Financial Research and Quantitative Trading Strategies for TSX Venture Investors

SIM.V: Warrant valuation.

April 18, 2019

 

Siyata Mobile Inc. (SIM.V) is a provider of vehicle mounted mobile communications platform (Push To Talk Over Cellular ("PoC") devices). 

We initiated coverage on March 2017 with additional notes on June 2017, July 2017, October 2017, November 2017. May 2018, and October 2018.

 

Here were the releases issued since our last note.

 

Oct. 9 - Announce Strategic Partnership with AINA Wireless. AINA’s Wireless PTT Voice Responder and Smart Button to be featured with Uniden® UV350 4G/LTE in-vehicle device. 

 

Oct. 16 - Receives Multiple Purchase Orders Valued at Over $1.3 Million Purchase Orders. Clients include a Multinational Silicon Chipset Company, a Large-Scale Airport Logistics Company, and a Repeat Order from First Responders Network.

 

Oct, 19 - Received $410,000 in proceeds from 1.3M options that were expiring in late September and October.

 

Oct. 23 - Signs Canadian Distribution Agreement with Allcan Distributors for Uniden® UV350 and PTT Accessories All in preparation for the launch of the Uniden® UV350 in-vehicle 4G/LTE device in Canada. Allcan’s distribution reach is a key component to Siyata's strategy as they distribute through channels for various tier 1 wireless operators in Canada.

 

Oct. 31 - Launches Flagship Uniden® UV350, In-Vehicle Cellular Device in Canada.

 

Nov 1 - Bell Mobility: First North American Carrier Launch for Siyata Mobile Siyata’s Uniden® UV350 (“UV350”), the world’s first and only all-in-one 4G/LTE in-vehicle IoT device will be available across Bell’s nationwide 4G/LTE network

 

Nov. 5 - Signs U.S. Distribution Agreement with Ingram Micro for Uniden® UV350. The agreement provides access to scalability, operational efficiencies and direct exposure to Ingram Micro's top-tier brands and retail customers across the United States.

 

Nov. 13 - Launches 4G/LTE UV350 Device in Israel.

 

Nov. 19 - Signs Supply Agreement with Leading Tier 1 U.S. Cellular Operator for Uniden® UV350. The agreement is a prerequisite to launching the with this operator in the U.S. and covers terms and conditions related to the distribution, pricing, logistics, warranty, legal terms and more.

 

Nov. 26 - Wins $750,000 Tender to Supply UV350 and Other 4G/LTE Push-to-Talk Rugged Handset.  Contract is with to an enterprise end user.

 

Nov. 28 - Reports Q3 Revenue of $3.15M Q3 2018 Revenue of $3.15M compared with $4.9M in Q3 2017. Adjusted EBITDA of ($0.89M), versus $0.09M for Q3 2017; Gross margin of 26% versus 28.7% in Q3 2017; Working capital is $7.3M with $1.3M cash balance as of September 30, 2018.

 

Also reported $8.7M sale value of inventory and advances to suppliers. The vast majority of the investment required for the commercial launch is complete. SIM.V expects purchase orders in Q1 2019 or earlier.

 

Dec. 3 - Logic Wireless Commences Enterprise Sales of UV350 in Australia and New Zealand. Advances towards Tier 1 Carrier Launch in Australia. Company anticipates it will receive carrier network approval for the UV350 in the first half of 2019. Approximately 3.6M commercial vehicles in Australia alone, increasing the total addressable market for the Company by ~20%.

 

Dec. 11 -Receives $1.33M from Exercise of Warrants. $0.40 broker warrants and $0.50 warrants most of which recently expired.

 

Dec. 21 - Completes $2.0 Million Non-Brokered Private Placement Financing at $0.45 cents - Warrants at $0.60 cents. The proceeds of the financing will be used principally for general working capital purposes.

 

Dec. 28 - Provide Year End Corporate Update.

 

Tier 1 cellular operators have a keen interest in launching the UV350 as it allows for new SIM card activations and increased ARPU from existing customers while targeting new customers with a unique, dedicated, multi-purpose in-vehicle smartphone.

 

The Company additionally announces it has granted 2.2M options at $0.50 cents - half to vest immediately.

 

Jan. 7 - Receives First Major Canadian PO for its Uniden® UV350 4G/LTE. A transportation company for 180 Uniden® UV350 smartphones.

