use calculations require estimations of discount rates and future cash flows derived from revenue growth,
gross margin and operating costs. Fair value less costs to sell calculations require the Company to estimate fair value of an asset
or a CGU using market values of similar assets as well as estimations of the related costs to sell.
|
|
●
|
Useful
life of intangible assets – The Company estimates the useful life used to amortize intangible assets which relates to the expected future
performance of the assets acquired based on management estimate of the sales forecast.
|
|
●
|
Collectability
of trade receivables – In order for management to determine expected credit losses in accordance with IFRS 9, we are required
to make estimates based on historical information related to collections, in addition to taking the current condition of our customers
credit quality into account.
|
Siyata
Mobile Inc.
Notes
to the Consolidated Financial Statements
(Expressed
in US dollars)
As
at and for the years ended December 31, 2020, 2019 and 2018
2.
|
BASIS
OF PREPARATION (cont’d)
|
Use
of estimates and judgements (Cont’d)
|
ii)
|
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:
|
●
|
Deferred
income taxes – judgments are made by management to determine the likelihood of whether deferred income tax assets at the end
of the reporting period will be realized from future taxable earnings. To the extent that assumptions regarding future profitability
change, there can be an increase or decrease in the amounts recognized in respect of deferred tax assets as well as the amounts recognized
in profit or loss in the period in which the change occurs.
|
|
●
|
Functional
currency - The functional currency for the Company and each of its subsidiaries is the currency of the primary economic environment
in which the respective entity operates. The Company has determined the functional currency of each entity to be the USD as of October
1, 2020, except for Signifi Mobile Inc. whose functional currency is Canadian dollars. The Company reconsiders the functional currency
of its subsidiaries if there is a change in events and/or conditions which determine the primary economic environment.
|
|
●
|
Going
concern – As disclosed in Note 1 to the consolidated financial statements.
|
3.
|
SIGNIFICANT
ACCOUNTING POLICIES
|
|
(a)
|
Impairment
of long lived assets
|
The
carrying amounts of the Company’s non-financial assets, other than deferred tax assets if any, are reviewed at each reporting date
to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount
is estimated.
For
the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that
generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the
“cash-generating unit” or “CGU”). The recoverable amount of an asset or CGU is the greater of its value in use
and its fair value less costs to sell. In assessing the value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the
asset.
If
there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate
asset belongs.
An
impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses
are recognized in profit or loss.
Impairment
losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists.
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss
is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined,
net of depreciation or amortization, if no impairment loss had been recognized. A reversal of an impairment loss is recognized immediately
in profit or loss.
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020,
2019 and 2018
|
3.
|
SIGNIFICANT
ACCOUNTING POLICIES (cont’d)
|
|
i)
|
Research
and development
|
Expenditure on research activities,
undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognized in profit or loss when
incurred.
Development activities involve a plan
or design for the production of new or substantially improved products and processes. Development expenditure is capitalized only if development
costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable,
and Siyata has the intention and sufficient resources to complete development and to use or sell the asset. The expenditure capitalized
in respect of development activities includes the cost of materials, direct labor and overhead costs that are directly attributable to
preparing the asset for its intended use, and capitalized borrowing costs. Other development expenditure is recognized in profit or loss
as incurred.
In subsequent periods, capitalized development
expenditure is measured at cost less accumulated amortization and accumulated impairment losses.
|
ii)
|
Subsequent expenditure
|
Subsequent expenditure is capitalized
only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including
expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.
Amortization is a systematic allocation
of the amortizable amount of an intangible asset over its useful life. The amortizable amount is the cost of the asset less its estimated
residual value.
Amortization is recognized in profit
or loss on a straight line basis over the estimated useful lives of the intangible assets from the date they are available for use. See
Note 9 for amortization rates and methods applied to each class of intangible assets. An annual review of the useful life of the intangibles
asset are made by management and any changes in useful life are reflected prospectively.
Internally generated intangible assets
are not systematically amortized as long as they are not available for use (i.e., they have not completed certifications and/or are in
working condition for their intended use). Accordingly, these intangible assets, such as development costs, are tested for impairment
at least once a year, until such date as they are available for use.
|
(c)
|
Business Combinations
|
Business combinations are accounted
for using the acquisition method. The cost of the acquisition is measured at the aggregate of the fair values at the date of acquisition,
of assets transferred, liabilities incurred or assumed, and equity instruments issued by the Company. The acquiree’s identifiable
assets and liabilities assumed are recognized at their fair value at the acquisition date. The excess of the consideration over the fair
value of the net identifiable assets and liabilities acquired is recorded as goodwill. Any gain on a bargain purchase is recorded in profit
or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities. Any goodwill
that arises is tested annually for impairment.
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
|
3.
|
SIGNIFICANT
ACCOUNTING POLICIES (cont’d)
|
Goodwill arising on the acquisition
of an entity represents the excess of the cost of acquisition over the Company’s interest in the net fair value of the identifiable
assets, liabilities and contingent liabilities of the entity recognized at the date of acquisition. Goodwill is initially recognized as
an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill is not subject to amortization
but is tested for impairment annually.
Inventories are
measured at the lower of cost and net realizable value. The cost of inventories is based on the first-in first-out (FIFO) principle, and
includes expenditure incurred in acquiring the inventories and the costs incurred in bringing them to their existing location and condition.
In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal
operating capacity. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of
completing and selling expenses.
Revenue from
the sale of goods, in the ordinary course of business is measured at the fair value of the consideration received or receivable, net of
returns, trade discounts and volume rebates. When the credit period is short and constitutes the accepted credit in the industry, the
future consideration is not discounted.
Revenue is recognized
when persuasive evidence exists (usually in the form of an executed sales agreement), that the significant risks and rewards of ownership
have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be
estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably.
If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognized as a reduction
of revenue as the sales are recognized.
Transfers of
risks and rewards vary depending on the individual terms of the contract of sale. For sales on products in Israel, transfer usually occurs
when the product is received at the customer’s warehouse, but for some international shipments transfer occurs upon loading the
goods onto the relevant carrier.
|
(g)
|
Financial
Instruments
|
Financial assets
On initial recognition, financial assets
are recognized at fair value and are subsequently classified and measured at: (i) amortized cost; (ii) fair value through other comprehensive
income (“FVOCI”); or (iii) fair value through profit or loss (“FVTPL”). The classification of financial assets
is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. A financial
asset is measured at fair value net of transaction costs that are directly attributable to its acquisition except for financial assets
at FVTPL where transaction costs are expensed. All financial assets not classified and measured at amortized cost or FVOCI are measured
at FVTPL. On initial recognition of an equity instrument that is not held for trading, the Company may irrevocably elect to present subsequent
changes in the investment’s fair value in other comprehensive.
The classification determines the method
by which the financial assets are carried on the balance sheet subsequent to inception and how changes in value are recorded. The Company
has classified its cash, restricted cash, loan to director and trade and other receivables at amortized cost.
Changes to financial assets measured
at fair value, are recognized in profit and loss as they arise (“FVPL”).
Changes in financial assets recorded
at amortized cost are recognized in profit and loss when the asset is derecognized or reclassified.
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
3.
|
SIGNIFICANT ACCOUNTING POLICIES (cont’d)
|
|
(g)
|
Financial Instruments (Cont’d)
|
Impairment
An ‘expected credit loss’
impairment model applies which requires a loss allowance to be recognized based on expected credit losses. The estimated present value
of future cash flows associated with the asset is determined and an impairment loss is recognized for the difference between this amount
and the carrying amount as follows: the carrying amount of the asset is reduced to estimated present value of the future cash flows associated
with the asset, discounted at the financial asset’s original effective interest rate, either directly or through the use of an allowance
account and the resulting loss is recognized in profit or loss for the period.
In a subsequent period, if the amount
of the impairment loss related to financial assets measured at amortized cost decreases, the previously recognized impairment loss is
reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not
exceed what the amortized cost would have been had the impairment not been recognized.
Financial liabilities
Financial liabilities are designated
as either: (i) fair value through profit or loss; or (ii) other financial liabilities. All financial liabilities are classified and subsequently
measured at amortized cost except for financial liabilities at FVTPL.
The classification determines the method
by which the financial liabilities are carried on the balance sheet subsequent to inception and how changes in value are recorded. The
Company has classified its bank loan, accounts payable and accrued liabilities, due to related party, convertible debentures and long
term debt as other financial liabilities and carried on the balance sheet at amortized cost. Future purchase consideration is classified
as FVTPL.
As at December 31, 2020, the Company
did not have any derivative financial liabilities since the change in functional currency did not give rise to an embedded derivative
related to the Company’s previously outstanding convertible debt with a conversion price denominated in Canadian dollars.
The Company presents basic and diluted
loss per share data for its common shares. Basic loss per share is calculated by dividing the profit or loss attributable to common shareholders
of the Company by the weighted average number of common shares outstanding during the period, adjusted for own shares held. Diluted loss
per share is calculated by dividing the loss by the weighted average number of common shares outstanding assuming that the proceeds to
be received on the exercise of dilutive share options and warrants are used to repurchase common shares at the average market price during
the period. In the Company’s case diluted loss per share is the same as basic loss per share, as the effect of outstanding share
options and warrants on loss per share would be anti-dilutive. The weighted average number of shares is retroactively changed to reflect
the 1-to-145 reverse stock split that occurred on September 25, 2020.
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
3.
|
SIGNIFICANT ACCOUNTING POLICIES (cont’d)
|
The stock option plan allows Company
employees and consultants to acquire shares of the Company. The fair value of options granted is recognized as a share-based payment expense
with a corresponding increase in equity. An individual is classified as an employee when the individual is an employee for legal or tax
purposes (direct employee) or provides services similar to those performed by a direct employee. Consideration paid on the exercise of
stock options is credited to share capital and the fair value of the option is reclassified from share-based payment reserve to share
capital.
In situations where equity instruments
are issued to non-employees and some or all of the services received by the entity as consideration cannot be specifically identified,
they are all measured at the fair value of the share-based payment, otherwise, share-based payments are measured at the fair value of
the services received.
The fair value is measured at grant
date at each tranche is recognized over the period during which the options vest. The fair value of the options granted is measured using
the Black-Scholes option pricing model taking into account the terms and conditions upon which the options were granted. At each reporting
date, the amount recognized as an expense is adjusted to reflect the number of stock options that are expected to vest.
Provisions
Provisions are recognized when the Company
has a present obligation (legal or constructive), as a result of past events, and it is probable that an outflow of resources that can
be reliably estimated will be required to settle the obligation. The amount recognized as a provision is the best estimate of the consideration
required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation.
Where the effect is material, the provision is discounted to net present value using an appropriate current market-based pre-tax discount
rate and the unwinding of the discount is included in profit or loss as interest expense from discounting obligations.
Current tax is the expected tax payable
or receivable on the taxable income or loss for the year using tax rates enacted or substantially enacted at the reporting date, and any
adjustment to tax payable in respect of previous years.
Deferred tax is recognized in respect
of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used
for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities
in a transaction that is not a business combination and that affects neither accounting nor taxable operations, and differences relating
to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable
future. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws
that have been enacted or substantively enacted by the reporting date.
Deferred tax assets and liabilities
are offset if there is a legally enforceable right to offset current tax assets and liabilities, and they relate to income taxes levied
by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities
and assets on a net basis or their tax assets and liabilities will be realized simultaneously. A deferred tax asset is recognized for
unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will
be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent
that it is no longer probable that the related tax benefit will be realized.
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
3.
|
SIGNIFICANT ACCOUNTING POLICIES (cont’d)
|
The Company accounts for lease contracts in accordance with IFRS 16,
Leases. At the inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains,
a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Company recognizes a right-of-use asset and a lease liability at the commencement date of the lease. The right-of-use asset is initially
measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement
date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset, less any lease incentives
received. The right-of-use asset is subsequently depreciated using the straight- line method from the commencement date to the earlier
of the end of the useful life of the right--of-use asset or the end of the lease tern. In addition, the right-of-use assets are adjusted
for impairment losses, if any. The estimated useful lives and recoverable amounts of right-of-use assets are determined on the same basis
as those of property and equipment.
The lease liability is initially measured
at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in
the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. The lease liability is subsequently
measured at amortized cost using the effective interest method. The Company has elected not to recognize right-of-use assets and lease
liabilities for short-term leases and leases for which the underlying asset is of low value. The Company recognizes the lease payments
associated with these leases as an expense: on a straight-line basis over the lease term. During the year ended December 31, 2020, the
Company did not recognize any lease payments as expenses for short-term leases and leases for which the underlying assets are of low value.
Property, plant and equipment that qualifies for recognition as
an asset shall be measured at its cost. The depreciable amount of an asset is determined after deducting its residual
value. Depreciation of property, plant and equipment is based on the straight line method
over the useful life of the asset. The depreciation charge for each period shall be recognized in profit or loss.
|
(m)
|
New accounting pronouncements
|
There are no upcoming account pronouncements
expected to have a material impact on the Company’s consolidated financial statements.
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
On December 31, 2020, as outlined in
more detail in Note 17, the Company issued capital through a private placement. At the year end date, the restricted cash of $10,995,500
(2019-$0, 2018-$0) represented the portion of the capital raise that remained in a trust account with the underwriter. These funds were
released by the underwriters, net of any underwriter fees previously accrued, to the Company’s bank account on January 6, 2021.
5.
|
TRADE AND OTHER RECEIVABLES
|
|
|
December 31,
2020
|
|
|
December 31,
2019
|
|
|
December 31,
2018
|
|
Trade receivables
|
|
$
|
3,501,223
|
|
|
|
1,160,457
|
|
|
|
351,803
|
|
Allowance for doubtful accounts
|
|
|
(1,530,667
|
)
|
|
|
-
|
|
|
|
-
|
|
Taxes receivable
|
|
|
766,540
|
|
|
|
110,714
|
|
|
|
231,312
|
|
Other receivables
|
|
|
-
|
|
|
|
221,784
|
|
|
|
96,294
|
|
Total
|
|
|
2,737,096
|
|
|
|
1,492,955
|
|
|
|
679,409
|
|
Provisions on Trade Receivables
In accordance with policy to use the
expected credit loss model, we utilize the expedited method where trade receivables are provided for based on their aging, as well as
providing for specified balances deemed non-collectible. In the year ended December 31, 2020 we concluded that a bad debt provision of
$1,530,667 was to be recognized (2019, 2018 - $Nil).
Factoring Arrangements and Liens
Siyata Mobile Israel (“SMI”)
has a factoring agreement on its trade receivables, whereby invoices are fully assigned to a funding entity in return for 80%-85% of the
total sale to be paid to SMI by the funding entity in advance. The remaining 15-20% is paid to SMI when the funding entity receives payment
from the customer.
SMI incurs a financing charge of 3.1%
on advances received and is subject to certain covenants.
The 80-85% received upfront remains
a liability from SMI to the funding entity until final settlement, however all such balances are fully insured in case of non-payment.
As SMI has both the legally enforceable right and the intention to settle the receivable and liability on a net basis in accordance with
IAS 32, Financial Instruments, trade receivables are presented net of the liability for amounts advanced. As at December 31, 2020 the
total amounts extended by the funding entity was $65,000 (December 31, 2019 - $1,954,000).
Signifi Mobile Inc. has a credit facility
outlined in Note 11. As part of its financing facility, the lender has a lien on certain assets including trade and other receivables
of Signifi Mobile Inc. in the amount of up to $4,000,000 CAD ($3,137,255 USD).
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
|
|
December 31,
2020
|
|
|
December 31,
2019
|
|
|
December 31,
2018
|
|
Finished products
|
|
|
3,349,382
|
|
|
|
2,964,890
|
|
|
|
3,028,617
|
|
Impairment of finished products
|
|
|
(1,255,649
|
)
|
|
|
(212,000
|
)
|
|
|
-
|
|
Accessories and spare parts
|
|
|
632,000
|
|
|
|
627,005
|
|
|
|
628,848
|
|
Impairment of accessories and spare parts
|
|
|
(316,000
|
)
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
|
2,409,733
|
|
|
|
3,379,895
|
|
|
|
3,657,465
|
|
Provision on Inventory
On an annual basis, management reviews
the inventory for impairment. For the year ended 2020, it was determined that $1,571,649 of the inventory was impaired (2019 - $212,000)
due to slow movement. The accessories and spare parts related to these products amounted to $316,000 (2019 - $Nil), which was also impaired.
Liens
As discussed in Note 11, a lender has
a lien on all of the assets of Signifi Mobile Inc. which includes the inventory of finished goods which comprises $1,289,133 at December
31, 2020 net of impairments.
|
|
Total
|
|
Balance Jan 1, 2019
|
|
|
-
|
|
Addition in the year
|
|
|
319,747
|
|
Translation adjustment
|
|
|
(601
|
)
|
Amortization in the year
|
|
|
(114,207
|
)
|
Balance December 31, 2019
|
|
|
204,939
|
|
Addition in the year
|
|
|
306,086
|
|
Foreign exchange
|
|
|
10,677
|
|
Amortization in the year
|
|
|
(144,667
|
)
|
Balance December 31, 2020
|
|
|
377,035
|
|
Right of Use Assets net book value at December
31, 2020, consists of $273,644 (2019-$32,036) related to an office lease and $103,391 (2019- 172,903) related to car leases.
Due to the implementation of IFRS16 as of January
1, 2019, there were no right of use assets recorded as of December 31, 2018.
The loan to our director and Chief Executive Officer
was advanced on April 1, 2019 in the amount of $200,000 with a 5 year term. Interest on the loan accrued and was payable at the rate of
7%. As of January 1, 2020, the rate on the loan was increased to 12%. Subsequent to the year end, on May 23, 2021, this loan was repaid
to the Company in full including principal and interest.
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
|
|
Development
Costs
|
|
|
Uniden
License
|
|
|
E-Wave
License
|
|
|
Total
|
|
Cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2017
|
|
$
|
5,396,776
|
|
|
$
|
118,447
|
|
|
$
|
1,340,741
|
|
|
$
|
6,855,964
|
|
Additions
|
|
|
1,597,303
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,597,303
|
|
Translation adjustment
|
|
|
(379,427
|
)
|
|
|
(9,349
|
)
|
|
|
(105,822
|
)
|
|
|
(494,598
|
)
|
Balance at December 31, 2018
|
|
|
6,614,652
|
|
|
|
109,098
|
|
|
|
1,234,919
|
|
|
|
7,958,669
|
|
Additions
|
|
|
2,380,196
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,380,196
|
|
Translation adjustment
|
|
|
11,401
|
|
|
|
5,028
|
|
|
|
56,908
|
|
|
|
73,337
|
|
Balance at December 31, 2019
|
|
|
9,006,249
|
|
|
|
114,126
|
|
|
|
1,291,827
|
|
|
|
10,412,202
|
|
Additions
|
|
|
1,513,570
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,513,570
|
|
Foreign Exchange
|
|
|
20,658
|
|
|
|
2,417
|
|
|
|
27,356
|
|
|
|
50,431
|
|
Balance at December 31, 2020
|
|
$
|
10,540,477
|
|
|
$
|
116,543
|
|
|
$
|
1,319,183
|
|
|
$
|
11,976,203
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2017
|
|
$
|
781,188
|
|
|
$
|
34,178
|
|
|
|
-
|
|
|
$
|
815,366
|
|
Additions
|
|
|
198,485
|
|
|
|
15,947
|
|
|
|
335,185
|
|
|
|
549,617
|
|
Impairment
|
|
|
1,508,880
|
|
|
|
-
|
|
|
|
|
|
|
|
1,508,880
|
|
Translation Adjustment
|
|
|
(388,279
|
)
|
|
|
992
|
|
|
|
(26,455
|
)
|
|
|
(413,742
|
)
|
Balance at December 31, 2018
|
|
|
2,100,274
|
|
|
|
51,117
|
|
|
|
308,730
|
|
|
|
2,460,121
|
|
Additions
|
|
|
716,712
|
|
|
|
20,589
|
|
|
|
316,898
|
|
|
|
1,054,199
|
|
Impairment
|
|
|
-
|
|
|
|
-
|
|
|
|
111,521
|
|
|
|
111,521
|
|
Translation Adjustment
|
|
|
293,820
|
|
|
|
2,749
|
|
|
|
20,288
|
|
|
|
316,857
|
|
Balance at December 31, 2019
|
|
|
3,110,806
|
|
|
|
74,455
|
|
|
|
757,437
|
|
|
|
3,942,698
|
|
Additions
|
|
|
872,717
|
|
|
|
20,365
|
|
|
|
257,175
|
|
|
|
1,150,257
|
|
Impairment
|
|
|
293,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
293,000
|
|
Foreign Exchange
|
|
|
6,859
|
|
|
|
2,640
|
|
|
|
31,631
|
|
|
|
41,130
|
|
Balance at December 31, 2020
|
|
$
|
4,283,382
|
|
|
$
|
97,460
|
|
|
$
|
1,046,243
|
|
|
$
|
5,427,085
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Book Value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2018
|
|
$
|
4,514,378
|
|
|
$
|
57,981
|
|
|
$
|
926,189
|
|
|
$
|
5,498,548
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2019
|
|
$
|
5,895,443
|
|
|
$
|
39,671
|
|
|
$
|
534,390
|
|
|
$
|
6,469,504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2020
|
|
$
|
6,257,095
|
|
|
$
|
19,083
|
|
|
$
|
272,940
|
|
|
$
|
6,549,118
|
|
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
9.
|
INTANGIBLE ASSETS (cont’d)
|
Development Costs
Development costs are internally generated
and are capitalized in accordance with the IAS 38, Intangible Assets. On an annual basis, the Company assesses capitalized development
costs for indicators of impairment or when facts or circumstances suggest the carrying amount may exceed its recoverable amount.
