Filed Pursuant to Rule 424(b)(5)
File No. 333-265998
Prospectus Supplement
(To Prospectus Dated July 1, 2022)
Up to 17,400,000 Common
Shares
and/or
Up to 17,400,000 Pre-Funded Warrants
We are offering up to 17,400,000 of our common
shares, without par value per share, at a price of $0.23 per share. We are also offering to those purchasers, if any, whose purchase
of our common shares in this offering would otherwise result in such purchaser, together with its affiliates and certain related parties,
beneficially owning more than 4.99% of our outstanding common shares immediately following the consummation of this offering, the opportunity,
to purchase up 17,400,000 pre-funded warrants (“Pre-Funded Warrants”) in lieu of purchasing common shares that would otherwise
result in the purchaser’s beneficial ownership exceeding 4.99% of our outstanding common shares (or at the election of the purchaser,
9.99% of our outstanding common shares). For each Pre-Funded Warrant purchased in this offering in lieu of a common share, we will reduce
the number of common shares being sold in the offering by one.
The purchase price of each Pre-Funded Warrant
is $0.22 and the exercise price of each Pre-Funded Warrant is $0.01 per common share. Pursuant to this prospectus, we are also offering
the common shares issuable upon the exercise of the Pre-Funded Warrants offered hereby. Each Pre-Funded Warrant is exercisable for one
common share (subject to adjustment as provided for therein) at any time at the option of the holder until such Pre-Funded Warrant is
exercised in full, provided that the holder will be prohibited from exercising Pre-Funded Warrants for our common shares if, as a result
of such exercise, the holder, together with its affiliates, would beneficially own more than 4.99% of the total number of our common
shares then issued and outstanding. However, any holder may increase such percentage to any other percentage not in excess of 9.99%,
provided that any increase in such percentage shall not be effective until 61 days after such notice to us.
Concurrently with this offering, we are also
issuing to purchasers of the common shares and/or the Pre-Funded Warrants, in a private placement under Rule 506 of Regulation D, five
year common share purchase warrants with an exercise price of $0.23 per common share (“Purchase Warrants”).
Our common shares are listed on The NASDAQ Capital
Market under the symbol “SYTA.” On October 11, 2022, the last reported sale price of our common shares on The NASDAQ Capital
Market was $0.1291 per share. There is no established trading market for the Pre-Funded Warrants and we do not expect a market to develop.
In addition, we do not intend to apply for the listing of the Pre-Funded Warrants on any national securities exchange or other trading
market. Without an active trading market, the liquidity of the Pre-Funded Warrants will be limited.
The aggregate market value of our common shares
held by non-affiliates, or our public float, was approximately $15,048,325 based on a total number of 17,880,745 common shares outstanding,
of which 69,969 common shares were held by affiliates, and a price of $0.8449 per share, which was the closing price of our common shares
on August 12, 2022. Pursuant to General Instruction I.B.5. of Form F-3, in no event will we sell the securities covered hereby in a public
primary offering with a value exceeding more than one-third of the aggregate market value worldwide of our common shares held by non-affiliates
of our company in any 12-month period so long as the aggregate market value of our outstanding common shares held by non-affiliates remains
below $75 million. We have not sold any securities pursuant to General Instruction I.B.5. of Form F-3 during the 12-month calendar period
that ends on and includes the date hereof.
INVESTING IN OUR COMMON SHARES AND/OR PRE-FUNDED
WARRANTS INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD REVIEW CAREFULLY THE RISKS AND UNCERTAINTIES DESCRIBED UNDER THE HEADING “RISK
FACTORS” ON PAGE S-11 OF THIS PROSPECTUS SUPPLEMENT, AND UNDER SIMILAR HEADINGS IN THE DOCUMENTS THAT ARE INCORPORATED BY
REFERENCE INTO THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS.
We have engaged Maxim Group LLC (the “Placement
Agent”) as our exclusive placement agent to use its reasonable best efforts to solicit offers to purchase the securities being
offered pursuant to this prospectus supplement and accompanying prospectus. The Placement Agent has no obligation to buy any of the securities
from us or to arrange for the purchase or sale of any specific number or dollar amount of securities. We have agreed to pay the Placement
Agent the fees set forth in the table below assuming the issuance and sale of 17,400,000 common shares and no Pre-Funded Warrants.
| | |
Per Security | | |
Total | |
| Public offering price per common share | |
$ | 0.23 | | |
| 3,636,300 | |
| Placement Agent fee per common share(1) | |
$ | 0.0161 | | |
| 254,541 | |
| Proceeds, before expenses, to us, common shares | |
$ | 0.2139 | | |
$ | 3,381,759 | |
| Public offering price per pre-funded warrants | |
$ | 0.22 | | |
| 349,800 | |
| Placement Agent fee per pre-funded
warrants | |
$ | 0.0154 | | |
| 24,486 | |
| Proceeds, before expenses, to us, pre-funded warrants | |
$ | 0.2046 | | |
| 325,314 | |
| (1) | We
have agreed to pay the Placement Agent: (i) a cash fee equal to 7.0% of the aggregate gross
proceeds raised in this offering and (ii) to reimburse the Placement Agent up to $60,000
for reasonable and documented fees and expenses of legal counsel and other actual out-of-pocket
expenses. See “Plan of Distribution” beginning on page S-29 of this prospectus
supplement for additional information with respect to the compensation we will pay the Placement
Agent.
|
The Placement Agent expects to deliver the common
shares or Pre-Funded Warrants being offered pursuant to this prospectus supplement and the accompanying prospectus to purchasers on or
about October 12, 2022.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION
NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Sole Placement Agent
MAXIM GROUP LLC
The date of this prospectus supplement is October
10, 2022.
TABLE OF CONTENTS
Prospectus Supplement
Base Prospectus
ABOUT THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first part
is this prospectus supplement, which describes the specific terms of this offering of our common shares and Pre-Funded Warrants. The
second part is the accompanying prospectus, which provides more general information, some of which may not apply to this offering. The
information included or incorporated by reference in this prospectus supplement also adds to, updates and changes information contained
or incorporated by reference in the accompanying prospectus. If information included or incorporated by reference in this prospectus
supplement is inconsistent with the accompanying prospectus or the information incorporated by reference therein, then this prospectus
supplement or the information incorporated by reference in this prospectus supplement will apply and will supersede the information in
the accompanying prospectus and the documents incorporated by reference therein.
This prospectus supplement is part of a registration
statement on Form F-3 (File No. 333-265998) that we filed with the U.S. Securities and Exchange Commission (“SEC”) using
a “shelf” registration process. Under the shelf registration process, we may from time to time offer and sell any combination
of the securities described in the accompanying prospectus up to a total dollar amount of $100,000,000, of which this offering is a part.
As of the date of this prospectus supplement, we have not sold any securities under the registration statement.
To the extent this prospectus supplement contains
summaries of the documents referred to herein, you are directed to the actual documents for complete information. All of the summaries
are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed or will be
filed in a Report of Foreign Private Issuer on Form 6-K, or will be incorporated by reference as exhibits to the registration statement
of which this prospectus supplement forms a part, and you may obtain copies of such documents as described below in the section titled
“Where You Can Find Additional Information.”
You should rely only on the information contained
or incorporated by reference in this prospectus supplement and the accompanying prospectus. We have not, and the Placement Agent has
not, authorized anyone to provide you with different or additional information. If anyone provides you with different or additional information,
you should not rely on it. We are not making an offer to sell or soliciting an offer to buy these securities under any circumstance in
any jurisdiction where the offer or solicitation is not permitted. You should assume that the information contained in this prospectus
supplement and the accompanying prospectus is accurate only as of the date of the respective document in which the information appears,
and that any information in documents that we have incorporated by reference is accurate only as of the date of the document incorporated
by reference, regardless of the time of delivery of this prospectus supplement or any sale of a security. Our business, financial condition,
results of operations and prospects may have changed since those dates.
Unless otherwise stated in this prospectus supplement,
“Siyata,” “we,” “us,” “our,” or “Company,” refers to Siyata Mobile Inc. and
our subsidiaries. All dollar amounts in this prospectus supplement are in United States dollars.
The market data and certain other statistical
information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus are based on independent
industry publications, governmental publications, reports by market research firms or other independent sources which we have not independently
verified. Some data are also based on our good faith estimates.
The logos, and
other trade names, trademarks, and service marks of Siyata Mobile Inc. appearing in this prospectus are the property of Siyata. Other
trade names, trademarks, and service marks appearing in this prospectus are the property of their respective holders. Trade names, trademarks,
and service marks contained in this prospectus may appear without the “®” or “™” symbols. Such references
are not intended to indicate, in any way, that we, or the applicable owner or licensor, will not assert, to the fullest extent possible
under applicable law, our rights or the rights of the applicable owner or licensor to those trade names, trademarks, and service marks.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains
“forward-looking statements” which include information relating to future events, future financial performance, financial
projections, strategies, expectations, competitive environment and regulation. Words such as “may,” “should,”
“could,” “would,” “predicts,” “potential,” “continue,” “expects,”
“anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,”
and similar expressions, as well as statements in future tense, identify forward-looking statements. Forward-looking statements should
not be read as a guarantee of future performance or results and may not be accurate indications of when such performance or results will
be achieved. Forward-looking statements are based on information we have when those statements are made or management’s good faith
belief as of that time with respect to future events, and are subject to significant risks and uncertainties that could cause actual
performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors
that could cause such differences include, but are not limited to:
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the size and growth potential of the markets for our products, and our ability to serve those markets; |
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the rate and degree of market acceptance of our products; |
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our ability to expand our sales organization to address effectively existing and new markets that
we intend to target; |
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impact from future regulatory, judicial, and legislative changes or developments in the U.S. and
foreign countries; |
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our ability to compete effectively in a competitive industry; |
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our ability to obtain funding for our operations and effectively utilize the capital raised therefrom; |
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our ability to attract collaborators and strategic partnerships; |
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our ability to meet the continued listing requirements and standards of the Nasdaq Capital Market,
or Nasdaq; |
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our ability to meet our financial operating objectives; |
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the availability of, and our ability to attract, qualified employees for our business operations; |
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general business and economic conditions; |
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our ability to meet our financial obligations as they become due; |
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positive cash flows and financial viability of our operations and any new business opportunities; |
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our ability to secure intellectual property rights over our proprietary products or enter into license
agreements to secure the legal use of certain patents and intellectual property; |
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our ability to be successful in new markets; |
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our ability to avoid infringement of intellectual property rights; and |
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the effects of the global COVID-19 pandemic. |
The foregoing does not
represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors that we
are faced with that may cause our actual results to differ from those anticipated in our forward-looking statements. Please see “Risk
Factors,” and “Business” and “Incorporation of Certain Documents by Reference,” as well as in our Annual
Report on Form 20-F under Item 3. “Key Information – D. Risk Factors,” “Item 4. Information on the Company,”
and “Item 5. Operating and Financial Review and Prospects” for additional factors that could adversely impact our business
and financial performance.
Moreover, new risks
regularly emerge and it is not possible for our management to predict or articulate all the risks we face, nor can we assess the impact
of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those
contained in any forward-looking statements. All forward-looking statements included in this prospectus are based on information available
to us on the date of this prospectus and as of the dates of the documents incorporated herein by reference. Except to the extent required
by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result
of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons
acting on our behalf are expressly qualified in their entirety by the cautionary statements contained above and throughout this prospectus
supplement and the documents incorporated by reference herein. Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from those described in this prospectus supplement as anticipated,
believed, estimated or expected.
Readers are urged to
carefully review and consider the various disclosures made throughout this prospectus supplement which are designed to advise interested
parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.
You should not put undue
reliance on any forward-looking statements. Any forward-looking statements in this prospectus supplement are made as of the date hereof,
and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by law.
PROSPECTUS
SUPPLEMENT SUMMARY
This summary description about us and our
business highlights selected information contained elsewhere in this prospectus supplement or the accompanying base prospectus. This
summary does not contain all of the information you should consider before deciding to invest in our securities. You should carefully
read this entire prospectus supplement and the accompanying base prospectus, including each of the documents incorporated herein or therein
by reference, before making an investment decision. You should also carefully consider the matters discussed in the section in this prospectus
supplement entitled “Risk Factors” and in the accompanying base prospectus and in other documents incorporated
herein by reference.
Corporate Overview
Siyata Mobile Inc. is a leading global developer
of innovative cellular-based communications solutions over advanced 4G/LTE mobile networks under the Uniden® Cellular and Siyata
brands to global first responders and enterprise customers. Siyata’s three complementary product categories include rugged handheld
mobile devices and in-vehicle communications solutions for first responders, military, enterprise customers, commercial fleet vehicles
and industrial workers, and cellular amplifiers to boost the cellular signal inside homes, buildings and vehicles.
Products
The Company develops, markets, and sells a portfolio
of rugged handheld Push-to-Talk over Cellular (“PoC”) smartphone devices. These rugged business-to-business (“B2B”)
handsets are focused on enterprise customers, first responders, construction workers, security guards, government agencies, utilities,
transportation and waste management, amusement parks, and mobile workers in multiple industries.
In the second quarter of 2022, Siyata unveiled
its next generation rugged device, the SD7. The SD7 is Siyata’s first mission critical push-to-talk device (“MCPTT”)
and is also the first rugged handset that Siyata launched in North America, in the fourth quarter of 2021 and is expected to launch in
Europe in the first quarter of 2023.
Our second product category are purpose built
in-vehicle communication devices. In the fourth quarter of 2021, Siyata launched the VK7, a first-of-its-kind, patent-pending car kit
with an integrated 10-watt speaker, a simple slide-in connection sleeve for the SD7, and an external antenna input for connecting to
a windshield or roof mount antenna that provides an in-vehicle experience for the user that is similar to that from a traditional land
mobile radio (“LMR”) device. The VK7 has been uniquely designed to be used with the SD7, while connecting directly into the
vehicle’s power and can also connect to a Uniden® cellular amplifier for better cellular connectivity. The VK7 can also be
equipped with an external remote speaker microphone (“RSM”) to ensure compliance with hands-free communication legislation.
The Uniden® UV350 4G/LTE is a purpose built
in-vehicle communication device designed specifically for professional vehicles such as trucks, vans, buses, emergency service vehicles
and other enterprise vehicles. This platform is designed to facilitate the replacement of the current in-vehicle, multi-device set up
with a single device that incorporates voice, PoC, data, fleet management solutions and other Android® based professional
applications. The UV350 also supports Band 14 for the First Responder Network Authority, or FirstNet®, compatibility which is the
U.S. First Responders’ 4G/LTE network with PoC capabilities that aims to replace aging two-way radio systems currently in use.
The aforementioned portfolio of solutions offers
the benefits of PoC without any of the difficulties managing the current generation of rugged smart/feature phones and is ideally suited
as a perfect upgrade from Land Mobile Radios. Used for generations, LMR has a significant number of limitations, including network incompatibility,
limited coverage areas, and restricted functionality that leave a huge need for a unified network and platform. Siyata’s innovative
PoC product lines are helping to service the generational shift from LMR to PoC. According to VDC Research, the LMR market is growing
at a 5.9% compound annual growth rate (“CAGR”), while the PoC market is growing at a 13.6% CAGR and annual PoC shipments
are expected to grow to 2.7 million units in 2023.
Approximately 30 million cellular boosters are
sold globally every year. Siyata manufactures and sells Uniden® cellular boosters and accessories for enterprise, first responder
and consumer customers with a focus on the North American markets. Cellular communication provides a robust, secure environment not just
for remote workers, in-home and in-vehicles, but also for restaurant patrons who wish to download menus; for patients at pharmacies who
need to verify identity and download prescriptions; for remote workers who require strong, clear cellular signals; and for first responders
where connectivity literally means the difference between life and death. The vehicle vertical in this portfolio complements Siyata’s
in-vehicle and rugged handheld smartphones as these sales can be bundled through the Company’s existing sales channels.
Customers and Channels
Qualifications with North American voice and
data carriers began with Bell Mobility in late in the fourth quarter of 2018; at AT&T as well as at its first responder cellular
network FirstNet®, in late in the second quarter of 2019; with Rogers Wireless and Verizon Wireless in the fourth quarter of 2019;
and internationally with Telstra in the fourth quarter of 2021. These are major milestones for the Company following Siyata’s seven
years of experience innovating in-vehicle cellular based technology, vehicle installations, software integration with various Push-to-Talk
(“PTT”) solutions and intensive carrier certifications.
Siyata’s customer base includes cellular
network operators and their dealers, as well as commercial vehicle technology distributors for fleets of all sizes in the U.S., Canada,
Europe, Australia, the Middle East and other international markets.
The
North American Tier 1 cellular carriers that Siyata is working with have large scale distribution and sales channels. With an estimated
25 million commercial vehicles including 7.0 million first responder vehicles, the Company sees the North American market as its largest
opportunity with a total addressable market over $19 billion. We believe that these Tier 1 cellular carriers have a keen interest in
launching the UV350 as it allows for new SIM card activations in commercial vehicles and increased average revenue per unit (“ARPU”)
from existing customers with corporate and first responder fleets while targeting new customers with a unique, dedicated, multi-purpose
in-vehicle Internet of Things (“IoT”) smartphone.
In addition, our rugged handsets will ultimately
be targeted to approximately 47 million enterprise task and public sector workers across North America including construction, transport
and logistics, manufacturing, energy and utility, public safety and the federal government.
Corporate Information
We are organized as a corporation under the laws
of British Columbia, Canada, and maintain our principal place of business at 1001 Lenoir Street, Suite A-414, Montreal, Quebec H4C 2Z6,
Canada. The registered and records office is located at 200 - 885 West Georgia Street, Vancouver, British Columbia V6C 3E8, Canada. Our
telephone number is (514) 500-1181 and our website is located on the internet at https://www.siyatamobile.com. Information contained
on our website does not constitute part of this prospectus supplement.
The Company was incorporated on October 15, 1986
as Big Rock Gold Ltd. as a corporation under the Company Act of British Columbia. On April 5, 1988, the Company changed its name to International
Cruiseshipcenters Corp. On June 24,1991, the Company changed its name to Riley Resources Ltd. Effective January 23, 1998, the Company
consolidated its share capital on an eight-to-one basis and changed its name to International Riley Resources Ltd. Effective November
22, 2001, the Company consolidated its share capital on a five-to-one basis and changed its name to Wind River Resources Ltd. On January
3, 2008, the Company changed its name to Teslin River Resources Corp.
On July 24, 2015, Teslin River Resources Corp,
completed a reverse acquisition by way of a three-cornered amalgamation, pursuant to which the Company acquired certain telecom operations
of an Israel-based cellular technology company and changed its name to Siyata Mobile Inc.
On June 7, 2016, the Company acquired all of
the issued and outstanding shares of Signifi Mobile Inc. (“Signifi”).
In March 2021, the Company acquired, through
a wholly owned subsidiary formed by Signifi, all the outstanding units of Clear RF LLC (“Clear RF”).
The Company was registered with the TSXV under
the symbol SIM, commenced trading on OTCQX under the symbol SYATF from May 11, 2017 until September 25, 2020, at which time the Company’s
common shares were listed only on the Nasdaq Capital Market.
The following diagram illustrates our corporate
structure as of the date of this prospectus:
Recent Developments
Effects of the Covid-19 Pandemic. In 2020,
the global outbreak of the COVID-19 virus spread to every country and to every state in the United States. The World Health Organization
designated COVID-19 as a pandemic, and numerous countries, including the United States, declared national emergencies with respect to
COVID-19. While vaccines have been approved and have been deployed in the United States, Canada and Israel, the global impact of the
outbreak continues to adversely affect many industries, and different geographies continue to reflect the effects of public health restrictions
in various ways. The timing and likelihood of achieving widespread global vaccination remain uncertain, and these vaccines may be less
effective against new variants, potentially leading to various health restrictions such as isolation, limiting large congregations of
people and even lock-downs that may continue to keep the global economy from recovering to pre-pandemic levels for a prolonged period
of time.
The economic recovery in the United States and
Canada following the initial impact of COVID-19 is underway but it has been gradual, uneven and characterized by meaningful dispersion
across sectors and regions with uncertainty regarding its ultimate length and trajectory. Further, although many jurisdictions had relaxed
or lifted restrictions in an effort to generate more economic activity, the risk of continued COVID-19 outbreaks remains, and certain
jurisdictions have re-imposed restrictions in an effort to mitigate risks to public health, especially as more infectious variants of
the virus emerge. Increasing infection rates and hospitalizations in certain geographies and a potential resulting market downturn have
resulted in the COVID-19 pandemic continuing to impact our business and our results of operations, financial condition and cash flow.
We have experienced an increase of sales of our
cellular boosters as more people are working remotely as a result of the COVID-19 pandemic but our overall sales during the pandemic
have remained similar to its sales in 2020 during this time period with a shift towards increased sales in North America in the first
responder market. It is not possible for us to predict the duration or magnitude of the adverse results of the outbreak and its effects
on our business or ability to raise funds. We plan to address any ongoing concerns from the pandemic by continuing to increase our sales
in North America. In addition, our cellular distribution business should remain strong during this time since more individuals will continue
to work from home. In addition, we believe that our cellular booster business will remain strong as more individuals continue to work
from home, requiring improved cellular reception.
Russia-Ukraine Conflict. U.S. and global
markets are experiencing volatility and disruption following the escalation of geopolitical tensions and Russia’s launch of a full-scale
military invasion of Ukraine in February 2022. Although the length and impact of the ongoing military conflict is highly unpredictable,
the war in Ukraine has led to market disruptions, including significant volatility in commodity prices, credit, and capital markets.
Additionally, Russia’s prior annexation of Crimea, the full scale military invasion in Ukraine and the recent illegal annexation
of two separatist republics in the Donetsk and Luhansk regions of Ukraine have led to sanctions and other penalties being levied by the
United States, the European Union, and other countries against Russia, Belarus, the Crimea Region of Ukraine, the so-called Donetsk People’s
Republic, and the so-called Luhansk People’s Republic, including the agreement by the U.S. and the EU to remove certain Russian
financial institutions from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment system. Additional potential
sanctions and penalties have also been proposed and/or threatened. Russian military actions and the resulting sanctions could adversely
affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets, potentially making
it more difficult for us to obtain additional equity or debt funding. Any of the abovementioned factors could affect our business, prospects,
financial condition, and operating results.
The short- and long-term implications of Russia’s
invasion of Ukraine are difficult to predict at this time. The imposition of sanctions and Russia’s withholding of its oil and
gas as an economic weapon may have an adverse effect on the economic markets generally and could impact our business, financial condition,
and results of operations. The war has created disruptions in the supply chain for certain of our products which, to date, has not had
a substantive impact on our operations. None of our critical raw materials are sourced from, and none of our finished products are manufactured
in, the sanctioned regions. We have no operations or other projects in that region.
Investment by Lind Partners. On October
27, 2021, we entered into a securities purchase agreement relating to the purchase and sale of a senior secured convertible note (the
“Lind Partners Note”) for gross proceeds of USD$6,000,000 (the “Purchase Agreement”) with Lind Global Partners
II, LP, an investment fund managed by The Lind Partners, a New York based institutional fund manager. Proceeds were used to repay and
terminate existing convertible notes, as well as to pay certain fees and costs associated with the transaction. The Purchase Agreement
provides for, among other things, the issuance of a USD$7,200,000 note with a 24-month maturity, 0% annual interest rate, and a fixed
conversion price of USD$10.00 per share (“Conversion Price”) of our common shares. We are required to make principal payments
in 18 equal monthly installments commencing 180 days after funding (“Repayment”). At our discretion, the Repayments can be
made in: (i) cash; (ii) common shares (after common shares are registered) (the “Repayment Shares”); or a combination of
both. Repayment Shares will be priced at 90% of the average of the five lowest daily volume weighted average prices (“VWAPs”)
during the 20 trading days before the issuance of the common shares (the “Repayment Price”). Further, the Lind Partners Note
provides for a pricing floor of $2.00 per common share (the “Repayment Share Price Floor”) such that Repayment Shares shall
be priced at 90% of the average of the five lowest daily VWAPs during the 20 trading days before the issuance of the common shares, subject
to the Repayment Share Floor Price provided, however, that the Repayment Share Price Floor became inapplicable after we obtained stockholder
approval as required by the Nasdaq at our Annual General Meeting of shareholders.
