Zacks Small Cap Research – SYTA: Siyata Mobile continues to make progress on sales and distribution of the company’s key SD7 rugged handset. – Technologist

By Thomas Kerr, CFA

NASDAQ:SYTA

READ THE FULL SYTA RESEARCH REPORT

On November 20, 2023, Siyata Mobile (NASDAQ:SYTA) indicated there are five catalysts for growth and free cash flow in 2024:

1. Increasing order flow domestically and internationally.

2. New products such as Siyata Real Time View and SD7+ will open up to more first responder markets.

3. The company may secure purchase order financing to facilitate its inventory needs going forward.

4. The company plans to increase its partnerships with the largest carriers, transitioning all of them to cobrand Siyata Mobile products.

5. The company plans to increase sales and strategic relationships to continue bringing the best first responder communications devices to the market.

On November 27, 2023, the company announced that it has received a purchase order from its Canadian resell partner and private LTE/5G engineering firm, Solutions Ambra, for the company’s SD7 Push-to-Talk (PTT) handsets, VK7 vehicle kits and related accessories. The devices will be deployed at a remote mining operation located in Northern Canada.

CEO Marc Seelenfreund stated, “This order establishes Siyata in a new vertical market and demonstrates the compatibility and durability of products. Our hardware will operate on a private LTE/5G network that Ambra created and deployed specifically to service mining operations in a remote area. Telecom coverage by mainstream providers is generally broad, but there are remote areas where coverage is not ubiquitous. Accordingly, there is a current and growing trend of mining companies turning to private cellular-based networks to support operations with reliable and secure communications. Importantly, the private network provides the backbone and catalyst for transitioning away from land mobile radio communication. We know that Ambra Solutions are experts in mission-critical communications having already deployed many private LTE/5G networks in underground and open-pit mines, so we are happy to work with them. We believe there is a compelling opportunity for our solutions to be used on private networks such as with mining operations, where reliable communication is critical to safety and efficient operations.”

On November 30, 2023, the company announced a 1-7 reverse stock split. The reverse stock split became effective on December 4, 2023. The shares will continue to trade on the Nasdaq Capital Market under the company’s existing trading symbol, “SYTA”. The reverse stock split is primarily intended to bring the company into compliance with the $1.00 minimum bid price requirement for maintaining its listing on Nasdaq.

On December 7, 2023, Siyata announced that it has received a $900,000 order for existing international Defense and EMS customers for the company’s UV350 In-Vehicle device, and its PTT rugged handsets.

CEO Marc Seelenfreund stated, “These orders increase our penetration with existing customers and affirm the positive impact our communication solutions are having. We are pleased that they are satisfied with the performance of our devices and will be deploying more of them across their mission critical operations.”

On December 20, 2023, the company announced that it has received an order from a top-ranked regional university located in the Midwest for its SD7 Push-to-Talk (PTT) handsets and related accessories. This is the company’s first order from a higher education institution, expanding its presence beyond local school districts in the education vertical.

Marc Seelenfreund, CEO of Siyata, stated, “Our SD7 handsets will be used by the campus security team of a higher education institution to help keep team members connected as they work to keep students safe. Campus safety is a top priority across the country, particularly amidst the recent rise in student protests. A tragic outcome can come down to whether schools have the appropriate communication tools to enable collaboration and immediate action at the time of a crisis. It is essential to equip security personnel with a clear, reliable and secure communication solution. With our SD7 handsets deployed over a nationwide tier-1 cellular network, this university will have the tools it needs to communicate across the organization. Higher education represents an attractive opportunity for our solutions and we have a growing pipeline of opportunities in this market, hence we are making it a priority for 2024.”

On January 22, 2024, the company announced that CTS Mobility, LTD, a recognized leader in the mobile communications space, is now a distributor of the PoC (MCPTT) SD7 solution and its broad range of accessories.

Siyata CEO Marc Seelenfreund, stated, “With clients in all 50 United States and internationally and its commitment to providing best-in-class outcomes for its customers, CTS Mobility is a solid strategic fit for the distribution of our products and solutions. The team at CTS understands the importance of rugged, reliable handsets as part of a critical communications infrastructure for enterprises and emergency management services. We are pleased to add CTS to our line-up and further expand the availability of our products in our addressable markets.”