The Company engaged a third-party valuator
to determine the recoverable amount of the intangible assets, being the higher of fair value less cost to dispose (“FVLCD”)
and Value In Use (“VIU”). Based on the results of their analysis using a discount rate of 14.5% in 2020 and 16% in 2019, management
determined that the recoverable amount was not equal to, or in excess to the carrying amount on two 4G products and therefore an impairment
was taken on development costs in 2020 in the amount of $293,000 (2019 - $111,521 impairment on the E-Wave license), (2018-$1,508,880
full impairment of the 3G devices).
As part of the 2019 annual valuation
process, the Company reduced the estimated useful lives of its 4G products from 7 years to 5-6 years and reduced the useful life of its
3G products from 11 years to five years. In 2020, the Company reduced the estimated useful lives of its 4G products from 5-6 years to
4 years. Its 3G products were fully amortized at the end of 2020 and therefore no change in estimated useful life was required. The change
in the estimated useful lives of these development costs is considered to be a change in estimate and applied prospectively. As follows:
Intangible Asset
|
|
Useful
Economic
Life 2020
|
|
Useful
Economic
Life 2019
|
|
Useful
Economic
Life 2018
|
|
Amortization
Method
|
4G Devices
|
|
4 years
|
|
5 - 6 years
|
|
7 years
|
|
Straight line
|
3G Devices
|
|
5 years
|
|
5 years
|
|
11 years
|
|
Straight line
|
During the year ended December 31,
2020 the Company incurred $580,236 (2019 - $757,404) in product development costs which did not satisfy the criteria for capitalization
and were recorded in profit and loss. The product development costs which did not satisfy the criteria for capitalization and were recorded
in profit and loss were for the following product in 2020- UR5 $580,236 (2019- UR-7 $215,000, CP-100 $76,000 and UR-5 $466,000), 2018-$0.
Uniden License
During 2016, the Company acquired a license agreement from Uniden America
Corporation (“Uniden”). The agreement provides for the Company to use the trademark “Uniden,” along with
associated designs and trade dress to distribute, market and sell its cellular signal booster and accessories during its term. The
agreement has been renewed 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 and will be fully amortized by December 31, 2021. Based on the valuation report, the
Company has determined that there is no impairment in the year ended December 31, 2021.
E-Wave License
On October 1, 2017, the Company acquired
a license from E-Wave mobile Ltd. (the “E-Wave License”). The license agreement is recoded at cost and is amortized on a straight-line
basis over its estimated useful life of four-year term and will be fully amortized by December 31, 2021.
On an annual basis, the Company assesses
its E-Wave License for indicators of impairment or when facts or circumstances suggest the carrying amount may exceed its recoverable
amount. Indicators of impairment relating to the E-Wave License included a decline in demand for the products in the exclusive license
agreement. In 2019, an impairment loss of $111,521 was recorded and none was recorded in 2020.
The Company engaged a third-party valuator
to determine the recoverable amount of the E-Wave License, which was completed using VIU.
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
9.
|
INTANGIBLE ASSETS (cont’d)
|
E-Wave License (Cont’d)
VIU is an estimate that involves (a)
estimating the future cash inflows and the outflows to be derived from continuing use of the asset and from its ultimate disposal and
(b) applying the appropriate pre-tax discount rate to those future cash flows after considering and reflecting elements outlined in IAS
36.30, Calculation of VIU.
The key assumptions used in the calculation
of the recoverable amount include forecasting the next twelve months:
|
ii)
|
Normalized
Operating Expenses;
|
VIU is determined with reference to
risk adjusted cash flows and a discount rate of 26% based on individual characteristics of the Company’s CGU, the risk-free rate
of return and other economic and operating factors.
The result is that the carrying amount
of intangible assets relating to the E-Wave License exceeded their recoverable amount and as a result the Company recorded an impairment
charge in 2019 in the amount of $111,521 and $NIL in 2020.
As at December 31, 2020 and December
31, 2019 the full goodwill balance was allocated to the company’s Canadian wholly owned subsidiary, Signifi Mobile Inc. (“CGU”).
The Company assesses whether there are, events, changes in circumstances, and/or changes in key assumptions which management has based
its determination of the CGU, that would, more likely than not, reduce the fair value of the CGU to below its carrying value and therefore,
require goodwill to be tested for impairment at the end of each reporting period.
As at December 31, 2020, the Company
performed its annual impairment test on the goodwill, whereby the recoverable amount of the CGU was determined as the higher of FVLCD
and VIU. The key assumptions used in the calculation of the recoverable amount relate to five-year future cash flows, weighted average
cost of capital, and five years’ average annual growth rate. These key assumptions were based on historical data from internal sources
as well as industry and market trends. The discount rate used was 14.5% representing the weighted average cost of capital determined based
on mid-year discounting. The five-year growth rate in gross revenues estimated as 37%. As the recoverable amount was above the carrying
value at December 31, 2020, management has determined that the goodwill does not have an impairment loss in the year.
During the year ended December 31,
2020 The Company entered into a line of credit with a lender for up to a maximum of $750,000 Canadian dollars. The loan is secured by
a floating charge on the receivables, inventory, trademarks and a universal lien on all the assets of Signifi Mobile Inc. to a maximum
of $CAD $4,000,000. The Export Development Corporation of Canada guarantees 50% of this debt. As of December 31, 2020 the loan balance
was $372,848 ($Nil at December 31, 2019). The loan bears interest at the bank’s prime lending rate plus 1.25% and is repayable on
demand. Subsequent to the year-end, the Company provided additional collateral in the form of a collateralized term deposit in the amount
of $375,000 Canadian dollars.
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
The related party, Accel Telecom Inc. owned more than 15% of the total
share capital of the Company on a fully diluted basis until September 29, 2020, after the 145/1 reverse stock split and its initial public
offering pursuant to which 1,260,000 shares and 1,260,000 warrants were issued. Therefore, the related party transaction note only includes
transactions that took place until September 30, 2020. Therefore, at December 31, 2020, the due to related party amount was $Nil.
Lease Obligations
|
|
2020
|
|
|
2019
|
|
Balance Jan 1, 2019
|
|
|
194,331
|
|
|
|
-
|
|
Addition in the year
|
|
|
306,086
|
|
|
|
301,747
|
|
interest expense
|
|
|
14,045
|
|
|
|
11,406
|
|
Translation adjustment
|
|
|
(26,724
|
)
|
|
|
(1,210
|
)
|
lease payments
|
|
|
(146,146
|
)
|
|
|
(117,612
|
)
|
Balance December 31, 2019
|
|
|
341,592
|
|
|
|
194,331
|
|
Due within one year
|
|
|
(127,776
|
)
|
|
|
(116,311
|
)
|
Balance December 31, 2020
|
|
|
213,816
|
|
|
|
78,020
|
|
|
|
|
|
|
|
|
|
|
Future Minimum Lease Payments
|
|
|
|
|
|
|
|
|
2020
|
|
|
-
|
|
|
|
116,311
|
|
2021
|
|
|
127,776
|
|
|
|
63,197
|
|
2022
|
|
|
104,897
|
|
|
|
14,823
|
|
2023
|
|
|
103,458
|
|
|
|
|
|
2024
|
|
|
5,461
|
|
|
|
|
|
Total lease obligations
|
|
|
341,592
|
|
|
|
194,331
|
|
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
14.
|
CONVERTIBLE DEBENTURES
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
Balance, Beginning of Period
|
|
$
|
5,097,010
|
|
|
$
|
2,866,983
|
|
|
$
|
2,834,052
|
|
Interest and accretion expense
|
|
|
1,744,119
|
|
|
|
693,712
|
|
|
|
643,961
|
|
Interest paid or accrued
|
|
|
(831,203
|
)
|
|
|
(364,006
|
)
|
|
|
(372,973
|
)
|
Rollover to the 10% convertible debenture
|
|
|
(186,359
|
)
|
|
|
-
|
|
|
|
-
|
|
Issuance of the 10% convertible debenture
|
|
|
1,177,786
|
|
|
|
-
|
|
|
|
-
|
|
Repayment of 10.5% convertible debenture
|
|
|
(921,641
|
)
|
|
|
-
|
|
|
|
-
|
|
Convert $75,000 debentures into share capital
|
|
|
(40,980
|
)
|
|
|
-
|
|
|
|
-
|
|
Rollover of the 12% convertible debenture
|
|
|
-
|
|
|
|
(2,287,452
|
)
|
|
|
-
|
|
Issuance of the 12% convertible debenture
|
|
|
-
|
|
|
|
4,049,349
|
|
|
|
-
|
|
Foreign exchange adjustment
|
|
|
122,037
|
|
|
|
138,424
|
|
|
|
(238,057
|
)
|
|
|
$
|
6,160,769
|
|
|
$
|
5,097,010
|
|
|
$
|
2,866,983
|
|
Due within one year
|
|
|
(6,160,769
|
)
|
|
|
(1,047,661
|
)
|
|
|
-
|
|
Balance, End of Year
|
|
|
-
|
|
|
$
|
4,049,349
|
|
|
$
|
2,866,983
|
|
|
(a)
|
On
December 28, 2017 the Company issued 4,600 unsecured convertible debentures at a price of $1,000 CAD per unit. Each debenture was convertible
into 11.5 common shares of the Company at $87.00 CAD per common share with a maturity date of June 28, 2020.
|
Each Convertible Debenture unit bore
an interest rate of 10.5% per annum from the date of issue, payable in cash quarterly in arrears. Any unpaid interest payments was to
accrue and be added to the principal amount of this Convertible Debenture. From January 1, 2020 until its maturity on June 28, 2020 the
Company paid $56,550 (year ended December 31, 2019-$364,006, year ended December 31, 2018-$372,973) in interest related to the convertible
debentures, included within finance expense in profit and loss.
On December 22, 2019, a portion of the
10.5% debentureholders rolled over the net present value of their holdings totaling $2,287,452 with a maturity value of $2,423,656 ($3,155,00
CAD) into $2,549,155 ($3,319,000 CAD) of face value 12% convertibles debentures as more fully described below.
The exchange of debt instruments between
the debenture holders and the Company satisfied the criteria under IFRS 9, Financial Instruments, as a substantial modification, and therefore
was treated as an extinguishment of the previous debt and a recognition of a new financial liability. In connection, a loss of $136,204
was recorded within finance expense (income) in profit or loss, as the difference between the carrying amount of the financial liability
extinguished and the consideration paid, which is comprised of the newly issued debentures.
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
14.
|
CONVERTIBLE DEBENTURES (cont’d)
|
The remaining portion of the 10.5% Convertible
Debentures matured on June 28, 2020 and were repaid at their face value of 1,108,000 ($1,445,000 CAD) except for $186,359 ($250,000 CAD)
that were rolled over, for a net repayment of $921,641 ($1,195,000 CAD) as more fully described in 14(d).
|
(b)
|
On
December 23, 2019, the Company issued 7,866,000 unsecured 12% convertible debentures at a price of $0.77 per unit ($1.00 CAD), convertible
into 0.0153 common shares of the Company at $65.25 CAD (the “Conversion Price”) per common share. The discounted liability
for this convertible debenture at December 23, 2019 is $4,049,349. The amount allocated to contributed surplus was $445,053 and the balance
of $1,547,500 was the transaction costs incurred.
|
Each of these Convertible Debenture
unit bears an interest rate of 12% per annum from the date of issue, payable in cash quarterly in arrears. Any unpaid interest payments
will accrue and be added to the principal amount of the Convertible Debenture. From January 1, 2020 until December 31, 2020 the Company
paid $715,763 (2019-$0) in interest related to these 12% convertible debentures, included within finance expense in profit and loss.
The 12% Convertible Debentures will mature on December 23, 2021 (the
“Maturity Date”) and are convertible into common shares at the Conversion Price, at the option of the holder, at any time
prior to the close of business on the earlier of: (i) the last business day immediately preceding the Maturity Date, and (ii) the date
fixed for redemption in the event of a change of control. The Company has the right to repay the convertible debenture at 101% of face
value any time after December 23, 2020.
On June 24, 2020, $57,692 ($75,000 CAD)
of face value of the 12% convertible debentures were converted into common shares of the Company. The discounted value of these debenture
at the date of conversion was $40,980 ($54,975 CAD). This gain on conversion of $16,712 was recorded as a finance income in the year.
|
(c)
|
On June 23, 2020, the Company entered into a non-brokered private placement financing agreement with Accel Telecom Inc. Accel Telecom subscribed for 1,330 senior unsecured 10% convertible debentures maturing one year from the issue date at an issue price of $745 (CDN$1,000) per 10% Convertible Debenture for aggregate gross proceeds of $991,427 ($1,330,000 CAD). Each Convertible Debenture can be convertible, at the option of the holder, into 23 common shares in the capital of the Company at a price of $34.11 (CDN$43.50) per Common Share and are redeemable at 101% of the face value at any time after the closing date. On the closing date, Accel will also receive 0.0069 non-transferrable common share purchase warrant for each $0.784 (CDN$1.00) principal amount of the Convertible Debentures purchased. Each warrant entitles the holder to acquire one common share at an exercise price of $34.11 (CDN$43.50) per warrant share for a period of twelve (12) months after the date of issue.
|
On January 6, 2021, the Company redeemed
in full this senior unsecured 10% convertible debenture (Note 30).
|
(d)
|
On June 28, 2020, one of the 10.5% convertible debentureholders, see 14 (c), elected to participate on the exact same terms and conditions in the 10% convertible debenture described in 14 (c) for their $186,359 ($250,000 CAD) face value that would otherwise have matured on June 28, 2020.
|
Subsequent to the year end, the Company
redeemed in full this senior unsecured 10% convertible debenture (Note 30(b)).
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
On June 28, 2018, Signifi borrowed
$192,886 from the Business Development Bank of Canada (“BDC”) for a term of four years, payable in monthly instalments of
principal and interest. This loan bears interest at the bank’s base rate + 3.2%. The loan must be fully repaid by July 23, 2022.
The loan is secured by the assets of Signifi and a guarantee by the Company and its Canadian subsidiaries.
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
Balance, Beginning of Year
|
|
$
|
150,538
|
|
|
$
|
168,869
|
|
|
|
-
|
|
Loan proceeds
|
|
|
-
|
|
|
|
-
|
|
|
|
192,886
|
|
Foreign Exchange adjustments
|
|
|
3,188
|
|
|
|
7,783
|
|
|
|
(8,586
|
)
|
Capital repayments in the year
|
|
|
(45,490
|
)
|
|
|
(26,114
|
)
|
|
|
(15,431
|
)
|
|
|
|
108,236
|
|
|
|
150,538
|
|
|
|
168,869
|
|
Current portion
|
|
|
(56,471
|
)
|
|
|
(44,547
|
)
|
|
|
(24,963
|
)
|
Long Term Debt, End of Year
|
|
$
|
51,765
|
|
|
$
|
105,991
|
|
|
$
|
143,906
|
|
16.
|
FUTURE PURCHASE CONSIDERATION
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
Balance, beginning of the year
|
|
|
-
|
|
|
$
|
315,712
|
|
|
$
|
865,854
|
|
E-Wave future purchase consideration accrued
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
E-wave future purchase consideration paid
|
|
|
-
|
|
|
|
-
|
|
|
|
(621,567
|
)
|
Signifi future purchase consideration paid
|
|
|
-
|
|
|
|
(315,712
|
)
|
|
|
(285,714
|
)
|
Accretion and change in value of future purchase consideration
|
|
|
-
|
|
|
|
|
|
|
|
519,148
|
|
Foreign exchange adjustments
|
|
|
|
|
|
|
|
|
|
|
(162,009
|
)
|
Balance, end of the year
|
|
|
-
|
|
|
|
-
|
|
|
$
|
315,712
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Classification:
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term (payable within one year)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
315,712
|
|
Long-term
|
|
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
At each reporting period, management updates estimates
with respect to probability of payment form and recognizes changes in the estimated value of future purchase consideration in profit or
loss.
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
|
(a)
|
Authorized
|
Unlimited number of common shares without par value
|
|
|
|
Unlimited number of preferred shares without par value
|
As at December 31, 2020, the Company had
4,663,331 common shares issued and outstanding (2019-863,747) (2018-715,269) and 40,000 shares to be issued to a consultant for services
rendered as part of the share issue costs that were accrued in reserves in 2020 and only issued in 2021 (Note 14(b)(iii)).
On September 24, 2020, the Company consolidated
its common shares (each, a “Share”) 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.
|
(b)
|
Common share transactions
|
Transactions for the year ended December
31, 2020 are as follows:
|
(i)
|
On June 22, 2020, the Company issued 1,149 shares as a result of an early conversion of the convertible debt (referred to in Note 14(b)) at $48.71— ($65.25 CAD) per share for proceeds of $57,692 ($75,000 CAD).
|
|
(ii)
|
On August 4, 2020, the Company completed a two part private placement raising aggregate gross proceeds of $1,604,729 ($2,150,000 CAD) through the issuance of 148,276 units at a price of $10.82 per unit ($14.50 CAD). Each unit consisted of one common share and one-half of one common share purchase warrant. Each whole warrant is exercisable at a price of $20.47 ($26.10 CAD) for a period of two years. The Company paid a cash commission of $19,358 ($24,682 CAD), issued 1,702 broker warrants on the same terms as the investor warrants having a Black Scholes value of $9,873, and other share issuance costs of $146,377.
|
|
(iii)
|
On September 29, 2020 the Company completed an initial public offering of 2,100,000 units (the “Units”) at $6.00 USD per unit for gross proceeds of $12,600,000 USD. Each Unit consisting of one common share and one tradeable warrant to purchase one common share. Each warrant has an exercise price of $6.85 USD per share, is exercisable immediately and will expire five (5) years from the date of issuance. The common shares and the warrants comprising the Units are immediately separable upon issuance and will be issued separately in this offering. The common shares using the residual value approach were valued at $4.73 USD per share and each warrant was valued at $1.27 USD per warrant. Share issuance costs related to the initial public offering was $2,810,274, of which $560,000 recorded in reserves relates to 40,000 common shares to be issued for services, 113,500 underwriter warrants exercisable at $6.60USD per share, with a Black Scholes value of $315,796, and underwriter overallotment 266,000 tradeable warrants with an exercise price of $6.85 USD with a Black Scholes value of $335,160.
|
|
(iv)
|
During the month of November 2020, the Company issued 170,000 common shares at $5.99 per share to the underwriter of the initial public offering as a result of the underwriter exercising its over-allotment option, for gross proceeds of $1,018,300 less share issuance costs of $81,464 for net proceeds of $936,836.
|
|
(v)
|
On December 14, 2020, the Company issued 85,659 common shares to various suppliers as required under contractual obligations valued at $710,970.
|
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
17.
|
SHARE CAPITAL (cont’d)
|
|
(b)
|
Common
share transactions (Cont’d)
|
|
(vi)
|
On December 31, 2020, the Company completed a private placement issuing
1,294,500 units at $10.00 USD per unit for gross proceeds of $12,945,500 USD. Each Unit consisting of one common share and one warrant
to purchase one common share. Each warrant has an exercise price of $11.50 USD per share, is exercisable immediately and will expire five
(5) years from the date of issuance. The common shares and the warrants comprising the units were immediately separable upon issuance
and were issued separately in the offering. The common shares using the residual value approach were valued at $10.00 USD per share and
each warrant was valued at $Nil per warrant. Total share issuance costs totaled $1,707,138 which includes 64,724 broker warrants exercisable
at $11.50 with a Black Scholes value of $420,508.
|
Transactions
for the year ended December 31, 2019 are as follows:
|
i)
|
Issued 5,668 common shares in connection with exercised of agents’ options for proceeds of $247,764.
|
|
ii)
|
Issued 80,865 common shares in connection with exercise of warrants for proceeds of $4,418,377.