 

Jan. 14 - Advances 5G In-Vehicle Smartphone Product Development. To compliment the 4G/LTE UV350, allowing for a strong variety of cutting-edge product offerings. The 5G device will allow for various form factors that can be incorporated for the specific needs of the customers.

 

Jan. 23 - Announces Appointment of Raymond J. Roman to its Board of Advisors.

 

Feb. 12 - Announces Network Approval With U.S Tier 1 Carrier for Uniden® UV350 and Advances Trials With End-Use Customers. As a result, the Company expects initial purchase orders from these end use customers through the U.S Tier 1 carrier in Q1.

 

Feb. 19 - Supply Royal Canadian Mounted Police (RCMP) with In-Vehicle Cellular Devices and Accessories. Atlantic region of Canada, with its UCP100 in-vehicle cellular device and accessories. The UCP100 is the Company’s first 3G in-vehicle cellular device used in Israel, Europe, Australia, New Zealand and Canada among others.

 

Feb. 26 - Demonstrate UV350 In-Vehicle Capabilities with Leading Industry Partners at IWCE Conference, Las Vegas.

 

Mar. 6 - Demonstrating Uniden® UV350 with AT&T Enhanced Push-to-Talk at IWCE 2019 It’s among the first dedicated 4G LTE vehicle mounted cellular devices to be available for First Responder vehicles and the commercial fleet market with carrier supported PTT, with an external microphone and speaker for unprecedented in-vehicle call quality.

 

The Company is also working with AT&T to obtain certification that the UV350 is FirstNet Ready™, and it looks forward to contributing cutting-edge devices to the FirstNet device ecosystem in the near future, helping to improve in-vehicle communications and driver safety.

 

Mar. 19 - Receives $6.19M from Exercise of Warrants (March 18th 2019). It represent the highest amount received since the company is public.

 

Mar. 27 - Grant of Stock Options: 1.79M at $0.55 per share.

 

Apr. 1 - Receives First Purchase Order from Tier 1 US Cellular Carrier for its Uniden® UV350 4G/LTE Vehicle Smartphone 
 

 

In the last six months, SIM.V made significant progress. It formed a partnership with AINA Wireless, signed Canadian distribution agreement with AllCan Distributors, as well as, launched with Bell Mobility. It also received orders from the RCMP and a major PO for a Canadian transportation client.

 

Simultaneously, SIM.V activities in the US included signing a distribution agreement with Ingram Micro, and a supply agreement with a Tier 1 US Carrier, as well as, demonstrated its product at IWCE with AT&T. Subsequently, SIM.V recently confirmed a PO from a Tier 1 US carrier. 

 

In addition, the company reported launching its flagship device (4G/LTE UV350) in Israel, Australia and New Zealand.

 

The stock close the day at $0.56 cents. Meaning despite all these accomplishments valuation for the period only grew by 16%? This fact is a little difficult for many investors to digest. Especially, when SIM.V has cleared all the hurdles to be able to distribute its product with some major players in the space.

 

The issue? Financing perhaps. SIM.V's valuation has not kept pace with its accomplishment for the better part of 18 months. The first six months of 2018 saw questionable selling pressure on the stock price. As a result, SIM.V had to extend it warrant expiration dates from June 2018 to December 2018.  Even with that extension, the yield obtained from the December 11, 2018 ($1.3M) warrants was tepid.  Hence the reason for another round of financing (non-brokered) on December 21, 2018. With a growing momentum and undeniable accomplishments, the stock price eventually manage to go above $0.50 cents. Finally, SIM.V was able to raise significant funds ($6.1M) via the latest round of redemption (March 19th).

 

This seems to be a recurring theme on the TSX Venture. Companies who elect to pursue the non-broker financing route are often significantly discounted by the market and this does not facilitate attempts to raise funds through warrants.  SIM.V is a clear case of warrant valuation.

 

 

 

DISCLAIMER: The work included in this article is based on current events, technical charts, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements.

The content of rally is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions - rally cannot take responsibility for your investment decisions. 

Please reload

PressPatronLogo.png

If you enjoyed the article, think of becoming a supporter.

You can make a one-time contribution or monthly one.

No amount is too little to help us expand coverage.

Click on the PressPatron button for more details.

Anonymous contributions are accepted.

  • LinkedIn Social Icon
  • Twitter Social Icon

Copyright © 2017-2019 rally. All rights reserved.