Siyata Mobile Issues Letter to Shareholders to Provide Business Update
Dear Fellow Shareholders,
As the global COVID-19 pandemic continues to evolve, we want to address the current situation as well as discuss how our company has transformed itself over the past year. First and foremost, our top priority is the health and safety of our employees and their families as well as our customers and partners. Because many of our customers are considered “essential,” we have continued to provide our products throughout COVID-19 related lockdowns, without compromising the safety of our employees.
Over the past twelve months, Siyata has achieved a number of transformational milestones that are integral to our vision of becoming a global leader in designing and developing Push-to-Talk over Cellular devices as well as cellular booster products with a focus on enterprise customers and first responders. We have executed on a number of initiatives, including an appointment of a seasoned telecom and enterprise VP Sales executive for the AT&T account, key telecom sales veteran hires focused on key accounts in the US market, enhancements to our product portfolio, a new geographic focus on the North American market, new methods of distribution, as well as critical new wireless carrier partnerships. In addition, COVID-19 emphasized the need for better communication products primarily for first responders, resulting in a positive impact on our sales and interest in our various product lines.
One of the most important additions to our product portfolio has been the Uniden UV350, a specialty Android Smartphone IoT device that supports Cellular voice calls, Push-to-Talk calls over Cellular networks, as well as multiple fleet management apps required for 21st century commercial vehicle fleets. In 2019, this product was certified for sale by two of the largest wireless carriers in the United States, as well as two of the largest wireless carriers in Canada. This certification and subsequent partnership with the wireless carriers is among the business’s most important assets, as it is a tremendous achievement for a company of our size to become an official supplier and to complete certification from all of these leading North American carriers. Additionally, in Q1 of this year, Siyata signed a Master Sales Agreement with the world’s leading Land Mobile Radio vendor who is also offering the UV350 to its global customer base coupled with their Push-to-Talk software.
Certification from these wireless carriers initiated a seismic shift in our sales and distribution channels. Siyata historically marketed and sold In-Vehicle devices through smaller Middle Eastern cellular carriers, two-way radio dealers, and directly to end customers. After receiving certification from the North American wireless carriers, the UV350 became marketed primarily through the large sales teams and dealer networks established by these wireless carriers. This massive ad growing distribution channel has increased sales dramatically, already producing 66% of the business’s revenue in the first quarter of 2020.
The UV350 addresses a sizeable market, one in which there are 17.6 million commercial vehicles and 3.5 million first responder and public service vehicles in the US, and 3.5 million first responder, public sector and commercial vehicles in Canada. Reflecting this large market opportunity and the early success that we are enjoying with the carriers, we have already seen our sales pipeline of active customer proof of concept trials surge to over $20 million in our short time working with the carriers.
Another part of our business with tremendous potential is our rugged handset portfolio which is also focused on the Push to Talk Over Cellular market. Building upon our earlier success with PTT 3G rugged handheld phones, we recently added new 4G rugged handheld phones to our offering. Within Siyata’s focus geographies, there are a combined 40 million public service and enterprise workers that are potential customers for this product line so this too represents a large market opportunity. Our rugged phones are extremely durable, waterproof, can be cleaned with bacteria disinfectants, are cost effective and offer key features workers normally associate with two-way radio devices while also offering superior range as they work over nationwide cellular carrier networks.
We are also very excited about our rapidly growing cellular booster business. Expanding upon our earlier 3G cellular boosters originally introduced in 2016, we recently introduced 4G cellular boosters to improve cellular signals in homes, cottages, warehouses, offices and vehicles. A new and improved 4G booster model introduced earlier in 2020 will be sold specifically with our UV350 In-Vehicle device to provide superior cell coverage when driving in remote areas. We are expanding our sales channels dramatically, recently launching on Amazon.com with plans to launch with a major US carrier in the coming months. During COVID-19 as people needed better cellular connectivity from their home offices, we have seen revenues increase substantially and expect this product line to grow dramatically in the coming months as we launch in the U.S., a market ten times larger than our primary market in Canada.
Siyata’s business continues to be active in the Middle East, which was the source of approximately 70% of revenue historically. However, beginning in the second half of 2019 and into 2020, our primary focus on the large scale North American market began paying big dividends. Considering our certification and relationships with some of North America’s largest wireless networks, we are well positioned to capitalize on this market opportunity and continue to aggressively grow our sales in the region as illustrated by our substantial and growing sales pipeline mentioned previously.
The gross margin for our product sales in North America is significantly higher than our historic gross margins, a trend we expect to continue to impact the Company’s overall gross margin as we continue to ramp our North American product sales. The high operating leverage in our model is primarily attributable to our low SG&A expense level, as we work together with, and utilize, the large-scale sales teams employed by the wireless carriers.
We have made considerable progress over the past year and have arrived at a key inflection point in our business’s history, one in which our innovative, industry leading solutions, coupled with never-before established relationships with the largest wireless carriers and an acute focus on one of the world’s largest markets, has primed us to win significant customer contracts and grow sales dramatically. We believe that at this time, as we are working with the leading U.S. telecom brands, there exists a strong appetite for our securities in the United States and are therefore seeking approval from our shareholders to make certain changes to our share structure and constating documents which will allow us to file an application to list our securities on the NASDAQ. After meeting with numerous relevant US funds and investors over the past several years, we believe this will open up opportunities to buy our securities from the thousands of microcap funds, family offices and retail investors that currently do not trade on the TSX Venture Exchange or OTC. With this in mind, our securities will continue to trade on the TSX Venture Exchange regardless of our status on the NASDAQ.
As we continue to navigate this critical moment in the Company’s development, management and the Board are extremely excited to see our vision realized for a profitable, growing business that will generate significant shareholder value. We look forward to providing additional updates on our progress.
Stay safe and healthy.
Glenn Kennedy, VP Sales
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
This news release may include forward-looking statements that are subject to risks and uncertainties. All statements within, other than statements of historical fact, are to be considered forward looking. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, continued availability of capital and financing, and general economic, market or business conditions. There can be no assurances that such statements will prove accurate and, therefore, readers are advised to rely on their own evaluation of such uncertainties. We do not assume any obligation to update any forward-looking statements except as required under the applicable laws.