|
|
iii)
|
Issued 6,897 common shares in connection with purchase consideration for Signifi with the value of the shares as $346,673.
|
|
iv)
|
On August 29, 2019 the Company completed a non-brokered private placement of 51,724 units at a price of $44.29 ($58.00 CAD) per unit for gross proceeds of $2,290,916. Each unit consisted of one common share and one-half share purchase warrant. Each warrant is exercisable at a price of $68.23 ($87.00 CAD) for a period of two years. In conjunction with the placement, the Company incurred share issuance costs of $185,854.
|
|
v)
|
On December 23, 2019, the Company issued 3,324 common shares as compensation to the agents in connection to the issuance of the convertible debentures (Note 14). These shares were recorded at its market value of $118,560.
|
The Company has a shareholder approved
“rolling” stock option plan (the “Plan”) in compliance with Nasdaq 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:
|
|
Number of
Stock Options
|
|
|
Weighted
Average
Exercise Price
|
|
Outstanding options, December 31, 2017
|
|
|
59,172
|
|
|
|
48.56
|
|
Granted
|
|
|
15,241
|
|
|
|
55.98
|
|
Exercised
|
|
|
(8,965
|
)
|
|
|
35.83
|
|
Outstanding options, December 31, 2018
|
|
|
65,448
|
|
|
|
49.00
|
|
Granted
|
|
|
17,655
|
|
|
|
59.01
|
|
Expired
|
|
|
(518
|
)
|
|
|
65.57
|
|
Outstanding options, December 31, 2019
|
|
|
82,585
|
|
|
$
|
52.34
|
|
Granted
|
|
|
279,190
|
|
|
|
6.47
|
|
Expired
|
|
|
(33,707
|
)
|
|
|
39.79
|
|
Outstanding options, December 31, 2020
|
|
|
328,068
|
|
|
$
|
14.66
|
|
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
17.
|
SHARE CAPITAL (cont’d)
|
|
(c)
|
Stock options (cont’d)
|
At December 31, 2020 stock options outstanding are as follows:
Grant Date
|
|
Number of
options
outstanding
|
|
|
Number of
options
exercisable
|
|
|
Weighted
Average
Exercise Price
|
|
|
Expiry date
|
|
Remaining
contractual
life (years)
|
|
01-Jan-17
|
|
|
2,207
|
|
|
|
2,207
|
|
|
|
40.37
|
|
|
01-Jan-22
|
|
|
1.00
|
|
11-Jan-17
|
|
|
2,483
|
|
|
|
2,483
|
|
|
|
40.94
|
|
|
11-Jan-22
|
|
|
1.03
|
|
04-Apr-17
|
|
|
6,897
|
|
|
|
6,897
|
|
|
|
62.54
|
|
|
04-Apr-22
|
|
|
1.26
|
|
24-Jul-17
|
|
|
8,619
|
|
|
|
8,619
|
|
|
|
78.47
|
|
|
24-Jul-22
|
|
|
1.56
|
|
24-Dec-18
|
|
|
14,620
|
|
|
|
12,103
|
|
|
|
56.86
|
|
|
24-Dec-23
|
|
|
2.98
|
|
15-Jan-19
|
|
|
828
|
|
|
|
276
|
|
|
|
56.86
|
|
|
15-Jan-24
|
|
|
3.04
|
|
21-Mar-19
|
|
|
12,345
|
|
|
|
10,943
|
|
|
|
62.55
|
|
|
21-Mar-24
|
|
|
3.47
|
|
01-Dec-19
|
|
|
1,293
|
|
|
|
1,293
|
|
|
|
56.86
|
|
|
01-Dec-21
|
|
|
0.92
|
|
01-Jan-20
|
|
|
2,069
|
|
|
|
689
|
|
|
|
56.86
|
|
|
31-Oct-25
|
|
|
4.75
|
|
01-Jan-20
|
|
|
207
|
|
|
|
207
|
|
|
|
56.86
|
|
|
01-Dec-21
|
|
|
0.89
|
|
15-Nov-20
|
|
|
95,000
|
|
|
|
11,875
|
|
|
|
6.00
|
|
|
15-Nov-30
|
|
|
9.88
|
|
15-Nov-20
|
|
|
181,500
|
|
|
|
22,688
|
|
|
|
6.00
|
|
|
15-Nov-25
|
|
|
4.88
|
|
Total
|
|
|
328,068
|
|
|
|
80,280
|
|
|
|
14.66
|
|
|
|
|
|
5.93
|
|
Transactions for the year ended December 31, 2020 are
as follows:
During the year ended December 31, 2020
the Company recorded share-based payments expense of $517,678 (2019- $1,123,154) and (2018-$850,747) in relation to options vesting.
On January 1, 2020, the Company issued
2,690 stock options to various employees at an exercise price of $56.86 that 2,069 expires on October 31, 2025 and 621 expires on January
1, 2023. On December 1, 2020, due to the termination of an employee, 414 stock options of the 621 stock options issued on January 1, 2020
were cancelled and the remaining balance of 207 vested stock options have an expire date of December 1, 2021.
On November 15, 2020 the Company issued
276,500 stock options at an exercise price of $6.00 per common share.
Transactions for the year ended December
31, 2019 are as follows:
In the first quarter of 2019, 2,207
stock options were granted at an exercise price of CAD$72.50 and 12,345 stock options were granted at an exercise price of CAD$79.75.
In the second quarter of 2019, 518 stock
options with an exercise price of CAD$65.57 expired. In the fourth quarter of 2019, the Company issued 3,103 options to a Director with
an exercise price of CAD$72.50 per option.
The following weighted average assumptions
have been used for the Black-Scholes valuation for the stock options granted:
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
Stock price
|
|
$
|
6.47
|
|
|
$
|
CAD 72.50
|
|
|
$
|
CAD 62.35
|
|
Risk-free interest rate
|
|
|
1.68
|
%
|
|
|
1.5
|
%
|
|
|
1.9
|
%
|
Expected life
|
|
|
5
|
|
|
|
4.8
|
|
|
|
5
|
|
Annualized volatility
|
|
|
83
|
%
|
|
|
143
|
%
|
|
|
148
|
%
|
Dividend rate
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
17.
|
SHARE CAPITAL (cont’d)
|
Transactions for the year ended December
31, 2020 are as follows:
The Company issued 1,702 agents’
options on the closing of the August 2020 capital raise at an exercise price of $20.47 ($26.10 CAD) per common share and these agents’
options expire on July 28, 2022, adding an additional $9,873 to reserves and share issuance costs,
The Company issued 113,500 agents’
options to the underwriter of its initial public offering at an exercise price of $6.60 per common share and these agents’ options
expire on September 28, 2025 including in reserves an additional $315,796 that are part of the share issuance costs.
On October 21, 2020, the underwriter of the initial public offering
acquired 266,000 share purchase warrants pursuant to that certain underwriting agreement at $0.01 per warrant. The warrant has an exercise
price of $6.85 USD with an expiry date of September 28, 2025. The Company added the Black Scholes value to these agent warrants adding
an additional $335,160 to reserves as part of the share issuance costs.
The Company issued 64,724 agent’s options to the placement agency
of the December 31, 2020 capital raise at an exercise price of $11.50 expiring on June 30, 2024 and using Black Scholes added $420,508
to reserves as part of the share issuance costs.
Transactions for the year ended December
31, 2019 are as follows:
On December 23, 2019, the Company granted
5,025 agents’ options at an exercise price of $45.58 ($CAD 60.18) that expire on December 23, 2021.
5,668 agent’s options, prior to
their expiry date of March 16, 2019, were exercised at $43.71 for total proceeds of $247,764.
On March 16, 2019, the Company issued
810 Agents’ options expired at an average exercise price of $53.00.
A summary of the Company’s agents’
options activity is as follows:
|
|
Number of
options
|
|
|
Weighted average
exercise price
|
|
Outstanding agent options, December 31, 2017
|
|
|
9,593
|
|
|
$
|
45.10
|
|
Granted
|
|
|
1,572
|
|
|
|
67.18
|
|
Exercised
|
|
|
(2,733
|
)
|
|
|
40.31
|
|
Expired
|
|
|
(382
|
)
|
|
|
39.19
|
|
Outstanding agent options, December 31, 2018
|
|
|
8,050
|
|
|
$
|
47.91
|
|
Granted
|
|
|
5,025
|
|
|
|
45.58
|
|
Exercised
|
|
|
(5,668
|
)
|
|
|
43.71
|
|
Expired
|
|
|
(810
|
)
|
|
|
53.00
|
|
Outstanding agent options, December 31, 2019
|
|
|
6,597
|
|
|
|
50.53
|
|
Granted
|
|
|
445,926
|
|
|
|
7.36
|
|
Outstanding agent options, December 31, 2020
|
|
|
452,523
|
|
|
$
|
8.02
|
|
At December 31, 2020 agents’ options outstanding
are as follows:
Grant Date
|
|
Number of options outstanding
|
|
|
Number of options exercisable
|
|
|
Weighted Average Exercise Price
|
|
|
Expiry date
|
|
Remaining contractual life (years)
|
|
December 24, 2018
|
|
|
1,572
|
|
|
|
1,572
|
|
|
|
65.90
|
|
|
December 24, 2021
|
|
|
0.98
|
|
December 23, 2019
|
|
|
5,025
|
|
|
|
5,025
|
|
|
|
45.58
|
|
|
December 23, 2021
|
|
|
0.98
|
|
July 28, 2020
|
|
|
1,702
|
|
|
|
1,702
|
|
|
|
20.47
|
|
|
July 28, 2022
|
|
|
1.57
|
|
September 29, 2020
|
|
|
113,500
|
|
|
|
113,500
|
|
|
$
|
6.60
|
|
|
September 28, 2025
|
|
|
4.74
|
|
September 29, 2020
|
|
|
266,000
|
|
|
|
266,000
|
|
|
$
|
6.85
|
|
|
September 28, 2025
|
|
|
4.74
|
|
December 31, 2020
|
|
|
64,724
|
|
|
|
64,724
|
|
|
$
|
11.50
|
|
|
June 30, 2024
|
|
|
3.5
|
|
Total
|
|
|
452,523
|
|
|
|
452,523
|
|
|
$
|
8.02
|
|
|
|
|
|
4.49
|
|
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
17.
|
SHARE CAPITAL (cont’d)
|
|
(e)
|
Share purchase warrants
|
A summary of the Company’s warrant activity is as
follows:
Transactions for the year ended December 31, 2020 are
as follows:
|
a.
|
On June 23, 2020, as part of the 10% convertible debenture referred to in 14(c), the Company issued 10,897 share purchase warrants at an exercise price of $34.12 with an expiry of June 23, 2021.
|
|
b.
|
On July 28, 2020, as part of the capital raise per 17(b)(ii), the Company issued 74,138 share purchase warrants at an exercise price of $20.47 with an expiry date of July 28, 2022.
|
|
c.
|
On September 29, 2020, the Company issued 2,100,000 share purchase warrants as part of the units offered and sold in its initial public offering, which included one common share and one warrant. The warrant has an exercise price of $6.85 USD with an expiry date of September 28, 2025. These warrants trade on Nasdaq under the symbol STYA-W and were valued at the residual value of $1.27 per warrant for total value of $2,667,000 including in reserves.
|
|
d.
|
On December 31, 2020, the Company issued 1,294,500 share purchase warrants to the December 31, 2020 investors who participated in the private placement. Each unit consisted of one common share and one share purchase warrant. The warrant have an exercise price of $11.50 USD with an expiry date of June 29, 2024.
|
Transactions for the year ended December 31, 2019 are
as follows:
|
a.
|
On August 20, 2019 the Company granted 25,863 share purchase warrants as part of the unit of a private placement. These warrants have an expiry date of August 20, 2021 and an exercise price of $68.63 ($CAD87.00).
|
|
b.
|
On December 23, 2019 the Company granted 54,248 share purchase warrants as part of the unit of a debenture issue. These warrants have an expiry date of December 23, 2022 and an exercise price of $51.18 ($CAD65.25).
|
|
c.
|
Prior to their expiry on March 16, 2019, 80,865 share purchase options were exercised at $68.36 for total proceeds of $5,529,858.
|
|
d.
|
On March 16, 2019, 5,196 share purchase warrants from a private placement, expired at $68.36.
|
|
e.
|
On December 28, 2019, 31,724 share purchase warrants, granted from a debenture issue, expired at $76.90.
|
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
17.
|
SHARE CAPITAL (cont’d)
|
|
(e)
|
Share purchase warrants (Cont’d)
|
|
|
Number of
warrants
|
|
|
Weighted average
exercise price
|
|
Outstanding, December 31, 2017
|
|
|
172,954
|
|
|
$
|
62.44
|
|
Granted
|
|
|
31,888
|
|
|
|
67.18
|
|
Exercised
|
|
|
(18,268
|
)
|
|
|
55.98
|
|
Expired
|
|
|
(36,900
|
)
|
|
|
74.73
|
|
Outstanding, December 31, 2018
|
|
|
149,674
|
|
|
$
|
60.16
|
|
Granted
|
|
|
80,110
|
|
|
|
54.64
|
|
Exercised
|
|
|
(80,865
|
)
|
|
|
54.64
|
|
Expired
|
|
|
(36,920
|
)
|
|
|
73.22
|
|
Outstanding, December 31, 2019
|
|
|
111,999
|
|
|
$
|
59.02
|
|
Granted
|
|
|
3,479,534
|
|
|
|
8.96
|
|
Outstanding, December 31, 2020
|
|
|
3,591,533
|
|
|
$
|
10.55
|
|
At December 31, 2020, share purchase warrants
outstanding and exercisable are as follows:
Grant Date
|
|
Number of Warrants
outstanding and
exercisable
|
|
|
Exercise Price
|
|
|
Expiry date
|
24-Dec-18
|
|
|
31,887
|
|
|
$
|
68.23
|
|
|
24-Dec-21
|
29-Aug-19
|
|
|
25,863
|
|
|
$
|
68.23
|
|
|
29-Aug-21
|
23-Dec-19
|
|
|
54,248
|
|
|
$
|
51.18
|
|
|
23-Dec-22
|
23-Jun-20
|
|
|
10,897
|
|
|
$
|
34.12
|
|
|
23-Jun-21**
|
July 28, 2020
|
|
|
74,138
|
|
|
$
|
20.47
|
|
|
28-Jul-22
|
September 29, 2020
|
|
|
2,100,000
|
|
|
$
|
6.85
|
|
|
28-Sep-25
|
December 31, 2020
|
|
|
1,294,500
|
|
|
$
|
11.50
|
|
|
30-June-24
|
Total
|
|
|
3,591,533
|
|
|
$
|
10.55
|
|
|
|
**
|
These 10,897 share purchase
warrants at $34.12 expired subsequent to the year end.
|
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
(in thousands)
|
|
December 31,
2020
|
|
|
December 31,
2019
|
|
|
December 31,
2018
|
|
Materials and merchandise
|
|
$
|
2,855
|
|
|
$
|
5,488
|
|
|
$
|
8,648
|
|
Royalties
|
|
|
257
|
|
|
|
322
|
|
|
|
261
|
|
Other expenses
|
|
|
1,155
|
|
|
|
816
|
|
|
|
1,115
|
|
Change in inventory
|
|
|
144
|
|
|
|
497
|
|
|
|
(633
|
)
|
Total
|
|
$
|
4,410
|
|
|
$
|
7,123
|
|
|
$
|
9,391
|
|
19.
|
SELLING AND MARKETING EXPENSES
|
(in thousands)
|
|
December 31,
2020
|
|
|
December 31,
2019
|
|
|
December 31,
2018
|
|
Salaries and related expenses
|
|
$
|
2,111
|
|
|
$
|
1,555
|
|
|
$
|
1,173
|
|
Advertising and marketing
|
|
|
1,425
|
|
|
|
1,700
|
|
|
|
2,737
|
|
Travel and conferences
|
|
|
156
|
|
|
|
305
|
|
|
|
297
|
|
Total
|
|
$
|
3,692
|
|
|
$
|
3,560
|
|
|
$
|
4,207
|
|
20.
|
GENERAL AND ADMINISTRATIVE EXPENSES
|
(in thousands)
|
|
December 31,
2020
|
|
|
December 31,
2019
|
|
|
December 31,
2018
|
|
Salaries and related expenses
|
|
$
|
284
|
|
|
$
|
407
|
|
|
$
|
236
|
|
Professional services
|
|
|
294
|
|
|
|
203
|
|
|
|
307
|
|
Consulting and director fees
|
|
|
1,206
|
|
|
|
775
|
|
|
|
639
|
|
Management fees
|
|
|
99
|
|
|
|
317
|
|
|
|
440
|
|
Travel
|
|
|
43
|
|
|
|
80
|
|
|
|
73
|
|
Office and general
|
|
|
603
|
|
|
|
304
|
|
|
|
297
|
|
Regulatory and filing fees
|
|
|
47
|
|
|
|
46
|
|
|
|
19
|
|
Shareholder relations
|
|
|
281
|
|
|
|
191
|
|
|
|
251
|
|
Total
|
|
$
|
2,857
|
|
|
$
|
2,323
|
|
|
$
|
2,262
|
|
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
Interest and accretion on convertible debentures
|
|
|
1,744,120
|
|
|
|
693,712
|
|
|
|
643,961
|
|
Interest expense on long term debt
|
|
|
11,107
|
|
|
|
15,413
|
|
|
|
8,230
|
|
Interest on bank loans from factoring
|
|
|
18,532
|
|
|
|
235,732
|
|
|
|
90,501
|
|
Other interest and bank charges
|
|
|
(3,819
|
)
|
|
|
15,999
|
|
|
|
10,565
|
|
Gain on conversion of debenture
|
|
|
(16,712
|
)
|
|
|
-
|
|
|
|
-
|
|
Interest earned on director’s loan
|
|
|
(23,000
|
)
|
|
|
(10,000
|
)
|
|
|
-
|
|
Interest expenses on lease obligations
|
|
|
14,045
|
|
|
|
11,406
|
|
|
|
-
|
|
Total
|
|
|
1,744,273
|
|
|
|
962,262
|
|
|
|
753,257
|
|
Transaction costs incurred in 2020 of $1,414,616 are
incremental costs that are directly attributable to the uplisting onto Nasdaq and the Company’s associated initial
public offering that do not meet the criteria to be treated as a share issuance cost, but are disclosed separately as an expense. These
transaction costs include a proportion of legal fees, accounting fees as well as 100% of filing fees, marketing costs for the uplisting
and the initial public offering and other professional fees and expenses.
The reconciliation of income taxes at statutory
rates is as follows:
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
Loss for the year
|
|
$
|
(13,591,117
|
)
|
|
$
|
(7,657,208
|
)
|
|
$
|
(8,897,107
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected income tax (recovery)
|
|
$
|
(3,670,000
|
)
|
|
$
|
(2,067,000
|
)
|
|
$
|
(2,404,000
|
)
|
Change in statutory, foreign tax, foreign exchange rates and other
|
|
|
(117,000
|
)
|
|
|
67,000
|
|
|
|
117,000
|
|
Permanent differences
|
|
|
134,000
|
|
|
|
309,000
|
|
|
|
(90,000
|
)
|
Share issue cost
|
|
|
(1,248,000
|
)
|
|
|
(50,000
|
)
|
|
|
(73,000
|
)
|
Impact of convertible debenture
|
|
|
17,000
|
|
|
|
107,000
|
|
|
|
-
|
|
Adjustment to prior years provision versus statutory tax returns and expiry of non-capital losses
|
|
|
208,000
|
|
|
|
9,000
|
|
|
|
457,000
|
|
Expiry of non-capital losses
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
Change in unrecognized deductible temporary differences
|
|
|
4,676,000
|
|
|
|
1,625,000
|
|
|
|
1,993,000
|
|
Total income tax expense (recovery)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current income tax
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Deferred tax recovery
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
23.
|
INCOME TAXES (cont’d)
|
The significant components of the Company’s
deferred tax assets and liabilities are as follows:
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
ROU assets and lease liabilities
|
|
|
(9,000
|
)
|
|
|
(2,000
|
)
|
|
|
-
|
|
Intangible assets
|
|
|
(141,000
|
)
|
|
|
-
|
|
|
|
-
|
|
Convertible debenture
|
|
|
(87,000
|
)
|
|
|
(321,000
|
)
|
|
|
(72,000
|
)
|
Non-capital losses
|
|
|
237,000
|
|
|
|
323,000
|
|
|
|
72,000
|
|
Net deferred tax liability
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
The significant components of the Company’s
deductible temporary differences, unused tax credits and unused tax losses that have not been included on the consolidated statement of
financial position are as follows:
The significant components of the Company’s
temporary differences, unused tax credits and unused tax losses that have not been included on the consolidated statement of financial
position are as follows:
|
|
2020
|
|
|
Expiry Date Range
|
|
2019
|
|
|
Expiry Date Range
|
|
2018
|
|
|
Expiry Date Range
|
Temporary Differences
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
$
|
775,000
|
|
|
No expiry date
|
|
$
|
-
|
|
|
No expiry date
|
|
$
|
-
|
|
|
No expiry date
|
Property, plant, and equipment and intangibles
|
|
|
2,216,000
|
|
|
No expiry date
|
|
|
1,541,000
|
|
|
No expiry date
|
|
|
538,000
|
|
|
No expiry date
|
Financing cost
|
|
|
5,948,000
|
|
|
2040 to 2044
|
|
|
1,376,000
|
|
|
2039 to 2043
|
|
|
1,178,000
|
|
|
2038-2042
|
Inventory
|
|
|
1,373,000
|
|
|
No expiry date
|
|
|
-
|
|
|
No expiry date
|
|
|
-
|
|
|
No expiry date
|
Allowance for doubtful accounts
|
|
|
714,000
|
|
|
No expiry date
|
|
|
-
|
|
|
No expiry date
|
|
|
-
|
|
|
No expiry date
|
Allowable capital losses
|
|
|
39,000
|
|
|
No expiry date
|
|
|
38,000
|
|
|
No expiry date
|
|
|
196,000
|
|
|
No expiry date
|
Non-capital losses available for future periods
|
|
|
30,491,000
|
|
|
see below
|
|
|
20,708,000
|
|
|
see below
|
|
|
14,991,000
|
|
|
see below
|
Canada
|
|
|
18,553,000
|
|
|
2026 to 2040
|
|
|
10,160,000
|
|
|
2026 to 2039
|
|
|
6,806,000
|
|
|
2026-2038
|
Israel
|
|
|
11,938,000
|
|
|
No expiry date
|
|
|
10,548,000
|
|
|
No expiry date
|
|
|
8,185,000
|
|
|
No expiry date
|
The Company has approximately $30,491,000 (2019
- $20,708,000) of operating tax loss carry-forwards. Of these, $11.9 million arise from Israel (2019 - $10.5 million) which do not expire,
and the remaining balance arise from Canada which expire between 2026 and 2040.