As of December 3, 2021, we incurred an event
of default under the terms of the Lind Partners Note. Upon the occurrence and during the continuance of an “Event of Default”,
the holder may at any time at its option: (1) declare that Interest Upon Default Amount (15%) has commenced and (2) exercise all other
rights and remedies available to it under the transaction documents; provided, however, that upon the occurrence of an Event of Default
described above, the holder, in its sole and absolute discretion, may: (a) from time-to-time demand that all or a portion of the outstanding
principal amount be converted into common shares at the lower of (i) the then-current Conversion Price and (ii) 80% of the average of
the three lowest daily Volume Weighted Average Prices during the 20 Trading Days prior to the delivery by the holder of the applicable
notice of conversion or (b) exercise or otherwise enforce any one or more of the holder’s rights, powers, privileges, remedies
and interests under the Lind Partners Note, the transaction documents or applicable law. No course of delay on the part of the holder
shall operate as a waiver thereof or otherwise prejudice the rights of the holder. The event of default was cured on December 7, 2021
when the Company’s market capitalization increased to an amount over $20,000,000.
If the Company issues any Equity Interests, other
than Exempted Securities (as defined), for aggregate proceeds to the Company of greater than $10,000,000, excluding offering costs or
other expenses, unless otherwise waived in writing by and at the discretion of Lind Partners, the Company will direct 20% of such proceeds
to reduce the principal balance of the Lind Note. If the Company issues any equity interests issued, subject to certain exemptions, at
an effective price per share that is less than the exercise price of the Lind Warrant then in effect or without consideration, then the
exercise price of the Lind Warrants shall be reduced to a price equal to the consideration per share paid for such additional common
shares. Based on this offering at $0.23 per share, the Lind Warrants would be repriced to $0.23. Prior to this offering, the exercise
price of the Lind Warrants is $2.30 per share. If the Company issues any equity interests, subject to certain exemptions, at an effective
price per share that is less than the conversion price of the Lind Notes then in effect or without consideration, then the conversion
price of the Lind Notes shall be reduced to a price equal to the consideration per share paid for such additional common shares.
Another Event of Default occurred on July 12,
2022 when the Company’s market capitalization fell below $20,000,000 for 10 consecutive days. Upon the occurrence of an Event of
Default as described above, the holder, in its sole and absolute discretion, may: (a) from time-to-time demand that all or a portion of
the outstanding principal amount be converted into common shares at the lower of: (i) the then-current Conversion Price, and (ii) 80%
of the average of the three lowest daily Volume Weighted Average Prices during the 20 Trading Days prior to the delivery by the holder
of the applicable notice of conversion, or (b) exercise or otherwise enforce any one or more of the holder’s rights, powers, privileges,
remedies and interests under the Lind Partners Note, the transaction documents or applicable law. Based on this offering at $0.23 per
common share, the conversion price of the Lind Note would be repriced to $0.23, which would result in 4,347,826 shares to be issued upon
conversion of the remaining principal balance of $1,000,000 under the Lind Note. Prior to this offering, the conversion price was $2.30
per share and the shares issued upon conversion of the remaining principal balance of $1,000,000 on the Lind Note would have been 434,782
based on that conversion price.
The Securities Purchase Agreement pursuant to
which Lind Partners acquired the Lind Notes prohibits the Company from entering into any Prohibited Transactions (defined to include
the Purchase Warrants in this offering) without Lind Partner’s prior written consent, until thirty days after such time as the
Lind Note has been repaid in full and/or has been converted into common shares. That agreement also provides to Lind a 10 day right of
first purchase if the Company makes a public offer of its Common Shares. On October 9, 2022, Lind Partners entered into an agreement
pursuant to which they waived such provisions in consideration of participating in this offering and receiving without payment therefor
Purchase Warrants in the private placement to acquire up to 1,739,130 common shares at an exercise price of $0.23 per common share (the
“Lind Waiver Warrants”).
Change in Accountants.
On May 24, 2022, we received a letter from Davidson & Company LLP (“Davidson”) that stated that Davidson did
not wish to be reappointed as the Company’s independent registered public accounting firm for the fiscal year ending December 31,
2022. Davidson ceased to serve as the Company’s independent registered accounting firm as of May 24, 2022. The Company requested
that Davidson respond fully to the inquiries of Friedman, LLP, the Company’s successor independent registered public accounting
firm (see below), and Davidson agreed to cooperate with the Company and Friedman with respect to the transition.
During the Company’s
fiscal years ended December 31, 2021 and 2020 and the subsequent interim period through the filing of the Company’s Report of Foreign
Private Issuer on Form 6-K on May 31, 2022, there were no “disagreements” (as defined in Item 304(a)(1)(iv) of Regulation
S-K and the related instructions to Item 304 of Regulation S-K) with Davidson on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Davidson, would have
caused Davidson to make reference to the subject matter of such disagreements in connection with its report.
Davidson’s report
on the consolidated financial statements for the Company’s fiscal years ended December 31, 2021 and 2020 did not contain any adverse
opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles, except that
Davidson’s report for the years ended December 31, 2021 and 2020 contained an explanatory paragraph indicating that there was substantial
doubt about the ability of the Company to continue as a going concern. In a separate correspondence, Davidson identified five material
weaknesses in our internal controls over financial reporting.
As previously disclosed
in Item 15(a) “Controls and Procedures” of the Company’s Annual Report on Form 20-F for the fiscal year ended December
31, 2021, Davidson identified five material weaknesses that related to: (i) the insufficient review of inventory balances for products
that are slow-moving; (ii) the insufficient review of advances to suppliers on products that are no longer selling; (iii) the insufficient
controls surrounding off-site inventory tracking; (iv) the insufficient review whether product returns relate to sales recorded in the
fiscal year; and (v) the insufficient review of title transfer terms to determine the period in which revenue should be recorded.
During the Company’s
fiscal years ended December 31, 2021 and 2020 and the subsequent interim period through May 31, 2022, there had been no “reportable
events” (as defined in Item 304(a)(1)(v) of Regulation S-K), except for certain material weaknesses in the Company’s internal
control over financial reporting.
On May 24, 2022, management
of the Company notified Friedman LLP (“Friedman”) that Friedman had been approved by the Company’s audit committee
(“Audit Committee”) of the board of directors and the board of directors as the Company’s independent registered public
accounting firm for the fiscal year ended December 31, 2022. Friedman LLP combined with Marcum LLP effective September 1, 2022 (“Marcum”).
During the fiscal years ended December 31, 2021 and 2020 and the subsequent interim period through May 31, 2022, the Company did not
consult with Friedman or Marcum with respect to: (a) the application of accounting principles to a specified transaction, either completed
or proposed, or the type of audit opinion that might be rendered with respect to the Company’s financial statements, and no written
report or oral advice was provided to the Company by Friedman or Marcum that was an important factor considered by the Company in reaching
a decision as to any accounting, auditing or financial reporting issue, or (b) any matter that was subject to any disagreement, as defined
in the United States Securities and Exchange Commission’s Regulation SK, Item 304(a)(1)(iv) and the related instructions thereto,
or a reportable event within the meaning set forth in Item 304(a)(1)(v) of Regulation S-K
Restatement of Financial Statements. As
part of the Company’s normal quarterly reporting process for the six months ended June 30, 2022, management and the Audit Committee
concluded that a material error was made related to the accounting for the Warrants entered into on January 11, 2022 and therefore were
misstated in the Company’s March 31, 2022 prior period financial statements (“Prior Period Financial Statements”).
There was no impact on any of the year end financial statements previously filed.
On August 15, 2022, management and the Audit
Committee determined that the Company’s condensed consolidated unaudited interim financial statements for the three month period
ended March 31, 2022, filed with the SEC on Form 6-K on May 17, 2022 should no longer be relied upon due to an error in the accounting
treatment for the classification of the Company’s Warrants as equity rather than as a derivative liability. In addition, investors
were advised that they should no longer rely upon any communications relating to these condensed consolidated unaudited interim financial
statements.
The Company determined that the Warrants should
be accounted for as a derivative liability in accordance with International Accounting Standards No. 32.6 and International Financial
Reporting Standards No. 9 that deal with the measurement of financial assets and financial liabilities. As a result of this change, the
Warrants for 9,999,999 shares of common shares have been classified as liabilities rather than equity, the fair value of the Warrants
decreased by $2.9 million, transaction costs increased by $0.96 million and the fair value loss increased by $0.96 million for the three
months ended March 31, 2022.
The Company filed its restated condensed consolidated
unaudited interim financial statements for the three month period ended March 31, 2022 as Exhibit 99.1 to its Form 6-K with the SEC on
August 18, 2022 together with its restated Management’s Discussion and Analysis of Results of Operations and Financial Condition
for the three months ended March 31, 2022.
Going Concern. Our auditor has included
a “going concern” explanatory paragraph in its report on our consolidated financial statements for the fiscal year ended
December 31, 2021, expressing substantial doubt about our ability to continue as an ongoing business for the next twelve months. Our
consolidated financial statements do not include any adjustments that may result from the outcome of this uncertainty. If we cannot secure
the financing needed to continue as a viable business, our shareholders may lose some or all of their investment in us.
Nasdaq Delisting Letter. On September
1, 2022, we announced that the Company had received a notification letter dated August 26, 2022 from the Listing Qualifications Department
of The Nasdaq Stock Market LLC (“Nasdaq”), notifying the Company that it is currently not in compliance with the minimum
bid price requirement set forth under Nasdaq Listing Rule 5550(a)(2), resulting from the fact that the closing bid price of the Company’s
common shares was below $1.00 per share for a period of thirty consecutive business days.
Pursuant to Nasdaq Listing Rule 5810(c)(3)(A),
the Company has a compliance period of 180 calendar days, or until February 22, 2023 (the “Compliance Period”), to regain
compliance with Nasdaq’s minimum bid price requirement. If at any time during the Compliance Period, the closing bid price per
share of the Company’s common shares is at least $1.00 for a minimum of ten consecutive business days, Nasdaq will provide the
Company a written confirmation of compliance and the matter will be closed. The Company is currently considering a number of alternatives
to boost its minimum bid price but has not yet reached a decision on a course of action.
Marketing Milestones. On October 6, 2021,
Siyata Mobile completed a major milestone and entered into a working partnership with a global leading U.S. distributor (“Leading
U.S. Distributor”) for its recently launched SD7 mission-critical push-to-talk ruggedized handheld device. The companies signed
an addendum to their Master Service Agreement appointing the Leading U.S. Distributor as a non-exclusive SD7 marketing and distribution
partner. The Leading U.S. Distributor, who is the leading global land mobile radio vendor, will be marketing the SD7 both in North America
as well as in international markets, selling both directly and in partnership with us.
On May 3, 2022, we announced that our SD7 push
to talk over cellular device was certified and approved for use on FirstNet®, the first high-speed, nationwide wireless broadband
network dedicated to public safety.
On June 7, 2022, we announced that Verizon Communications
Inc., the largest mobile cellular telephone operator in the U.S. by total retail connections, will fully integrate our rugged SD7 device
into their network. And on June 27, 2022, we announced that the SD7 rugged device first became commercially available on and will be
sold through the FirstNet® network and to AT&T Inc.’s enterprise channels.
On July 13, 2022, Siyata announced Logic Wireless
Europe Ltd. a leading distributor of business-critical communication solutions across the United Kingdom, Australia, New Zealand and
the Pacific Islands, will introduce the Siyata SD7 rugged PoC device integrated with ChatterPTT.
On July 14, 2022, Siyata announced it is launching
a new product, a Siyata High Power User Equipment (“HPUE”) antenna, in conjunction with Assured Wireless Corporation.
On July 18, 2022, Siyata announced an agreement
with Spain’s Wireless Zeta Telecomunicaciones, S.L. (“Azetti”) to offer the Company’s SD7 rugged mission-critical
push-to-talk device through Azetti’s existing enterprise sales channels.
On July 26, 2022, Siyata announced its SD7 rugged
mission-critical push-to-talk device is now available for customers who need the integrated industry-leading PTT solutions from TASSTA,
a global MCPTT software provider and end-to-end solution for critical communications.
On July 28, 2022, Siyata announced the Company’s
SD7 rugged push-to-talk over cellular devices were used to provide critical emergency communications services for the World Athletics
Championships “Oregon22” summer games.
On August 30, 2022, Siyata announced that it
is in the process of ramping up sales of its next-generation MCPTT SD7 device, as well as the VK7 and Rapid Kit companion devices to
numerous customers across multiple verticals.
On September 8, 2022, Siyata announced that its
SD7 rugged mission-critical push-to-talk device is now integrated with CrisisGo Inc.’s Panic App, giving teachers instant access
to first responders with a single push of a button.
On September 22, 2022, Siyata announced that
it has received a purchase order from a federal government contractor who will provide Uniden® cellular booster kits and accessories
to the U.S. Navy.
Implications of Our Being an “Emerging Growth Company”
As a company with less than $7.5 million in revenue
during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups
Act of 2012, or the JOBS Act. An “emerging growth company” may take advantage of reduced reporting requirements that are
otherwise applicable to larger public companies. In particular, as an emerging growth company, we:
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may present only two years of audited financial statements and only two years of related Management’s
Discussion and Analysis of Financial Condition and Results of Operations, or “MD&A;” |
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are not required to provide a detailed narrative disclosure discussing our compensation principles,
objectives and elements and analyzing how those elements fit with our principles and objectives, which is commonly referred to as
“compensation discussion and analysis;” |
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are not required to obtain an attestation and report from our auditors on our management’s
assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002; |
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are not required to obtain a non-binding advisory vote from our shareholders on executive compensation
or golden parachute arrangements (commonly referred to as the “say-on-pay,” “say-on frequency” and “say-on-golden-parachute”
votes); |
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are exempt from certain executive compensation disclosure provisions requiring a pay-for-performance
graph and chief executive officer pay ratio disclosure; |
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are eligible to claim longer phase-in periods for the adoption of new or revised financial accounting
standards under §107 of the JOBS Act; and |
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will not be required to conduct an evaluation of our internal control over financial reporting. |
We intend to take advantage of all of these reduced
reporting requirements and exemptions, including the longer phase-in periods for the adoption of new or revised financial accounting
standards under §107 of the JOBS Act. Our election to use the phase-in periods may make it difficult to compare our financial statements
to those of non-emerging growth companies and other emerging growth companies that have opted out of the phase-in periods under §107
of the JOBS Act.
Under the JOBS Act, we may take advantage of
the above-described reduced reporting requirements and exemptions until we no longer meet the definition of an emerging growth company.
The JOBS Act provides that we would cease to be an “emerging growth company” at the end of the fiscal year in which the fifth
anniversary of our initial sale of common equity pursuant to a registration statement declared effective under the Securities Act of
1933, as amended, (the “Securities Act”), occurred, if we have more than $1.07 billion in annual revenues, have more than
$700 million in market value of our common shares held by non-affiliates, or issue more than $1.0 billion in principal amount of non-convertible
debt over a three-year period.
Foreign Private Issuer Status
We are a foreign private issuer within the meaning
of the rules under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As such, we are exempt from certain
provisions applicable to United States domestic public companies. For example:
| ● | we are not required
to provide as many Exchange Act reports, or as frequently, as a domestic public company; |
| ● | for interim reporting,
we are permitted to comply solely with our home country requirements, which are less rigorous
than the rules that apply to domestic public companies; |
| ● | we are not required
to provide the same level of disclosure on certain issues, such as executive compensation; |
| ● | we are exempt
from provisions of Regulation FD aimed at preventing issuers from making selective disclosures
of material information; |
| ● | we are not required
to comply with the sections of the Exchange Act regulating the solicitation of proxies, consents,
or authorizations in respect of a security registered under the Exchange Act; and |
| ● | we are not required
to comply with Section 16 of the Exchange Act requiring insiders to file public reports of
their share ownership and trading activities and establishing insider liability for profits
realized from any “short-swing” trading transaction. |
Risks Affecting Our Company
In evaluating an investment in our securities,
you should carefully read this prospectus supplement and especially consider the factors incorporated by reference in the sections titled
“Risk Factors” commencing on page S-11 of this prospectus supplement and in our base prospectus and the Annual Report incorporated
by reference herein.
THE
OFFERING
| Issuer: |
Siyata Mobile Inc., a British Columbia
(Canada) corporation. |
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|
| Securities Offered: |
Up to
17,400,000 common shares and/or up to 17,400,000 Pre-Funded Warrants, for those purchasers,
if any, whose purchase of common shares in this offering would otherwise result in such purchaser,
together with its affiliates and certain related parties, beneficially owning more than 4.99%
of our outstanding common shares immediately following the consummation of this offering.
For each Pre-Funded Warrant purchased in this offering in lieu of a common share, we will
reduce the number of common shares being sold in the offering by one. Each Pre-Funded Warrant
is exercisable to purchase one common share at an exercise price of $0.01 per share, exercisable
immediately and will not expire. |
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|
| Public Offering Price: |
$0.23 per common share and $0.22 per Pre-Funded Warrant. |
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|
Common Shares Outstanding
Immediately Before This
Offering: |
17,880,745 common shares. |
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|
Common Shares to Be
Outstanding Immediately
Following This Offering: |
33,690,745 common shares(1). |
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|
| Use of Proceeds: |
We intend
to use the net proceeds from the sale of the securities offered hereby for working capital
and other general corporate purposes. See the section titled “Use of Proceeds”
on page S-18
|
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|
| Risk Factors: |
See the
sections titled “Risk Factors” commencing on page S-11 of this prospectus supplement
and in our base prospectus and the Annual Report incorporated by reference herein for a discussion
of factors you should consider carefully before deciding to invest in our common shares or
Pre-Funded Warrants. |
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|
| Listing: |
Our common shares are listed on the Nasdaq
Capital Market under the symbol “SYTA.” There is no established trading market for the Pre-Funded Warrants and we
do not intend to apply for the listing of the Pre-Funded Warrants on any national securities exchange or other trading market. Without
an active trading market, the liquidity of the Pre-Funded Warrants will be limited. |
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|
| Transfer Agent: |
Computershare Inc. is the registrar and transfer
agent of our common shares. |
| (1) | The number of shares of our common shares
to be outstanding after this offering is based on 17,880,745 common shares outstanding, assumes
the no exercise of any Pre-Funded Warrants issued in this offering and excludes: |
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1,517,638 common shares issuable upon
the exercise of stock options outstanding under our 2016 Stock Option Plan, as amended, with a weighted-average exercise price
of $3.65 per share;
|
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3,165,000 common shares issuable upon the exercise of restricted share units outstanding under the
2016 Stock Option Plan, as amended, with a weighted-average exercise price of $1.05 per share; |
| ● | 1,167,392 common
shares reserved for future issuance under our 2016 Stock Option Plan, as amended; |
| ● | 15,047,189 common
shares issuable upon the exercise of outstanding warrants with a weighted average exercise
price of $3.81 per share; |
| ● | 4,347,826 common
shares issuable upon the conversion of the Lind Partners Note; |
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1,739,130 common shares issuable upon the conversion of the Lind Waiver Warrants; |
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931,507 common shares issuable
upon the exercise of outstanding agent’s warrants with a weighted average exercise price of
$4.87 per share; and |
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the 17,400,000 common shares issuable upon the exercise
of the Purchase Warrants to be sold by the Company to investors in a private placement concurrent with this offering. |
RISK
FACTORS
An investment in our securities involves a
high degree of risk. Before investing in our common shares, you should carefully consider the risk factors set forth below and those
described under “Risk Factors” in the documents incorporated by reference herein, including in our most recent Annual Report
on Form 20-F filed with the SEC, together with the other information included in this prospectus supplement and incorporated by reference
herein from our filings with the SEC. If any of such risks or uncertainties occur, our business, financial condition, and operating results
could be materially and adversely affected. Additional risks and uncertainties not currently known to us or that we currently deem immaterial
also may materially and adversely affect our business operations. As a result, the trading price of our common shares could decline and
you could lose all or a part of your investment.
Summary of Risk Factors
The following summarizes risk factors relating
to our financial condition and capital requirements, our business and industry, our reliance on third parties, governmental regulation,
our intellectual property, our locations in Israel and Canada and our international operations and the ownership of our securities. All
of such risks are described in greater detail in our Annual Report on Form 20-F and other filings with the SEC.