CTS Mobility Principal Owner, Vic Jain, also stated, “As a leading Verizon reseller, we are eager to work with Siyata and its innovative PTT products, which are of great interest to many of our enterprise and EMS customers. At CTS, we are committed to expanding our strategic partner relationships to offer leading technology products that help our customers realize the greatest benefits from the technologies they deploy. We are pleased to add Siyata to our line-up of offerings.”

On January 29, 2024, the company announced that it is providing its SD7 handsets for use at the 2024 Special Olympics. Siyata has partnered with ESChat, a provider of broadband Push-to-Talk (PTT) services, to provide secure PTT communications for event personnel and volunteers. The 2024 Special Olympics State Winter Games will be held on February 23-24, 2024, in Syracuse, NY.

The SD7 device enables push-to-talk communications for users in a simple easy-to-use rugged Android based Push-To-Talk (PTT) handset with excellent sound quality that operates over a high bandwidth 4G LTE network to provide consistent connectivity. Its IP68 rating, resistance to water and dust, drop protection, and robust battery make it well suited for use in harsh winter conditions. Users of the SD7 can initiate and receive talk-group calls, receive private calls, notify others of emergencies and report locations.

President of ESChat, Josh Lober, said, “We’ve seen strong adoption across our markets for ESChat service on the Siyata SD7. EMS communication is a primary focus of our company, so working with the Special Olympics is a natural fit. The 2024 Winter Games in Syracuse will be the sixth Special Olympics event we have served, and we’re proud to be recognized as an official sponsor of the Special Olympics of New York (SONY). The combination of the Siyata SD7 and ESChat will once again provide SONY personnel a seamless and secure communications solution that is ready to operate, easy to use and most importantly, supports a safe and successful event.”

On February 1, 2024, the company announced a partnership with Helix Advanced Communications & Infrastructure, Inc., (operating as Allcan Distributors). The partnership is a result of Allcan Distributors’ introduction of ChatterPTT to Canada. ChatterPTT is a nationwide push-to-talk service that allows instant connection between remote teams. Hosted in Canada and offered exclusively by Allcan Distributors, ChatterPTT offers nationwide, secure, instant PTT communications services on any IOT broadband network.

Craig Baker, Vice President of Business Development for Allcan Distributors, stated, “The Siyata SD7 will provide nation-wide PTT instant communications on Allcan’s ChatterPTT service from St. Johns Newfoundland to Victoria BC, and any location that has IoT broadband connectivity. We believe the SD7 form factor will appeal to LMR radio users who will feel immediately comfortable with the SD7’s familiar buttons and rotary knob with no need to delete, lock down or upload other apps. ChatterPTT Canada will feature Priority Group Calling, messaging and location tracking and can support over 1,000 users per Talkgroup. We are excited to launch this highly desired ChatterPTT service in Canada with Siyata Mobile.”

Valuation and Estimates

We are maintaining our 2023 and 2024 revenue and EPS estimates at this time as we await the release of the company’s 4th quarter and full year 2023 results. We will provide split adjusted historical and projected EPS upon release of the 2023 10-K.

We believe Siyata Mobile is on track to generate strong double-digit revenue growth rates going forward. We expected overall gross margins to increase steadily from current levels as volume levels increase.

Our primary valuation tool utilizes a Discounted Cash Flow (DCF) process and incorporates a relatively high discount rate to account for uncertainties in the timing of the company achieving net profitability. We believe that revenue growth rates could average 20%-22% over the next 10 years and that consolidated gross margins could reach 35% by 2026.

Under this scenario, we maintain our split adjusted price target of $7.00 for SYTA stock, which is a decrease from prior targets due to the additional dilution from equity capital raises in 2023 and the potential for future equity issuances. $7.00 is also the liquidation value for the company as the tangible book value per share is approximately $7.70 as of the end of the 3rd quarter of 2023.

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