The Board of Directors has overall
responsibility for the establishment and oversight of the Company’s risk management framework.
The Company defines capital as consisting
of shareholder’s equity. The Company’s objectives when managing capital are to support the creation of shareholder value,
as well as to ensure that the Company is able to meet its financial obligations as they become due.
The Company manages its capital structure
to maximize its financial flexibility making adjustments 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 subject to externally imposed capital requirements arising from the quarterly payments of interest on the convertible debentures outstanding,
as described in Note 14, the monthly principal and interest payments from the BDC loan described in Note 15 and the Bank loan as described
in Note 11. The Company also subject to a debt covenant in relation to the factoring agreement described in Note 5.
Management reviews its capital management
approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
25.
|
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 to/from related party, accounts payable and accrued liabilities, long term debt, and convertible
debentures approximate carrying value, which is the amount recorded on the consolidated statement of financial position.
Credit risk
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 14% of the Company’s revenue for the year ended December 31, 2020 (2019 -24%) is
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. Certain key customers were offered extended payment terms on their purchases due to slow
down from Covid-19 and budget approvals for government tenders. As a result, the Company had customers with overdue receivables on their
books which resulted in the Company taking a bad debt provision of these overdue receivables which amounted to $1,530,667.
More than 50% of the Company’s
customers have been active with the Company for over four years, and the impairment of $1,530,667 in 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.
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
25.
|
FINANCIAL INSTRUMENTS (cont’d)
|
Credit risk (cont’d)
The maximum exposure to credit risk
for trade and other receivables at the reporting date by geographic region was as follows:
(in thousands)
|
|
December 31,
2020
|
|
|
December 31,
2019
|
|
|
December 31,
2018
|
|
EMEA
|
|
$
|
1,246
|
|
|
$
|
609
|
|
|
$
|
478
|
|
North America
|
|
|
1,491
|
|
|
|
884
|
|
|
|
203
|
|
Total
|
|
$
|
2,737
|
|
|
$
|
1,493
|
|
|
$
|
679
|
|
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 5).
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.
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
25.
|
FINANCIAL INSTRUMENTS (cont’d)
|
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 December 31, 2020 the Company’s exposure to foreign
currency risk with respect to financial instruments is as follows:
(in USD thousands)
|
|
USD
|
|
|
New
Israel
Shekel (“NIS”)
|
|
|
CAD
|
|
|
Total
|
|
Financial assets and financial liabilities:
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
5,236
|
|
|
|
36
|
|
|
|
197
|
|
|
|
5,469
|
|
Restricted cash
|
|
|
0
|
|
|
|
10,995
|
|
|
|
0
|
|
|
|
10,995
|
|
Trade receivables
|
|
|
1,266
|
|
|
|
1,246
|
|
|
|
225
|
|
|
|
2,737
|
|
Due from director
|
|
|
214
|
|
|
|
-
|
|
|
|
-
|
|
|
|
214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank loan
|
|
|
-
|
|
|
|
(65
|
)
|
|
|
(372
|
)
|
|
|
(437
|
)
|
Accounts payable and accrued liabilities
|
|
|
(1,176
|
)
|
|
|
(1,087
|
)
|
|
|
(359
|
)
|
|
|
(2,622
|
)
|
Convertible debentures
|
|
|
|
|
|
|
|
|
|
|
(6,161
|
)
|
|
|
(6,161
|
)
|
Long term debt
|
|
|
-
|
|
|
|
-
|
|
|
|
(108
|
)
|
|
|
(108
|
)
|
Total
|
|
|
5,540
|
|
|
|
11,125
|
|
|
|
(6,578
|
)
|
|
|
10,087
|
|
Impact of 10% fluctuation in Exchange Rate
|
|
$
|
554
|
|
|
$
|
1,113
|
|
|
$
|
(658
|
)
|
|
$
|
1,008
|
|
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 limited to the BDC loan, and is therefore currently immaterial as the rest of 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.
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
26.
|
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 year ended December 31, 2020 and 2019 are as
follows:
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
Payments to key management personnel:
|
|
|
|
|
|
|
|
|
|
Salaries, consulting and directors’ fees
|
|
$
|
1,179,762
|
|
|
$
|
928,637
|
|
|
$
|
728,624
|
|
Share-based payments
|
|
|
261,794
|
|
|
|
656,895
|
|
|
|
216,218
|
|
Total
|
|
$
|
1,441,556
|
|
|
$
|
1,585,532
|
|
|
$
|
944,842
|
|
Other related party transactions are
as follows:
|
|
|
|
(in thousands)
|
|
Type of Service
|
|
Nature of Relationship
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
Selling and marketing expenses
|
|
VP Technology
|
|
|
174
|
|
|
|
210
|
|
|
|
105
|
|
General and administrative expense
|
|
Companies controlled by the CEO, CFO and Directors
|
|
|
1,006
|
|
|
|
718
|
|
|
|
624
|
|
Loan to Director
On April 1, 2019 the Company loaned
to a director and its chief Executive Officer, $200,000 USD. This loan was 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 was increased to 12% per annum. There were no capital repayment
requirements until the end of the term when a balloon payment of the principal balance was required. The director repaid the loan in full
on May 23, 2021.
27.
|
SEGMENTED INFORMATION
|
The Company is domiciled in Canada
and it operates and produces its income primarily in Israel, Europe and North America.
In presenting information on the basis
of geographical segments, segment revenue is based on the geographical location of the customers and is as follows:
External Revenues (in thousands)
|
|
December 31,
2020
|
|
|
December 31,
2019
|
|
|
December 31,
2018
|
|
EMEA
|
|
$
|
1,465
|
|
|
$
|
6,230
|
|
|
|
8,166
|
|
USA
|
|
|
2,679
|
|
|
|
2,339
|
|
|
|
1,062
|
|
Canada
|
|
|
1,691
|
|
|
|
1,232
|
|
|
|
1,713
|
|
Australia and New Zealand
|
|
|
155
|
|
|
|
11
|
|
|
|
40
|
|
Total
|
|
$
|
5,990
|
|
|
$
|
9,812
|
|
|
|
10,981
|
|
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
Revenues from four customers of the Company for the year ended December
31, 2020 represent approximately $2,445,000 or 41% of the Company’s total revenues (December 31, 2019 is four customers representing
$4,808,000 or 49% of total revenues). As two of these customers required extended payment terms, 50% bad debt provisions were taken on
these accounts as part of the Company’s accounting policy for aged receivable provisions.
29.
|
SUPPLEMENTAL INFORMATION WITH RESPECT TO CASH FLOWS
|
During the year ended December 31,
2020, the Company paid $872,505 (December 31, 2019 - $627,557) in interest and $Nil (December 31 - $Nil) in income taxes.
During the year ended December 31,
2020 the Company incurred the following non-cash investing or financing activities:
|
(a)
|
Reclassified $40,980 from convertible debenture to share capital as the result of a conversion of $57,692 of debentures into 1,149 shares.
|
|
(b)
|
Recognized $912,916 (2019-$329,706) of accretion of the convertible debentures, classified $56,471 of long-term debt, $127,776 of lease obligations and $6,160,769 of convertible debentures all as current liabilities.
|
|
(c)
|
Issued shares with a value of $710,970 and accrued share to be issued of $560,000 in exchange for services.
|
|
(d)
|
Recognized $306,086 in right of use assets and lease liabilities.
|
(a)
|
The company issued a total of 100,500 stock options to various employees and members of the Board at an exercise price of $11.50 per share.
|
(b)
|
On March 23, 2021, Signifi Mobile Inc incorporated a new wholly-owned subsidiary, Clear RF Nevada Inc.
|
(c)
|
On March 31, 2021, Clear RF Nevada Inc. acquired 100% of the units of Clear RF LLC, a company that 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 that can be leveraged with our existing distribution channels. In exchange for 100% of the units of the partnership, the company agreed to pay a total of $700,000 by issuing 23,949 common shares of Siyata Mobile Inc. and paid $155,015 in cash, both at closing. One year from the anniversary of the closing date, the company shall pay a further $155,015 in cash and $194,985 common shares of the Company, subject to certain adjustments. This transaction is considered as an acquisition for accounting purposes.
|
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
30.
|
SUBSEQUENT EVENTS (cont’d)
|
Acquisition of Clear RF LLC
On March 31, 2021, the Company acquired the issued
and outstanding units of Clear RF LLC (“ClearRF”). In consideration, the Company paid cash of $155,014 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:
|
(a)
|
On March 31, 2022, pay $155,014 in cash (or less, subject to certain income minimums);
|
|
(b)
|
On March 31, 2022, issue common shares of the Company valued at $194,985.in cash, and
|
|
|
|
|
(c)
|
In addition to the above, further incentives may be earned and payable to the vendors based on revenues earned from the date of acquisition to March 31, 2022, inclusive.
|
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 for the 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 innovative patented products in the cellular booster market. 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:
Consideration
|
|
Note
|
|
Fair
Value
|
|
Cash
|
|
|
|
$
|
155,014
|
|
Fair value of 23,949 shares at $8.14 per share
|
|
(i)
|
|
|
194,986
|
|
Future purchase consideration
|
|
(ii)
|
|
|
350,000
|
|
Total Consideration
|
|
|
|
$
|
700,000
|
|
|
(i)
|
The fair value of the shares issued was determined by multiplying the number shares issued by the share price of the Company on March 31, 2021.
|
|
(ii)
|
Future consideration represents the expected future payments of cash and common shares. Since the balance of the shares and the cash is due within one year, the Company did not discount the future purchase consideration for the time value of money.
|
The purchase price was allocated as follows:
Purchase price allocation
|
|
Fair Value
|
|
Purchase price
|
|
$
|
700,000
|
|
|
|
|
|
|
Less: Net assets acquired
|
|
|
|
|
Net identifiable tangible assets
|
|
|
100,107
|
|
Net identifiable intangible assets
|
|
|
763,893
|
|
Deferred tax liability
|
|
|
(164,000
|
)
|
|
|
|
(700,000
|
)
|
Goodwill
|
|
$
|
0
|
|
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
30.
|
SUBSEQUENT EVENTS (cont’d)
|
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.
|
(d)
|
On
May 23, 2021, the loan to director was repaid including principal and interest.
|
|
(e)
|
On
January 6, 2021, the Company repaid the full amount of the of the 10% convertible debenture
including principal and accrued interest at its face value of $1,239,215 with a book value
of $1,205,684.
|
|
(f)
|
During
the month of February 2021, the Company received multiple tradeable warrant exercises for
total proceeds of $609,040 on the redemption of a total of 88,911 tradeable warrants at an
exercise price of $6.85 for each common share.
|
31.
|
EFFECTS OF THE CHANGE
IN PRESENTATION CURRENCY
|
The
effects of the change in presentation currency are as follow:
Restatement
of previously reported financial information due to change in presentation currency
For comparative purposes, the consolidated
balance sheets as at December 31, 2019 and January 1, 2019 include adjustments to reflect the change in the presentation currency to the
USD, which is a change in accounting policy. The balance sheet as at January 1, 2019 has been derived from the balance sheet at December
31, 2018 (not presented herein). The exchange rates used to translate the amounts previously reported into Canadian dollars at December
31, 2019 were 1.302 CAD/USD, and at January 1, 2019 were 1.362 CAD/USD.
For comparative purposes, the consolidated
statement of loss and comprehensive loss for the years ended December 31, 2019 and 2018 includes adjustments to reflect the change in
the presentation currency to the USD, which is a change in accounting policy. The exchange rates used to translate the amounts previously
reported into USD for the years ended December 31, 2019 and 2018 were 1.3269 CAD to $1USD and $1.295 CAD to $1USD respectively,
which were the average exchange rates for the period.
For the year ended December 31, 2019,
an inventory impairment of $212,000 was reclassified from cost of sales to operating expenses to be consistent with the current year presentation,
without changing the net loss.
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
31.
|
EFFECTS OF THE CHANGE IN PRESENTATION CURRENCY (cont’d)
|
(i) Effect on the consolidated balance sheet as
at December 31, 2019 and January 1, 2019
|
|
Dec 31,
2019 $USD
|
|
|
Dec
31,
2019 CAD $
|
|
|
Dec 31,
2018 $USD
|
|
|
Dec 31,
2018 $CAD
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
2,661,575
|
|
|
|
3,465,371
|
|
|
|
1,776,949
|
|
|
|
2,420,205
|
|
Trade and Other Receivables
|
|
|
1,492,955
|
|
|
|
1,943,828
|
|
|
|
679,409
|
|
|
|
925,355
|
|
Prepaid expenses
|
|
|
252,868
|
|
|
|
329,234
|
|
|
|
303,314
|
|
|
|
413,114
|
|
Inventory
|
|
|
3,379,895
|
|
|
|
4,400,623
|
|
|
|
3,657,465
|
|
|
|
4,981,467
|
|
Advance to suppliers
|
|
|
650,690
|
|
|
|
847,198
|
|
|
|
351,334
|
|
|
|
478,517
|
|
|
|
|
8,437,983
|
|
|
|
10,986,254
|
|
|
|
6,768,471
|
|
|
|
9,218,658
|
|
Right of Use
|
|
|
204,939
|
|
|
|
266,830
|
|
|
|
-
|
|
|
|
-
|
|
Loan to Director
|
|
|
200,000
|
|
|
|
260,400
|
|
|
|
-
|
|
|
|
-
|
|
Equipment
|
|
|
39,747
|
|
|
|
51,750
|
|
|
|
39,935
|
|
|
|
54,392
|
|
Intangible assets
|
|
|
6,469,504
|
|
|
|
8,423,294
|
|
|
|
5,498,548
|
|
|
|
7,489,023
|
|
Goodwill
|
|
|
785,153
|
|
|
|
1,022,269
|
|
|
|
750,565
|
|
|
|
1,022,269
|
|
Total assets
|
|
|
16,137,326
|
|
|
|
21,010,797
|
|
|
|
13,057,519
|
|
|
|
17,784,342
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank Loan
|
|
|
32,435
|
|
|
|
42,230
|
|
|
|
-
|
|
|
|
-
|
|
Accounts payable and accrued liabilities
|
|
|
1,970,663
|
|
|
|
2,565,802
|
|
|
|
2,930,310
|
|
|
|
3,991,081
|
|
Due to Related Party
|
|
|
76,866
|
|
|
|
100,079
|
|
|
|
145,640
|
|
|
|
198,362
|
|
Lease Obligations
|
|
|
116,311
|
|
|
|
151,437
|
|
|
|
-
|
|
|
|
-
|
|
Convertible debenture
|
|
|
1,047,661
|
|
|
|
1,364,055
|
|
|
|
-
|
|
|
|
-
|
|
Current portion of long term debt
|
|
|
44,547
|
|
|
|
58,000
|
|
|
|
24,963
|
|
|
|
34,000
|
|
Future Purchase Consideration
|
|
|
-
|
|
|
|
-
|
|
|
|
315,712
|
|
|
|
430,000
|
|
|
|
|
3,288,483
|
|
|
|
4,281,603
|
|
|
|
3,416,625
|
|
|
|
4,653,443
|
|
Lease Obligation
|
|
|
78,020
|
|
|
|
101,582
|
|
|
|
-
|
|
|
|
-
|
|
Other payables
|
|
|
132,906
|
|
|
|
173,044
|
|
|
|
-
|
|
|
|
-
|
|
Long Term Convertible Debenture
|
|
|
4,049,349
|
|
|
|
5,272,252
|
|
|
|
2,866,983
|
|
|
|
3,904,831
|
|
Long Term Debt
|
|
|
105,991
|
|
|
|
138,000
|
|
|
|
143,906
|
|
|
|
196,000
|
|
|
|
|
4,366,266
|
|
|
|
5,684,878
|
|
|
|
3,010,889
|
|
|
|
4,100,831
|
|
Total Liabilities
|
|
|
7,654,749
|
|
|
|
9,966,481
|
|
|
|
6,427,514
|
|
|
|
8,754,274
|
|
Shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
|
|
28,592,662
|
|
|
|
37,346,168
|
|
|
|
21,246,401
|
|
|
|
27,638,100
|
|
Reserves
|
|
|
5,095,530
|
|
|
|
6,602,751
|
|
|
|
2,923,511
|
|
|
|
3,750,999
|
|
Accumulated other comprehensive loss
|
|
|
97,138
|
|
|
|
(125,084
|
)
|
|
|
105,638
|
|
|
|
260,137
|
|
Deficit
|
|
|
(25,302,753
|
)
|
|
|
(32,779,519
|
)
|
|
|
(17,645,545
|
)
|
|
|
(22,619,168
|
)
|
|
|
|
8,482,577
|
|
|
|
11,044,316
|
|
|
|
6,630,005
|
|
|
|
9,030,068
|
|
Total liabilities and shareholders’ equity
|
|
|
16,137,326
|
|
|
|
21,010,797
|
|
|
|
13,057,519
|
|
|
|
17,784,342
|
|
Siyata Mobile Inc.