Risks Related to Our Financial Condition and
Capital Requirements
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We have a history of operating losses and we may never achieve or maintain profitability. |
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Our auditor has included a “going concern” explanatory paragraph in its report on our
consolidated financial statements for the fiscal year ended December 31, 2021, expressing substantial doubt about our ability to
continue as an ongoing business for the next twelve months. Our consolidated financial statements do not include any adjustments
that may result from the outcome of this uncertainty. If we cannot secure the financing needed to continue as a viable business,
our shareholders may lose some or all of their investment in us. |
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In 2021, our independent registered public accountants identified five material weaknesses in our
internal controls over financial reporting. If we are unable to remediate these material weaknesses, we may not be able to
report our financial results accurately, prevent fraud or file our periodic reports as a public company in a timely manner. In 2020,
our independent registered public accountants identified six material weaknesses in our internal controls over financial reporting,
which have only been partially remediated. |
Risks Related to Our Business and Industry
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We rely on our channel partners to generate a substantial majority of our revenues. If these channel
partners fail to perform or if we cannot enter into agreements with channel partners on favorable terms, our operating results could
be significantly harmed. |
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We are materially dependent on the adoption of our solutions by both the industrial enterprise and
public sector markets, and if end customers in those markets do not purchase our solutions, our revenues will be adversely impacted,
and we may not be able to expand into other markets. |
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We participate in a competitive industry, which may become more competitive. Competitors with greater
resources and significant experience in high-volume product manufacturing may be able to respond more quickly and cost-effectively
than we can to new or emerging technologies and changes in customer requirements. |
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Defects in our products could reduce demand for our products and result in a loss of sales, delay
in market acceptance and injury to our reputation, which would adversely impact our business. |
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If our business does not grow as we expect, or if we fail to manage our growth effectively, our operating
results and business would suffer. |
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The markets for our devices and related accessories may not develop as quickly as we expect, or may
not develop at all. Our dependence on our cellular carrier channel partners and their success in promoting Push to Talk over Cellular
to their client base is key for the success of the business. |
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Our future success is dependent on our ability to create independent brand awareness for our Company
and products with end customers, and our inability to achieve such brand awareness could limit our prospects. |
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We are dependent on the continued services and performance of a concentrated group of senior management
and other key personnel, the loss of any of whom could adversely impact our business. |
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We compete in a rapidly evolving market, and the failure to respond quickly and effectively to changing
market requirements could cause our business and operating results to decline. |
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If we are unable to sell our solutions into new markets, our revenues may not grow. |
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If we are unable to attract, integrate and retain additional qualified personnel, including top technical
talent, our business could be adversely impacted. |
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A security breach or other significant disruption of our information technology systems or those
of our partners, suppliers or manufacturers, caused by cyberattacks or other means, could have a negative impact on our operations,
sales, and operating results. |
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We experience lengthy sales cycles for our products and the delay of an expected large order could
result in a significant unexpected revenue shortfall. |
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We have a limited history of high-volume commercial production of our devices, and we may face manufacturing
capacity constraints. |
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We face risks related to novel Coronavirus (COVID-19) which could significantly disrupt our research
and development, operations, sales, supply chain and financial results. |
Risks Related to our Reliance on Third
Parties
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As we work with multiple vendors for our components, if we fail to adequately forecast demand for
our inventory and supply needs, we could incur additional costs or experience manufacturing delays, which could reduce our gross
margin or cause us to delay or even lose sales. |
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Our dependence on third-party suppliers for key components of our products could delay shipment of
our products and reduce our sales. |
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Because we rely on a small number of channel partners/customers for a large portion of our revenue,
the loss of any of these customers would have a material adverse effect on our operating results and cash flows. |
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If dedicated public safety LTE networks are not deployed at the rate we anticipate or at all, demand
for our solutions may not grow as expected. |
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The application development ecosystem supporting our devices and related accessories is new and evolving. |
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Failure of our suppliers, subcontractors, distributors, resellers, and representatives to use acceptable
legal or ethical business practices, or to fail for any other reason, could negatively impact our business. |
| ● | Our
products are subject to risks associated with sourcing, manufacturing and shipping in non-U.S.
and non-Canadian countries including China. |
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The nature of our business may result in undesirable press coverage or other negative publicity,
which would adversely impact our brand identity, future sales and results of operations. |
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Changes in the availability of federal funding to support local public safety or other public sector
efforts could impact our opportunities with public sector end customers. |
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Economic uncertainties or downturns, or political changes, could limit the availability of funds
available to our customers and potential customers, which could significantly adversely impact our business. |
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Natural or man-made disasters and other similar events may significantly disrupt our business, and
negatively impact our operating results and financial condition. |
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We are exposed to risks associated with strategic acquisitions and investments. |
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We could be adversely impacted by changes in accounting standards and subjective assumptions, estimates
and judgments by management related to complex accounting matters. |
Risks Related to Government Regulation
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We are subject to anti-corruption, anti-bribery, anti-money laundering, economic sanctions, export
control, and similar laws. Non- compliance with such laws can subject us to criminal or civil liability and harm our business, revenues,
financial condition and results of operations. |
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We are subject to a wide range of product regulatory and safety, consumer, worker safety and environmental
laws and regulations. |
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Changes in laws and regulations concerning the use of telecommunication bandwidth could increase
our costs and adversely impact our business. |
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We are subject to a wide range of privacy and data security laws, regulations and other legal obligations. |
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The effects of the Tax Cuts and Jobs Act on our business have not yet been fully analyzed and could
harm our results of operations. |
Risks Related to Our Intellectual Property
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If we are unable to successfully protect our intellectual property, our competitive position may
be harmed. |
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Others may claim that we infringe on their intellectual property rights, which may result in costly
and time-consuming litigation and could delay or otherwise impair the development and commercialization of our products. |
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Our use of open source software could subject us to possible litigation or otherwise impair the development
of our products. |
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Our inability to obtain and maintain any third-party license required to develop new products and
product enhancements could seriously harm our business, financial condition and results of operations. |
Risks Related to our Locations in Israel and
Canada and Our International Operations
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Conditions in Israel could materially and adversely affect our business. |
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Because we are a corporation incorporated in British Columbia and some of our directors and officers
are resident in Canada, it may be difficult for investors in the United States to enforce civil liabilities against us based solely
upon the federal securities laws of the United States. Similarly, it may be difficult for Canadian investors to enforce civil liabilities
against our directors and officers residing outside of Canada. |
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We have operations in China, which exposes us to risks inherent in doing business there. |
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The impact of potential changes in customs, tariffs, and trade policies in the United States and
the potential corresponding actions by other countries, including recent trade initiatives announced by the U.S. presidential administration
against China, in which we do business could adversely impact our financial performance. |
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Operating outside of the United States presents specific risks to our business, and we have substantial
operations outside of the United States. |
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Foreign currency fluctuations may reduce our competitiveness and sales in foreign markets. |
Risks Related to Ownership of Our Securities
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We may require additional capital to fund our business and support our growth, and our inability
to generate and obtain such capital on acceptable terms, or at all, could harm our business, operating results, financial condition
and prospects. In addition, such funding may dilute our existing shareholders. |
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We expect that our stock price will fluctuate significantly, and you may not be able to resell your
shares at or above the public offering price you paid for your shares. |
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The conversion of the Lind Partner Note and the exercise of the Lind Partner Warrant or future sales
of our common shares may further dilute the common shares and adversely impact the price of our common shares. |
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If we are not able to comply with the applicable continued listing requirements or standards of Nasdaq,
Nasdaq could delist our common shares and warrants which could negatively impact the price of our securities and an investor’s
ability to sell them. |
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If we fail to maintain proper and effective internal controls, our ability to produce accurate financial
statements on a timely basis could be impaired. |
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We will continue to incur significant increased costs as a result of operating as a public company
in the United States, and our management will be required to devote substantial time to new compliance initiatives. |
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Because we are a foreign private issuer and are exempt from certain Nasdaq corporate governance standards
applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer. |
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We may lose our foreign private issuer status in the future, which could result
in significant additional costs and expenses. |
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Our executive officers and directors, and their affiliated entities, along with
our two other largest stockholders, own a significant percentage of our stock and will be able to exert significant control over
matters subject to stockholder approval. |
Risks Related to this Offering
Our management will have broad discretion
in the use of the net proceeds from this offering and may not use them effectively.
Our management will have broad discretion in
the application of the net proceeds from this offering, and our shareholders will not have the opportunity as part of their investment
decision to assess whether the net proceeds are being used appropriately. Because of the number and variability of factors that will
determine our use of the net proceeds from this offering, their ultimate use may vary substantially from their currently intended use.
The failure by our management to apply these funds effectively could harm our business. See “Use of Proceeds” on page S-18
of this prospectus supplement for a description of our proposed use of proceeds from this offering.
You will experience immediate and substantial
dilution in the net tangible book value per common share you purchase.
The offering price per common share being offered
is substantially higher than the pro forma net tangible book value per share of our outstanding common shares. As a result, the investor
purchasing common shares in this offering will incur immediate increase of $0.011 per share, after giving further effect to the sale by
us of all the common shares offered hereby and after deducting the Placement Agent’s fees and estimated offering expenses payable
by us. See “Dilution” on page S-19 of this prospectus supplement for a more detailed discussion of the dilution you will incur
if you purchase shares in this offering.
In addition, in order to raise additional capital,
we may in the future offer additional common shares, warrants or other securities (whether or not convertible into, or exercisable or
exchangeable for, our common shares) at prices that may not be the same as the price of the securities being sold in this offering. We
may not be able to sell common shares or other securities in any subsequent offering at a price per share that is equal to or greater
than the price per common share paid by investors in this offering, and investors purchasing our securities in the future could have
rights superior to existing shareholders. Sales of a substantial number of common shares, or other securities convertible into, or exercisable
or exchangeable for, our common shares) in the public market or the perception that such sales might occur could materially adversely
affect the market price of our common shares, and would result in dilution of your ownership interest in the Company. Because our decision
to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or
estimate the amount, timing or nature of our future offerings. Accordingly, our shareholders and warrant holders bear the risk that our
future offerings will reduce the market price of our common shares and dilute their ownership interest in the Company.
In addition, we are issuing Purchase Warrants
in a private placement concurrent with this offering and are issuing 17,400,000 Purchase Warrants in the private placement. The exercise
of the Purchase Warrants and the Purchase Warrant sold in the private placement and any future sales of the underlying shares into the
public market, or the perception that such sales may occur, could adversely affect the price of our common shares.
The number of common shares sold in this
offering could cause the price of our common shares to decline.
The common shares offered and sold hereby (including
the common shares underlying any Pre-Funded Warrants sold in this offering) represent approximately 97.0% of our outstanding common shares
as of October 11, 2022. The common shares to be issued in this offering in the public market, or any future sales of a substantial number
of our common shares in the public market, or the perception that such sales may occur, could adversely affect the price of our common
shares on the Nasdaq Capital Market. We cannot predict the effect, if any, that market sales of those common shares or the availability
of those common shares for sale will have on the market price of our common shares.
The price of our common shares may be adversely
affected by the future issuance and sale of our common shares or other equity securities.
We cannot predict the size of future issuances
or sales of our common shares or other equity securities, or the effect, if any, that such issuances or sales may have on the market
price of our common shares. The issuance and sale of substantial amounts of common shares or other equity securities or announcement
that such issuances and sales may occur, could adversely affect the market price of our common shares.
Warrants are speculative in nature.
The Pre-Funded Warrants offered in this offering
do not confer any rights of common share ownership on their holders, such as voting rights or the right to receive dividends, but rather
merely represent the right to acquire common shares at a fixed price. Specifically, commencing on the date of issuance, holders of the
Pre-Funded Warrants may exercise their right to acquire the common shares and pay an exercise price of $0.01 per share from the date
of issuance. The Pre-Funded Warrants have no expiration date.
There is no public market for the Pre-Funded
Warrants being offered in this offering.
There is no established public trading market
for the Pre-Funded Warrants being offered in this offering, and we do not expect a market to develop. In addition, we do not intend to
apply to list the Pre-Funded Warrants on any national securities exchange or other nationally recognized trading system, including The
Nasdaq Capital Market. Without an active trading market, the liquidity of the Pre-Funded Warrants will be limited.
A substantial number of common shares may
be sold in the market following this offering, which may depress the market price for our common stock.
Following this offering, a large number of our
common shares issuable upon the upon exercise of the Pre-Funded Warrants sold in this offering and the Purchase Warrants sold in the
concurrent private placement may be sold in the market, which may depress the market price of our common shares. We have agreed to register
the common shares issuable upon the exercise of the Purchase Warrants within 45 days after the closing of this offering. Sales of a substantial
number of our common shares in the public market following this offering could cause the market price of our common shares to decline.
A substantial majority of the outstanding common shares are, and the common shares sold in this offering upon issuance will be, freely
tradable without restriction or further registration under the Securities Act, unless owned or purchased by our “affiliates”
as that term is defined in Rule 144 under the Securities Act.
We could lose our listing on the Nasdaq
Capital Market if the closing bid price of our common shares does not return to above $1.00 for ten consecutive days during the 180 days
ending February 22, 2023. The loss of the Nasdaq listing would make our common shares significantly less liquid and would affect its
value.
On September 1, 2022, we announced that the Company
had received a notification letter dated August 26, 2022 from the Listing Qualifications Department of The Nasdaq Stock Market LLC, notifying
the Company that it is currently not in compliance with the minimum bid price requirement set forth under Nasdaq Listing Rule 5550(a)(2),
resulting from the fact that the closing bid price of the Company’s common shares was below $1.00 per share for a period
of thirty consecutive business days.
Pursuant to Nasdaq Listing Rule 5810(c)(3)(A),
the Company has a compliance period of 180 calendar days, or until February 22, 2023, to regain compliance with Nasdaq’s minimum
bid price requirement. If at any time during the Compliance Period, the closing bid price per share of the Company’s common shares
is at least $1.00 for a minimum of ten consecutive business days, Nasdaq will provide the Company a written confirmation of compliance
and the matter will be closed. The Company is currently considering a number of alternatives to boost its minimum bid price but has not
yet reached a decision on a course of action. We will continue to monitor the closing bid price of our common shares and seek to regain
compliance with the Minimum Bid Price Requirement within the allotted compliance period; however, there can be no assurance that we will
regain compliance with the Minimum Bid Requirement or that if we do appeal a subsequent delisting determination, that such appeal would
be successful.
If the common shares are not listed on Nasdaq
at any time after this offering, we could face significant material adverse consequences, including:
| |
● |
a limited availability of market quotations for our
securities; |
| |
● |
a determination that the common shares are a “penny
stock” which will require brokers trading in our shares to adhere to more stringent rules, possibly resulting in a reduced
level of trading activity in the secondary trading market for the common shares; |
| |
● |
a limited amount of news and analyst coverage for
our Company; and |
| |
● |
a decreased ability to issue additional securities
or obtain additional financing in the future. |
Upon delisting from the Nasdaq Capital Market,
our common shares would be traded over-the-counter inter-dealer quotation system, more commonly known as the OTC. OTC transactions involve
risks in addition to those associated with transactions in securities traded on the securities exchanges, such as the Nasdaq Capital
Market (“Exchange-listed Stocks”). Many OTC stocks trade less frequently and in smaller volumes than Exchange-listed Stocks.
Accordingly, our stock would be less liquid than it would be otherwise. Also, the values of OTC stocks are often more volatile than Exchange-listed
Stocks. Additionally, institutional investors are usually prohibited from investing in OTC stocks, and it might be more challenging to
raise capital when needed.
In addition, if our common shares are delisted,
your ability to transfer or sell your common shares or the common shares underlying the Pre-Funded Warrants may be limited and the value
of those securities will be materially adversely affected.
If our common shares become subject to
the penny stock rules, it may be more difficult to sell our common shares.
The SEC has adopted rules that regulate
broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of
less than $5.00 (other than securities registered on certain national securities exchanges or authorized for quotation on certain automated
quotation systems, provided that current price and volume information with respect to transactions in such securities is provided by
the exchange or system). The OTC Bulletin Board does not meet such requirements and if the price of our common shares is less than $5.00
and our common shares are no longer listed on a national securities exchange such as Nasdaq, our stock may be deemed a penny stock. The
penny stock rules require a broker-dealer, at least two business days prior to a transaction in a penny stock not otherwise exempt
from those rules, to deliver to the customer a standardized risk disclosure document containing specified information and to obtain from
the customer a signed and dated acknowledgment of receipt of that document. In addition, the penny stock rules require that prior to
effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive: (i) the purchaser’s written acknowledgment of the
receipt of a risk disclosure statement; (ii) a written agreement to transactions involving penny stocks; and (iii) a signed and dated
copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary
market for our common shares, and therefore shareholders may have difficulty selling their shares.
The market for our common shares may not provide
investors with adequate liquidity.
Liquidity of the market for our common shares
depends on a number of factors, including our financial condition and operating results, the number of holders of our common shares,
the market for similar securities and the interest of securities dealers in making a market in the securities. We cannot predict the
extent to which investor interest in the Company will maintain a trading market in our common shares, or how liquid that market will
be. If an active market is not maintained, investors may have difficulty selling common shares that they hold.
USE
OF PROCEEDS
Based upon an offering price of $0.23 per common share
for 15,810,000 common share units and an offering price of $0.22 per prefunded warrant for 1,590,000 pre-funded warrant units, we estimate
that we will receive net proceeds from this offering, after deducting the Placement Agent fee of $279,027, and the estimated offering
expenses of $185,871 payable by us, of approximately $3,521,202
We plan to use the net proceeds we receive from
this offering as follows:
| | |
Use of Net
Proceeds
Approximately
(in $000’s) |
| Repayment of Lind Senior Secured Convertible Promissory Note | |
$ | 0 | |
| Working Capital | |
$ | 2,113 | |
| Growth Strategies | |
$ | 704 | |
| Research and Development | |
$ | 352 | |
| Sales and Marketing | |
$ | 352 | |
| Total | |
$ | 3,521 | |
The foregoing represents our current intentions
based upon our present plans and business conditions to use and allocate the net proceeds of this offering. Our management, however,
will have flexibility and discretion to apply the net proceeds of this offering. If an unforeseen event occurs or business conditions
change, we may use the proceeds of this offering differently than as described in this prospectus supplement. To the extent that the
net proceeds we receive from this offering are not immediately used for the above purposes, we intend to invest our net proceeds in short-term,
interest-bearing bank deposits or debt instruments.
CAPITALIZATION
The
following table sets forth our capitalization as of June 30, 2022:
| ● | on
an actual as-reported basis; |
| |
● |
on
a pro forma basis to reflect, subsequent to June 30, 2022: (i) the monthly repayments in
the form of 2,670,221 common shares of the Lind Partners Note, (ii) the issuance of
60,000 shares to suppliers and others; and (iii) the conversion of 30,000 restricted stock
units (“RSU’s”) into shares; and |
| ● | on
a pro forma as adjusted basis to reflect the issuance and sale of 15,810,000 common shares
by us at an offering price of $0.23 and 1,590,000 Pre-Funded Warrant at an offering
price of $0.22 per common share, after deducting the estimated Placement Agent fees and the
estimated offering expenses payable by us in this offering. |
| |
|
Actual As of
June 30,
2022 |
|
Pro Forma |
|
Pro Forma as
Adjusted
for Offering |
| Cash and cash equivalents |
|
$ |
4,054,420 |
|
|
$ |
4,054,420 |
|
|
$ |
7,575,656 |
|
| Warrant Liability (Note 2, Note 5) |
|
$ |
4,209,769 |
|
|
$ |
4,209,769 |
|
|
$ |
5,994,053 |
|
| Lease Obligations (short and long term) |
|
$ |
881,505 |
|
|
$ |
881,505 |
|
|
$ |
881,505 |
|
| Total liabilities not included in capitalization |
|
$ |
5,091,274 |
|
|
$ |
5,091,274 |
|
|
$ |
6,875,558 |
|
| Total Outstanding Long-Term Debt |
|
$ |
1,591,680 |
|
|
$ |
663,200 |
|
|
$ |
663,200 |
|
| Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
| Common shares, no par value: unlimited shares authorized; 15,120,524 shares, actual; 17,880,745 shares pro forma, 33,690,745 shares pro forma as adjusted (Note 3, Note 5) |
|
|
68,478,827 |
|
|
|
70,239,549 |
|
|
|
72,184,536 |
|
| Preferred shares, no par value, unlimited shares authorized, 0 shares actual 0 shares, as adjusted |
|
|
|
|
|
|
|
|
|
|
|
|
| Reserves |
|
$ |
12,635,779 |
|
|
$ |
12,635,779 |
|
|
$ |
12,635,779 |
|
| Accumulated Other Comprehensive Income (loss) |
|
$ |
(37,221 |
) |
|
$ |
(37,221 |
) |
|
$ |
(37,221 |
) |
| Shareholders’ Deficit (Note 4) |
|
$ |
(70,702,409 |
) |
|
$ |
(70,979,131 |
) |
|
$ |
(71,187,216 |
) |
| Total Shareholders’ Equity (1) |
|
$ |
10,374,976 |
|
|
$ |
11,858,976 |
|
|
$ |
13,595,928 |
|
| Total Capitalization |
|
$ |
11,966,656 |
|
|
$ |
12,522,176 |
|
|
$ |
14,259,128 |
|
| (1) |
The number of shares of our common shares to be outstanding after this
offering is based on 17,880,745 common shares outstanding and excludes: |
| ● | 1,517,638
common shares issuable upon the exercise of stock options outstanding under our 2016 Stock
Option Plan as amended, with a weighted-average exercise price of $3.86 per share; |
| ● | 3,165,000
common shares issuable upon the exercise of restricted share units outstanding under the
2016 Stock Option Plan, as amended, with a weighted-average exercise price of $1.05 per share; |
| ● | 1,167,392
common shares reserved for future issuance under our 2016 Stock Option Plan; |
| ● | 15,047,189
common shares issuable upon the exercise of outstanding warrants with a weighted average
exercise price of $3.81 per share; |
| ● | 4,347,826
common shares issuable upon the conversion of the Lind Partners Note; |
| |
● |
1,739,130
common shares issuable upon the conversion of the Lind Waiver Warrants; |
| ● | 931,507
common shares issuable upon the exercise of outstanding agent’s warrants with a weighted
average exercise price of $4.87 per share; and |
| ● | the
17,400,000 common shares issuable upon the exercise of the Purchase Warrants to be sold by
the Company to investors in a private placement concurrent with this offering. |
| (2) |
Warrant Liability: While the company has not prepared a valuation report to determine
the fair value of the new warrants to be issued in this offering nor to determine the change in fair value, if any, of the existing outstanding
warrants, the company performed a preliminary valuation using the Black-Scholes option pricing model to determine a preliminary estimate
for the new warrants’ fair value of $1,784,284 and the change in fair value of the Lind warrants that is to be determined. |
| |
|
| (3) |
Share
Capital: As noted in Note 2 above, the company has not prepared a valuation
report to determine the fair value of the new warrants to be issued and nor to determine the change in fair value, if any, of the existing
outstanding warrants. As the warrants are treated as a liability, the residual value method was utilized to allocate the total proceeds
of the issuance. The residual value to be allocated to the share capital is $1,945,037. Approximately 60.0% of the share issuance costs
are also shown in the common share capital amount with the excess allocated to transaction costs as an expense. |
| |
|
| (4) |
Shareholders’
Deficit: The share issuance costs were bi-furcated proportionally based on the fair value of the
warrant and of the share capital, which was estimated by management as approximately 40.0% to the
warrants and approximately 60.0% to the share capital. Approximately 40.0% of the share issuance
costs were allocated to the shareholders’ deficit. Once the valuation report is prepared, the
share issuance costs will be bi-furcated between the exact proportion between the share capital and
as transaction cost expense. |
| (5) |
The residual value method is utilized to allocate the total proceeds of the
issuance for any Pre-Funded Warrants. |
DILUTION
If you invest in
our common shares in this offering, your interest will increase to the extent of the difference between the public offering price
per share of the common shares and the pro-forma as adjusted net tangible book value per share of common share immediately after
this offering.
Our historical net tangible
book value as of June 30, 2022 was $4,910,515, or $0.325 per common share. Our historical net tangible book value is the amount of our
total tangible assets (Total assets less Intangible Assets and Goodwill) less our liabilities. Historical net tangible book value per
common share is our historical net tangible book value divided by the number of outstanding common shares as of June 30, 2022.
The pro forma net tangible
book value of our common shares as of June 30, 2022 was $6,394,515, or $0.358 per common share. Pro forma net tangible book value per
common share represents our total tangible assets less our total liabilities, divided by the number of outstanding common shares, after
giving effect to the pro forma adjustments referenced under “Capitalization.”
After giving effect to the
sale of 15,810,000 common shares that we are offering at an offering price of $0.23 per common share and 1,590,000 pre-funded warrants
at $0.22 per unit, after deducting Placement Agent fees and estimated offering expenses payable by us, our net tangible book value on
a pro forma as adjusted basis as of June 30, 2022 would have been $0.241 per common share. This amount represents an immediate decrease
in net tangible book value of $0.117 per common share to our existing shareholders and an immediate increase of $0.011 per common share
to new investors purchasing common shares in this offering. We determine dilution by subtracting the pro forma as adjusted net tangible
book value per share after this offering from the amount of cash that a new investor paid for a common share.
The following table illustrates this dilution:
| Public offering price per common share |
|
$ |
0.23 |
|
| Pro-forma net tangible book value per common share as of June 30, 2022(1) |
|
$ |
0.358 |
|
| Increase per share attributable to this offering(2) |
|
$ |
0.128 |
|
| Pro-Forma as adjusted net tangible book value per common share after this offering(2) |
|
$ |
0.241 |
|
| Increase in value per share to new investors in this offering(3) |
|
$ |
0.011 |
|
| (1) |
Pro-forma as adjusted net tangible book value is calculated from the following items on the June 30, 2022 (unaudited) financial statements: |
| Pro-forma Shareholders’ Equity |
|
$ |
11,858,976 |
|
| Less: Intangible Assets |
|
$ |
5,464,461 |
|
| Pro-forma net tangible book value at June 30, 2022 |
|
$ |
6,394,515 |
|
| Pro-forma net tangible book value per common share at June 30, 2022 |
|
$ |
0.358 |
|
| Pro-forma as adjusted net tangible book value at June 30, 2022 |
|
$ |
8,131,467 |
|
| Number of common shares outstanding at June 30, 2022 |
|
|
15,120,524 |
|
| Total pro-forma common shares outstanding at June 30, 2022 |
|
|
17,880,745 |
|
| Total pro-forma as adjusted common shares at June 30, 2022 |
|
|
33,690,745 |
|
| Pro-forma as adjusted net tangible book value per common share at June 30, 2022 |
|
$ |
0.241 |
|
| (2) |
Increase per common share attributable to this offering at June 30, 2022 is as follows |
| Number of common shares to be issued in the offering |
|
|
15,810,000 |
|
| Total pro-forma common shares outstanding at June 30, 2022 |
|
|
17,880,745 |
|
| Total pro-forma as adjusted common shares outstanding at June 30, 2022 |
|
|
33,690,745 |
|
| Pro-forma net tangible book value per common share at June 30, 2022 |
|
$ |
0.358 |
|
| Pro-forma as adjusted net tangible book value per common share at June 30, 2022 per (1) above |
|
$ |
0.241 |
|
| Decrease per common share attributable to this offering |
|
$ |
0.117 |
|
| (3) |
Dilution per common share to new investors |
| Offering price per common share |
|
$ |
0.23 |
|
| Pro-forma as adjusted net tangible book value per common share at June 30, 2022 |
|
$ |
0.241 |
|
| Increase per common share to new investors in this offering |
|
$ |
0.011 |
|
The foregoing discussion
and table do not take into account further dilution to new investors that could occur upon the exercise of all currently outstanding
warrants having a per share exercise or conversion price less than the per share offering price to the public in this offering.