Notes to the Consolidated Financial Statements
(Expressed in US dollars)
As at and for the years ended December 31, 2020, 2019 and 2018
31.
|
EFFECTS OF THE CHANGE IN PRESENTATION CURRENCY (cont’d)
|
(ii) Effect on the consolidated statement of loss
and comprehensive loss for the years ended December 31, 2019 and 2018.
|
|
Year ended
Dec 31,
2019
$USD
|
|
|
Year ended
Dec 31,
2019
$CAD
|
|
|
Year ended
Dec 31,
2018
$USD
|
|
|
Year ended
Dec 31,
2018
$CAD
|
|
Revenue
|
|
|
9,812,188
|
|
|
|
13,019,792
|
|
|
|
10,981,114
|
|
|
|
14,220,542
|
|
Cost of Sales
|
|
|
(7,122,823
|
)
|
|
|
(9,451,274
|
)
|
|
|
(9,390,768
|
)
|
|
|
(12,161,044
|
)
|
Gross profit
|
|
|
2,689,365
|
|
|
|
3,568,518
|
|
|
|
1,590,346
|
|
|
|
2,059,498
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization and Depreciation
|
|
|
1,168,594
|
|
|
|
1,550,607
|
|
|
|
544,208
|
|
|
|
704,749
|
|
Product development
|
|
|
757,404
|
|
|
|
1,005,000
|
|
|
|
-
|
|
|
|
-
|
|
Selling and marketing
|
|
|
3,559,602
|
|
|
|
4,723,236
|
|
|
|
4,207,746
|
|
|
|
5,449,031
|
|
General and administrative
|
|
|
2,322,681
|
|
|
|
3,081,966
|
|
|
|
2,261,990
|
|
|
|
2,929,277
|
|
Bad Debt expense
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Inventory impairment
|
|
|
212,000
|
|
|
|
281,303
|
|
|
|
-
|
|
|
|
-
|
|
Impairment of intangible assets
|
|
|
111,521
|
|
|
|
147,977
|
|
|
|
1,508,880
|
|
|
|
1,954,000
|
|
Share-based payments
|
|
|
1,123,154
|
|
|
|
1,490,313
|
|
|
|
850,747
|
|
|
|
1,102,313
|
|
Total Operating Expenses
|
|
|
9,254,956
|
|
|
|
12,280,402
|
|
|
|
9,373,571
|
|
|
|
12,139,370
|
|
Net operating income (loss)
|
|
|
(6,565,591
|
)
|
|
|
(8,711,884
|
)
|
|
|
(7,783,225
|
)
|
|
|
(10,079,872
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance expense (income)
|
|
|
962,263
|
|
|
|
1,276,827
|
|
|
|
753,257
|
|
|
|
975,468
|
|
Foreign exchange
|
|
|
106,745
|
|
|
|
141,640
|
|
|
|
(40,261
|
)
|
|
|
(46,507
|
)
|
Accretion and change in value of future purchase consideration
|
|
|
22,609
|
|
|
|
30,000
|
|
|
|
400,886
|
|
|
|
519,148
|
|
Total other expenses
|
|
|
1,091,617
|
|
|
|
1,448,467
|
|
|
|
1,113,882
|
|
|
|
1,448,109
|
|
Net Income (loss) for the period
|
|
|
(7,657,208
|
)
|
|
|
(10,160,351
|
)
|
|
|
(8,897,107
|
)
|
|
|
(11,527,981
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Translation Adjustment
|
|
|
(8,500
|
)
|
|
|
(385,221
|
)
|
|
|
32,671
|
|
|
|
869,082
|
|
Comprehensive loss for the period
|
|
|
7,665,708
|
|
|
|
10,545,572
|
|
|
|
8,864,436
|
|
|
|
10,658,899
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares
|
|
|
807,956
|
|
|
|
807,956
|
|
|
|
657,764
|
|
|
|
657,764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share
|
|
$
|
(9.48
|
)
|
|
$
|
(12.58
|
)
|
|
$
|
(13.53
|
)
|
|
$
|
(17.53
|
)
|
SIYATA
MOBILE INC.
Consolidated
Interim Financial Statements
(Unaudited-Prepared by Management)
(Expressed in US Dollars)
As
at and for the three and nine months ended September 30, 2021 and 2020
Siyata
Mobile Inc.
(the
“Company” or “Siyata”)
CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
As
at and for the three and nine months ended September 30, 2021
NOTICE
OF NO AUDITOR REVIEW OF INTERIM CONSOLIDATED FINANCIAL STATEMENTS
The
Management of the Company is responsible for the preparation of the accompanying unaudited consolidated interim financial statements.
The unaudited consolidated interim financial statements 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 Public Company Accounting Oversight Board for a review of interim financial
statements by an entity’s auditor.
Consolidated
Unaudited Interim Statements of Financial Position
(Expressed in US dollars)
For
the nine months ended September 30, 2021 and December 31, 2020
|
|
September 30,
2021
|
|
|
December 31,
2020
|
|
ASSETS
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
Cash
|
|
|
2,747,572
|
|
|
|
5,468,766
|
|
Restricted cash (Note 5)
|
|
|
676,969
|
|
|
|
10,995,500
|
|
Trade and Other Receivables (Note 6)
|
|
|
2,182,219
|
|
|
|
2,737,096
|
|
Prepaid expenses
|
|
|
421,120
|
|
|
|
749,000
|
|
Inventory (Note 7)
|
|
|
2,421,025
|
|
|
|
2,409,733
|
|
Advance to suppliers
|
|
|
206,524
|
|
|
|
734,550
|
|
|
|
|
8,655,429
|
|
|
|
23,094,645
|
|
Right of Use Assets (Note 8)
|
|
|
301,539
|
|
|
|
377,035
|
|
Loan to Director
|
|
|
-
|
|
|
|
214,456
|
|
Equipment
|
|
|
176,513
|
|
|
|
55,454
|
|
Intangible assets (Note 9)
|
|
|
4,517,907
|
|
|
|
6,549,118
|
|
Goodwill (Note 10)
|
|
|
-
|
|
|
|
801,780
|
|
Total assets
|
|
|
13,651,388
|
|
|
|
31,092,488
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
Bank Loan (Note 12)
|
|
|
382,109
|
|
|
|
437,848
|
|
Accounts payable and accrued liabilities
|
|
|
2,014,631
|
|
|
|
2,622,118
|
|
Lease Obligations (Note 13)
|
|
|
122,363
|
|
|
|
127,776
|
|
Convertible debenture (Note 14)
|
|
|
5,781,646
|
|
|
|
6,160,769
|
|
Current portion of long term debt (Note 15)
|
|
|
-
|
|
|
|
56,471
|
|
Future Purchase Consideration (Note 4,16)
|
|
|
350,000
|
|
|
|
-
|
|
|
|
|
8,650,749
|
|
|
|
9,404,982
|
|
Lease Obligation (Note 13)
|
|
|
175,459
|
|
|
|
213,816
|
|
Other payables
|
|
|
-
|
|
|
|
142,870
|
|
Long Term Debt (Note 15)
|
|
|
-
|
|
|
|
51,765
|
|
Deferred income taxes
|
|
|
159,623
|
|
|
|
-
|
|
|
|
|
335,082
|
|
|
|
408,451
|
|
Total Liabilities
|
|
|
8,985,831
|
|
|
|
9,813,433
|
|
Shareholders’ equity
|
|
|
|
|
|
|
|
|
Share capital (Note 17)
|
|
|
51,601,362
|
|
|
|
50,088,369
|
|
Reserves (Note 17)
|
|
|
10,496,819
|
|
|
|
9,984,531
|
|
Accumulated other comprehensive loss
|
|
|
107,127
|
|
|
|
100,025
|
|
Deficit
|
|
|
(57,539,751
|
)
|
|
|
(38,893,870
|
)
|
|
|
|
4,665,557
|
|
|
|
21,279,055
|
|
Total liabilities and shareholders’ equity
|
|
|
13,651,388
|
|
|
|
31,092,488
|
|
Nature
of operations and going concern (Note 1)
Subsequent
Events (Note 27)
Approved
on November 14, 2021 on behalf of the Board:
“Michael
Kron”
|
|
“Marc
Seelenfreund”
|
Michael Kron-Director
|
|
Marc Seelenfreund-Director
|
The
accompanying notes are an integral part of these consolidated unaudited interim financial statements.
Siyata
Mobile Inc.
Consolidated
Unaudited Interim Statements of Loss and Comprehensive Loss
(Expressed
in US Dollars)
For
the three and nine months ended September 30, 2021 and 2020
|
|
9 months ended Sep 30
|
|
|
3 months ended Sep 30
|
|
|
|
2021
|
|
|
2020 as restated
Note 28
|
|
|
2021
|
|
|
2020 as restated
Note 28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
5,607,829
|
|
|
|
6,676,761
|
|
|
|
1,218,875
|
|
|
|
2,262,730
|
|
Cost of Sales (Note 16)
|
|
|
(3,904,544
|
)
|
|
|
(4,507,661
|
)
|
|
|
(789,362
|
)
|
|
|
(1,536,994
|
)
|
Gross profit
|
|
|
1,703,285
|
|
|
|
2,169,100
|
|
|
|
429,513
|
|
|
|
725,736
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization and Depreciation (Note 8)
|
|
|
785,655
|
|
|
|
970,690
|
|
|
|
117,035
|
|
|
|
342,329
|
|
Development expenses (Note 8)
|
|
|
818,515
|
|
|
|
-
|
|
|
|
659,942
|
|
|
|
|
|
Selling and marketing (Note 17)
|
|
|
3,457,375
|
|
|
|
2,574,577
|
|
|
|
1,263,195
|
|
|
|
1,026,492
|
|
General and administrative (Note 18)
|
|
|
3,257,857
|
|
|
|
1,481,555
|
|
|
|
1,051,846
|
|
|
|
584,453
|
|
Inventory impairment (Note 7)
|
|
|
3,389,531
|
|
|
|
-
|
|
|
|
1,550,873
|
|
|
|
-
|
|
Bad Debts (recovered) (Note 6)
|
|
|
548,403
|
|
|
|
-
|
|
|
|
772,960
|
|
|
|
-
|
|
Impairment of intangibles (Note 8)
|
|
|
4,322,799
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Impairment goodwill (Note 9)
|
|
|
819,454
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Share-based payments (Note 15)
|
|
|
1,185,205
|
|
|
|
202,576
|
|
|
|
235,414
|
|
|
|
46,143
|
|
Total Operating Expenses
|
|
|
18,584,794
|
|
|
|
5,229,398
|
|
|
|
5,651,265
|
|
|
|
1,999,417
|
|
Net operating income (loss)
|
|
|
(16,881,509
|
)
|
|
|
(3,060,298
|
)
|
|
|
(5,221,752
|
)
|
|
|
(1,273,681
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance expense (income) (note 19)
|
|
|
1,476,335
|
|
|
|
1,396,799
|
|
|
|
493,647
|
|
|
|
484,739
|
|
Foreign exchange
|
|
|
208,968
|
|
|
|
(777,940
|
)
|
|
|
(47,462
|
)
|
|
|
123,561
|
|
Transaction costs Note 4)
|
|
|
79,069
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total other expenses
|
|
|
1,764,372
|
|
|
|
618,859
|
|
|
|
446,185
|
|
|
|
608,300
|
|
Net Income (loss) for the period
|
|
|
(18,645,881
|
)
|
|
|
(3,679,157
|
)
|
|
|
(5,667,937
|
)
|
|
|
(1,881,981
|
)
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Translation Adjustment
|
|
|
(7,102
|
)
|
|
|
(661,957
|
)
|
|
|
(9,337
|
)
|
|
|
11,633
|
|
Comprehensive loss for the period
|
|
|
(18,652,983
|
)
|
|
|
(4,341,114
|
)
|
|
|
(5,677,274
|
)
|
|
|
(1,870,348
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares
|
|
|
4,787,762
|
|
|
|
902,407
|
|
|
|
4,820,104
|
|
|
|
979,589
|
|
Basic and diluted loss per share
|
|
|
(3.89
|
)
|
|
|
(4.08
|
)
|
|
$
|
(1.18
|
)
|
|
$
|
(1.92
|
)
|
The
accompanying notes are an integral part of these consolidated unaudited interim financial statements.
Siyata
Mobile Inc.
Consolidated
Unaudited Interim Statement of Changes in Shareholders’ Equity
(Expressed
in US dollars)
For
the nine months ended September 30, 2021 and September 30, 2020
|
|
Number of
Common Shares
|
|
|
Share Capital
Amount
|
|
|
Reserves
|
|
|
Accumulated
other
comprehensive
Income (loss)
|
|
|
Deficit
|
|
|
Total
Shareholders’
Equity
|
|
Balance, December 31, 2019
|
|
|
863,747
|
|
|
$
|
28,592,662
|
|
|
$
|
5,095,530
|
|
|
$
|
97,138
|
|
|
$
|
(25,302,753
|
)
|
|
$
|
8,482,577
|
|
Equity portion of debenture bifurcated
|
|
|
-
|
|
|
|
-
|
|
|
|
62,986
|
|
|
|
-
|
|
|
|
-
|
|
|
|
62,986
|
|
Share based payments
|
|
|
-
|
|
|
|
-
|
|
|
|
202,576
|
|
|
|
-
|
|
|
|
-
|
|
|
|
202,576
|
|
Share issuance on conversion of convertible debt
|
|
|
1,149
|
|
|
|
57,692
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
57,692
|
|
Share issuance on capital raise
|
|
|
148,276
|
|
|
|
1,604,729
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,604,729
|
|
Share issuance on capital raise-IPO
|
|
|
2,100,000
|
|
|
|
9,933,000
|
|
|
|
2,667,000
|
|
|
|
|
|
|
|
|
|
|
|
12,600,000
|
|
Share issuance costs on capital raise
|
|
|
|
|
|
|
(175,608
|
)
|
|
|
9,873
|
|
|
|
|
|
|
|
|
|
|
|
(165,735
|
)
|
Share issuance costs on capital raise-IPO
|
|
|
|
|
|
|
(2,810,274
|
)
|
|
|
650,956
|
|
|
|
|
|
|
|
|
|
|
|
(2,159,318
|
)
|
Translation adjustment
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(661,957
|
)
|
|
|
-
|
|
|
|
(661,957
|
)
|
Loss for the period
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
(3,679,157
|
)
|
|
|
(3,679,157
|
)
|
Balance, September 30, 2020
|
|
|
3,113,172
|
|
|
$
|
37,202,201
|
|
|
$
|
8,688,921
|
|
|
$
|
(564,819
|
)
|
|
$
|
(28,981,910
|
)
|
|
$
|
16,344,393
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2020
|
|
|
4,663,331
|
|
|
|
50,088,369
|
|
|
|
9,984,531
|
|
|
|
100,025
|
|
|
|
(38,893,870
|
)
|
|
|
21,279,055
|
|
Issuance of shares to be issued
|
|
|
40,000
|
|
|
|
560,000
|
|
|
|
(560,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Shares issued on acquisition of ClearRF
|
|
|
23,949
|
|
|
|
194,985
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
194,985
|
|
Shares issued on warrant exercises
|
|
|
88,911
|
|
|
|
721,958
|
|
|
|
(112,917
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
609,041
|
|
Share based payments
|
|
|
-
|
|
|
|
-
|
|
|
|
1,185,205
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,185,205
|
|
Translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,208
|
)
|
|
|
-
|
|
|
|
(4,208
|
)
|
Shares issued for debts
|
|
|
5,000
|
|
|
|
36,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,050
|
|
Loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
(18,645,881
|
)
|
|
|
(18,645,881
|
)
|
Balance, September 30, 2021
|
|
|
4,821,191
|
|
|
$
|
51,601,362
|
|
|
$
|
10,496,819
|
|
|
$
|
95,817
|
|
|
$
|
(57,539,751
|
)
|
|
$
|
4,654,247
|
|
The
accompanying notes are an integral part of these consolidated unaudited interim financial statements.
Siyata
Mobile Inc.
Consolidated
Unaudited Interim Statements of Cash Flows
(Expressed
in US dollars)
For the nine months ended September 30, 2021 and 2020
|
|
2021
|
|
|
2020
|
|
Operating activities:
|
|
|
|
|
|
|
Net loss for the period
|
|
$
|
(18,645,881
|
)
|
|
$
|
(3,679,157
|
)
|
Items not affecting cash:
|
|
|
|
|
|
|
|
|
Amortization and depreciation
|
|
|
785,655
|
|
|
|
970,690
|
|
Bad debt expense
|
|
$
|
548,404
|
|
|
|
-
|
|
Inventory impairments
|
|
|
3,389,530
|
|
|
|
-
|
|
Intangible impairment
|
|
|
4,322,799
|
|
|
|
-
|
|
Impairment goodwill
|
|
|
819,454
|
|
|
|
-
|
|
Interest expense, net of repayments
|
|
|
871,991
|
|
|
|
653,021
|
|
Share-based payments
|
|
|
1,185,205
|
|
|
|
202,576
|
|
|
|
|
|
|
|
|
|
|
Net change in non-cash working capital items:
|
|
|
|
|
|
|
|
|
Trade and other receivables, prepaids, and advances to suppliers
|
|
|
929,485
|
|
|
|
(2,863,106
|
)
|
Inventory
|
|
|
(3,400,822
|
)
|
|
|
796,216
|
|
Accounts payable and accrued liabilities
|
|
|
(750,357
|
)
|
|
|
1,469,092
|
|
Due to/from related party
|
|
|
-
|
|
|
|
(16,940
|
)
|
Net cash used in operating activities
|
|
|
(9,944,537
|
)
|
|
|
(2,467,608
|
)
|
Investing activities:
|
|
|
|
|
|
|
|
|
Intangible additions
|
|
|
(2,207,450
|
)
|
|
|
(995,285
|
)
|
Equipment additions
|
|
|
(121,059
|
)
|
|
|
(8,016
|
)
|
Right of use assets
|
|
|
-
|
|
|
|
(289,532
|
)
|
Acquisition of ClearRF
|
|
|
(122,014
|
)
|
|
|
-
|
|
Net cash used in investing activities
|
|
|
(2,450,523
|
)
|
|
|
(1,292,833
|
)
|
Financing activities:
|
|
|
|
|
|
|
|
|
Lease payments
|
|
|
(115,019
|
)
|
|
|
172,308
|
|
Bank loan
|
|
|
(55,739
|
)
|
|
|
598,330
|
|
Repayment of long term debt
|
|
|
(110,312
|
)
|
|
|
(29,575
|
)
|
Convertible debt issued, net of repayments
|
|
|
(1,177,786
|
)
|
|
|
99,815
|
|
Repayment of loan to Director
|
|
|
214,456
|
|
|
|
-
|
|
Shares issued for debt
|
|
|
36,050
|
|
|
|
-
|
|
Shares issued for cash, net of share issue costs
|
|
|
609,041
|
|
|
|
11,595,506
|
|
Net cash from financing activities
|
|
|
(599,309
|
)
|
|
|
12,436,384
|
|
Effect of foreign exchange on cash
|
|
|
(45,356
|
)
|
|
|
(337,526
|
)
|
Change in cash for the period
|
|
|
(13,039,725
|
)
|
|
|
8,338,417
|
|
Cash and restricted cash, beginning of period
|
|
|
16,464,266
|
|
|
|
2,630,862
|
|
Cash and restricted cash, end of period
|
|
$
|
3,424,541
|
|
|
$
|
10,969,279
|
|
See
Note 26 for supplemental information with respect to cash flows.
The
accompanying notes are an integral part of these consolidated unaudited interim financial statements.
Siyata
Mobile Inc.
Notes to the Consolidated Interim Financial Statements
(Unaudited-Prepared by Management)
(Expressed in US dollars)
As at and for the three and nine months ended September 30, 2021 and 2020
|
1.
|
NATURE
OF OPERATIONS AND GOING CONCERN
|
Siyata Mobile Inc. (“Siyata”
or the “Company”) was incorporated under the Business Corporations Act, British Columbia on October 15, 1986. The Company’s
shares are listed on NASDAQ under the symbol SYTA and warrants issued on September 29, 2020 are traded under the symbol SYTAW. As at September
30, 2021, the Company’s principal activity is the sale of vehicle mounted, cellular based communications platforms over advanced
4G mobile networks and cellular booster systems. The registered and records office is located at 2200 – 885 West Georgia Street,
Vancouver, BC V6C 3E8.
These
consolidated unaudited interim financial statements have been prepared in accordance with International Financial Reporting Standards
(“IFRS”) with 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. These consolidated unaudited interim 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 as a going concern.
The
Company incurred a net loss of $18,645,881 for the nine-month period ended September 30, 2021 (nine months ended September 30, 2020-
$3,679,157) and, as of that date, the Company’s total deficit was $57,539,751. The Company’s continuation as a going concern
is dependent upon the success of the Company’s sale of inventory, the existing cash flows, and the ability of the Company to obtain
additional debt or equity financing, all of which are uncertain. The Company faces risks related to (COVID-19) which could significantly
disrupt research and development, operations, sales, and financial results.
These
material uncertainties, along with those discussed in Note 22, may cast significant doubt on the Company’s ability to continue
as a going concern.
Statement
of compliance for interim financial statements
These
consolidated unaudited interim financial statements, including comparatives, have been prepared in accordance with IAS34 interim financial
reporting standards under International Financial Reporting Standards (“IFRS”). This standard required that the interim Balance
Sheets as at September 30, 2021 with December 31, 2020 comparative, interim Statements of Loss and Comprehensive loss for the three and
nine months’ ended September 30, 2021 and 2020 respectively, the interim Statements of Changes in Shareholders’ Equity for
the nine months’ ended September 30, 2021 and 2020 respectively and the interim Statements of Cash flows for the nine months ended
September 30, 2021 and 2020 respectively.
The
interim financial report is based on the same accounting policies and methods of computation that are followed in the most recent annual
financial statements.
This
interim financial report is to be read in conjunction with the most recent annual financial report for the year ended December 31, 2020.
Change
of functional currency
Effective
October 1, 2020, management determined that the Company’s functional currency changed from Canadian dollars to United States dollars
(“USD”). The change in the functional currency has been accounted for on a prospective basis and is primarily based on the
fact that the Company’s securities are listed on the Nasdaq exchange and as a result the future financing of the Company and cash
flows of the entities will be in USD.
In
accordance with Company’s existing policy, the Company did not reassess the classification of financials instruments as liabilities
or equity as a result of the change in functional currency. As a result, warrants remain classified as equity and are not revalued at
fair value. For the same reason, the change in functional currency did not give rise to an embedded derivative related to the Company’s
previously outstanding convertible debt with a conversion price denominated in Canadian dollars.
Siyata
Mobile Inc.
Notes to the Consolidated Interim Financial Statements
(Unaudited-Prepared by Management)
(Expressed in US dollars)
As at and for the three and nine months ended September 30, 2021 and 2020
|
2.
|
BASIS
OF PREPARATION (cont’d)
|
Change
of presentation currency
As
a result of the USD financing and the majority of cash flows denominated in US dollars, the Company changed its presentation currency
from Canadian dollars to “USD” effective October 1, 2020. The change in the financial statement presentation currency is
an accounting policy change and has been accounted for retrospectively. The balance sheets for each period presented have been translated
from the related subsidiary’s functional currency to the new “USD” presentation currency at the rate of exchange prevailing
at the respective balance sheet date except for equity items, which have been translated at accumulated historical rates from the related
subsidiary’s date of incorporation. The statements of loss and comprehensive loss were translated at the average exchange rates
for the reporting period, or at the exchange rate prevailing at the date of transactions. Exchange differences arising in 2018 on translation
from the related subsidiary’s functional currency to the “USD” presentation currency have been recognized in other
comprehensive income and accumulated as a separate component of equity.
With the retrospective application
of the change in presentation currency from the Canadian dollar to the US dollar, the Accumulated Other Comprehensive Income (“AOCI”)
related to the translation of “USD” functional currency subsidiaries was eliminated except for the wholly-owned subsidiary,
Signifi Mobile Inc. whose functional currency is in Canadian dollars. However, with the retrospective application of the change in presentation
currency to the “USD,” the Company’s corporate office, which had a Canadian dollar functional currency, resulted in
an AOCI balance. The AOCI balance generated by the Canadian dollar entities has been adjusted since it now reflects the translation into
the new “USD” presentation currency.
Basis
of consolidation and presentation
These
consolidated unaudited interim financial statements of the Company have been prepared on the historical cost basis, except for financial
instruments classified as financial instruments at fair value through profit and loss, which are stated at their fair value. In addition,
the consolidated unaudited interim financial statements have been prepared using the accrual basis of accounting, except for the statement
of cash flows.
These
consolidated unaudited interim financial statements incorporate the financial statements of the Company and its wholly controlled subsidiaries.
Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so
as to obtain benefits from its activities. These consolidated unaudited interim financial statements include the accounts of the Company
and its direct wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated.
The
consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries:
Name of Subsidiary
|
|
Place of Incorporation
|
|
Ownership
|
|
Queensgate Resources Corp.
|
|
British Columbia, Canada
|
|
|
100
|
%
|
Queensgate Resources US Corp.
|
|
Nevada, USA
|
|
|
100
|
%
|
Siyata Mobile (Canada) Inc.
|
|
British Columbia, Canada
|
|
|
100
|
%
|
Siyata Mobile Israel Ltd.
|
|
Israel
|
|
|
100
|
%
|
Signifi Mobile Inc.
|
|
Quebec, Canada
|
|
|
100
|
%
|
ClearRF Nevada Ltd.
|
|
Nevada, USA
|
|
|
100
|
%
|
Siyata
Mobile Inc.
Notes to the Consolidated Interim Financial Statements
(Unaudited-Prepared by Management)
(Expressed in US dollars)
As at and for the three and nine months ended September 30, 2021 and 2020
|
2.
|
BASIS
OF PREPARATION (cont’d)
|
Foreign
currency translation
Items
included in the financial statements of each entity in the Company are measured using the currency of the primary economic environment
in which the entity operates (the “functional currency”) and has been determined for each entity within the Company. The
functional currency of Siyata Mobile Inc. is the USD which is also the functional currency of all its subsidiaries except Signifi Mobile
Inc. whose functional currency is Canadian dollars. The functional currency determinations were conducted through an analysis of the
consideration factors identified in International Accounting Standards (“IAS”) 21, The Effects of Changes in Foreign
Exchange Rates.
Assets
and liabilities of entities with a functional currency other than the USD are translated into USD at period end exchange rates. Income
and expenses, and cash flows are translated into USD using the average exchange rate.
Transactions
in currencies other than the entity’s functional currency are translated at the exchange rates in effect on the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange in effect as at the statement
of financial position date. Non-monetary assets and liabilities denominated in foreign currencies are translated at the exchange rates
prevailing at the time of the acquisition of the assets or assumption of the liabilities. Foreign currency differences arising on translation
are recognized in the statement of loss and comprehensive loss.
Restatement
of previously reported financial information due to change in presentation currency
For
comparative purposes, the consolidated statement of loss and comprehensive loss for the nine months ended September 30, 2020 includes
adjustments to reflect the change in the presentation currency to the USD, which is a change in accounting policy. The exchange rates
used to translate the amounts previously reported into USD for the nine months ended September 30, 2020 was 1.3525 CAD to $1USD which
were the average exchange rates for the period.
For
comparative purposes, the consolidated statement of loss and comprehensive loss for the three months ended September 30, 2020, includes
adjustments to reflect the change in the presentation currency to the USD, which is a change in accounting policy. The exchange rates
used to translate the amounts previously reported into USD for the three months ended September 30, 2020 were 1.332 CAD to $1USD which
were the average exchange rates for the period.
Siyata
Mobile Inc.
Notes
to the Consolidated Interim Financial Statements
(Unaudited-Prepared
by Management)
(Expressed
in US dollars)
As
at and for the three and nine months ended September 30, 2021 and 2020
|
2.
|
BASIS
OF PREPARATION (cont’d)
|
Use
of estimates and judgements
The
preparation of the consolidated unaudited interim 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.
|
(i)
|
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 unaudited interim financial statements are, but not limited
to the following:
|
●
|
Income taxes -Tax provisions
are based on enacted or substantively enacted laws. Changes in those laws could affect amounts recognized in profit or loss both
in the period of change, which would include any impact on cumulative provisions, and future periods. Deferred tax assets, if any,
are recognized to the extent it is considered probable that those assets will be recoverable. This involves an assessment of when
those deferred tax assets are likely to reverse.
|
|
●
|
Fair value of stock options
and warrants - Determining the fair value of warrants and stock options requires judgments related to the choice of a pricing model,
the estimation of stock price volatility, the expected forfeiture rate and the expected term of the underlying instruments. Any changes
in the estimates or inputs utilized to determine fair value could have a significant impact on the Company’s future operating
results or on other components of shareholders’ equity.
|
|
●
|
Capitalization of development
costs and their amortization rate – Development costs are capitalized in accordance with the accounting policy. To determine
the amounts earmarked for capitalization, management estimates the cash flows which are expected to be derived from the asset for
which the development is carried out and the expected benefit period.
|
|
●
|
Inventory - Inventory is
valued at the lower of cost and net realizable value. Cost of inventory includes cost of purchase (purchase price, import duties,
transport, handling, and other costs directly attributable to the acquisition of inventories), cost of conversion, and other costs
incurred in bringing the inventories to their present location and condition. Net realizable value for inventories is the estimated
selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make
the sale. Provisions are made in profit or loss of the current period on any difference between book value and net realizable value.
|
|
●
|
Estimated product returns
- Revenue from product sales is recognized net of estimated sales discounts, credits, returns, rebates and allowances. The return
allowance is determined based on an analysis of the historical rate of returns, industry return data, and current market conditions,
which is applied directly against sales.
|
Siyata
Mobile Inc.
Notes
to the Consolidated Interim Financial Statements
(Unaudited-Prepared
by Management)
(Expressed
in US dollars)
As
at and for the three and nine months ended September 30, 2021 and 2020
|
2.
|
BASIS
OF PREPARATION (cont’d)
|
Use
of estimates and judgements (cont’d)
|
●
|
Impairment of non-financial
assets – The Company assesses impairment at each reporting date by evaluating conditions specific to the Company that may lead to
asset impairment. The recoverable amount of an asset or a cash-generating unit (“CGU”) is determined using the greater
of fair value less costs to sell and value in use which requires the use of various judgments, estimates, and assumptions. The Company
identifies CGUs as identifiable groups of assets that are largely independent of the cash inflows from other assets or groups of
assets. Value in use calculations require estimations of discount rates and future cash flows derived from revenue growth, gross
margin and operating costs. Fair value less costs to sell calculations require the Company to estimate fair value of an asset or
a CGU using market values of similar assets as well as estimations of the related costs to sell.
|
|
●
|
Useful life of intangible
assets – The Company estimates the useful life used to amortize intangible assets which relates to the expected future
performance of the assets acquired based on management estimate of the sales forecast.
|
|
(ii)
|
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:
|
●
|
Deferred income taxes –
judgments are made by management to determine the likelihood of whether deferred income tax assets at the end of the reporting period
will be realized from future taxable earnings. To the extent that assumptions regarding future profitability change, there can be
an increase or decrease in the amounts recognized in respect of deferred tax assets as well as the amounts recognized in profit or
loss in the period in which the change occurs.
|
|
●
|
Functional currency – The
functional currency for the Company and each of its subsidiaries is the currency of the primary economic environment in which the
respective entity operates. The Company has determined the functional currency of each entity to be the USD as of October 1, 2020,
except for Signifi Mobile Inc. whose functional currency is Canadian dollars. The Company reconsiders the functional currency of
its subsidiaries if there is a change in events and/or conditions which determine the primary economic environment.
|
|
●
|
Going concern – As
disclosed in Note 1 to the consolidated unaudited interim financial statements.
|
Siyata
Mobile Inc.
Notes
to the Consolidated Interim Financial Statements
(Unaudited-Prepared
by Management)
(Expressed
in US dollars)
As
at and for the three and nine months ended September 30, 2021 and 2020
|
3.
|
SIGNIFICANT
ACCOUNTING POLICIES
|
No
changes to any of the significant accounting policies in the period. Please refer to the December 2020 year end audited financial statements
for the details of our accounting policies.
There
are no upcoming account pronouncements expected to have a material impact on the Company’s consolidated financial statements.
|
4.
|
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:
|
(a)
|
On March 31, 2022, pay $155,015 in cash (or less, subject to certain income minimums);
|
|
(b)
|
On March 31, 2022, issue common shares of the Company valued at $194,985, and
|
|
(c)
|
In addition to the above, further incentives may be earned and payable to the vendors based on revenues earned from the date of acquisition to March 31, 2022, inclusive.
|
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 innovative patented products
in the cellular booster market. 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:
Consideration
|
|
Note
|
|
|
Fair Value
|
|
Cash
|
|
|
|
|
$
|
155,015
|
|
Fair value of 23,949 shares at $8.14 per share
|
|
(i)
|
|
|
|
194,985
|
|
Future purchase consideration
|
|
(ii)
|
|
|
|
350,000
|
|
Total Consideration
|
|
|
|
|
$
|
700,000
|
|
|
(i)
|
The fair value of the shares
issued was determined by multiplying the number shares issued by the share price of the Company on March 31, 2021.
|
|
(ii)
|
Future consideration represents
the expected future payments of cash and common shares. Since the balance of the shares and the cash is due within one year, the
Company did not discount the future purchase consideration for the time value of money.
|
Siyata
Mobile Inc.
Notes
to the Consolidated Interim Financial Statements
(Unaudited-Prepared
by Management)
(Expressed
in US dollars)
As
at and for the three and nine months ended September 30, 2021 and 2020
|
4.
|
ACQUISITION
OF CLEAR RF LLC (cont’d)
|
The
purchase price was allocated as follows:
Purchase price allocation
|
|
Fair Value
|
|
|
|
|
|
Purchase price
|
|
$
|
700,000
|
|
|
|
|
|
|
Less: Net assets acquired
|
|
|
|
|
Net identifiable tangible assets
|
|
|
100,107
|
|
Net identifiable intangible assets
|
|
|
763,893
|
|
Deferred tax liability
|
|
|
(164,000
|
)
|
|
|
|
(700,000
|
)
|
Goodwill
|
|
$
|
0
|
|
The
above acquisition price allocation is considered preliminary and may change before being considered final.
The
net identifiable intangible asset consists of two patents acquired on the acquisition that are valued at $763,893. This asset is recorded
at cost and will be amortized on straight line basis over its estimated useful life of four years with no residual value. 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.
On
December 31, 2020, the Company issued capital through a private placement. The restricted cash of $10,995,500 represented the portion
of the capital raise that remained in a trust account with the underwriter. These funds were released by the underwriters, net of any
underwriter fees previously accrued, to the Company’s bank account on January 6, 2021.
In
2021, The Company issued through its bank two letters of guarantees to suppliers totaling $675,430. These letters of guarantee are secured
by term deposits totaling $676,969, included in restricted cash.
Siyata
Mobile Inc.
Notes
to the Consolidated Interim Financial Statements
(Unaudited-Prepared
by Management)
(Expressed
in US dollars)
As
at and for the three and nine months ended September 30, 2021 and 2020
|
6.
|
TRADE
AND OTHER RECEIVABLES
|
|
|
September 30,
2021
|
|
|
December 31,
2020
|
|
Trade receivables
|
|
$
|
3,040,626
|
|
|
$
|
3,501,223
|
|
Allowance for doubtful accounts
|
|
|
(1,314,775
|
)
|
|
|
(1,530,667
|
)
|
Taxes receivable
|
|
|
456,368
|
|
|
|
766,540
|
|
Total
|
|
$
|
2,182,219
|
|
|
$
|
2,737,096
|
|
Provisions
on Trade Receivables
In
accordance with policy to use the expected credit loss model, we utilize the expedited method where trade receivables are provided for
based on their aging, as well as providing for specified balances deemed non-collectible. At September 30, 2021, the allowance for doubtful
accounts is $1,314,775 (December 31, 2020- $1,530,667). In the nine months ended September 30, 2021, the allowance for doubtful accounts
decreased by $215,892 as we had a customer return merchandise to us for full credit which resulted in an AFDA recovery of $564,808 and
we had a receivable write of $305,282 which was also an AFDA recovery, offset by the increase in new bad debts in the period of $654,198.
One
customer owed $1,264,358 at September 30, 2021 and was in breach of its distribution agreement with the Company, by not respecting the
payment terms. The customer has paid since the quarter end $768,358 of this obligation. The Company accepted the Customer’s revised
payment terms for these invoices only, which included the payment of the balance due prior to the year end, and therefore, management’s
opinion was that a provision for doubtful accounts for this customer was not required at this time.
Factoring
Arrangements and Liens
Siyata
Mobile Israel (“SMI”) has a factoring agreement on its trade receivables, whereby invoices are fully assigned to a funding
entity in return for 80%-85% of the total sale to be paid to SMI by the funding entity in advance. The remaining 15-20% is paid to SMI
when the funding entity receives payment from the customer.
SMI
incurs a financing charge of 3.1% on advances received and is subject to certain covenants.
The
80-85% received upfront remains a liability from SMI to the funding entity until final settlement, however all such balances are fully
insured in case of non-payment. As SMI has both the legally enforceable right and the intention to settle the receivable and liability
on a net basis in accordance with IAS 32, Financial Instruments, trade receivables are presented net of the liability for amounts advanced.
As at September 30, 2021 the total amounts extended by the funding entity was $382,000 (December 31, 2020 - $65,000).
Signifi
Mobile Inc. has a credit facility as outlined in Note 10. As part of its financing facility, the lender has a lien on certain assets
including trade and other receivables of Signifi Mobile Inc. in the amount of up to $4,000,000 CAD ($3,137,255 USD).
Subsequent
to the period ended September 30, 2021, at Signifi Mobile Inc. request, the lender rescinded the demand operating line of credit and
removed all of their liens.
Subsequent
to the period ended September 30, 2021, and as more fully described in Subsequent Events note 27(a), Siyata Mobile Inc. entered into
a financing arrangement whereby the Company issued $7.2MM worth of convertible debentures at a discounted proceeds of $6.0MM, maturing
on October 26, 2023. This lender has taken liens on all of the assets (including Accounts receivables) of Syata Mobile Inc., Signifi
Mobile Inc. and Siyata Mobile Israel Ltd. and guarantee for payment by, Siyata Mobile (Canada) Inc., Queensgate Resources Corp., Signifi
Mobile Inc., ClearRF Nevada Inc. and Clear RF LLC.
Siyata
Mobile Inc.
Notes
to the Consolidated Interim Financial Statements
(Unaudited-Prepared
by Management)
(Expressed
in US dollars)
As
at and for the three and nine months ended September 30, 2021 and 2020
|
6.
|
TRADE
AND OTHER RECEIVABLES (cont’d)
|
Taxes
Receivable
As
the sales tax receivable have been outstanding for more than 180 days, the Company’s policy is to take a provision for collectability.
Therefore, management determined that a 50% provision of $456,368 would be appropriate.
Taxes
receivable before the provision was $912,736 less provision of $456,368 for a net sales tax receivable of $456,368.
|
|
September 30,
2021
|
|
|
December 31,
2020
|
|
Finished products
|
|
|
6,106,794
|
|
|
|
3,349,383
|
|
Impairment of finished products
|
|
|
(3,761,064
|
)
|
|
|
(1,255,649
|
)
|
Accessories and spare parts
|
|
|
777,697
|
|
|
|
632,000
|
|
Impairment of accessories and spare parts
|
|
|
(702,402
|
)
|
|
|
(316,000
|
)
|
Total
|
|
|
2,421,025
|
|
|
|
2,409,733
|
|
Provision
on inventory
On
a quarterly basis, management reviews the inventory for impairment. The inventory impaired at September 30, 2021 is $4,463,466 which
includes $702,402 of spare parts and accessories. This consists of an increase in inventory impairment for the nine months’ ended
September 30, 2021 of $2,891,817 due to slow movement.
For
the year ended 2020, it was determined that $1,571,649 of the inventory was impaired due to slow movement. The accessories and spare
parts related to these products amounted to $316,000 (2019 - $Nil), which was also impaired.
Liens
As
discussed in Note 10, the lender has a lien on all of the assets of Signifi Mobile Inc. which includes their inventory of finished goods
which comprises $2,131,4120 (December 31, 2020-$1,289,133). The lender as part of the refinancing as noted in the subsequent events note,
lender rescinded the demand operating line of credit and removed all of their liens.
Subsequent
to the period ended September 30, 2021, and as more fully described in Subsequent Events note 27(a), Siyata Mobile Inc. entered into
a financing arrangement whereby the Company issued $7.2MM worth of convertible debentures at discounted proceeds of $6.0MM, maturing
on October 26, 2023. This convertible debenture is repayable in consecutive monthly repayments of principal only, in the amount of $400,000
per month (repayable in either cash or shares of the Company, as determined by the sole discretion of Siyata Mobile Inc.) starting in
May 2021 and ending on the maturity date. This lender has taken liens on all of the assets (including inventory) of Syata Mobile Inc.,
Signifi Mobile Inc. and Siyata Mobile Israel Ltd. and guarantee for payment by, Siyata Mobile (Canada) Inc., Queensgate Resources Corp.,
Signifi Mobile Inc., ClearRF Nevada Inc. and Clear RF LLC.
Siyata
Mobile Inc.
Notes
to the Consolidated Interim Financial Statements
(Unaudited-Prepared
by Management)
(Expressed
in US dollars)
As
at and for the three and nine months ended September 30, 2021 and 2020
|
|
Development
Costs
|
|
|
Uniden License
|
|
|
E-Wave License
|
|
|
Clear RF Patent
|
|
|
Total
|
|
Cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2019
|
|
|
9,006,249
|
|
|
|
114,126
|
|
|
|
1,291,827
|
|
|
|
|
|
|
|
10,412,202
|
|
Additions
|
|
|
1,513,570
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
1,513,570
|
|
Foreign Exchange
|
|
|
20,658
|
|
|
|
2,417
|
|
|
|
27,357
|
|
|
|
|
|
|
|
50,432
|
|
Balance at December 31, 2020
|
|
|
10,540,477
|
|
|
|
116,543
|
|
|
|
1,319,184
|
|
|
|
-
|
|
|
|
11,976,204
|
|
Additions
|
|
|
2,207,450
|
|
|
|
-
|
|
|
|
-
|
|
|
|
763,893
|
|
|
|
2,971,343
|
|
Foreign Exchange
|
|
|
(14,453
|
)
|
|
|
-
|
|
|
|
1,035
|
|
|
|
-
|
|
|
|
-13,418
|
|
Balance at September 30, 2021
|
|
|
12,733,474
|
|
|
|
116,543
|
|
|
|
1,320,219
|
|
|
|
763,893
|
|
|
|
14,934,129
|
|
Accumulated Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2019
|
|
|
3,110,806
|
|
|
|
74,455
|
|
|
|
757,437
|
|
|
|
|
|
|
|
3,942,698
|
|
Additions
|
|
|
872,717
|
|
|
|
20,365
|
|
|
|
257,175
|
|
|
|
|
|
|
|
1,150,257
|
|
Impairment
|
|
|
293,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
293,000
|
|
Foreign Exchange
|
|
|
6,859
|
|
|
|
2,640
|
|
|
|
31,632
|
|
|
|
|
|
|
|
41,131
|
|
Balance at December 31, 2020
|
|
|
4,283,382
|
|
|
|
97,460
|
|
|
|
1,046,244
|
|
|
|
|
|
|
|
5,427,086
|
|
Additions
|
|
|
433,314
|
|
|
|
16,379
|
|
|
|
206,235
|
|
|
|
22,660
|
|
|
|
678,588
|
|
Impairment
|
|
|
4,322,799
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,322,799
|
|
Foreign Exchange
|
|
|
(7,823
|
)
|
|
|
(296
|
)
|
|
|
(3,723
|
)
|
|
|
(409
|
)
|
|
|
(12,251
|
)
|
Balance at September 30, 2021
|
|
|
9,031,672
|
|
|
|
113,543
|
|
|
|
1,248,756
|
|
|
|
22,251
|
|
|
|
10,416,222
|
|
Net Book Value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2020
|
|
$
|
6,257,095
|
|
|
$
|
19,083
|
|
|
$
|
272,940
|
|
|
|
|
|
|
$
|
6,549,118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2021
|
|
$
|
3,701,802
|
|
|
$
|
3,000
|
|
|
$
|
71,463
|
|
|
$
|
741,642
|
|
|
$
|
4,517,907
|
|
Siyata Mobile Inc.