PRIVATE PLACEMENT TRANSACTION
Concurrently with the sale of common shares and/or
Pre-Funded Warrants in this offering, we will issue to the investors in this offering Purchase Warrants to purchase up to an aggregate
of 17,400,000 common shares at an exercise price equal to $0.23 per share, subject to adjustment in certain cases described therein.
The Purchase Warrants and the common shares issuable
upon the exercise of such warrants are not being registered under the Securities Act, are not being offered pursuant to this prospectus
supplement and the accompanying prospectus and are being offered pursuant to the exemption provided in Section 4(a)(2) under the Securities
Act and Rule 506(b) promulgated thereunder. Accordingly, purchasers may only sell common shares issued upon exercise of the Purchase
Warrants pursuant to an effective registration statement under the Securities Act covering the resale of those shares, an exemption under
Rule 144 under the Securities Act or another applicable exemption under the Securities Act.
Exercisability. The Purchase Warrants
are exercisable for a period of five years commencing on the date of issuance. The Purchase Warrants will be exercisable, at the option
of each holder, in whole or in part by delivering to us a duly executed exercise notice with payment in full in immediately available
funds for the number of common shares purchased upon such exercise. If a registration statement registering the resale of the common
shares underlying the Purchase Warrants under the Securities Act is not effective or available at any time after the four month anniversary
of the date of issuance of the Purchase Warrants, the holder may, in its sole discretion, elect to exercise the Purchase Warrant through
a cashless exercise, in which case the holder would receive upon such exercise the net number of common shares determined according to
the formula set forth in the Purchase Warrant.
Exercise Limitation. A holder will
not have the right to exercise any portion of the Purchase Warrant if the holder (together with its affiliates) would beneficially own
in excess of 4.99% (or, upon election of the holder, 9.99%) of the number of our common shares outstanding immediately after giving effect
to the exercise, as such percentage of beneficial ownership is determined in accordance with the terms of the Purchase Warrants. However,
any holder may increase or decrease such percentage, but not in excess of 9.99%, provided that any increase will not be effective until
the 61st day after such election.
Exercise Price Adjustment. The
exercise price of the Purchase Warrants is subject to appropriate adjustment in the event of certain stock dividends and distributions,
stock splits, stock combinations, reclassifications or similar events affecting our common shares and also upon any distributions of
assets, including cash, stock or other property to our stockholders. In addition, the exercise price is also subject to an anti-dilution
adjustment if we issue or are deemed to have issued securities at a price lower than the then applicable exercise price.
The Purchase Warrants require “buy-in”
payments to be made by us for failure to deliver any shares of common stock issuable upon exercise.
Exchange Listing. There is no established
trading market for the Purchase Warrants and we do not expect a market to develop. In addition, we do not intend to apply for the listing
of the Purchase Warrants on any national securities exchange or other trading market.
Fundamental Transactions. If a
fundamental transaction occurs, then the successor entity will succeed to, and be substituted for us, and may exercise every right and
power that we may exercise and will assume all of our obligations under the Purchase Warrants with the same effect as if such successor
entity had been named in the warrant itself. If holders of our common shares are given a choice as to the securities, cash or property
to be received in a fundamental transaction, then the holder shall be given the same choice as to the consideration it receives upon
any exercise of the Purchase Warrant following such fundamental transaction. In addition, the successor entity, at the request of warrant
holders, will be obligated to purchase any unexercised portion of the Purchase Warrants in accordance with the terms of such warrants.
DESCRIPTION
OF THE SECURITIES BEING OFFERED
Common Shares
A description of the common shares we are offering
pursuant to this prospectus supplement is set forth under the heading “Description of Share Capital,” starting on page 11
of the accompanying prospectus. As of October 11, 2022, we had 17,880,745 common shares outstanding.
Pre-Funded Warrants
The following summary of certain terms and provisions
of the Pre-Funded Warrants that are being offered hereby is not complete and is subject to, and qualified in its entirety by the provisions
of, the Pre-Funded Warrant. Prospective investors should carefully review the terms and provisions of the form of Pre-Funded Warrant
for a complete description of the terms and conditions of the Pre-Funded Warrants.
Purchase. The term “pre-funded”
refers to the fact that the purchase price of our common shares in this offering includes almost the entire exercise price that will
be paid under the Pre-Funded Warrants, except for a nominal remaining exercise price of $0.01. The purpose of the Pre-Funded Warrants
is to enable investors that may have restrictions on their ability to beneficially own more than 4.99% (or, upon their election of the
holder, 9.99%) of our outstanding common shares following the consummation of this offering the opportunity to invest capital into the
Company without triggering their ownership restrictions, by receiving Pre-Funded Warrants in lieu of our common shares which would result
in such ownership of more than 4.99% (or 9.99%), and receive the ability to exercise their option to purchase the shares underlying the
Pre-Funded Warrants at such nominal price at any time at a later date.
Duration. The Pre-Funded Warrants
offered hereby will entitle the holders thereof to purchase our common shares at a nominal exercise price of $0.01 per share, commencing
immediately on the date of issuance and until the Pre-Funded Warrant is fully exercised. The Pre-Funded Warrants have no expiration date.
Exercise Limitation. A holder will
not have the right to exercise any portion of the Pre-Funded Warrant if the holder (together with its affiliates) would beneficially
own in excess of 4.99% (or, upon election of the holder, 9.99%) of the number of shares of our common shares outstanding immediately
after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Pre-Funded Warrants.
However, any holder may increase or decrease such percentage, provided that any increase will not be effective until the 61st day
after such election.
Exercise Price. The Pre-Funded Warrants
will have an exercise price of $0.01 per share. The exercise price is subject to appropriate adjustment in the event of certain stock
dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting our common shares and also
upon any distributions of assets, including cash, stock or other property to our stockholders.
Transferability. Subject to applicable
laws, the Pre-Funded Warrants may be offered for sale, sold, transferred or assigned without our consent.
Exchange Listing. There is no established
trading market for the Pre-Funded Warrants and we do not expect a market to develop. In addition, we do not intend to apply for the listing
of the Pre-Funded Warrants on any national securities exchange or other trading market. Without an active trading market, the liquidity
of the Pre-Funded Warrants will be limited.
Fundamental Transactions. If a fundamental
transaction (as defined in the Pre-Funded Warrant) occurs, then the successor entity will succeed to, and be substituted for us, and
may exercise every right and power that we may exercise and will assume all of our obligations under the Pre-Funded Warrants with the
same effect as if such successor entity had been named in the Pre-Funded Warrant itself. If holders of our common shares are given a
choice as to the securities, cash or property to be received in a fundamental transaction, then the holder of the Pre-Funded Warrant
shall be given the same choice as to the consideration it receives upon any exercise of the Pre-Funded Warrant following such fundamental
transaction.
Rights as a Stockholder. Except as otherwise
provided in the Pre-Funded Warrants or by virtue of such holder’s ownership of our common shares, the holder of a Pre-Funded Warrants
does not have the rights or privileges of a holder of our common shares, including any voting rights, until the holder exercises the
Pre-Funded Warrant.
CERTAIN
TAX CONSIDERATIONS
Material United States Federal Income Tax
Consequences to U.S. Holders
The following discussion describes the material
United States federal income tax consequences to a United States Holder (as defined herein) of the purchase, ownership and disposition
of our voting shares as of the date hereof. This discussion deals only with voting shares that are held as capital assets by a United
States Holder. In addition, the discussion set forth below is applicable only to United States Holders (i) who are residents of the United
States for purposes of the current United States—Canada Income Tax Convention (the “Treaty”), (ii) whose voting shares
are not, for purposes of the Treaty, effectively connected with a permanent establishment in Canada and (iii) who otherwise qualify for
the full benefits of the Treaty.
As used herein, the term “United States
Holder” means a beneficial owner of our voting shares that is, for United States federal income tax purposes, any of the following:
| ● | an
individual citizen or resident of the United States; |
| ● | a
corporation (or other entity treated as a corporation for United States federal income tax
purposes) created or organized in or under the laws of the United States, any state thereof
or the District of Columbia; |
| ● | an
estate the income of which is subject to United States federal income taxation regardless
of its source; or |
| |
● |
a trust if it (1) is subject to the primary supervision of a court
within the United States and one or more United States persons have the authority to control all substantial decisions of the trust
or (2) has a valid election in effect under applicable United States Treasury regulations to be treated as a United States person. |
This discussion is based upon provisions of the
Internal Revenue Code of 1986, as amended (the “Code”), and regulations, rulings and judicial decisions thereunder as of
the date hereof. Those authorities may be changed, perhaps retroactively, so as to result in United States federal income tax consequences
different from those summarized below.
This discussion does not represent a detailed
description of the United States federal income tax consequences applicable to you if you are subject to special treatment under the
United States federal income tax laws, including if you are:
| ● | a
dealer in securities or currencies; |
| ● | a
financial institution; |
| ● | a
regulated investment company; |
| ● | a
real estate investment trust; |
| ● | a
tax-exempt organization; |
| ● | a
person holding our voting shares as part of a hedging, integrated or conversion transaction,
a constructive sale or a straddle; |
| ● | a
trader in securities that has elected the mark-to-market method of tax accounting for your
securities; |
| ● | a
person liable for alternative minimum tax; |
| ● | a
person who owns or is deemed to own 10% or more of our stock (by vote or value); |
| ● | a
partnership or other pass-through entity for United States federal income tax purposes; |
| ● | a
person required to accelerate the recognition of any item of gross income with respect to
our voting shares as a result of such income being recognized on an applicable financial
statement; or |
| ● | a
person whose “functional currency” is not the United States dollar. |
If a partnership (or other entity treated as
a partnership for United States federal income tax purposes) holds our voting shares, the tax treatment of a partner will generally depend
upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding our voting shares,
you should consult your tax advisors.
This discussion does not contain a detailed description
of all the United States federal income tax consequences to you in light of your particular circumstances and does not address the Medicare
tax on net investment income or the effects of any state, local or non- United States tax laws. If you are considering the purchase of
our voting shares, you should consult your own tax advisors concerning the particular United States federal income tax consequences to
you of the purchase, ownership and disposition of our voting shares, as well as the consequences to you arising under other United States
federal tax laws and the laws of any other taxing jurisdiction.
This discussion assumes that we are not, and
will not become, a passive foreign investment company, as described below.
Taxation of Dividends
The gross amount of distributions on the voting
shares (including any amounts withheld to reflect Canadian withholding taxes) will be taxable as dividends to the extent paid out of
our current or accumulated earnings and profits, as determined under United States federal income tax principles. To the extent that
the amount of any distribution exceeds our current and accumulated earnings and profits for a taxable year, the distribution will first
be treated as a tax-free return of capital, causing a reduction in the tax basis of the voting shares, and to the extent the amount of
the distribution exceeds your tax basis, the excess will be taxed as capital gain recognized on a sale or exchange. We do not, however,
expect to determine earnings and profits in accordance with United States federal income tax principles. Therefore, you should expect
that a distribution will generally be treated as a dividend.
Any dividends that you receive (including any
withheld taxes) will be includable in your gross income as ordinary income on the day actually or constructively received by you. Such
dividends will not be eligible for the dividends received deduction allowed to corporations under the Code.
With respect to non-corporate United States Holders,
certain dividends received from a qualified foreign corporation may be subject to reduced rates of taxation. A qualified foreign corporation
includes a non-U.S. corporation that is eligible for the benefits of a comprehensive income tax treaty with the United States which the
United States Treasury Department determines to be satisfactory for these purposes and which includes an exchange of information provision.
The United States Treasury Department has determined that the Treaty meets these requirements, but we may not be eligible for the benefits
of the Treaty. However, a non-U.S. corporation is also treated as a qualified foreign corporation with respect to dividends paid by that
corporation on shares that are readily tradable on an established securities market in the United States. United States Treasury Department
guidance indicates that our voting shares, which will be listed on the NASDAQ, will be readily tradable on an established securities
market in the United States. There can be no assurance, however, that our voting shares will be considered readily tradable on an established
securities market in later years. Non-corporate holders that do not meet a minimum holding period requirement during which they are not
protected from the risk of loss or that elect to treat the dividend income as “investment income” pursuant to Section 163(d)(4)
of the Code will not be eligible for the reduced rates of taxation regardless of our status as a qualified foreign corporation. In addition,
the rate reduction will not apply to dividends if the recipient of a dividend is obligated to make related payments with respect to positions
in substantially similar or related property. This disallowance applies even if the minimum holding period has been met. You should consult
your own tax advisors regarding the application of these rules to your particular circumstances.
The amount of any dividend paid in Canadian dollars
will equal the United States dollar value of the Canadian dollars received calculated by reference to the exchange rate in effect on
the date the dividend is received by you, regardless of whether the Canadian dollars are converted into United States dollars. If the
Canadian dollars received as a dividend are converted into United States dollars on the date they are received, you generally will not
be required to recognize foreign currency gain or loss in respect of the dividend income. If the Canadian dollars received as a dividend
are not converted into United States dollars on the date of receipt, you will have a basis in the Canadian dollars equal to their United
States dollar value on the date of receipt. Any gain or loss realized on a subsequent conversion or other disposition of the Canadian
dollars will be treated as United States source ordinary income or loss.
Subject to certain conditions and limitations,
Canadian withholding taxes on dividends may be treated as foreign taxes eligible for credit against your United States federal income
tax liability. For purposes of calculating the foreign tax credit, dividends paid on the voting shares will be treated as income from
sources outside the United States and will generally constitute passive category income. However, in certain circumstances, if you have
held the voting shares for less than a specified minimum period during which you are not protected from risk of loss, or are obligated
to make payments related to the dividends, you will not be allowed a foreign tax credit for Canadian withholding taxes imposed on dividends
paid on the voting shares. If you do not elect to claim a United States foreign tax credit, you may instead claim a deduction for Canadian
income tax withheld, but only for a taxable year in which you elect to do so with respect to all foreign income taxes paid or accrued
in such taxable year. The rules governing the foreign tax credit are complex. You are urged to consult your tax advisors regarding the
availability of the foreign tax credit under your particular circumstances.
Passive Foreign Investment Company
We do not believe that we are, for United States
federal income tax purposes, a passive foreign investment company (a “PFIC”), and we expect to operate in such a manner so
as not to become a PFIC. If, however, we are or become a PFIC, you could be subject to additional United States federal income taxes
on gain recognized with respect to the voting shares and on certain distributions, plus an interest charge on certain taxes treated as
having been deferred under the PFIC rules.
Taxation of Capital Gains
For United States federal income tax purposes,
you will recognize taxable gain or loss on any sale or exchange of the voting shares in an amount equal to the difference between the
amount realized for the voting shares and your tax basis in the voting shares. Such gain or loss will generally be capital gain or loss
and will generally be long-term capital gain or loss if you have held the voting shares for more than one year. Long-term capital gains
of non-corporate United States Holders (including individuals) are eligible for reduced rates of taxation. The deductibility of capital
losses is subject to limitations. Any gain or loss recognized by you will generally be treated as United States source gain or loss.
Consequently, you may not be able to use the foreign tax credit arising from any Canadian tax imposed on the disposition of voting shares
unless such credit can be applied (subject to applicable limitations) against tax due on other income treated as derived from foreign
sources.
Information Reporting and Backup Withholding
In general, information reporting will apply
to dividends in respect of our voting shares and the proceeds from the sale, exchange or other disposition of our voting shares that
are paid to you within the United States (and in certain cases, outside the United States), unless you are an exempt recipient. A backup
withholding tax may apply to such payments if you fail to provide a taxpayer identification number or certification of exempt status
or fail to report in full dividend and interest income.
Backup withholding is not an additional tax and
any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against your United States federal income
tax liability provided the required information is timely furnished to the Internal Revenue Service.
Reporting Obligations for Specified Foreign
Financial Assets
United States Holders who are individuals (and
certain entities) are required to report on Internal Revenue Service Form 8938 specified foreign financial assets that they own if the
aggregate value of those assets exceeds certain threshold amounts. Specified foreign financial assets may include stock of a foreign
issuer such as the voting shares if not held through a financial account maintained at an United States “financial institution,”
as defined in the applicable rules. United States Holders should consult their own tax advisors as to the possible application of this
reporting obligation under their particular circumstances.
Material Canadian Federal Income Tax Considerations
The following summary describes, as of the date
hereof, the principal Canadian federal income tax considerations under the Income Tax Act (Canada) (the “Tax Act”)
and the regulations thereunder (the “Regulations”) generally applicable to an investor who holds common shares and
Pre-Funded Warrants. For purposes of this summary, references to common shares include common shares acquired on the exercise of a Pre-Funded
Warrant (“Warrant Share”) unless otherwise indicated. This summary applies only to an investor who is a beneficial
owner of common shares and Pre-Funded Warrants and who, for the purposes of the Tax Act, and at all relevant times: (i) deals at arm’s
length with the Company and Placement Agent, (ii) is not affiliated with the Company or Placement Agent; and (iii) acquires and holds
the common shares or Pre-Funded Warrants as capital property (a “Holder”).
Common shares and Pre-Funded Warrants will generally
be considered to be capital property to a Holder unless they are held in the course of carrying on a business of trading or dealing in
securities or were acquired in one or more transactions considered to be an adventure or concern in the nature of trade.
This summary is not applicable to a Holder: (i)
that is a “financial institution” for the purposes of the mark-to-market rules contained in the Tax Act, (ii) that is a “specified
financial institution” (as defined in the Tax Act); (iii) an interest in which is a “tax shelter investment” for purposes
of the Tax Act; (iv) that has made a functional currency reporting election under section 261 of the Tax Act to report its “Canadian
tax results” as defined in the Tax Act in a currency other than Canadian currency; (v) that has entered into, or will enter into,
a “derivative forward agreement” or “synthetic disposition arrangement” (each as defined in the Tax Act) with
respect to the common shares or Pre-Funded Warrants; or (vi) that receives dividends on common shares under or as part of a “dividend
rental arrangement” (as defined in the Tax Act). This summary does not address the deductibility of interest by a Holder who has
borrowed money to acquire the common shares or Pre-Funded Warrants or any Holder that receives property other than common shares on exercise
of the Pre-Funded Warrants. Such Holders should consult their own tax advisors. Additionally, this summary does not address the tax considerations
of the Purchase Warrants sold to subscribers pursuant to the Securities Purchase Agreement.
Additional considerations, not discussed herein,
may apply to a Holder that is a corporation resident in Canada, and is or becomes (or does not deal at arm's length for purposes of the
Tax Act with a corporation resident in Canada that is or becomes), as part of a transaction or event or series of transactions or events
that includes the acquisition of the common shares or Pre-Funded Warrants, controlled by a non-resident person or a group of non-resident
persons that do not deal with each other at arm's length for purposes of the “foreign affiliate dumping” rules in section
212.3 of the Tax Act. Such Holders should consult their own tax advisors.
This summary is based on the current provisions
of the Tax Act and the Regulations in force on the date hereof, all specific proposals to amend the Tax Act or the Regulations publicly
announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the “Proposed Amendments”)
and counsel’s understanding of the current administrative practices and assessing policies of the Canada Revenue Agency (the “CRA”)
publicly available prior to the date hereof. This summary assumes that the Proposed Amendments will be enacted in the form proposed.
However, no assurances can be given that the Proposed Amendments will be enacted as proposed or at all. This summary is not exhaustive
of all possible Canadian federal income tax considerations and, except for the Proposed Amendments, does not take into account or anticipate
any changes in the law or in the administrative practices or assessing policies of the CRA, whether by legislative, governmental, administrative
or judicial decision or action, nor does it take into account or consider other federal or any provincial, territorial or foreign tax
considerations, which may differ significantly from the Canadian federal income tax considerations discussed in this summary.
This summary is not exhaustive of all possible
Canadian federal income tax considerations applicable to an investment in common share or Pre-Funded Warrants. The following description
of income tax matters is of a general nature only and is not intended to be, nor should it be construed to be, legal or income tax advice
to any particular Holder. Holders are urged to consult their own income tax advisors with respect to the tax consequences applicable
to them based on their own particular circumstances.
Currency Conversion
In general, for purposes of the Tax Act, all
amounts relating to the acquisition, holding or disposition of the common shares or Pre-Funded Warrants (including, without limitation,
dividends, adjusted cost base and proceeds of disposition) must be expressed in Canadian dollars. Amounts denominated in foreign currency
must be converted into Canadian dollars using the “relevant spot rate” (as defined in the Tax Act) for the day on which such
amount arose or such other rate as is acceptable to the CRA.
Exercise of Pre-Funded
Warrants
A Holder will not realize a gain or loss upon
the exercise of a Pre-Funded Warrant to acquire a Warrant Share. When a Pre-Funded Warrant is exercised, the Holder’s cost of the
Warrant Share acquired thereby will be equal to the aggregate of the Holder’s adjusted cost base of such Pre-Funded Warrant and
the exercise price paid for the Warrant Share. The Holder’s adjusted cost base of the Warrant Share so acquired will be determined
by averaging the cost of the Warrant Share with the adjusted cost base to the Holder of all common shares of the Company (if any) held
as capital property immediately before the exercise of the Pre-Funded Warrant.
Taxation of Resident Holders
The following portion of this summary applies
to a Holder who, for the purposes of the Tax Act, is or is deemed to be resident in Canada at all relevant times (a “Resident
Holder”). A Resident Holder whose common shares might not otherwise qualify as capital property may be entitled to make an
irrevocable election permitted by subsection 39(4) of the Tax Act to deem the common shares, and every other “Canadian security”
(as defined in the Tax Act), held by such person in the taxation year of the election and each subsequent taxation year to be capital
property. This election does not apply to Pre-Funded Warrants. Resident Holders should consult their own tax advisors regarding this
election.
Expiry of Pre-Funded
Warrants
The expiry of an unexercised Pre-Funded Warrant
generally will result in a capital loss to the Resident Holder equal to the adjusted cost base of the Pre-Funded Warrant to the Resident
Holder immediately before its expiry. The tax treatment of capital gains and capital losses is discussed in greater detail below under
the heading “Capital Gains and Capital Losses”.
Dividends
Dividends received or deemed to be received on
the common shares will be included in computing a Resident Holder’s income. In the case of an individual (other than certain trusts),
such dividends will be subject to the gross-up and dividend tax credit rules normally applicable in respect of “taxable dividends”
received from “taxable Canadian corporations” (as such terms are defined in the Tax Act). An enhanced gross-up and dividend
tax credit will be available to individuals in respect of “eligible dividends” designated by the Company to the Resident
Holder in accordance with the provisions of the Tax Act. There may be limitations on the ability of the Company to designate dividends
as eligible dividends.
Dividends received or deemed to be received on
the common shares by a Resident Holder that is a corporation will be included in computing its income for the taxation year in which
such dividends are received, but such dividends will generally be deductible in computing the corporation’s taxable income. In
certain circumstances, subsection 55(2) of the Tax Act will treat a taxable dividend received or deemed to be received by a Resident
Holder that is a corporation as proceeds of disposition or a capital gain. Resident Holders that are corporations should consult their
own tax advisors having regard to their own circumstances.
A
Resident Holder that is a “private corporation” or a “subject corporation”, each as defined in the Tax Act, may
be liable to pay a tax under Part IV of the Tax Act on dividends received (or deemed to be received) on the common shares to the extent
that such dividends are deductible in computing the Resident Holder’s taxable income for the year. Resident Holders that are corporations
should consult their own tax advisers regarding their particular circumstances.
Disposition of common
shares and Pre-Funded Warrants
A Resident Holder who disposes, or is deemed
to dispose, of a common share (other than on a disposition to the Company that is not a sale in the open market in the manner in which
shares would normally be purchased by any member of the public in an open market), or a Pre-Funded Warrant (other than on the exercise
thereof) generally will realize a capital gain (or capital loss) in the taxation year of the disposition equal to the amount, if any,
by which the proceeds of disposition, net of any reasonable costs of disposition, are greater (or are less) than the adjusted cost base
to the Resident Holder of such common shares or Pre-Funded Warrant, as the case may be, immediately before the disposition or deemed
disposition. The taxation of capital gains and losses is generally described below under the heading “Capital Gains and Capital
Losses”.
Capital Gains and
Capital Losses
Generally, a Resident Holder is required to include
in computing income for a taxation year one-half of the amount of any capital gain (a “taxable capital gain”) realized
by the Resident Holder in such taxation year. Subject to and in accordance with the rules contained in the Tax Act, a Resident Holder
is required to deduct one-half of the amount of any capital loss (an “allowable capital loss”) realized in a particular
taxation year against taxable capital gains realized by the Resident Holder in the year. Allowable capital losses in excess of taxable
capital gains realized in a taxation year may be carried back and deducted in any of the three preceding taxation years or carried forward
and deducted in any subsequent taxation year against net taxable capital gains realized in such years, to the extent and under the circumstances
described in the Tax Act.
The amount of any capital loss realized by a
Resident Holder that is a corporation on the disposition or deemed disposition of a common share may be reduced by the amount of any
dividends received or deemed to have been received by such Resident Holder on such shares, to the extent and under the circumstances
described in the Tax Act. Similar rules may apply where a Resident Holder that is a corporation is a member of a partnership or a beneficiary
of a trust that owns common shares, directly or indirectly, through a partnership or trust. Resident Holders to whom these rules may
be relevant should consult their own tax advisors.
A
Resident Holder that is throughout the relevant taxation year a “Canadian-controlled private corporation”, as defined in
the Tax Act, or a “substantive CCPC”, as defined in the Proposed Amendments released by the Minister of Finance (Canada)
on August 9, 2022, may be liable for an additional tax on its “aggregate investment income” (as defined in the Tax Act),
which is defined to include an amount in respect of taxable capital gains. Such additional tax may be refundable in certain circumstances.
Resident Holders that are corporations should consult their own tax advisers regarding their particular circumstances.
Alternative Minimum
Tax
Generally, a Resident Holder that is an individual
(other than certain trusts) that receives or is deemed to have received taxable dividends on the common shares or realizes a capital
gain on the disposition or deemed disposition of the common shares or Pre-Funded Warrant may be liable for alternative minimum tax under
the Tax Act. Resident holders should consult their own tax advisors with respect to the application of alternative minimum tax.
Taxation of Non-Resident
Holders
The following portion of this summary is generally
applicable to Holders who, for the purposes of the Tax Act and at all relevant times: (i) are not resident, and are not deemed to be,
resident in Canada, and (ii) do not use or hold common shares or Pre-Funded Warrants in the course of a business carried on or deemed
to be carried on in Canada (“Non-Resident Holders”). Special rules, which are not discussed in this summary, may apply
to a Non-Resident Holder that is an insurer carrying on business in Canada and elsewhere or that is an “authorized foreign bank”
(as defined in the Tax Act). Such Non-Resident Holders should consult their own tax advisors.
Dividends
Dividends paid or credited or deemed to be paid
or credited to a Non-Resident Holder on the common shares will generally be subject to Canadian withholding tax at the rate of 25% on
the gross amount of the dividend, unless such rate is reduced by the terms of an applicable income tax treaty or convention. Under the
Canada-United States Tax Convention (1980), as amended (the “Treaty”), the rate of withholding tax on dividends
paid or credited to a Non-Resident Holder who is resident in the U.S. for purposes of the Treaty, is the beneficial owner of the dividends,
and is fully entitled to benefits under the Treaty (a “U.S. Holder”) is generally reduced to 15% of the gross amount
of the dividend. The rate of withholding tax is further reduced to 5% if the beneficial owner of such dividend is a U.S. Holder that
is a company that owns, directly or indirectly, at least 10% of the voting stock of the Company. Non-Resident Holders should consult
their own tax advisors regarding the application of the Treaty or any other tax treaty.
Disposition of common
shares and Pre-Funded Warrants
A Non-Resident Holder will not be subject to
tax under the Tax Act in respect of any capital gain realized on a disposition or deemed disposition of a common shares or Pre-Funded
Warrant, nor will capital losses arising therefrom be recognized under the Tax Act, unless such securities, as the case may be, constitute
“taxable Canadian property” (as defined in the Tax Act) of the Non-Resident Holder at the time of disposition and the Non-Resident
Holder is not entitled to relief under an applicable income tax treaty or convention between Canada and the country in which the Non-Resident
Holder is resident.
Provided that the common shares are listed on
a “designated stock exchange” for the purposes of the Tax Act (which currently includes the Nasdaq), at the time of disposition,
the common shares and Pre-Funded Warrant generally will not constitute taxable Canadian property of a Non-Resident Holder at that time,
unless at any time during the 60 month period immediately preceding the disposition, (i) 25% or more of the issued shares of any class
or series of the capital stock of the Company were owned by, or belonged to, any combination of (a) the Non-Resident Holder, (b) persons
with whom the Non-Resident Holder did not deal at arm’s length (for purposes of the Tax Act), and (c) partnerships in which the
Non-Resident Holder or a person described in (b) holds a membership interest directly or indirectly through one or more partnerships;
and (ii) at such time, more than 50% of the fair market value of such shares was derived, directly or indirectly, from any combination
of real or immovable property situated in Canada, “Canadian resource property” (as defined in the Tax Act), “timber
resource property” (as defined in the Tax Act), or options in respect of, interests in, or for civil law rights in such properties,
whether or not such property exists. Notwithstanding the foregoing, the common shares and Pre-Funded Warrants may also be deemed to be
taxable Canadian property to a Non-Resident Holder for purposes of the Tax Act in certain other circumstances. Non-Resident Holders should
consult their own tax advisors as to whether their common shares or Pre-Funded Warrants constitute “taxable Canadian property”
in their own particular circumstances.
In the event that a common share or Pre-Funded
Warrant constitutes taxable Canadian property of a Non-Resident Holder and any capital gain that would be realized on the disposition
thereof is not exempt from tax under the Tax Act pursuant to an applicable income tax treaty or convention, the income tax consequences
discussed above for Resident Holders under “Taxation of Resident Holders – Disposition of common shares and Pre-Funded
Warrants” and “Capital Gains and Capital Losses” will generally apply to the Non-Resident Holder. Non-Resident
Holders whose common shares or Pre-Funded Warrant are taxable Canadian property should consult their own tax advisors.
THE FOREGOING SUMMARY IS NOT INTENDED TO CONSTITUTE
A COMPLETE DESCRIPTION OF ALL TAX CONSEQUENCES THAT MAY BE RELEVANT TO PARTICULAR HOLDERS OF COMMON SHARE OR PRE-FUNDED WARRANTS AND
IS NOT TAX OR LEGAL ADVICE. HOLDERS OF COMMON SHARE OR PRE-FUNDED WARRANTS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE PARTICULAR
TAX CONSEQUENCES TO THEM OF ACQUIRING, HOLDING AND DISPOSING OF THE COMMON SHARE OR PRE-FUNDED WARRANTS.
Eligibility For Investment
Based on the current provisions of Tax Act and
the Regulations thereunder, in force as of the date hereof, and the Proposed Amendments released by the Minister of Finance (Canada)
on August 9, 2022 with respect to trusts governed by a first home savings account (“FHSA”) which are proposed to come
into force on January 1, 2023, the common shares and Pre-Funded Warrants, if issued on the date hereof, would be qualified investments
for trusts governed by a registered retirement savings plan, registered retirement income fund, registered education savings plan, registered
disability savings plan, tax-free savings account, FHSA (collectively referred to as “Registered Plans”) or deferred
profit sharing plan (“DPSP”) at the time of the acquisition of such common shares and Pre-Funded Warrants, provided
that at such time:
| (i) | in the case of the common shares,
the common shares are listed on a “designated stock exchange” as defined in the
Tax Act (which currently includes the Nasdaq) or the Company qualifies as a “public
corporation” (as defined in the Tax Act); and |
| (ii) | in the case of the Pre-Funded
Warrants, |
| a. | the Pre-Funded Warrants are
listed on a “designated stock exchange” as defined in the Tax Act; or |
| b. | the Warrant Shares are qualified
investments as described in (i) above and neither the Company, nor any person with whom the
Company does not deals at arm’s length, is an annuitant, a beneficiary, an employer
or a subscriber under or a holder of such Registered Plan or DPSP. |
Notwithstanding the foregoing, the
holder of, or annuitant or subscriber under, a Registered Plan (the “Controlling Individual”) will be subject to a
penalty tax in respect of the common shares or Pre-Funded Warrants held in the Registered Plan if such securities are a prohibited investment
for the particular Registered Plan. A common share or Pre-Funded Warrant generally will be a “prohibited investment” for
a Registered Plan if the Controlling Individual does not deal at arm’s length with the Company for the purposes of the Tax Act
or the Controlling Individual has a “significant interest” (as defined in subsection 207.01(4) of the Tax Act) in the Company.
In addition, the common shares will generally not be a “prohibited investment” if such shares are “excluded property”
(as defined in subsection 207.01(1) of the Tax Act) for the Registered Plan. Under the Proposed Amendments, the holders of FHSAs would
also be subject to the aforementioned prohibited investment rules.
Prospective purchasers who intend to hold common shares or Pre-Funded
Warrants in a Registered Plan or DPSP should consult their own tax advisors regarding their particular circumstances.
PLAN OF DISTRIBUTION
Pursuant to an Placement Agency Agreement, dated
October 10, 2022 (the “Placement Agency Agreement”), we have engaged Maxim Group LLC (the “Placement Agent”),
to act as our exclusive placement agent, on a reasonable best efforts basis, in connection with this offering pursuant to this prospectus
supplement and accompanying base prospectus. The terms of this offering are subject to market conditions and negotiations between us,
the Placement Agent, and prospective investors. The Placement Agency Agreement does not give rise to any commitment by the Placement
Agent to purchase any of the securities, and the Placement Agent will have no authority to bind us by virtue of the Placement Agency
Agreement. The Placement Agent is not purchasing the securities offered by us in this offering and is not required to sell any specific
number or dollar amount of common shares or Pre-Funded Warrants, but will assist us in this offering on a reasonable best efforts basis.
On October 10, 2022, we entered into a Securities
Purchase Agreement directly with the investors in connection with this offering who have agreed to purchase the common shares or Pre-Funded
Warrants in this offering. Such investors will also purchase the Purchase Warrants in a concurrent private placement under Rule 506 of
Regulation D. We will only sell to investors who have entered into the Securities Purchase Agreement.
The Placement Agent expects to deliver the common
shares and/or the Pre-Funded Warrants being offered pursuant to this prospectus supplement and accompanying base prospectus on or about
October 12, 2022, subject to satisfaction of customary closing conditions.
Fees and Expenses
We have agreed to pay to the Placement Agent:
(i) a cash fee equal to 7.0% of the aggregate gross proceeds raised in this offering and (ii) to reimburse the Placement Agent
up to $60,000 for reasonable and documented fees and expenses of legal counsel and other actual out-of-pocket expenses.
| |
|
Per Security |
|
|
Total |
|
| Public offering price per common share |
|
$ |
0.23 |
|
|
|
3,636,300 |
|
| Placement Agent fee per common share |
|
$ |
0.0161 |
|
|
|
254,541 |
|
| Proceeds, before expenses, to us, common shares |
|
$ |
0.2139 |
|
|
$ |
3,381,759 |
|
| Public offering price per pre-funded warrants |
|
$ |
0.22 |
|
|
|
349,800 |
|
| Placement Agent fee per pre-funded warrants |
|
$ |
0.0154 |
|
|
|
24,486 |
|
| Proceeds, before expenses, to us, pre-funded warrants |
|
$ |
0.2046 |
|
|
|
325,314 |
|
We estimate the total expenses
payable by us for this offering to be approximately $464,864, which amount includes (i) a Placement Agent’s fee of $279,027, assuming
the purchase of all of the common shares we are offering; (ii) up to $60,000 for the Placement Agent’s accountable expenses; and
(iii) other estimated expenses of approximately $185,837 which include legal, accounting, printing costs and various fees associated with
the registration and listing of our shares.
Tail Fee
We have also agreed to pay the Placement Agent,
subject to certain exceptions, a tail fee if within twelve (12) months following the closing of this offering or any such termination,
we complete any financing of equity, equity-linked or debt or other capital raising activity of the Company (other than the exercise
by any person or entity of any options, warrants or other convertible securities) with any of the investors “wall-crossed”
by the Placement Agent to the Company during such term. We will then pay to the Placement Agent upon the closing of such financing the
compensation equal to the compensation in this offering to the extent of the gross proceeds received.
Indemnification
We have agreed to indemnify the Placement Agent
and specified other persons against certain liabilities, including liabilities under the Securities Act, and the Exchange Act, and to
contribute to payments that the Placement Agent may be required to make in respect of such liabilities.
Regulation M
The Placement Agent may be deemed to be an underwriter
within the meaning of Section 2(a)(11) of the Securities Act and any fees received by it and any profit realized on the sale of the securities
by it while acting as principal might be deemed to be underwriting discounts or commissions under the Securities Act. The Placement Agent
will be required to comply with the requirements of the Securities Act and the Exchange Act including, without limitation, Rule 10b-5
and Regulation M under the Exchange Act. These rules and regulations may limit the timing of purchases and sales of our securities by
the Placement Agent. Under these rules and regulations, the Placement Agent may not (i) engage in any stabilization activity in connection
with our securities; and (ii) bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities,
other than as permitted under the Exchange Act, until they have completed their participation in the distribution.
Lock-up Restrictions
In the Securities Purchase Agreement, we have
agreed to a limitation on the issuance and sale of our securities for 90 days following the closing date of this offering, subject to
certain exceptions. In addition, we have agreed to not issue any securities that are subject to a price reset based on the trading prices
of our common stock or upon a specified or contingent event in the future or enter into any agreement to issue securities at a future
determined price for a period of one year following the closing date of this offering, subject to an exception.
Each of our executive officers, directors and
stockholders holding 10% or more of our securities have entered into lock-up agreements under which these parties have agreed not to
sell or otherwise transfer their shares for a period of 90 days after the date of this prospectus supplement. These lock-up restrictions
are subject to certain exceptions and may be waived by the Placement Agent at any time. As a result of these contractual restrictions,
our common shares subject to lock-up agreements will not be eligible for sale, including pursuant to Rules 144 or 701 under the Securities
Act, until these agreements expire or the restrictions are waived by the Placement Agent.
Other Relationships
The Placement Agent acted as the underwriter
for the public offering of 7,215,652 Units, each Unit consisting of one common share and one warrant to purchase one common share that
we consummated in January 2022 for which it received compensation.
From time to time, the Placement Agent may provide
in the future, various advisory, investment and commercial banking and other services to us in the ordinary course of business, for which
it may receive customary fees and commissions. Except as disclosed in this prospectus supplement, we have no present arrangements with
the Placement Agent for any services.
Nasdaq Capital Market Listing
Our common shares are currently traded on The Nasdaq
Capital Market under the symbol “SYTA.” On October 11, 2022, the last reported sale price of our common stock was $0.1291
per share.
EXPENSES
The following are the estimated expenses of the
issuance and distribution of the securities being registered under the registration statement of which this prospectus supplement forms
a part, all of which will be paid by us.
| SEC registration fee | |
$ | 337 | (1) |
| FINRA filing fee | |
$ | 15,500 | |
| Placement Agent’s fees | |
$ | 279,027 | |
| Placement Agent’s expenses | |
| 60,000 | |
| Legal fees and expenses | |
$ | 60,000 | |
| Accounting fees and expenses | |
$ | 50,000 | |
| Total | |
$ | 464,864 | |
| 1 | Represents the
portion of the previously paid filing fee for this offering on the Form F-3. |
ENFORCEABILITY OF CIVIL
LIABILITY
We are incorporated under the laws of British
Columbia, Canada. Service of process upon us and upon certain of our directors and officers and the experts named in this prospectus,
who reside outside the U.S., may be difficult to obtain within the U.S. Furthermore, because a substantial amount of our assets and certain
of our directors and officers are located outside the U.S., any judgment obtained in the U.S. against us or any of our directors and
officers may not be collectible within the U.S.
We have also been advised by Cassels Brock &
Blackwell LLP, our Canadian legal advisor, that there is doubt as to the enforceability, in original actions in Canadian courts, of liabilities
based on the U.S. federal securities laws or “blue sky” laws of any state within the United States and as to the enforceability
in Canadian courts of judgments of U.S. courts obtained in actions based on the civil liability provisions of the U.S. federal securities
laws or any such state securities or blue sky laws. Therefore, it may not be possible to enforce those judgments against us, certain
of our directors and officers, the experts named in this prospectus.
LEGAL MATTERS
Certain legal matters with respect to Canadian
law and with respect to the validity of the offered securities under the law of British Columbia, Canada, will be passed upon for us
by Cassels Brock & Blackwell LLP, Vancouver, British Columbia, Canada. Certain legal matters with respect to New York law and U.S.
federal securities law will be passed upon for us by Carmel, Milazzo & Feil LLP, New York, New York. Loeb & Loeb LLP, New York,
New York is acting as counsel for the Placement Agent in connection with this offering.
EXPERTS
The consolidated financial statements of the
Company incorporated in this prospectus supplement by reference to our Annual Report on Form 20-F for the year ended December 31,
2021 have been audited by Davidson & Company LLP, an independent registered public accounting firm, as set forth in their reports,
which are incorporated herein by reference. Such consolidated financial statements have been so incorporated by reference in reliance
upon such reports given on the authority of such firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE
INFORMATION
We file annual, quarterly and current reports,
proxy statements and other information with the SEC. The SEC maintains an Internet site that contains reports, proxy and information
statements and other information regarding issuers, including us, that file electronically with the SEC. As a foreign private issuer,
we are exempt under the Exchange Act from, among other things, the rules prescribing the furnishing and content of proxy statements,
and our officers, directors and principal shareholders are exempt from the “short-swing profits” reporting and liability
provisions contained in Section 16 of the Exchange Act and related Exchange Act rules. In addition, we are not required under the
Exchange Act to file periodic reports and financial statements with the Commission as frequently or as promptly as U.S. companies whose
securities are registered under the Exchange Act.
You may access the documents that we file with
the SEC at the SEC’s website at www.sec.gov. Copies of certain information filed by us with the SEC are also available
on our website at www.siyatamobile.com. Information contained in or accessible through our website does not constitute a
part of this prospectus supplement or the accompanying prospectus and is not incorporated by reference in this prospectus supplement
or the accompanying prospectus.
This prospectus supplement and the accompanying
prospectus are part of a registration statement on Form F-3 we filed with the SEC. This prospectus supplement and the accompanying prospectus
do not contain all of the information set forth in the registration statement and the exhibits to the registration statement. For further
information with respect to us and the securities we are offering under this prospectus supplement and the accompanying prospectus, we
refer you to the registration statement and the exhibits and schedules filed as a part of the registration statement. You should rely
only on the information contained in this prospectus supplement and the accompanying prospectus or incorporated by reference in prospectus
supplement and the accompanying prospectus. We have not authorized anyone else to provide you with different information.
INCORPORATION
OF DOCUMENTS BY REFERENCE
We file annual and special reports and other
information with the Commission (File Number 001-39557). These filings contain important information which does not appear in this prospectus.
The Commission allows us to “incorporate by reference” information into this prospectus, which means that we can disclose
important information to you by referring you to other documents which we have filed or will file with the Commission. The information
incorporated by reference is considered to be part of this prospectus, and information in documents that we file later with the Commission
will automatically update and supersede information in this prospectus. We incorporate by reference into this prospectus the documents
listed below and any future filings made by us with the Commission under Section 13(a), 13(c) 15(d) of the Exchange Act, except
for information “furnished” to the Commission that is not deemed filed and not incorporated by reference into this prospectus
(unless otherwise indicated below), until the termination of the offering of securities described in the applicable prospectus supplement:
| |
● |
our Annual Report on Form
20-F for the fiscal year ended on December 31, 2021, filed with the Commission on April 28, 2022 (the “Form 20-F”); |
| |
● |
our Report of Foreign Private Issuer on Form 6-K furnished to the Commission on April
29, 2022, May 3, 2022, May
17, 2022, May 26, 2022,
May 31, 2022, May
31, 2022, June 7, 2022,
June 27, 2022, July
6, 2022, July 13, 2022,
July 14, 2022, July
18, 2022, July 26, 2022,
July 28, 2022, August
1, 2022, August 19, 2022,
August 19, 2022, August
19, 2022, August 30, 2022,
September 1, 2022, September
8, 2022, September 22, 2022 ,
September 23, 2022; and October 12, 2022; |
| |
● |
the description of our securities registered under Section 12 of the Exchange Act contained
in the Form 8-A12B,
as filed with the Commission on September 24, 2020, including any amendment or report filed for the purpose of updating such description;
and |
| |
● |
any future filings made with the Commission under Section 13(a), 13(c) or 15(d) of the Exchange Act. |
In addition, any reports on Form 6-K submitted
to the Commission by the registrant pursuant to the Exchange Act after the date of the initial registration statement and prior to effectiveness
of the registration statement that we specifically identify in such forms as being incorporated by reference into the registration statement
of which this prospectus forms a part and all subsequent Annual Reports on Form 20-F filed after the effective date of this registration
statement and prior to the termination of this offering and any reports on Form 6-K subsequently submitted to the Commission or portions
thereof that we specifically identify in such forms as being incorporated by reference into the registration statement of which this
prospectus forms a part, shall be considered to be incorporated into this prospectus by reference and shall be considered a part of this
prospectus from the date of filing or submission of such documents.
You should rely only on the information contained
or incorporated by reference in this prospectus and any accompanying prospectus supplement. We have not authorized any other person to
provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it.
We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus and any accompanying prospectus supplement as well as the information we previously filed
with the Commission and incorporated by reference, is accurate as of the dates on the front cover of those documents only. Our business,
financial condition and results of operations and prospects may have changed since those dates. Certain statements in and portions of
this prospectus update and replace information in the above listed documents incorporated by reference. Likewise, statements in or portions
of a future document incorporated by reference in this prospectus may update and replace statements in and portions of this prospectus
or the above listed documents.
We will provide you without charge, upon your
written or oral request, a copy of any of the documents incorporated by reference in this prospectus, other than exhibits to such documents
which are not specifically incorporated by reference into such documents. Please direct your written or telephone requests to Siyata
Mobile Inc., Attn: Chief Financial Officer, 1001 Lenoir St Suite A-414, Montreal, QC H4C 2Z6, Canada. You may also obtain information
about us by visiting our website at https://www.siyatamobile.com. The information contained on or accessible through our
website is not incorporated by reference and is not part of this prospectus.