Notes to the Consolidated Interim Financial Statements
(Unaudited-Prepared by Management)
(Expressed in US dollars)
As at and for the three and nine months ended September 30, 2021 and
2020
|
8.
|
INTANGIBLE
ASSETS (cont’d)
|
Development Costs
Development costs are internally generated
and are capitalized in accordance with the IAS 38, Intangible Assets. The Company assesses capitalized development costs for indicators
of impairment or when facts or circumstances suggest the carrying amount may exceed its recoverable amount.
On an annual basis, the Company engaged
a third-party valuator to determine the recoverable amount of the intangible assets. Based on the results of their analysis using the
Value In Use (“VIU”) model using a discounted value of 14.5% in 2020 and 16% in 2019, management determined that at December
31, 2020, the recoverable amount was not equal to, or in excess to the carrying amount on two 4G products and therefore an impairment
was taken on development costs in 2020 in the amount of $293,000.
For the nine months ended September
30, 2021, as a result of lower than expected sales in 2021 and accumulated deficits, the Company has recorded an impairment of certain
intangibles in the amount of $4,322,799. The intangibles impaired are the UV350 truckfone in the amount of $2,956,896, the UR5 rugged
smartphone in the amount of $1,030,756 and the UW1 watch phone for $335,147.
During the year ended December 31,
2020 the Company incurred $580,236 and $818,515 in YTD September 30, 2021 in product development costs which did not satisfy the criteria
for capitalization and were recorded in profit and loss. The product development costs which did not satisfy the criteria for capitalization
and were recorded in profit and loss were for the following product in 2020- UR5 $580,236, YTD 2021 the UR5-$158,573 and SD7-$659,942.
As at September 30, 2021 and December
31, 2020 the full goodwill balance was allocated to the company’s Canadian wholly owned subsidiary, Signifi Mobile Inc. (“CGU”).
The Company assesses whether there are, events, changes in circumstances, and/or changes in key assumptions which management has based
its determination of the CGU, that would, more likely than not, reduce the fair value of the CGU to below its carrying value and therefore,
require goodwill to be tested for impairment at the end of each reporting period.
As at September 30, 2021, as a result
of recurring losses of Signifi Mobile Inc., management determined that the goodwill was fully impaired and recorded an impairment of $819,454
on its statement of loss in the amount for the nine months’ ended September 30, 2021.
Siyata Mobile Inc.
Notes to the Consolidated Interim Financial Statements
(Unaudited-Prepared by Management)
(Expressed in US dollars)
As at and for the three and nine months ended September 30, 2021 and
2020
During the year ended December 31,
2020, the Company entered into a line of credit for up to a maximum of $750,000 Canadian dollars. The loan is secured by a floating charge
on the receivables, inventory, trademarks and a universal lien on all the assets of Signifi Mobile Inc. to a maximum of $4,000,000 Canadian.
The Export Development Corporation of Canada guarantees 50% of this debt. As of September 30, 2021 this loan balance was Nil (December
31, 2020- $372,848 USD). The loan bears interest at the bank’s prime lending rate plus 1.25% and is repayable on demand. Subsequent
to the period ended September 30, 2021, at Signifi Mobile Inc. request, the lender rescinded this demand operating line of credit and
removed all of their liens.
Siyata Mobile Israel (“SMI”)
has a factoring agreement on its trade receivables, whereby invoices are fully assigned to a funding entity in return for 80%-85% of the
total sale to be paid to SMI by the funding entity in advance. The remaining 15-20% is paid to SMI when the funding entity receives payment
from the customers. As at September 30, 2021 the total amount borrowed by the Company extended by the funding entity was $382,000 (December
31, 2020 - $65,000).
|
|
Sep 30 21
|
|
|
Dec 31 20
|
|
Opening Balance
|
|
$
|
341,592
|
|
|
$
|
194,331
|
|
Additions in the year
|
|
$
|
49,200
|
|
|
|
306,086
|
|
Interest expense
|
|
|
(10,830
|
)
|
|
|
14,045
|
|
Translation adjustment
|
|
|
32,879
|
|
|
|
(26,724
|
)
|
Lease payments
|
|
|
(115,019
|
)
|
|
|
(146,146
|
)
|
|
|
|
297,822
|
|
|
|
341,592
|
|
Due within one year
|
|
|
(122,363
|
)
|
|
|
(127,776
|
)
|
Balance-end of period
|
|
$
|
175,459
|
|
|
$
|
213,816
|
|
Future Minimum Lease Payments
|
|
Sep 30 21
|
|
|
Dec 31 20
|
|
year 1
|
|
|
122,363
|
|
|
$
|
127,776
|
|
year 2
|
|
|
82,954
|
|
|
|
104,897
|
|
year 3
|
|
|
92,505
|
|
|
|
103,458
|
|
year 4
|
|
|
-
|
|
|
|
5,461
|
|
Total lease obligations
|
|
$
|
297,822
|
|
|
$
|
341,592
|
|
Siyata Mobile Inc.
Notes to the Consolidated Interim Financial Statements
(Unaudited-Prepared by Management)
(Expressed in US dollars)
As at and for the three and nine months ended September 30, 2021 and
2020
|
12.
|
CONVERTIBLE
DEBENTURES
|
|
|
30-Sep-21
|
|
|
31-Dec-20
|
|
Balance, Beginning of Period
|
|
$
|
6,160,769
|
|
|
$
|
5,097,010
|
|
Interest and accretion expense
|
|
|
1,398,301
|
|
|
|
1,744,119
|
|
Interest paid or accrued
|
|
|
(560,504
|
)
|
|
|
(831,203
|
)
|
Rollover to the 10% convertible debenture
|
|
|
-
|
|
|
|
(186,359
|
)
|
Issuance of the 10% convertible debenture
|
|
|
-
|
|
|
|
1,177,786
|
|
Repayment of 10% convertible debenture
|
|
|
(1,177,786
|
)
|
|
|
-
|
|
Repayment of 10.5% convertible debenture
|
|
|
-
|
|
|
|
(921,641
|
)
|
Convert $75,000 debentures into share capital
|
|
|
-
|
|
|
|
(40,980
|
)
|
Foreign exchange adjustment
|
|
|
(39,134
|
)
|
|
|
122,037
|
|
|
|
$
|
5,781,646
|
|
|
$
|
6,160,769
|
|
Due within one year
|
|
|
(5,781,646
|
)
|
|
|
(6,160,769
|
)
|
Balance, End of Period
|
|
|
-
|
|
|
|
-
|
|
The 12% Convertible Debenture, interest
payable in cash quarterly in arrears, will mature on December 23, 2021 (the “Maturity Date”) and are convertible into common
shares at the Conversion Price, at the option of the holder, at any time prior to the close of business on the earlier of: (i) the last
business day immediately preceding the Maturity Date, and (ii) the date fixed for redemption in the event of a change of control. The
Company has the right to repay the convertible debenture at 101% of face value any time after December 23, 2020.
From January 1, 2021 until September
30, 2021, the Company paid $560,503 (2020-full year $715,763) in interest related to these 12% convertible debentures, included within
finance expense in profit and loss. The face value of this 12% convertible debenture at September 30, 2021 is CAD$ 7,791,000 (US $6,115,385).
On January 6, 2021, the Company redeemed
in full the senior unsecured 10% convertible debenture for an amount of $1,000,000.
On January 6, 2021, the Company redeemed
in full the senior unsecured 10% convertible debenture for an amount of $196,078. The discounted value of these debenture at the date
of redemption was $186,359.
Siyata Mobile Inc.
Notes to the Consolidated Interim Financial Statements
(Unaudited-Prepared by Management)
(Expressed in US dollars)
As at and for the three and nine months ended September 30, 2021 and
2020
On June 28, 2018, Signifi borrowed
$192,886 CAD from the Business Development Bank of Canada (“BDC”) for a term of four years, payable in monthly instalments
of principal and interest. This loan bears interest at the bank’s base rate + 3.2%. The loan must be fully repaid by July 23, 2022.
The loan is secured by the assets of Signifi and a guarantee by the Company and its Canadian subsidiaries.
On September 22, 2021, the Signifi
repaid the balance of the long-term debt and had all liens related to this debt removed.
|
|
30-Sep-21
|
|
|
31-Dec-20
|
|
Balance, Beginning of Period
|
|
$
|
108,236
|
|
|
$
|
150,538
|
|
Foreign Exchange adjustment
|
|
|
2,076
|
|
|
|
3,188
|
|
Capital repayments in the period
|
|
|
(110,312
|
)
|
|
|
(45,490
|
)
|
|
|
|
0
|
|
|
|
108,236
|
|
Less: current portion of long term debt
|
|
|
-
|
|
|
|
(56,471
|
)
|
Balance, End of Period
|
|
$
|
0
|
|
|
$
|
51,765
|
|
|
14.
|
FUTURE
PURCHASE CONSIDERATION
|
|
|
2021
|
|
|
2020
|
|
Balance, beginning of the period
|
|
$
|
-
|
|
|
$
|
-
|
|
ClearRF future purchase consideration
|
|
|
350,000
|
|
|
|
-
|
|
Balance, end of the period
|
|
$
|
350,000
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Classification:
|
|
|
|
|
|
|
|
|
Short-term (payable within one year)
|
|
$
|
350,000
|
|
|
|
-
|
|
Long-term
|
|
|
-
|
|
|
|
-
|
|
The future consideration arose on March
31, 2021, resulting from the acquisition of ClearRf as discussed in Note 4.
The future purchase consideration consists
of the contractual obligation to pay $155,015 in cash on March 31, 2022 and to issue common shares of the Company with a value of $194,985
on March 31, 2022. This future purchase consideration was not discounted since it is due within the year.
At each reporting period, management
updates estimates with respect to probability of payment form and recognizes changes in the estimated value of future purchase consideration
in profit or loss.
Siyata Mobile Inc.
Notes to the Consolidated Interim Financial Statements
(Unaudited-Prepared by Management)
(Expressed in US dollars)
As at and for the three and nine months ended September 30, 2021 and
2020
|
(a)
|
Authorized
|
Unlimited number of common shares without par value
|
|
|
|
Unlimited number of preferred shares without par value
|
Issued and Outstanding:
As at September 30, 2021, the Company
had 4,821,191 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
(each a “Share”) its common 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.
|
(b)
|
Common share transactions
|
Transactions for the nine-month period
ended September 30, 2021 are as follows:
|
(i)
|
During the month of February 2021, the Company received multiple tradeable warrant exercises for total proceeds of $609,041 on the redemption of a total of 88,911 tradeable warrants at an exercise price of $6.85 for each common share.
|
|
(ii)
|
The company issued in February 2021, the 40,000 shares to be issued for services rendered at a value of $560,000.
|
|
(iii)
|
As discussed in Note 4 -Acquisition of Clear Rf, the Company issued 23,949 common shares to the vendors of ClearRF equal to $194,985.
|
|
(iv)
|
On July 21, 2021, the Company issued 5,000 common shares as part of the contractual obligations owed to one of its suppliers. This transaction was recorded to share capital in the amount of $36,050 (based on the market value on the date of issuance of $7.21 per share).
|
Subsequent events common share transactions
are as follows:
On October 28, 2021 received gross cash
of $1,027,500 USD from the exercise of 150,000 warrants at $6.85 USD, and on October 29, 2021 received gross cash of $380,202 USD from
the exercise of 55,504 warrants at $6.85 USD.
The Company has a shareholder approved
“rolling” stock option plan (the “Plan”) in compliance with Nasdaq 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.
Siyata Mobile Inc.
Notes to the Consolidated Interim Financial Statements
(Unaudited-Prepared by Management)
(Expressed in US dollars)
As at and for the three and nine months ended September 30, 2021 and
2020
|
15.
|
SHARE
CAPITAL (cont’d)
|
|
(c)
|
Stock options (cont’d)
|
A summary of the Company’s stock
option activity is as follows:
|
|
Number of
Stock
Options
|
|
|
Weighted Average
Exercise Price
|
|
Outstanding options, December 31, 2019
|
|
|
82,585
|
|
|
|
52.34
|
|
Granted
|
|
|
279,190
|
|
|
|
6.47
|
|
Expired/Cancelled
|
|
|
(33,707
|
)
|
|
|
39.79
|
|
Outstanding options, December 31, 2020
|
|
|
328,068
|
|
|
|
13.99
|
|
Granted
|
|
|
100,500
|
|
|
|
11.50
|
|
Expired/Cancelled
|
|
|
|
|
|
|
|
|
Outstanding options, September 30, 2021
|
|
|
428,568
|
|
|
$
|
13.96
|
|
At September 30, 2021 and the date of
this MD&A, stock options outstanding are as follows:
Grant Date
|
|
Number of
options
outstanding
|
|
|
Number of
options
exercisable
|
|
|
Weighted
Average
Exercise Price
|
|
|
Expiry date
|
|
Remaining contractual
life (years)
|
|
01-Jan-17
|
|
|
2,207
|
|
|
|
2,207
|
|
|
$
|
40.00
|
|
|
01-Jan-22
|
|
|
0.25
|
|
11-Jan-17
|
|
|
2,483
|
|
|
|
2,483
|
|
|
|
41.00
|
|
|
11-Jan-22
|
|
|
0.28
|
|
04-Apr-17
|
|
|
6,897
|
|
|
|
6,897
|
|
|
|
63.00
|
|
|
04-Apr-22
|
|
|
0.52
|
|
24-Jul-17
|
|
|
8,619
|
|
|
|
8,619
|
|
|
|
79.00
|
|
|
24-Jul-22
|
|
|
0.81
|
|
24-Dec-18
|
|
|
14,620
|
|
|
|
14,620
|
|
|
|
57.00
|
|
|
24-Dec-23
|
|
|
2.23
|
|
15-Jan-19
|
|
|
828
|
|
|
|
621
|
|
|
|
57.00
|
|
|
15-Jan-24
|
|
|
2.29
|
|
21-Mar-19
|
|
|
12,345
|
|
|
|
12,345
|
|
|
|
63.00
|
|
|
21-Mar-24
|
|
|
2.47
|
|
01-Dec-19
|
|
|
1,293
|
|
|
|
1,293
|
|
|
|
57.00
|
|
|
01-Dec-21
|
|
|
0.17
|
|
01-Jan-20
|
|
|
2,069
|
|
|
|
1,380
|
|
|
|
57.00
|
|
|
01-Jan-24
|
|
|
2.25
|
|
01-Jan-20
|
|
|
207
|
|
|
|
207
|
|
|
|
57.00
|
|
|
31-Dec-21
|
|
|
0.25
|
|
15-Nov-20
|
|
|
95,000
|
|
|
|
47,500
|
|
|
|
6.00
|
|
|
15-Nov-30
|
|
|
9.13
|
|
15-Nov-20
|
|
|
181,500
|
|
|
|
90,750
|
|
|
|
6.00
|
|
|
15-Nov-25
|
|
|
4.13
|
|
02-Jan-21
|
|
|
57,000
|
|
|
|
14,250
|
|
|
|
11.50
|
|
|
02-Jan-26
|
|
|
4.26
|
|
02-Jan-21
|
|
|
5,000
|
|
|
|
1,875
|
|
|
|
11.50
|
|
|
02-Jan-31
|
|
|
8.26
|
|
18-Jan-21
|
|
|
38,500
|
|
|
|
14,438
|
|
|
|
11.50
|
|
|
18-Jan-26
|
|
|
4.3
|
|
Total
|
|
|
428,568
|
|
|
|
219,485
|
|
|
$
|
13.96
|
|
|
|
|
|
5.01
|
|
Siyata Mobile Inc.
Notes to the Consolidated Interim Financial Statements
(Unaudited-Prepared by Management)
(Expressed in US dollars)
As at and for the three and nine months ended September 30, 2021 and
2020
|
15.
|
SHARE
CAPITAL (cont’d)
|
|
(c)
|
Stock options (cont’d)
|
Transactions for the nine months
ended September 30, 2021 are as follows:
The company issued a total of 100,500
stock options to various employees and members of the Board at an exercise price of $11.50 per share.
The following weighted average assumptions
have been used for the Black-Scholes valuation for the stock options granted:
|
|
2021
|
|
|
2020
|
|
Stock price
|
|
$
|
11.50
|
|
|
$
|
6.47
|
|
Risk-free interest rate
|
|
|
0.23
|
%
|
|
|
1.68
|
%
|
Expected life
|
|
|
5
|
|
|
|
5
|
|
Annualized volatility
|
|
|
85
|
%
|
|
|
83
|
%
|
No agent’s options activity in
the nine months ended September 30, 2021.
A summary of the Company’s agents’
options activity is as follows
|
|
Number of
options
|
|
|
Weighted average
exercise price
|
|
Outstanding agent options, December 31, 2019
|
|
|
6,597
|
|
|
|
52.689
|
|
Granted
|
|
|
445,926
|
|
|
|
7.36
|
|
Outstanding agent options, September 30, 2021 and December 31, 2020
|
|
|
452,523
|
|
|
$
|
8.02
|
|
Siyata Mobile Inc.
Notes to the Consolidated Interim Financial Statements
(Unaudited-Prepared by Management)
(Expressed in US dollars)
As at and for the three and nine months ended September 30, 2021 and
2020
|
15.
|
SHARE
CAPITAL (cont’d)
|
|
(d)
|
Agents’ options (cont’d)
|
At September 30, 2021 agents’
options outstanding are as follows:
Grant Date
|
|
Number of
options
outstanding
|
|
|
Number of
options
exercisable
|
|
|
Weighted
Average
Exercise Price
|
|
|
Expiry date
|
|
Remaining
contractual
life (years)
|
|
24-Dec-18
|
|
|
1,572
|
|
|
|
1,572
|
|
|
|
68.29
|
|
|
24-Dec-21
|
|
|
0.23
|
|
23-Dec-19
|
|
|
5,025
|
|
|
|
5,025
|
|
|
|
47.8
|
|
|
23-Dec-21
|
|
|
0.23
|
|
28-Jul-20
|
|
|
1,702
|
|
|
|
1,702
|
|
|
$
|
20.49
|
|
|
28-Jul-22
|
|
|
0.82
|
|
29-Sep-20
|
|
|
113,500
|
|
|
|
113,500
|
|
|
$
|
6.60
|
|
|
28-Sep-25
|
|
|
4.00
|
|
29-Sep-20
|
|
|
266,000
|
|
|
|
266,000
|
|
|
$
|
6.85
|
|
|
28-Sep-25
|
|
|
4.00
|
|
31-Dec-20
|
|
|
64,724
|
|
|
|
64,724
|
|
|
$
|
11.50
|
|
|
30-Jun-24
|
|
|
2.75
|
|
Total
|
|
|
452,523
|
|
|
|
452,523
|
|
|
$
|
8.02
|
|
|
|
|
|
3.75
|
|
|
(e)
|
Share purchase warrants
|
A summary of the Company’s warrant
activity in the nine months ended September 30, 2021 are as follows: In February 2021, 88,911 share purchase warrants at $6.85 were exercised
for net proceeds of $609,041.
On June 23, 2021, 10,897 warrants expired.