PROSPECTUS
SIYATA MOBILE INC.
$100,000,000
Common Shares
Warrants
Rights
Purchase Contracts
Debt Securities
Units
This prospectus relates to the sale by Siyata
Mobile Inc. (the “Company”) from time to time in one or more offerings of up to $100,000,000 aggregate amount of common shares
in the capital of the Company (“common shares”), warrants to purchase common shares or Debt Securities (as defined below),
or any combination thereof (“Warrants”), subscription rights evidencing the right to purchase common shares or Debt Securities,
or any combination thereof (“Rights”), purchase contracts to purchase common shares, Warrants, Rights, Debt Securities, or
any combination thereof (“Purchase Contracts”), debt securities of the Company (“Debt Securities”), as well as
units that include any of these securities (“Units”) and, collectively with the common shares, Warrants, Rights, Purchase
Contracts and Debt Securities, the “securities”).
We will provide the specific terms of the securities
to be offered in one or more supplements to this prospectus. You should read this prospectus and the applicable prospectus supplement
carefully before you invest in our securities. This prospectus may not be used to offer and sell our securities unless accompanied by
a prospectus supplement describing the method and terms of the offering of those offered securities.
We may sell the securities directly or to or
through underwriters or dealers, and also to other purchasers or through agents. The names of any underwriters or agents that are included
in a sale of securities to you, and any applicable commissions or discounts, will be stated in an accompanying prospectus supplement.
For additional information on the methods of sale, you should refer to the section entitled “Plan of Distribution” in this
prospectus.
The common shares are traded on the Nasdaq Capital
Market under the symbol “SYTA” and the Prior Warrants (as defined herein) are traded on the Nasdaq Capital Market under the
symbol “SYTAW.” The closing price of the common shares on the Nasdaq Capital Market on June 30, 2022 was $1.08 per share.
An investment in these securities involves
risks. See the section entitled “Risk Factors” on page 11 of this prospectus, and other risk factors contained in any applicable
prospectus supplement and in the documents incorporated by reference herein and therein.
Neither the U.S. Securities and Exchange Commission
nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
The date of this prospectus
is July 1, 2022.
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
In this prospectus, except as otherwise indicated
or as the context otherwise requires, “Siyata”, “Siyata Mobile”, “we”, “our”, “us”
and the “Company” refer to Siyata Mobile Inc., a company organized under the laws of British Columbia, Canada.
This prospectus is part of a registration statement
on Form F-3 that the Company filed with the Securities and Exchange Commission (the “Commission”) using a “shelf”
registration process. Under this shelf registration process, the Company may, from time to time sell the securities described in this
prospectus in one or more offerings pursuant to this registration statement, or any combination of the securities described in this prospectus.
The Company may use the shelf registration statement to sell up to an aggregate of $100,000,000 of securities.
The Company will pay the expenses, other than
underwriting discounts and commissions, if any, associated with the sale of the securities pursuant to this prospectus. We will provide
the specific terms of the securities to be offered in one or more supplements to this prospectus. The prospectus supplement may also
add, update or change information contained in this prospectus with respect to that offering. If there is any inconsistency between the
information in this prospectus and the applicable prospectus supplement, you should rely on the prospectus supplement. You should read
both this prospectus and any applicable prospectus supplement, together with additional information described below under the captions
“Where You Can Find Additional Information.”
You should rely only on the information contained
or incorporated by reference in this prospectus and in any prospectus supplement. The Company has not authorized any other person to
provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it.
The Company will not make any offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should
assume that the information appearing in this prospectus and, if applicable, the supplement to this prospectus is accurate as of the
date on its respective cover, and that any information incorporated by reference is accurate only as of the date of the document incorporated
by reference, unless indicated otherwise. The Company’s business, financial condition, results of operations and prospects may
have changed since those dates. This prospectus may not be used to consummate sales of our securities, unless it is accompanied by a
prospectus supplement. To the extent there are inconsistencies between any prospectus supplement, this prospectus and any documents incorporated
by reference, the document with the most recent date will control.
MARKET INFORMATION
This prospectus and the documents incorporated
by reference contain certain industry and market data that were obtained from third-party sources, such as industry surveys and industry
publications. This prospectus and the documents incorporated by reference also contain other industry and market data, including market
sizing estimates, growth and other projections and information regarding our competitive position, prepared by our management on the
basis of such industry sources and our management’s knowledge of and experience in the industry and markets in which we operate
(including management’s estimates and assumptions relating to such industry and markets based on that knowledge). Our management
has developed its knowledge of such industry and markets through its experience and participation in these markets.
In addition, industry surveys and industry publications
generally state that the information they contain has been obtained from sources believed to be reliable but that the accuracy and completeness
of such information is not guaranteed and that any projections they contain are based on a number of significant assumptions. Forecasts,
projections and other forward-looking information obtained from these sources involve risks and uncertainties and are subject to change
based on various factors, including those discussed in the section “Special Note About Forward-Looking Statements” below.
You should not place undue reliance on these statements.
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
This prospectus contains
“forward-looking statements”, which includes information relating to future events, future financial performance, financial
projections, strategies, expectations, competitive environment and regulation. Words such as “may”, “should”,
“could”, “would”, “predicts”, “potential”, “continue”, “expects”,
“anticipates”, “future”, “intends”, “plans”, “believes”, “estimates”,
and similar expressions, as well as statements in future tense, identify forward-looking statements. Forward-looking statements should
not be read as a guarantee of future performance or results and may not be accurate indications of when such performance or results will
be achieved. Forward-looking statements are based on information we have when those statements are made or management’s good faith
belief as of that time with respect to future events, and are subject to significant risks and uncertainties that could cause actual
performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors
that could cause such differences include, but are not limited to:
| |
● |
the size and growth potential of the markets for our products, and our ability to serve those markets; |
| |
● |
the rate and degree of market acceptance of our products; |
| |
● |
our ability to expand our sales organization to address effectively existing and new markets that
we intend to target; |
| |
● |
impact from future regulatory, judicial, and legislative changes or developments in the U.S. and
foreign countries; |
| |
● |
our ability to compete effectively in a competitive industry; |
| |
● |
our ability to obtain funding for our operations and effectively utilize the capital raised therefrom; |
| |
● |
our ability to attract collaborators and strategic partnerships; |
| |
● |
our ability to meet the continued listing requirements and standards of the Nasdaq Capital Market,
or Nasdaq; |
| |
● |
our ability to meet our financial operating objectives; |
| |
● |
the availability of, and our ability to attract, qualified employees for our business operations; |
| |
● |
general business and economic conditions; |
| |
● |
our ability to meet our financial obligations as they become due; |
| |
● |
positive cash flows and financial viability of our operations and any new business opportunities; |
| |
● |
our ability to secure intellectual property rights over our proprietary products or enter into license
agreements to secure the legal use of certain patents and intellectual property; |
| |
● |
our ability to be successful in new markets; |
| |
● |
our ability to avoid infringement of intellectual property rights; and |
| |
● |
the effects of the global COVID-19 pandemic. |
The foregoing does not
represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors that we
are faced with that may cause our actual results to differ from those anticipated in our forward-looking statements. Please see “Risk
Factors”, and “Business”, and “Incorporation of Certain Documents by Reference”, as well as in our Annual
Report on Form 20-F under Item 3. Key Information – D. Risk Factors”, “Item 4. Information on the Company”, and
“Item 5. Operating and Financial Review and Prospects” for additional factors that could adversely impact our business and
financial performance.
Moreover, new risks
regularly emerge and it is not possible for our management to predict or articulate all the risks we face, nor can we assess the impact
of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those
contained in any forward-looking statements. All forward-looking statements included in this prospectus are based on information available
to us on the date of this prospectus and as of the dates of the documents incorporated herein by reference. Except to the extent required
by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result
of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons
acting on our behalf are expressly qualified in their entirety by the cautionary statements contained above and throughout this prospectus
and the documents incorporated by reference herein. Should one or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those described in this prospectus as anticipated, believed, estimated
or expected.
Readers are urged to
carefully review and consider the various disclosures made throughout this prospectus which are designed to advise interested parties
of the risks and factors that may affect our business, financial condition, results of operations and prospects.
You should not put undue
reliance on any forward-looking statements. Any forward-looking statements in this prospectus are made as of the date hereof, and we
undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events
or otherwise, except as required by law.
BUSINESS
The Problem
Businesses and organizations
that rely on commercial vehicle fleets to carry out critical business functions and operations have historically used two-way radios
(“Land Mobile Radios” or “LMR”) to communicate between drivers and headquarters. LMR communication devices have
historically encountered several challenges. These devices are typically expensive, generally consisting of older and outdated technology.
LMR devices are also limited in their range of communication, as local radio bandwidth is limited. Most devices are restricted to communications
in one metro areas with limited connectivity with neighboring areas, agencies or companies, hindering headquarters’ ability to
communicate with their vehicles. Occasionally, vehicles communicating through LMR will often encounter a communication “dead zone”,
thus hindering these vehicles’ abilities to communicate during times of emergencies. They are single-purpose devices, allowing
for communications through “push-to-talk” (“PTT”) broadcasting with limited additional features.
UV350 In-Vehicle Solution
The Uniden® UV350 (the “UV350”)
is the world’s first and only smartphone with 4G/LTE capabilities specifically designed for in- vehicle usage, optimizing mobile
communications for on the road commercial fleet vehicles. Unlike existing Land Mobile Radio (LMR) technology, that operates over radio
signals, the UV350 operates over standard 4G cellular networks. The UV350 received United States Federal Communications Commission’s
approval as a cellular device, Industry Canada’s approval, certification of PCS Type Certification Review Board (“PTCRB”),
Google GMS certification, and Conformité Européenne (“CE”) and Emark certification. The UV350 and has been
certified or approved for manufacturing or sale by several North American wireless carriers, or our “channel partners”, including
AT&T, Bell Mobility, Rogers, Verizon and by several international wireless carriers. The UV350’s reputation and approvals from
industry leaders represent a barrier to entry for potential direct competitive devices, with North American carrier for in-vehicle devices
for fleet communication.
AT&T, our largest channel partner, represented
14% of our revenues in 2020. AT&T did not enter into a master services agreement with the Company, but rather, enters into standard
purchase order forms on a per order basis. We do does not obligate AT&T to fulfill any required minimum purchase orders. Our typical
purchase order contracts with AT&T involve standard warranties and indemnification, insurance requirement and delivery terms. Each
separate purchase order agreement can be terminated by AT&T within 10 days’ notice upon notice of and failure to cure any breach
by the Company of such agreement.
The UV350 contains several unique features, including:
| |
● |
Android Operating System Compatibility. Android compatibility allows customers to download
apps such as a PTT app and have it configured by the wireless carrier to ensure your workers can communicate one-to-one, or in a
full group call. Because virtually any Android fleet application can be downloaded, this enables customers to eliminate redundant
single-purpose hardware in their fleet vehicles. |
| |
● |
Noise Cancelation. Best-in-class loud and clear audio in noisy commercial vehicles. Our bundled
kit includes a dedicated loud speaker and microphone for both phone calls and Push To Talk (PTT) calls. |
| |
● |
Economic. Far lower price to customers compared to using multiple single purpose devices which
can cost thousands of dollars to purchase, and lots of time to install and maintain. With our UV350, the truck only needs one sim
card with a voice and data plan as opposed to using multiple devices with multiple sims and plans. This allows lower monthly fees
per vehicle. |
| |
● |
Safety. With its large display a dedicated palm mic and one-touch buttons for key driver tasks,
the UV350 is safe for drivers, allowing them to keep their eyes on the road and hands on the wheel. |
| |
● |
Wi-Fi Hotspot. Customers can connect up to five devices to the UV350 via Wi-Fi, giving the
customers added connectivity options. |
| |
● |
Always Powered. The UV350 is powered by the vehicle’s battery so it automatically powers
on when the vehicle is started up, and it defaults to turn off automatically when the vehicle is turned off. This default setting
can be changed for customers who need the device to stay on after the vehicle is shut off. The device is designed to operate properly
in any extreme temperature situation. |
| |
● |
4G/LTE. The UV350 works on the multiple wireless carrier networks which provide the best nation-wide
coverage options for customers and is compatible with high speed 4G data networks. |
| |
● |
Accessories. In addition to the UV350 standard bundle kit which includes everything that customers
need to get started, Siyata also offers optional PTT accessories such as a Wired Palm Mic which most PTT customers prefer. For customers
whose fleet vehicles travel into areas with limited cellular reception, Siyata offers an outdoor, roof mounted antenna as well as
an optional in-line cellular booster to amplify the cellular signal so that fleet vehicles can maintain connection when they are
further away from cellular tower sites. |
Our Rugged Handheld Solution
Siyata has entered into supply agreements with
several North American wireless carriers. The Company believes that additional complementary PTT devices can be offered by Siyata to
these wireless carriers. The rugged handheld market, smartphones designed specifically to withstand hardship and exposure, have relatively
few competitors, and wireless carriers appear poised to expand their offerings in this category.
Siyata currently offers a rugged handheld clamshell
device (UR7) outside of North America for customers who demand a cost-effective high performing PTT device. Another rugged handheld device
(UR5) is intended to complement our commercial vehicle devices for international markets and will support popular Push-to-Talk apps.
Key vertical markets for rugged handheld devices are construction job sites, warehouses, factories, hotels, retail stores, schools, landscaping
crews, special events. Customers who would consider our rugged handheld devices are looking to increase the worker’s productivity,
and to reduce their total cost of ownership compared to other devices.
In Q3 2021, Siyata unveiled its next generation
rugged device, the SD7. The SD7 is Siyata’s first mission critical push-to-talk device (MCPTT) and is also the first rugged handset
that Siyata will offer in North America, expected in the second half of 2021, then in Europe in 2022. With this device, Siyata expects
to increase its MCPTT market share not only in the first responder market, but also in the utilities, transportation and waste management
markets.
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Tough & Rugged. Our rugged devices meet the industry standards for ruggedness and water
resistance. |
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Large PTT Button. With a large dedicated PTT Button, this makes it easy for customers
to use for PTT, as opposed to having to hold down a virtual button on the screen. |
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Loud and Clear. Its powerful speakers ensure loud, clear audio sound quality. |
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Large optional extended. Long lasting battery to keep working for several days, in most customer
use cases. The battery can be easily and quickly replaced on short notice. |
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SOS Button. Workers can alert supervisors of emergency situations that occur on the job. |
Our Cellular Booster Solution
We offer a full line of cellular boosters, a
device intended to form a wireless system to boost cellular reception, under the brand name Uniden®®. We have entered into a
partnership whereby Uniden® America Corporation has granted the exclusive license to Siyata Mobile to market cellular signal boosters
under the Uniden®® brand name within the U.S. and Canada. As a world-wide leader in wireless communications, Uniden® America
Corporation, the North American subsidiary of Japan-based Uniden® Corporation, manufactures and markets wireless consumer electronic
products. Based in Fort Worth, Texas, Uniden®®Uniden® sells
its products through dealers and distributors throughout North, Central and South America. Uniden®®Uniden®
Cellular booster kits solve issues of poor reception, dropped calls, lost data and transmission quality issues that users routinely experience
on every cellular network. These easy-to-install cellular booster kits are designed for homes, cabins, offices, and buildings to improve
the cellular signal reception indoors, allowing people to use their cellular phones indoors where they previously could not do so. We
also offer models designed for vehicles, both wired and wireless boosters, to improve the cellular reception inside a vehicle that is
driving in a weak cellular signal area. Uniden® cellular signal boosters offer kits designed to offer cellphone coverage for difference
distances, including kits for a small area of 1 or 2 rooms, and more expansive solutions that will cover over 100,000 sq. ft. Our cellular
signal boosters are carrier agnostic to ensure the best signal integrity, supporting 2G, 3G, 4G and soon 5G (in development) technologies
on all carriers operating in North America.
The Uniden®® U60C 4G Cellular Booster
and Uniden®® U65C 4G Cellular Booster are user friendly devices that simply require plugging it into a power source and turning
it on. The device will automatically adjust to provide the user with a boosted cellular signal in their trouble zone. These devices range
in price starting from a retail price of $347 USD and up. The Uniden®® U60P Cellular Booster, Uniden®® U65P Cellular
Booster, and Uniden®® U70P Cellular Booster and available in 3G and 4G versions. These devices are just as easy to install as
the consumer boosters but include additional features, such as manual gain control override, LCD status display and input signal display.
The Uniden®® Link 4G Cradle Style Cellular
Booster is used for single use case, Uniden®® UM50 4G Cellular Booster works great in cars, vans, first responders, and any situation
on the go where you need to expand your coverage zone. The Uniden®® UM2M 4G Cellular Booster is our direct connect unit that
works in vehicles connected to your in-vehicle phone or your cellular modem. These devices range in price starting from a retail price
of $197 USD and up.
The Uniden®® UM2M 4G Cellular Booster
is our newest product in our line up and one of the most promising. We are very excited to launch this item as it is not only great for
machine-to-machine application such as in vending and ATM machines, but this booster perfectly complements the company’s Uniden®®
UV350 In Vehicle Smartphone. This booster connects directly to the Uniden®® UV350 In Vehicle Smartphone giving the device a much-expanded
coverage zone. This is a complete solution that many customers need. The combination of Uniden®® UV350 and Uniden®® M2M
4G Cellular Booster gives our customer the ultimate enterprise class solution to enjoy crystal clear phone calls and lightning fast data
speeds.
Industry
Communication, productivity and safety among
task workers are the central requirements in business-critical and mission-critical environments. Organizations with remote and disparate
workers—from police and firefighters to construction, oil rigs and manufacturing workers—require extremely durable communication
solutions that provide reliable and secure voice, data and workflow applications.
The types of vehicles that we provide communication
solutions to include school buses, utilities, oil and gas, waste management, snow plows, transportation, construction vehicles, and first
responder vehicles. In North America there are, according to the United States Department of Transportation, over 20 million of such
vehicles, representing a significant potential customer base for Siyata. Each of these types of vehicles demands superior in-vehicle
communications solutions.
A cost-effective solution is essential for both
government fleets, such as first responder police vehicles, and commercial enterprises, including construction companies. These industries
are concerned with managing and controlling their capital expenditures and operating expenses and they adopt such mindset with their
selection of communication devices for their staff and fleets.
These industries are also required to adhere
to the current safety and operational requirements, while maintaining the flexibility to adjust to meet future relevant requirements.
For example, currently, the fleet managers may only require PTT communications with the drivers, and the ability to track the location
of their vehicles. However, latest industry trends require that drivers possess a driver emergency safety app or a workforce automation
solution. A communications solution based on the UV350 contains built-in flexibility to adapt with customer demand. The UV350 is a highly
connected Internet of Things (IoT) platform which supports downloadable Android apps for future functionality.
There is a demand within our targeted vertical
markets to be connected with the First Responder Network Authority (“FirstNet Authority” or “FirstNet”). FirstNet
is a nationwide high-speed broadband wireless network providing a single interoperable platform for law enforcement, firefighters, paramedics
and other public safety officials in every state, county, locality and tribal area. AT&T has developed a 4G network for organizations
or agencies in times of emergencies to communicate and coordinate response efforts. AT&T’s FirstNet network is reserved for
“primary” first responder users such as police, fire, and ambulance, and it includes “extended primary” users
such as utilities, snow plows, and yellow school buses, who are occasionally summoned for emergencies. The United States Government is
increasingly encouraging first-responder organizations and agencies to transition to a FirstNet-based communications network to facilitate
communications and coordination during emergencies.
According to the Smithsonian Institute, there
approximately 500,000 yellow school buses in the United States. School buses primarily communicate through the existing legacy technology
of two-way radios (LMR). Many county school districts own both their own fleet of buses and their own radio towers with two-way radio
service coverage that is restricted to within in their county. However, occasionally, when school buses transport students outside their
county for field trips and sports events, the drivers are unable to communicate with their dispatchers. The UV350 device addresses this
problem since it uses the nationwide cellular networks. Moving from a solely PTT to a cellular-based system also precludes the necessity
for counties and school districts to maintain older radio towers.
Our Strategy
Siyata’s primary focus is to increase sales
of our UV350 In-Vehicle device, rugged handhelds and cellular boosters in North America and other international markets. With approximately
20 million potential commercial vehicles to pursue in North America, per the United States Department of Transportation, Siyata believes
there is large growth potential in this market. Our strategy is to continue to partner with North American and other international wireless
carriers in order to interface with new potential customers and expand our customer base. Siyata sales are B2B and we will sell the hardware
to the wireless carrier (or their distributors), who will in turn sell the hardware to the fleet vehicle customer.
Siyata already has established distribution relationships
with several North American and international carriers and is generating revenue from selected countries outside of North America. Siyata
will continue to be strategic in selecting geographic markets with strong demand for our existing solutions. We will identify key distributors
in those new markets who can assist us with establishing a market presence.
Siyata is also willing to consider strategic
moves such as acquiring a complementary company if the right opportunity presents itself.
Our Pricing
For wireless carriers, they are free to price
the device how they choose. In most cases for significant sales opportunities the carriers are willing to subsidize the cost of the device
in order to secure the new activations with the associated monthly Average Revenue Per User (ARPU).
Even our unsubsidized full price is competitive
compared to other hardware solutions, but when our device is subsidized, the capital and operational expense benefits to customers compared
to other solutions are even greater.
Target Markets
Yellow School Buses
There are currently approximately 500,000 active
yellow school buses in North America, per the Smithsonian Institute. The majority of these use a two-way LMR radio for voice communications
between their dispatchers and the bus drivers. A small percentage of yellow school buses also use a tracking system so that the fleet
manager at the local school district headquarters can identify where the buses are at any time. Challenges for school districts include
controlling costs, maintaining legacy two-way radio devices and networks, and also the lack of communication with their drivers when
buses are beyond the county borders for field trips and sports events. The US Government is also encouraging school districts to incorporate
technology that is compatible with FirstNet. Siyata believes that UV350 In-Vehicle device with a Push-to-Talk over Cellular app, a Mobile
Device Management (MDM) app, and an emergency response app such as CrisisGo, combined with Siyata’s Wired Palm Mic, Roof Mounted
Antenna and In-line Cellular Booster provides a solution to these school districts. This will result in lower Capex and Opex, as well
as increased driver safety, increased functionality, and much improved cellular coverage. If the School District selects FirstNet as
its wireless carrier partner, then drivers can be assured of communicating with their dispatchers and with neighboring agencies in times
of emergencies. This availability of the new FirstNet network is causing many school districts to reconsider their communications solutions,
which will benefit Siyata. Siyata is conducting multiple trials and has already commenced sales in this sector.
Utility ‘Bucket Trucks’
Utility businesses in North America operate hundreds
of thousands of vehicles, including bucket trucks used by workers to fix or install hydro-lines on utility poles. These trucks require
the ability for their dispatchers to communicate with the workers in the truck. These trucks currently primarily incorporate a mix of
two-way LMR radio and Push-to-Talk over Cellular (PoC) to communicate. Many bucket trucks also utilize a second weatherproof speaker
mounted in the back of the truck in order for dispatchers to communicate with elevated workers operating on hydro lines. Communicating
with and relaying important information to workers operating on hydro lines can be challenging. Siyata has developed a custom solution
for dispatchers to communicate with the truck, and also an extra amplifier which can power the Utility’s pre-installed second speaker,
connected by a simple toggle switch. Siyata has conducted trials with this product with several utility trucks.
First Responder Vehicles
According to the Smithsonian Institute, there
are approximately 3 million active First Responder vehicles in the US. Most police vehicles contain “P25” two-way radio devices
for PTT voice communication. P25 devices are expensive, with each device costing thousands of USD, along with a ruggedized laptop computer
for database lookups which can cost over $2,000 USD. The opportunity for Siyata in the near term is to augment, rather than to replace
the P25 in vehicle two-way radio. Police agencies are traditionally less willing to abandon their legacy two-way radio technology. With
the launch and growth of FirstNet, police agencies are beginning to adopt FirstNet compatible PTT over cellular devices to enable neighboring
agencies to communicate during emergencies. While it is possible to enable P25 two-way radios to talk with PTT over cellular devices,
the UV350 is a dedicated PTT over cellular solution which delivers strong audio quality and dependability for first responders. Siyata
recognizes opportunities with police agencies in smaller rural communities where two-way radio coverage is more challenging. With Siyata’s
roof mounted antenna and in-line cellular booster, the UV350 device can be the solution that allows rural police vehicles to communicate
efficiently. Siyata is also currently conducting trials with several ambulance agencies.
Construction Vehicles
Construction companies present a strong customer
base for Siyata’s suite of products. Companies operating trucks that deliver gravel or remove soil from construction sites traditionally
have used commercial grade two-way LMR radios for voice communication. These vehicles occasionally also integrate technologies such as
Automatic Vehicle Location devices so that headquarters can monitor the locations of their trucks. For metro-wide two-way radio coverage,
these construction companies are typically paying a small two-way radio company between $20 and $40 USD per month per truck for the use
of their towers and repeaters for voice communications between headquarters and their drivers. If the trucks need to travel outside the
metro region then they are unable to communicate. The UV350 device delivers loud and clear audio communications while its relatively
small footprint fits securely in vehicles. The UV350 can replace the two-way radio devices used in construction company vehicles to make
driving simpler and safer. Siyata is currently conducting trials with several construction companies and has already begun sales in this
vertical.
Competition
We do not believe that we have any direct competitors
within the in-vehicle market category and we believe that no other Company offers an In-Vehicle Smartphone that is approved for sale
in North America by wireless carriers. To date, we are not aware of any directly competing devices that are in development.
We have several indirect competitors. Customers
could choose a handheld phone along with a professionally installed third party car kit. There are car kit providers who attempt to make
their car kits compatible with popular handheld phone models. By comparison, the UV350 device offers enhanced audio quality, safety,
and reception. Furthermore, the UV350 is always active and can be used in temperature extremes. Furthermore, the UV350 kit is one complete
solution from one supplier, as opposed to buying separately from two different companies and assembling a phone and a car kit that offers
no proven compatibility.
Our second indirect competitor are rugged tablets
that can be placed in a mount. The UV350 device offers better audio quality, better safety, better cellular reception, and it is always
on and ready to be used. Also, compared to a tablet, the UV350 can also make cellular calls including emergency 911 calls whereas the
tablet cannot as it is a data only device.
Our third indirect competitor is an In-Vehicle
Two-way Radio (LMR). Not only can the UV350 make phone calls which the LMR radio cannot, but the UV350 offers much better coverage due
to using the cellular network as opposed to a limited two-way radio network. And the UV350 can support downloadable Android apps and
can serve as a modem for IoT devices and as a Wi-Fi hotspot for further connectivity options and more.
Our fourth indirect competition is that global
leading LMR vendor has recently announced the TLK 150 In-Vehicle device which is a Push to Talk over Cellular device, compatible only
with its own Wave PTT application and does not feature any downloadable apps (fleet management, GPS tracking, live video feed, etc.)
nor the ability to make a phone call over the wireless network. This leading LMR vendor sells the TLK 150 In-Vehicle devices directly
to customers and through its dealer channel, but not through wireless carriers.
Within the Ruggedized handheld phone category,
we have a few direct competitors, including Sonim Technologies, Inc., Kyocera Corporation and Bullet Mobile using the CAT brand who produce
rugged handheld devices. Samsung Electronics Co. Ltd. also offer some of their consumer cellular devices in a more rugged form factor.
There are also several Chinese companies who manufacture rugged devices but are less active in the North American markets.
Within the Cellular Booster category, we have
several direct competitors, including Wilson Electronics, LLC, Nextivity Inc., and SureCall Company.
Employees
As of March 31, 2022, we had 27 full-time employees
and no part-time employees. Ten of our employees are located in Israel, with three performing sales functions, four performing research
and development functions, and four performing operations. Of the remaining 17 employees, 13 are located in Canada, with six performing
sales functions and nine performing operational functions and 4 are located in the USA, all performing sales functions.
Intellectual Property
We own two patents that we acquired from ClearRF,
as discussed below, and we have entered into several licensing agreements for the use of a trademark and certain patents.
Uniden® America Corporation
In December 2012, Signifi Mobile, the Company’s
wholly-owned subsidiary entered into a license agreement with Uniden® America Corporation, as amended (the “Uniden® Agreement”).
The Uniden® Agreement provides for the Company to use the trademark “Uniden®®”, along with associated designs
and trade dress to distribute, market and sell its In-Vehicle device, cellular signal booster and accessories during its term in North
America. The agreement includes renewal options up to December 31, 2022 and is subject to certain minimum royalties. The license agreement
is amortized on a straight-line basis over its five-year term.
Wilson Electronics LLC
Effective January 1, 2018, Signifi Mobile Inc.,
the Company’s wholly-owned subsidiary, entered into an agreement with Wilson Electronics, LLC to permit the Company to utilize
several of Wilson Electronics’ patents related to cellphone boosters (the “Wilson Agreement”). The Wilson Agreement
grants the Company an indefinite right to utilize its cellphone booster-related patents in exchange for paying Wilson Electronics, LLC
a royalty fee for boosters sold by the Company. The Wilson Agreement remains in force until the Wilson patents on the Booster products
expire.
Via Licensing Corporation
Effective June 8, 2018, the Company entered into
two separate licensing agreements with Via Licensing Corporation to utilize worldwide patents related to the coding and decoding of “android”
software as well as access and download within the “LTE/ 4G” network. This patent is for an initial period of 5 years and
can be extended for a further 5-year term. The Company has the right at any time during the term on any extension hereof, to terminate
these agreements upon providing 60 days advanced notice of termination. The quarterly royalty fees are based solely on product sales
and is a percentage formula based upon the number of units sold, the country manufactured and the country location of the end customer.
There are no minimum royalty fees payable according to the agreement.
e Wave Mobile Ltd.
Effective October 1, 2017, the Company entered
into an Asset Purchase Agreement with eWave Mobile Ltd. (“eWave”) for the purchase of certain distribution rights and contracts
in connection with the right to sell and distribute in Israel certain cellular devices for the push to talk market (the “eWave
Supplies”) in exchange for $700,000 and the Company issuing an amount equal to USD$700,000 to the Company. Additionally, the Company
shall pay eWave 50% of the net profit from all sales the Company earns from the eWave Supplies from 2017 – 2018, and then 25% thereafter.
Clear RF, LLC
On March 31, 2021, the Company’s indirectly
and wholly-owned subsidiary ClearRF Nevada Inc. acquired all of the issued and outstanding interests of Clear RF, LLC, or ClearRF, a
Washington State limited liability company, for a total purchase price of $700,000 in a combination of cash and common shares. ClearRF
produces M2M (machine-to-machine) cellular amplifiers for commercial and industrial M2M applications and offers patented direct connect
cellular amplifiers and patented auto gain & oscillation control designed for M2M and “internet-of-things” (IoT) applications.
Two patents (described below) held by ClearRF were subsequently transferred and assigned to Signifi Mobile Inc. following the closing
of this acquisition.
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i. |
RF Passive Bypass technology enables tethered devices to communicate through the amplifier network,
even if the amplifier loses power, or when the signal is not required, a key differentiator amongst competitors, in particular for
mission-critical applications and first responder vehicles that require constant clear cellular coverage and connectivity. |
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ii. |
Auto Gain & Oscillation Control detects the level of incoming signal strength and self-adjusts
output power to ensure maximum signal strength. This feature is vital for telematics (mobile) M2M applications because the amplifier
will be in constant motion and will require periodic self-adjustment based on changing incoming signal environment. |
Seasonality
The Company does not experience any effects of
seasonality it its business. Our products are designed to function at full capacity under all weather conditions and therefore, we do
not experience any shifts in our sales patterns.
Facilities
The Company’s headquarters are located
at 1001 Lenoir Street, Suite A-414, Montreal, QC H4C 2Z6, with approximately 4,472 square feet of space. The Company entered into a lease
agreement for its property for a five-year term, beginning on July 1, 2020 (the “Lease”). The Lease is set to expire on May
31, 2024. Under the Lease, the Company pays Net Rent of $12.00 per square foot per annum, approximately $53,664 annum, payable in monthly
equal installments.
Legal Proceedings
From time to time, we are involved in litigation
or other legal proceedings incidental to our business. We are not currently a party to any litigation the outcome of which, if determined
adversely to us, would individually or in the aggregate be reasonably expected to have a material adverse effect on our business, operating
results, cash flows or financial condition.
Going Concern
Our auditor has included a “going concern”
explanatory paragraph in its report on our consolidated financial statements for the fiscal year ended December 31, 2020, expressing
substantial doubt about our ability to continue as an ongoing business for the next twelve months. Our consolidated financial statements
do not include any adjustments that may result from the outcome of this uncertainty. If we cannot secure the financing needed to continue
as a viable business, our shareholders may lose some or all of their investment in us.
Corporate History and Structure
The Company was incorporated on October 15, 1986
as Big Rock Gold Ltd. as a corporation under the Company Act of British Columbia. On April 5, 1988, the Company changed its name to International
Cruiseshipcenters Corp. On June 24,1991, the Company changed its name to Riley Resources Ltd. Effective January 23, 1998, the Company
consolidated its share capital on an eight-to-one basis and changed its name to International Riley Resources Ltd. Effective November
22, 2001, the Company consolidated its share capital on a five-to-one basis and changed its name to Wind River Resources Ltd. On January
3,2008, the Company changed its name to Teslin River Resources Corp.
On July 24, 2015, Teslin River Resources Corp,
completed a reverse acquisition by way of a three-cornered amalgamation, pursuant to which the Company acquired certain telecom operations
of an Israel-based cellular technology company and changed its name to Siyata Mobile Inc.
On June 7, 2016, the Company acquired all of
the issued and outstanding shares of Signifi Mobile Inc.
In March 2021, the Company acquired, through
a wholly owned subsidiary formed by Signifi, all the outstanding units of Clear RF LLC (“Clear RF”).
The Company was registered with the TSXV under
the symbol SIM, commenced trading on OTCQX under the symbol SYATF from May 11, 2017 until September 25, 2020, at which time the Company’s
common shares were listed only on the Nasdaq Capital Market.
The following diagram illustrates our corporate
structure as of the date of this prospectus:
Recent Developments
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We have experienced an increase of sales of our cellular boosters as more people are working remotely
as a result of the COVID-19 pandemic but our overall sales during the pandemic have remained similar to its sales in 2019 during
this time period with a shift towards increased sales in North America in the first responder market. It is not possible for us to
predict the duration or magnitude of the adverse results of the outbreak and its effects on our business or ability to raise funds.
We plan to address any going concerns from the pandemic by continuing to increase its sales in North America is a substantial larger
market than we have sold in the past. In addition, our cellular distribution business should remain strong during this time since
more individuals will continue to work from home. We also expect the proceeds from this offering to allow us to cover any shortfall
that we may incur until the pandemic is no longer a worldwide issue. In addition, we believe that our cellular booster business remains
strong during the COVID-19 pandemic as more individuals continue to work from home, requiring improved cellular reception. |
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On April 8, 2021, the British Columbia Securities Commission (“BCSC”) issued an order
to cease the trading in our common shares because we had not timely filed with the BCSC our annual audited financial statements for
the year ended December 31, 2020, our annual management’s discussion and analysis for the year ended December 31, 2020, the
annual information form for the year ended December 31, 2020 and the certification of annual filings for the year ended December
31, 2020. We subsequently filed the noted items and the cease trading order was revoked by the BCSC on July 8, 2021. We are currently
in compliance with all BCSC requirements as of the date of this prospectus. |
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On August 20, 2021, the British Columbia Securities Commission (“BCSC”) issued an order
to cease the trading in our common shares because we had not timely filed with the BCSC our interim financial report for the period
ended June 30, 2021, our interim management’s discussion and analysis for the period ended June 30, 2021 and the certification
of interim filings for the period ended June 30, 2021. We subsequently filed the noted items and the cease trading order was revoked
by the BCSC on October 15, 2021. We are currently in compliance with all BCSC requirements as of the date of this prospectus. |
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On October 27, 2021, we entered into
a securities purchase agreement relating to the purchase and sale of a senior secured convertible note (the “Lind Partners
Note”) for gross proceeds of USD$6,000,000 (the “Purchase Agreement”) with Lind Global Partners II, LP, an
investment fund managed by The Lind Partners, a New York based institutional fund manager. Proceeds were used to repay and terminate
existing convertible notes, as well as to pay certain fees and costs associated with the transaction. The Purchase Agreement
provides for, among other things, the issuance of a USD$7,200,000 note with a 24-month maturity, 0% annual interest rate, and
a fixed conversion price of USD$10.00 per share (“Conversion Price”) of our common shares. We are required to make
principal payments in 18 equal monthly installments commencing 180 days after funding (“Repayment”). At our discretion,
the Repayments can be made in: (i) cash; (ii) common shares (after common shares are registered) (the “Repayment Shares”);
or a combination of both. Repayment Shares will be priced at 90% of the average of the five lowest daily volume weighted average
prices (“VWAPs”) during the 20 trading days before the issuance of the common shares (the “Repayment Price”).
Further, the Lind Partners Note provides for a pricing floor of $2.00 per common share (the “Repayment Share Price Floor”)
such that Repayment Shares shall be priced at 90% of the average of the five lowest daily VWAPs during the 20 trading days before
the issuance of the common shares, subject to the Repayment Share Floor Price provided, however, that the Repayment Share Price
Floor shall not be applied once we obtain stockholder approval as required by the Nasdaq at our upcoming Annual General Meeting
of shareholders. As of December 3, 2021, we incurred an event of default under the terms of the Lind Partners Note. Upon the
occurrence and during the continuance of an “Event of Default”, the holder may at any time at its option: (1) declare
that Interest Upon Default Amount (15%) has commenced and (2) exercise all other rights and remedies available to it under the
transaction documents; provided, however, that upon the occurrence of an Event of Default described above, the holder, in its
sole and absolute discretion, may: (a) from time-to-time demand that all or a portion of the outstanding principal amount be
converted into common shares at the lower of (i) the then-current Conversion Price and (ii) 80% of the average of the 3 lowest
daily Volume Weighted Average Prices during the 20 Trading Days prior to the delivery by the holder of the applicable notice
of conversion or (b) exercise or otherwise enforce any one or more of the holder’s rights, powers, privileges, remedies
and interests under the Lind Partners Note, the transaction documents or applicable law. No course of delay on the part of the
holder shall operate as a waiver thereof or otherwise prejudice the rights of the holder. The event of default was cured on December
7, 2021 when the Company’s market capitalization increased to an amount over $20,000,000. If the Company issues any Equity
Interests, other than Exempted Securities, for aggregate proceeds to the Company of greater than $10,000,000, excluding offering
costs or other expenses, unless otherwise waived in writing by and at the discretion of Lind Partners, the Company will direct
20% of such proceeds to reduce the principal balance of the Lind Note. Based on a $20,000,000 offering, 20% of said proceeds,
or $4,000,000, will be used by the Company to reduce the principal balance of the Lind Note. If the Company issues any equity
interests issued, subject to certain exemptions, at an effective price per share that is less than the exercise price of the
Lind Warrant then in effect or without consideration, then the exercise price of the Lind Warrants shall be reduced to a price
equal to the consideration per share paid for such additional common shares. Based on this offering at $2.30 per share, the Lind
Warrants would be repriced to $2.30. Prior to this offering, the exercise price of the Lind Warrants is $4.00 per share. If the
Company issues any equity interests, subject to certain exemptions, at an effective price per share that is less than the conversion
price of the Lind Notes then in effect or without consideration, then the conversion price of the Lind Notes shall be reduced
to a price equal to the consideration per share paid for such additional common shares. Based on this offering at $2.30 per common
share, the conversion price of the Lind Note would be repriced to $2.30, which would result in 3,130,435 shares to be issued
upon conversion of the full $7,200,000 Lind Note. Prior to this offering, the conversion price is $10.00 per share and the shares
issued upon conversion of the full $7,200,000 Lind Note would be 720,000.
See “Description of Share Capital – The Lind Partners
Senior Secured Convertible Note and Warrant” for more information. |
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On October 6, 2021, Siyata Mobile completed a major milestone and entered into a working partnership
with a global leading U.S. distributor (“Leading U.S. Distributor”) for its recently launched SD7 mission-critical push-to-talk
(MCPTT) ruggedized handheld device. The companies signed an addendum to their Master Service Agreement (MSA) appointing the Leading
U.S. Distributor as a non-exclusive SD7 marketing and distribution partner. The Leading U.S. Distributor, the leading global land
mobile radio (LMR) vendor, will be marketing the SD7 both in North America as well as in international markets, selling both directly
and in partnership with us. |
Corporate
Information
Our principal executive offices and headquarters
are located at 1001 Lenoir Street, Suite A-414, Montreal, QC H4C 2Z6 and our phone number is +1-514-500-1181. We maintain a corporate
website at www.siyatamobile.com. The information contained in, or accessible from, our website or any other website does not constitute
a part of this prospectus.
Nasdaq Listing
Our common shares are listed on the Nasdaq Capital
Market under the symbol “SYTA” and our Prior Warrants are listed on the Nasdaq Capital Market under the symbol “SYTAW.”
We currently do not plan to apply to list any other of the securities on any national securities exchange.
The Securities the Company May Offer
The Company may sell, in one or more offerings
pursuant to this prospectus and the applicable prospectus supplement, up to $100,000,000 aggregate amount of common shares, Warrants,
Rights, Purchase Contracts, Debt Securities and Units listed on the cover page of this prospectus.
RISK FACTORS
An investment in our securities involves a high
degree of risk. Before making an investment in our securities, you should carefully consider all of the information included in this
prospectus, the risk factors presented in “Item 3. Key Information—3.D. Risk Factors” of the Form 20-F, which is incorporated
herein by reference, and all of the other information included in any prospectus supplement and other documents that have been incorporated
by reference in this prospectus and any prospectus supplement, as well in our other filings with the Commission. Please see the sections
of this prospectus entitled “Cautionary Note Regarding Forward-Looking Statements” and “Incorporation of Certain Documents
by Reference.” The occurrence of one or more of those risk factors could adversely impact our business, financial condition or
results of operations.
OFFER STATISTICS AND EXPECTED
TIMETABLE
We may sell from time to time pursuant to this
prospectus (as may be detailed in a prospectus supplement) an indeterminate number of common shares, Warrants, Rights, Purchase Contracts,
Debt Securities and/or Units comprised of any of the foregoing securities as shall have a maximum aggregate offering amount of $100,000,000.
The actual price per share or per security of the securities that we will offer pursuant hereto will depend on a number of factors that
may be relevant as of the time of offer. See “Plan of Distribution.”
REASONS FOR THE OFFER AND
USE OF PROCEEDS
We are raising capital to expand and grow our
business. Unless otherwise indicated in an accompanying prospectus supplement, the net proceeds from our sale of securities under this
prospectus will be used for, in no particular order of magnitude, capital expenditures, expansion of our marketing efforts, investments
in or advances to our subsidiaries, acquisitions of complementary businesses, debt reduction or debt refinancing, capital expenditures,
working capital and other general corporate purposes. When securities are offered, the prospectus supplement relating thereto will set
forth our intended use of the net proceeds that we receive from the sale of such securities.
CAPITALIZATION AND INDEBTEDNESS
Our capitalization and indebtedness will be set
forth in a prospectus supplement to this prospectus or in a report on Form 6-K subsequently filed with the Commission and specifically
incorporated herein by reference.
DESCRIPTION OF SHARE CAPITAL
For a description of our share capital, see “ITEM
5. “Operating And Financial Review And Prospects – B. Liquidity and Capital Resources – SHARE CAPITAL” in the
Company’s Annual Report on Form 20-F.
Common Shares
For a description of our common shares, see “Description
of common shares”, below.
Warrants Issued January 11, 2022
Overview
The following summary of certain terms and provisions
of the Warrants issued January 11, 2022 (the “January 22 Warrants”) is not complete and is subject to, and qualified in its
entirety by, the provisions of the warrant agency agreement between Computershare Inc. and Computershare Trust Company, N.A. (together,
the “Warrant Agent”) and the Company (the “Warrant Agreement”), and the form of the January 22 Warrants, both
of which are filed as exhibits to the registration statement relating to the offer and sale of such warrants, which is not incorporated
herein.
The January 22 Warrants entitle the registered
holder to purchase common shares at a price equal to $2.30 per share, subject to adjustment as discussed below, immediately following
the issuance of such warrant and terminating at 5:00 p.m., New York City time, five years after the closing of this offering.
The exercise price and number of common shares
issuable upon exercise of the January 22 Warrants may be adjusted in certain circumstances, including in the event of a stock dividend
or recapitalization, reorganization, merger or consolidation. However, the January 22 Warrants will not be adjusted for issuances common
shares at prices below its exercise price.
Exercisability. The January 22 Warrants
are exercisable at any time after their original issuance and at any time up to the date that is five years after their original issuance.
The January 22 Warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices
of the Warrant Agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied
by full payment of the exercise price, by certified or official bank check payable to us, for the number of warrants being exercised.
Under the terms of the Warrant Agreement, we must use our best efforts to maintain the effectiveness of the registration statement and
current prospectus relating to common shares issuable upon exercise of the Warrants until the expiration of the January 22 Warrants.
If we fail to maintain the effectiveness of the registration statement and a current prospectus relating to the common shares issuable
upon exercise of the January 22 Warrants, the holders of the January 22 Warrants will have the right to exercise the January 22 Warrants
solely via a cashless exercise feature provided for in the January 22 Warrants, until such time as there is an effective registration
statement and a current prospectus.
Exercise Limitation. A holder may not
exercise any portion of a January 22 Warrant to the extent that the holder, together with its affiliates and any other person or entity
acting as a group, would own more than 4.99% of the outstanding common shares after exercise, as such percentage ownership is determined
in accordance with the terms of the January 22 Warrants, except that upon prior notice from the holder to us, the holder may waive such
limitation up to a percentage not in excess of 9.99%.
Exercise Price. The exercise price per
whole common share purchasable upon exercise of the January 22 Warrants is no less than 100% of public offering price of the Units offered
by the Company in this offering. The exercise price is subject to appropriate adjustment in the event of certain stock dividends and
distributions, stock splits, stock combinations, reclassifications or similar events affecting our common shares and also upon any distributions
of assets, including cash, stock or other property to our stockholders.
Fractional Shares. No fractional common
shares will be issued upon exercise of the January 22 Warrants. As to any fraction of a share which the holder would otherwise be entitled
to purchase upon such exercise, the Company will, either pay a cash adjustment in respect of such final fraction in an amount equal to
such fraction multiplied by the exercise price or round up to the nearest whole share.
Transferability. Subject to applicable
laws, the January 22 Warrants may be offered for sale, sold, transferred or assigned without our consent. However, the January 22 Warrants
will not trade on the Nasdaq Capital Market and no trading market is expected to develop for the Warrants.
Warrant Agent; Global Certificate. The
January 22 Warrants will be issued in registered form under a warrant agency agreement between the Warrant Agent and us. The January
22 Warrants were will initially be represented only by one or more global warrants deposited with the Warrant Agent, as custodian on
behalf of The Depository Trust Company (DTC) and registered in the name of Cede & Co., a nominee of DTC, or as otherwise directed
by DTC.