On August 29, 2021, 25,863 warrants
expired.
|
|
Number of
warrants
|
|
|
Weighted average
exercise price
|
|
Outstanding, December 31, 2019
|
|
|
111,999
|
|
|
$
|
59.02
|
|
Granted in the year
|
|
|
3,479,534
|
|
|
|
8.96
|
|
Outstanding, December 31, 2020
|
|
|
3,591,533
|
|
|
$
|
10.55
|
|
Exercised in the period
|
|
|
(88,911
|
)
|
|
|
6.85
|
|
Expired in the period
|
|
|
(36,760
|
)
|
|
|
58.16
|
|
Outstanding Balance, September 30, 2021
|
|
|
3,465,862
|
|
|
$
|
10.14
|
|
At September 30, 2021, share purchase
warrants outstanding and exercisable are as follows:
Grant Date
|
|
Number of
Warrants
outstanding and
exercisable
|
|
|
Exercise Price
|
|
|
Expiry date
|
|
24-Dec-18
|
|
|
31,887
|
|
|
$
|
68.29
|
|
|
|
24-Dec-21
|
|
23-Dec-19
|
|
|
54,248
|
|
|
$
|
51.22
|
|
|
|
23-Dec-22
|
|
28-Jul-20
|
|
|
74,138
|
|
|
$
|
20.49
|
|
|
|
28-Jul-22
|
|
29-Sep-20
|
|
|
2,011,089
|
|
|
$
|
6.85
|
|
|
|
28-Sep-25
|
|
31-Dec-20
|
|
|
1,294,500
|
|
|
$
|
11.50
|
|
|
|
30-Jun-24
|
|
Total September 30, 2021
|
|
|
3,465,862
|
|
|
$
|
10.14
|
|
|
|
|
|
Siyata Mobile Inc.
Notes to the Consolidated Interim Financial Statements
(Unaudited-Prepared by Management)
(Expressed in US dollars)
As at and for the three and nine months ended September 30, 2021 and
2020
|
15.
|
SHARE
CAPITAL (cont’d)
|
|
(e)
|
Share purchase warrants (cont’d)
|
Subsequent to the year end, 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.
Subsequent to the year end, as part
of the financing as more fully described in Subsequent Events Note 27(a), the Company issued 2,142,857 share purchase warrants to the
convertible debenture holders at an exercise price of $4.00 per share. These warrants expire on October 26, 2026.
|
|
9 months ended Sep 30
|
|
|
3 months ended Sep 30
|
|
Cost of Sales
|
|
2021
|
|
|
2020 as restated
Note 28
|
|
|
2021
|
|
|
2020 as restated
Note 28
|
|
Merchandise and Materials
|
|
|
3,843,785
|
|
|
|
2,613,268
|
|
|
|
117,351
|
|
|
|
1,087,457
|
|
Royalties
|
|
|
498,755
|
|
|
|
249,479
|
|
|
|
290,728
|
|
|
|
110,624
|
|
Other Expenses
|
|
|
785,531
|
|
|
|
623,432
|
|
|
|
202,434
|
|
|
|
230,813
|
|
Change in Inventory
|
|
|
(1,223,527
|
)
|
|
|
1,021,482
|
|
|
|
178,849
|
|
|
|
108,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Cost of Sales
|
|
|
3,904,544
|
|
|
|
4,507,661
|
|
|
|
789,362
|
|
|
|
1,536,994
|
|
|
17.
|
SELLING
AND MARKETING EXPENSES
|
|
|
9 months ended Sep 30
|
|
|
3 months ended Sep 30
|
|
Selling and Marketing Expenses
|
|
2021
|
|
|
2020 as restated
Note 28
|
|
|
2021
|
|
|
2020 as restated
Note 28
|
|
Salaries and Consulting Fees
|
|
|
2,254,684
|
|
|
|
1,230,296
|
|
|
|
683,895
|
|
|
|
308,850
|
|
Marketing and Promotion
|
|
|
1,176,799
|
|
|
|
1,193,792
|
|
|
|
562,563
|
|
|
|
711,702
|
|
Travel
|
|
|
25,892
|
|
|
|
150,489
|
|
|
|
16,737
|
|
|
|
5,940
|
|
Total Selling and marketing
|
|
|
3,457,375
|
|
|
|
2,574,577
|
|
|
|
1,263,195
|
|
|
|
1,026,492
|
|
|
18.
|
GENERAL
AND ADMINISTRATIVE EXPENSES
|
|
|
9 months ended Sep 30
|
|
|
3 months ended Sep 30
|
|
General and administrative Expenses
|
|
2021
|
|
|
2020 as restated
Note 28
|
|
|
2021
|
|
|
2020 as restated
Note 28
|
|
Salaries General and administrative
|
|
|
346,743
|
|
|
|
132,443
|
|
|
|
120,156
|
|
|
|
37,109
|
|
Professional services
|
|
|
615,784
|
|
|
|
208,365
|
|
|
|
206,387
|
|
|
|
27,902
|
|
Consulting and Director’s Fees-G&A
|
|
|
753,650
|
|
|
|
704,406
|
|
|
|
240,779
|
|
|
|
437,430
|
|
Management Fees-G&A
|
|
|
-
|
|
|
|
97,880
|
|
|
|
-
|
|
|
|
9,841
|
|
Travel-G&A
|
|
|
79,046
|
|
|
|
36,961
|
|
|
|
18,963
|
|
|
|
10,065
|
|
Office and General
|
|
|
979,612
|
|
|
|
166,140
|
|
|
|
296,294
|
|
|
|
38,010
|
|
Regulatory and filing fees-G&A
|
|
|
106,493
|
|
|
|
61,805
|
|
|
|
58,480
|
|
|
|
11,637
|
|
Shareholder relations-G&A
|
|
|
376,529
|
|
|
|
73,555
|
|
|
|
110,787
|
|
|
|
12,459
|
|
Total G&A
|
|
|
3,257,857
|
|
|
|
1,481,555
|
|
|
|
1,051,846
|
|
|
|
584,453
|
|
Siyata Mobile Inc.
Notes to the Consolidated Interim Financial Statements
(Unaudited-Prepared by Management)
(Expressed in US dollars)
As at and for the three and nine months ended September 30, 2021 and
2020
|
|
30-Sep-21
|
|
|
30-Sep-20
|
|
Interest paid and accretive interest on debentures
|
|
$
|
1,402,817
|
|
|
$
|
1,285,002
|
|
Interest expense on long term debt
|
|
|
5,580
|
|
|
|
8,628
|
|
Interest on bank loans
|
|
|
22,612
|
|
|
|
87,157
|
|
Other interest and bank charges
|
|
|
22,204
|
|
|
|
18,017
|
|
Loss on redemption of debentures
|
|
|
18,292
|
|
|
|
-
|
|
Interest earned on director’s loan
|
|
|
(6,000
|
)
|
|
|
(10,330
|
)
|
Interest expense on lease obligations
|
|
|
10,830
|
|
|
|
8,324
|
|
Total
|
|
$
|
1,476,335
|
|
|
$
|
1,396,799
|
|
Transaction costs incurred for the
nine months’ ended September 30, 2021 totaling $79,069 are all due to the acquisition of ClearRF in the period which is treated
as an acquisition and therefore these transaction costs are disclosed separately as an expense. These transaction costs include a proportion
of legal fees, and other professional fees and expenses.
The Board of Directors has overall
responsibility for the establishment and oversight of the Company’s risk management framework.
The Company defines capital as consisting
of shareholder’s equity. The Company’s objectives when managing capital are to support the creation of shareholder value,
as well as to ensure that the Company is able to meet its financial obligations as they become due.
The Company manages its capital structure
to maximize its financial flexibility making adjustments 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 convertible debentures outstanding,
as described in Note 12, the monthly principal and interest payments from the BDC loan described in Note 13 and the TD Bank loan as described
in Note 10. The Company also subject to a debt covenant in relation to the factoring agreement described in Note 6.
Management reviews its capital management
approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.
|
22.
|
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 to/from related party, accounts payable and accrued liabilities, long term debt, and convertible
debentures approximate carrying value, which is the amount recorded on the consolidated statement of financial position.
Siyata Mobile Inc.
Notes to the Consolidated Interim Financial Statements
(Unaudited-Prepared by Management)
(Expressed in US dollars)
As at and for the three and nine months ended September 30, 2021 and
2020
|
22.
|
FINANCIAL
INSTRUMENTS (cont’d)
|
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 29% of the Company’s revenue for the nine months’ ended September 30, 2021
(September 30, 2020 -17%) is 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. Certain key customers were offered extended payment terms on their purchases due to slow
down from Covid-19 and budget approvals for government tenders. As a result, the Company had customer with overdue receivables on their
books at December 31, 2020 which resulted in the Company taking a bad debt provision of 50% of these overdue receivables which amounted
to $1,530,667.
For the nine months ended September
30, 2021, the Company accepted a return from a customer included in the 50% overdue provision from December 2020 which resulted in a recovery
of $568,224, offset by increases in other bad debts of $1,166,627 for a net bad debts expense of $548,403.
More than 65% of the Company’s
customers have been active with the Company for over four years, and a provision for bad debts offsetting the receivables amount to $1,257,352
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.
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:
(in thousands)
|
|
September 30,
2021
|
|
|
December 31,
2020
|
|
EMEA
|
|
$
|
1,463
|
|
|
$
|
1,246
|
|
North America
|
|
|
719
|
|
|
|
1,491
|
|
Total
|
|
$
|
2,182
|
|
|
$
|
2,737
|
|
Siyata Mobile Inc.
Notes to the Consolidated Interim Financial Statements
(Unaudited-Prepared by Management)
(Expressed in US dollars)
As at and for the three and nine months ended September 30, 2021 and
2020
|
22.
|
FINANCIAL
INSTRUMENTS (cont’d)
|
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.
Siyata Mobile Inc.
Notes to the Consolidated Interim Financial Statements
(Unaudited-Prepared by Management)
(Expressed in US dollars)
As at and for the three and nine months ended September 30,
2021 and 2020
|
22.
|
FINANCIAL
INSTRUMENTS (cont’d)
|
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 September 30, 2021 the Company’s exposure
to foreign currency risk with respect to financial instruments is as follows:
(in USD thousands)
|
|
USD
|
|
|
NIS
|
|
|
CAD
|
|
|
Total
|
|
Financial assets and financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and restricted cash
|
|
|
2,262
|
|
|
|
818
|
|
|
|
345
|
|
|
|
3,425
|
|
Trade and other receivables
|
|
|
455
|
|
|
|
1,357
|
|
|
|
370
|
|
|
|
2,182
|
|
Advances to supplier
|
|
|
207
|
|
|
|
-
|
|
|
|
-
|
|
|
|
207
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank loan
|
|
|
(382
|
)
|
|
|
|
|
|
|
|
|
|
|
(382
|
)
|
Accounts payable and accrued liabilities
|
|
|
(275
|
)
|
|
|
(1,002
|
)
|
|
|
(738
|
)
|
|
|
(2,015
|
)
|
Due to related party
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Future purchase consideration
|
|
|
(350
|
)
|
|
|
|
|
|
|
|
|
|
|
(350
|
)
|
Convertible debentures
|
|
|
0
|
|
|
|
0
|
|
|
|
(5,782
|
)
|
|
|
(5,782
|
)
|
Long term debt
|
|
|
0
|
|
|
|
0
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
|
1,917
|
|
|
|
1,173
|
|
|
|
(5,805
|
)
|
|
|
(2,715
|
)
|
10% fluctuation in exchange rate
|
|
|
192
|
|
|
|
117
|
|
|
|
(580
|
)
|
|
|
(271
|
)
|
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 limited to the BDC loan, the Canadian bank loan and the Israeli factoring facility and is therefore currently immaterial as
the rest of 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.
Siyata Mobile Inc.
Notes to the Consolidated Interim Financial Statements
(Unaudited-Prepared by Management)
(Expressed in US dollars)
As at and for the three and nine months ended September 30,
2021 and 2020
|
23.
|
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 nine months ended September 30, 2021 and September
30, 2020 are respectively as follows:
|
|
2021
|
|
|
2020
|
|
Payments to key management personnel:
|
|
|
|
|
|
|
Salaries, consulting and directors’ fees
|
|
$
|
852,321
|
|
|
$
|
559,820
|
|
Share-based payments
|
|
|
619,660
|
|
|
|
93,108
|
|
Total
|
|
$
|
1,444,981
|
|
|
$
|
652,928
|
|
Other related party transactions are
as follows:
|
|
|
|
(in thousands)
|
|
Type of Service
|
|
Nature of Relationship
|
|
2021
|
|
|
2020
|
|
Selling and marketing expenses
|
|
VP Technology
|
|
|
124
|
|
|
|
68
|
|
General and administrative expense
|
|
Companies controlled by the CEO, CFO and Directors
|
|
|
728
|
|
|
|
492
|
|
Loan to Director
On April 1, 2019 the Company loaned
to a director and its chief Executive Officer, $200,000 USD. This loan was 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 was increased to 12% per annum. There were no capital
repayment requirements until the end of the term when a balloon payment of the principal balance was required. The director repaid the
loan in full on May 23, 2021.
|
24.
|
SEGMENTED
INFORMATION
|
The Company is domiciled in Canada
and it operates and produces its income primarily in Israel, Europe and North America.
In presenting information on the basis
of geographical segments, segment revenue is based on the geographical location of the customers and is as follows:
External Revenues (in thousands)
|
|
September 30,
2021
|
|
|
September 30,
2020
|
|
EMEA
|
|
$
|
2,864
|
|
|
$
|
2,493
|
|
USA
|
|
|
1,435
|
|
|
|
2,218
|
|
Canada
|
|
|
1,250
|
|
|
|
1,635
|
|
Australia and New Zealand
|
|
|
59
|
|
|
|
331
|
|
Total
|
|
$
|
5,608
|
|
|
$
|
6,677
|
|
Siyata Mobile Inc.
Notes to the Consolidated Interim Financial Statements
(Unaudited-Prepared by Management)
(Expressed in US dollars)
As at and for the three and nine months ended September 30,
2021 and 2020
Revenues from three customers of the
Company for the nine-month period ended September 30, 2021 represent approximately $2,934,000 or 52% of the Company’s total revenues
(September 30, 2020 is two customers representing $2,594,000 or 38% of total revenues).
|
26.
|
SUPPLEMENTAL
INFORMATION WITH RESPECT TO CASH FLOWS
|
During the nine months ended September
30, 2021, the Company paid $588,696 (9 months ended September 30, 2020- $628,586) in interest and $Nil (December 31 - $Nil) in income
taxes.
During the nine months ended September
30, 2021, the Company incurred the following non-cash investing or financing activities:
|
(a)
|
In acquiring the assets
of ClearRF, the Company paid a portion of the purchase price by issuing 23,949 common shares valued at $194,985 to the vendors in
the period.
|
|
(b)
|
Recognized $861,161 for
the nine months ended September 30, 2021 (September 30, 2020--$667,927) of accretion of the convertible debentures, $122,363 of lease
obligations, $350,000 of future purchase consideration and $5,781,646 of convertible debentures, all as current liabilities.
|
|
(a)
|
On November 4, 2021, Siyata
Mobile Inc. entered into a financing arrangement whereby the Company issued $7.2MM worth of convertible debentures for discounted
gross proceeds of $6.0MM, maturing on November 4, 2023. This convertible debenture is repayable in consecutive monthly repayments
of principal only, in the amount of $400,000 per month (repayable in either cash or shares of the Company, as determined by the sole
discretion of Siyata Mobile Inc.) starting in May 2022 and ending on the maturity date. This lender has taken liens on all of the
assets of Syata Mobile Inc., Signifi Mobile Inc. and Siyata Mobile Israel Ltd. and guarantee for payment by, Siyata Mobile (Canada)
Inc., Queensgate Resources Corp., Signifi Mobile Inc., ClearRF Nevada Inc. and Clear RF LLC. Proceeds of this debenture have been
put in trust to repay a portion of the convertible debenture due December 23, 2021. As part of the transaction, the Lender received
2,142,857 warrants of SYTA, exercisable at $4.00/share as of March 4, 2022 and expiring on November 4, 2026.
|
|
(b)
|
On October 6, 2021, Signifi
Mobile Inc. cancelled their demand operating line of credit with its lender and had their liens removed in order to enter into the
financing arrangement described in 27 (a) above.
|
|
(c)
|
On October 29, 2021, Luisa
Ingargiola voluntarily resigned as a Director of the Company and was replaced as a Board nominee by Lourdes Felix who was appointed
by a unanimous vote of the Board of Directors and is to accept at the next Annual General Meeting.
|
|
(d)
|
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.
|
Siyata Mobile Inc.
Notes to the Consolidated Interim Financial Statements
(Unaudited-Prepared by Management)
(Expressed in US dollars)
As at and for the three and nine months ended September 30,
2021 and 2020
|
28.
|
EFFECTS
OF THE CHANGE IN PRESENTATION CURRENCY
|
The effects of the change in presentation
currency are as follow:
Restatement of previously reported
financial information due to change in presentation currency
For comparative purposes, the consolidated
statement of loss and comprehensive loss for the nine- month period ended September 30, 2020 includes adjustments to reflect the change
in the presentation currency to the USD, which is a change in accounting policy. The exchange rates used to translate the amounts previously
reported into USD for the three and nine months’ ended September 30, 2020 was 1.332 CAD to $1USD and 1.3525 CAD to $1USD, respectively,
which were the average exchange rates for the period.
Effect on the consolidated unaudited
interim statement of loss and comprehensive loss for the three and nine months ended September 30, 2020 are as follows:
|
|
3 months
Q3 2020
USD $ @
1.332
|
|
|
3 months
Q3 2020
CAD $
|
|
|
9 months
YTD Q3
2020
USD $ @
1.3525
|
|
|
9 months
YTDQ3
2020
CAD $
|
|
Revenue
|
|
|
2,262,730
|
|
|
|
3,013,957
|
|
|
|
6,676,761
|
|
|
|
9,030,208
|
|
Cost of Sales
|
|
|
(1,536,994
|
)
|
|
|
(2,047,276
|
)
|
|
|
(4,507,661
|
)
|
|
|
(6,095,943
|
)
|
Gross profit
|
|
|
725,736
|
|
|
|
966,681
|
|
|
|
2,169,100
|
|
|
|
2,934,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization and Depreciation
|
|
|
342,329
|
|
|
|
455,982
|
|
|
|
970,690
|
|
|
|
1,312,464
|
|
Selling and marketing
|
|
|
1,026,492
|
|
|
|
1,367,288
|
|
|
|
2,574,577
|
|
|
|
3,477,556
|
|
General and administrative
|
|
|
584,453
|
|
|
|
778,491
|
|
|
|
1,481,555
|
|
|
|
2,003,860
|
|
Share-based payments
|
|
|
46,143
|
|
|
|
61,462
|
|
|
|
202,576
|
|
|
|
274,068
|
|
Total Operating Expenses
|
|
|
(1,999,417
|
)
|
|
|
(2,663,223
|
)
|
|
|
(5,229,398
|
)
|
|
|
(7,067,948
|
)
|
Net operating loss
|
|
|
(1,273,681
|
)
|
|
|
(1,696,542
|
)
|
|
|
(3,060,298
|
)
|
|
|
(4,133,683
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance expense (income) (note 19)
|
|
|
484,739
|
|
|
|
645,673
|
|
|
|
1,396,799
|
|
|
|
1,890,540
|
|
Foreign exchange
|
|
|
123,561
|
|
|
|
164,583
|
|
|
|
(777,940
|
)
|
|
|
(1,078,611
|
)
|
Total other expenses
|
|
|
(608,300
|
)
|
|
|
(810,256
|
)
|
|
|
(618,859
|
)
|
|
|
(811,929
|
)
|
Net loss for the period
|
|
|
(1,881,981
|
)
|
|
|
(2,506,798
|
)
|
|
|
(3,679,157
|
)
|
|
|
(4,945,612
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Translation Adjustment
|
|
|
(50,389
|
)
|
|
|
(51,623
|
)
|
|
|
(723,979
|
)
|
|
|
(414,937
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss for the period
|
|
|
(1,932,370
|
)
|
|
|
(2,558,421
|
)
|
|
|
(4,403,136
|
)
|
|
|
(5,360,549
|
)
|
Up to [ * ] Units
Each Unit Consisting of
One Common Share and
One Warrant to Purchase One Common Share
and
Up to [ * ] Pre-Funded Units
Each Pre-Funded Unit Consisting of
One Pre-Funded Warrant to Purchase One Common
Share
One Warrant to Purchase One Common Share
Common Shares Underlying the Pre-Funded
Warrants and
Common Shares Underlying the Warrants
PROSPECTUS
Sole Book-Running Manager
Maxim Group LLC
[*], 2021
Through and including [*], 2021 (the 25th
day after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this
offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting
as an underwriter and with respect to an unsold allotment or subscription.