Fundamental Transactions. In the event
of a fundamental transaction, as described in the January 22 Warrants and generally including any reorganization, recapitalization or
reclassification of our common shares, the sale, transfer or other disposition of all or substantially all of our properties or assets,
our consolidation or merger with or into another person, the acquisition of more than 50% of our outstanding common shares, or any person
or group becoming the beneficial owner of 50% of the voting power represented by our outstanding common shares, the holders of the January
22 Warrants will be entitled to receive the kind and amount of securities, cash or other property that the holders would have received
had they exercised the January 22 Warrants immediately prior to such fundamental transaction.
Rights as a Stockholder. The January 22
Warrant holders do not have the rights or privileges of holders of common shares or any voting rights until they exercise their warrants
and receive common shares. After the issuance of common shares upon exercise of the January 22 Warrants, each holder will be entitled
to one vote for each share held of record on all matters to be voted on by shareholders.
Governing Law. The January 22 Warrants
and the Warrant Agreement are governed by New York law.
Prior Warrants
Overview. Our warrants that were issued
in conjunction with our initial public offering on the Nasdaq Capital Market (“Prior Warrants”) were listed on the Nasdaq
Capital Market and currently trade under the symbols “SYTAW.”
The following summary of certain terms and provisions
of the Prior Warrants is not complete and is subject to, and qualified in its entirety by, the provisions of the warrant agency agreement
between us and the Warrant Agent, and the form of Prior Warrants, both of which are filed as exhibits to the registration statement for
that offering which is not incorporated herein by reference.
The Prior Warrants entitle the registered holder
to purchase common shares at a price equal to $6.85 per share, subject to adjustment as discussed below, immediately following the issuance
of such warrant and terminating at 5:00 p.m., New York City time, five years after the closing of the initial public offering in September,
2020.
The exercise price and number of common shares
issuable upon exercise of the Prior Warrants may be adjusted in certain circumstances, including in the event of a stock dividend or
recapitalization, reorganization, merger or consolidation. However, the Prior Warrants will not be adjusted for issuances of common shares
at prices below its exercise price.
Exercisability. The Prior Warrants are
exercisable at any time after their original issuance and at any time up to the date that is five years after their original issuance.
The Prior Warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the
Warrant Agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied
by full payment of the exercise price, by certified or official bank check payable to us, for the number of Prior Warrants being exercised.
Under the terms of the Warrant Agreement, we must use our best efforts to maintain the effectiveness of the registration statement and
current prospectus relating to common shares issuable upon exercise of the Prior Warrants until the expiration of the warrants. If we
fail to maintain the effectiveness of the registration statement and current prospectus relating to the common shares issuable upon exercise
of the Prior Warrants, the holders of the Prior Warrants shall have the right to exercise the Prior Warrants solely via a cashless exercise
feature provided for in the Prior Warrants, until such time as there is an effective registration statement and current prospectus.
Exercise Limitation. A holder may not
exercise any portion of a Prior Warrant to the extent that the holder, together with its affiliates and any other person or entity acting
as a group, would own more than 4.99% of the outstanding common shares after exercise, as such percentage ownership is determined in
accordance with the terms of the warrant, except that upon prior notice from the holder to us, the holder may waive such limitation up
to a percentage not in excess of 9.99%.
Exercise Price. The exercise price per
whole common share purchasable upon exercise of the Prior Warrants is no less than 100% of public offering price of the Units that were
previously offered by the Company. The exercise price is subject to appropriate adjustment in the event of certain stock dividends and
distributions, stock splits, stock combinations, reclassifications or similar events affecting our common shares and also upon any distributions
of assets, including cash, stock or other property to our stockholders.
Fractional Shares. No fractional common
shares will be issued upon exercise of the Prior Warrants. As to any fraction of a share which the holder would otherwise be entitled
to purchase upon such exercise, the Company will round up or down, as applicable, to the nearest whole share.
Transferability. Subject to applicable
laws, the Prior Warrants may be offered for sale, sold, transferred or assigned without our consent.
Warrant Agent; Global Certificate. The
Prior Warrants were issued in registered form under a warrant agency agreement between the Warrant Agent and us. The Prior Warrants were
initially represented only by one or more global warrants deposited with the Warrant Agent, as custodian on behalf of The Depository
Trust Company (DTC) and registered in the name of Cede & Co., a nominee of DTC, or as otherwise directed by DTC.
Fundamental Transactions. In the event
of a fundamental transaction, as described in the Prior Warrants and generally including any reorganization, recapitalization or reclassification
of our common shares, the sale, transfer or other disposition of all or substantially all of our properties or assets, our consolidation
or merger with or into another person, the acquisition of more than 50% of our outstanding common shares, or any person or group becoming
the beneficial owner of 50% of the voting power represented by our outstanding common shares, the holders of the Prior Warrants will
be entitled to receive the kind and amount of securities, cash or other property that the holders would have received had they exercised
the Prior Warrants immediately prior to such fundamental transaction.
Rights as a Stockholder. The Prior Warrant
holders do not have the rights or privileges of holders of common shares or any voting rights until they exercise their warrants and
receive common shares. After the issuance of common shares upon exercise of the Prior Warrants, each holder will be entitled to one vote
for each share held of record on all matters to be voted on by shareholders.
Governing Law. The Prior Warrants and
the warrant agency agreement are governed by New York law.
The Lind Partners Senior Secured Convertible
Note and Warrant
On October 27, 2021, we entered into a securities
purchase agreement relating to the purchase and sale of a senior secured convertible note (the “Lind Partners Note”) for
gross proceeds of USD$6,000,000 (the “Purchase Agreement”) with Lind Global Partners II, LP, an investment fund managed by
The Lind Partners, a New York based institutional fund manager. Proceeds were used to repay and terminate existing convertible notes,
as well as to pay certain fees and costs associated with the transaction. The Purchase Agreement provides for, among other things, the
issuance of a USD$7,200,000 note with a 24-month maturity, 0% annual interest rate, and a fixed conversion price of USD$10.00 per common
share (“Conversion Price”). We are required to make principal payments in 18 equal monthly installments commencing 180 days
after funding (“Repayment”). At our discretion, the Repayments can be made in: (i) cash; (ii) common shares (after common
shares are registered) (the “Repayment Shares”); or a combination of both. Repayment Shares will be priced at 90% of the
average of the five lowest daily volume weighted average prices (“VWAPs”) during the 20 trading days before the issuance
of the common shares (the “Repayment Price”). Further, the Lind Partners Note provides for a pricing floor of $2.00 per common
share (the “Repayment Share Price Floor”) such that Repayment Shares shall be priced at 90% of the average of the five lowest
daily VWAPs during the 20 trading days before the issuance of the common shares, subject to the Repayment Share Floor Price provided,
however, that the Repayment Share Price Floor shall not be applied once we obtain stockholder approval as required by the Nasdaq at our
upcoming Annual General Meeting of shareholders. As of December 3, 2021, we incurred an event default under the terms of the Lind Partners
Note. Upon the occurrence and during the continuance of an “Event of Default”, the holder may at any time at its option:
(1) declare that Interest Upon Default Amount (15%) has commenced and (2) exercise all other rights and remedies available to it under
the transaction documents; provided, however, that upon the occurrence of an Event of Default described above, the holder, in its sole
and absolute discretion, may: (a) from time-to-time demand that all or a portion of the outstanding principal amount be converted into
common shares at the lower of (i) the then-current Conversion Price and (ii) 80% of the average of the 3 lowest daily Volume Weighted
Average Prices during the 20 Trading Days prior to the delivery by the holder of the applicable notice of conversion or (b) exercise
or otherwise enforce any one or more of the holder’s rights, powers, privileges, remedies and interests under the Lind Partners
Note, the transaction documents or applicable law. No course of delay on the part of the holder shall operate as a waiver thereof or
otherwise prejudice the rights of the holder. The event of default was cured on December 7, 2021 when the Company’s market capitalization
increased to an amount over $20,000,000.
The Company will have the right to buy-back the
outstanding face value of the Lind Partners Note at any time with no penalty (“Buy-Back Right”). Should the Company exercise
its Buy-Back Right, Lind will have the option to convert up to 25% of the face value of the Note at the lesser of the Conversion Price
or Repayment Price. Additionally, the Lind Partners Note ranks senior to other Company debt, excluding certain debt facilities, and is
secured over Company assets, as more fully detailed in the Purchase Agreement and Note.
Further, the Purchase Agreement provides that
Lind will also receive a common shares purchase warrant to purchase up to 2,142,857 shares of the Company’s common shares (“Lind
Partners Warrant”). The Lind Partners Warrant may be exercisable with cash payment for 60 months with an exercise price of USD$4.00
per common share and may be exercised on a cashless basis in the event that a registration statement covering the underlying common shares
is not deemed effective. Additionally, in the event that, on any day following the date that is 120 calendar days after the Issue Date,
the Holder is not able to exercise all or any portion of the Lind Partners Warrant, the Company shall, at the Holder’s election,
within 90 calendar days following receipt of a written notice from the Holder (the “Alternate Issuance Notice”) be required,
with respect to all or any portion of the Lind Partners Warrant, as applicable, that cannot be exercised, to pay to the Holder an amount
of cash equal to the Alternate Issuance Value (as defined below) of the portion of the Lind Partners Warrant that is not exercisable
due to the Issuance Cap (as defined below) on the date of such Alternate Issuance Notice (the “Alternate Issuance Shares”).
In the event of any Alternate Issuance, the Exercise Shares shall be reduced by the amount of Alternate Issuance Shares. As defined in
the Lind Partners Warrant, the “Alternate Issuance Value” means a value equal to the number of common shares as to which
the Lind Partners Warrant is sought to be exercised (as indicated on the Exercise Notice), multiplied by a per share price equal to the
VWAP for the Trading Day immediately preceding the intended date of exercise minus the Exercise Price.
If the Company issues any Equity Interests, other
than Exempted Securities, for aggregate proceeds to the Company of greater than $10,000,000, excluding offering costs or other expenses,
unless otherwise waived in writing by and at the discretion of Lind Partners, the Company will direct 20% of such proceeds to reduce
the principal balance of the Lind Note. Based on this $20,000,000 offering, 20% of said proceeds, or $4,000,000, will be used by the
Company to reduce the principal balance of the Lind Note. If the Company issues any equity interests, subject to certain exemptions,
at an effective price per share that is less than the exercise price of the Lind Warrant then in effect or without consideration, then
the exercise price of the Lind Warrants shall be reduced to a price equal to the consideration per share paid for such additional common
shares. Based on this capital raise at $2.300 per share, the Lind Warrants would be repriced to $2.30. Prior to this offering, the exercise
price of the Lind Warrants is $4.00 per share. If the Company issues any equity interests issued, subject to certain exemptions, at an
effective price per share that is less than the conversion price of the Lind Notes then in effect or without consideration, then the
conversion price of the Lind Notes shall be reduced to a price equal to the consideration per share paid for such additional common shares.
Based on the offering at $2.30 per common share, the conversion price of the Lind Note would be repriced to $2.30, which would result
in 3,130,435 shares to be issued upon conversion of the full $7,200,000 Lind Note. Prior to this offering, the conversion price is $10.00
per share and the shares issued upon conversion of the full $7,200,000 Lind Note would be 720,000.
Both the Lind Partners Note and the Lind Partners
Warrant contain certain anti-dilution protection in certain circumstances. In connection with the transaction, the Company filed a registration
statement covering the common shares underlying the Lind Partners Note and Lind Partners Warrant. The Lind Partners Note and Lind Partners
Warrant also include a common share issuance cap preventing the Company from issuing Conversion Shares or Warrant Shares, as the case
may be, in the event that any such issuance would violate any issuance restrictions of the Trading Market, after taking into account
all of the Investor Shares (the “Issuance Cap”), as more fully detailed in the Lind Partners Note and Lind Partners Warrant.
Concurrently with the execution of the Purchase
Agreement, the Company, its subsidiaries and Lind entered into certain security agreements and guarantees as more fully detailed in the
Purchase Agreement.
The Securities Agreement requires that the Company
shall hold a special meeting of shareholders (which may also be at the annual meeting of shareholders) on or before the 90th calendar
day following the date hereof for the purpose of obtaining the Shareholder Approval; provided, however, such 90 calendar days shall be
increased to 120 calendar days in the event the Company receives comments to its proxy statement from the SEC, with the recommendation
of the Board of Directors that such proposal be approved, and the Company shall solicit proxies from its shareholders in connection therewith
in the same manner as all other management proposals in such proxy statement and all management-appointed proxyholders shall vote their
proxies in favor of such proposal. If the Company does not obtain Shareholder Approval at the first meeting, the Company shall call a
meeting every four months thereafter to seek Shareholder Approval until the date the Shareholder Approval is obtained. Prior to any such
shareholder meeting, the Company shall timely file a proxy circular pursuant to NI 51-102 in compliance in all material respects with
the provisions of the Company’s constating documents and all applicable Law.
The Purchase Agreement contains customary representations
and warranties of the Company and Lind. In addition, the Note contains restrictive covenants and event of default provisions that are
customary for transactions of this type.
Lind may sell all, some or none of the common
shares issuable upon conversion of the Lind Partners Note or exercise of the Lind Partners Warrant pursuant to a registration statement
declared effective on December 3, 2021.
DESCRIPTION OF COMMON SHARES
The following description of our common shares
and provisions of our articles are summaries and do not purport to be complete. The following summary is not complete and is qualified
in its entirety by our articles and notice of articles, and the actual terms and conditions of such shares.
We are authorized to issue an unlimited number
of common shares with no par value. We have 15,120,524 common shares issued and outstanding as of June 30, 2022, excluding 1,183,023
common shares that may be granted in the future under our equity incentive plan. We currently only have one class of issued shares, being
the common shares, which have identical rights in all respects and rank equally with one another. On September 20, 2020, the Company
consolidated our issued and outstanding common shares on a 145-to-1 basis.
Our common shares are listed on the Nasdaq Capital
Market and currently trade under the symbols “SYTA.”
All of our issued and outstanding common shares
are fully paid and non-assessable. Unless the board of directors determine otherwise, each holder of our common shares will not receive
a certificate in respect of such common shares. Our shareholders may freely hold and vote their common shares.
Subject to the provisions of the Business
Corporations Act (British Columbia) (“BCBCA”) and our articles regarding redemption and purchase of the shares, the directors
have general and unconditional authority to allot (with or without confirming rights of renunciation), grant options over or otherwise
deal with any unissued shares to such persons, at such times and on such terms and conditions as they may decide. Such authority could
be exercised by the directors to allot shares which cany rights and privileges that are preferential to the rights attaching to common
shares. No share may be issued at a discount except in accordance with the provisions of the BCBCA. The directors may refuse to accept
any application for shares, and may accept any application in whole or in part, for any reason or for no reason.
The holders of common shares are entitled to
vote at all meetings of the shareholders of the Company except meetings at which only holders of a specified class or series of shares
are entitled to vote. The holders of common shares are entitled to receive dividends as and when declared by the Board of Directors.
After payment of all outstanding debts, the holders of common shares shall be entitled to receive the remaining property of the Company
upon the liquidation, dissolution or winding-up thereof.
DESCRIPTION OF WARRANTS
We are registering Warrants to purchase Debt
Securities, common shares, or any combination thereof. We may issue Warrants independently or together with any other securities offered
by a prospectus supplement. Warrants may be attached to or separate from such securities and may or may not be transferable. Each series
of Warrants will be issued under a separate warrant agreement we will enter into with a warrant agent specified in the applicable prospectus
supplement. The warrant agent will act solely as our agent in connection with the warrants of a particular series and will not assume
any obligation or relationship of agency or trust for or with any holders or beneficial owners of warrants. In connection with any Warrants,
we may enter into a standby underwriting agreement with one or more underwriters pursuant to which the underwriters will agree to purchase
any securities underlying such Warrants that remain unpurchased upon the expiration of such Warrants. The issuance of Warrants is subject
to our articles and notice of articles, the BCBCA, and the prior approval of the board of directors and, if applicable, shareholders
at a general meeting.
To the extent appropriate, the applicable prospectus
supplement will describe the specific terms of the Warrants offered thereby, including the following:
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the title of the Warrants; |
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the aggregate number of the Warrants; |
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the price or prices, if any, at which the Warrants will be issued; |
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the currency or currency units in which the offering price, if any, and the
exercise price, are payable; |
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the extent to which the Warrants are not transferable; |
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the designation, number or principal amount and terms of the Debt Securities
and/or common shares purchasable upon exercise of the Warrants; |
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the designation and terms of the other securities, if any, with which the Warrants
are issued and the number of Warrants issued with each security; |
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the date, if any, on and after which the Warrants and the related underlying
securities will be separately transferable; |
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the price at which each underlying security purchasable upon exercise of the
Warrants may be purchased; |
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the date on which the right to exercise the Warrants will commence and the date
on which that right will expire or, if you may not continuously exercise the warrants throughout the period, the specific date or
dates on which you may exercise the Warrants; |
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whether the Warrant will be issued in definitive or global form or in any combination
of these forms, although, in any case, the form of a Warrant included in a Unit will correspond to the form of the unit and of any
security included in that Unit; |
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the identity of the warrant agent or of any other depositaries, execution or
paying agents, transfer agents, registrars or other agents; |
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the maximum or minimum number of the Warrants that may be exercised at any one
time; |
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information with respect to book-entry procedures, if any; |
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in connection with Warrants denominated as Rights, the extent of any over-subscription
privilege with respect to unsubscribed securities; |
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the anti-dilution provisions of the Warrants, if any; |
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any redemption or call provisions; |
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whether the Warrants may be sold separately or with other securities as part of Units; |
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any material Canadian and United States federal income tax consequences; |
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the material terms of any standby underwriting arrangement entered into by us
in connection with any Warrants; and |
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any other terms of the Warrants, including terms, procedures and limitations relating to the transferability,
exchange and exercise of the Warrants. |
DESCRIPTION
OF RIGHTS
We may issue to our shareholders Rights to purchase
our common shares, or Debt Securities. The following description sets forth certain general terms and provisions of the Rights that we
may offer pursuant to this prospectus, or any combination of those securities in the form of Units, as described in the applicable prospectus
supplement. The particular terms of the Rights and the extent, if any, to which the general terms and provisions may apply to the Rights
so offered will be described in the applicable prospectus supplement. To the extent that any particular terms of the Rights, rights agreement
(if any) or Rights certificates described in a prospectus supplement differ from any of the terms described below, then the terms described
below will be deemed to have been superseded by that prospectus supplement. We encourage you to read the applicable rights agreement
(if any) and Rights certificate for additional information before you decide whether to purchase any of our Rights.
Rights may be issued independently or together
with any other security offered by this prospectus, or any combination of those securities in the form of Units, as described in the
applicable prospectus supplement, and may or may not be transferable by the shareholder receiving the Rights in the Rights offering.
Each series of Rights may be issued under a separate rights agreement to be entered into between us and a bank or trust company, as rights
agent. The Rights agent, if any, will act solely as our agent in connection with the certificates relating to the rights of the series
of certificates and will not assume any obligation or relationship of agency or trust for or with any holders of Rights certificates
or beneficial owners of Rights. In connection with any Rights offering, we may enter into a standby underwriting agreement with one or
more underwriters pursuant to which the underwriter will purchase any securities that remain unsubscribed for upon completion of the
Rights offering, or offer these securities to other parties who are not our shareholders. A copy of the form of Rights certificate will
be filed with the Commission each time we issue Rights, and you should read that document for provisions that may be important to you.
The issuance of Rights is subject to our articles and notice of articles, the BCBCA, the prior approval of the board of directors and,
if applicable, shareholders at a general meeting.
The applicable prospectus supplement relating
to any Rights will describe the terms of the offered Rights, including, where applicable, the following:
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the date for determining the shareholders entitled to the Rights distribution; |
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the exercise price for the Rights; |
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the number of Rights issued to each shareholder and the aggregate number of
Rights issued; |
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the exercise price payable for each common share or Debt Security upon the exercise
of the Rights; |
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the number and terms of the common shares or Debt Securities which may be purchased
per Right; |
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the extent to which the Rights are transferable and the date, if any, on and
after the Rights may be separately transferred; |
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the date on which the right to exercise the Rights will commence and the date
on which the right to exercise the Rights will expire; |
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the method by which holders of Rights will be entitled to exercise; |
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the conditions to the completion of the offering; if any; |
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the withdrawal, termination and cancellation rights, if any; |
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the extent to which the Rights include an over-subscription privilege with respect
to unsubscribed securities; |
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the material terms of any standby underwriting arrangement entered into by us
in connection with the Rights offering; and |
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any other terms of the Rights, including terms, procedures and limitations relating
to the exchange and exercise of the Rights; |
Holders may exercise rights as described in the
applicable prospectus supplement. Upon receipt of payment and the Rights certificate properly completed and duly executed at the corporate
trust office of the rights agent or any other office indicated in the prospectus supplement, we will, as soon as practicable, forward
the common shares or other securities, as applicable, purchasable upon exercise of the Rights. The issuance of rights agreements is subject
to our articles and notice of articles, the BCBCA, and the prior approval of the board of directors and shareholders at a general meeting.
Rights Agent
The Rights agent (if any) for any Rights we offer
will be set forth in the applicable prospectus supplement.
DESCRIPTION OF PURCHASE
CONTRACTS
We may issue Purchase Contracts, including contracts
obligating holders to purchase from us, and obligating us to sell to the holders, a specified number of common shares, Warrants, Rights,
Debt Securities, or any combination thereof, at a future date or dates. The price per security of the securities and the number of securities
may be fixed at the time the Purchase Contracts are issued or may be determined by reference to a specific formula set forth in the Purchase
Contracts. The Purchase Contracts also may require us to make periodic payments to the holders of the Purchase Contracts, or vice
versa, and those payments may be unsecured or refunded on some basis. The Purchase Contracts may require holders to secure their
obligations thereunder in a specified manner and may provide for the prepayment of all or part of the consideration payable by holders
in connection with the purchase of the underlying security or other property pursuant to the Purchase Contracts. The securities related
to Purchase Contracts may be pledged to a collateral agent for our benefit pursuant to a pledge agreement to secure the obligations of
holders of the Purchase Contracts to purchase the underlying security or property under the related Purchase Contracts. The rights of
holders of Purchase Contracts to the related pledged securities will be subject to our security interest therein created by the pledge
agreement. No holder of Purchase Contracts will be permitted to withdraw the pledged securities related to such Purchase Contracts from
the pledge arrangement.
Subject to any restrictions under to our articles,
notice of articles, or the BCBCA, the Purchase Contracts may obligate us to purchase from holders, and obligate holders to sell to us,
a specific or variable number of our common shares, Warrants, Rights, Debt Securities, or any combination thereof.
The prospectus supplement relating to any particular
issuance of Purchase Contracts will describe the terms of the Purchase Contracts. The description in the prospectus supplement will not
necessarily be complete, and reference will be made to the Purchase Contracts, and, if applicable, collateral or depositary arrangements,
relating to the Purchase Contracts, which will be filed with the Commission each time we issue purchase contracts. U.S. federal income
tax considerations applicable to the Purchase Contracts will also be discussed in the prospectus supplement.
DESCRIPTION OF DEBT SECURITIES
We may issue, separately or together with, or
upon conversion, exercise or exchange of other securities, Debt Securities from time to time in one or more series, as set forth in the
applicable prospectus supplement. We may issue senior Debt Securities or subordinated Debt Securities under separate indentures between
us and an indenture trustee to be named in a prospectus supplement, which may be supplemented or amended from time to time following
their execution. The senior Debt Securities will be our direct, unsecured general obligations, will constitute senior indebtedness, and
will have the same rank as our other senior indebtedness. The subordinated Debt Securities will be our direct, unsecured general obligations.
The subordinated Debt Securities will be subordinate and junior in right of payment to all senior indebtedness and, in certain circumstances
relating to our dissolution, winding-up, liquidation, or reorganization, to all other financial obligations. Unless otherwise specified
in the applicable prospectus supplement, the amount of debt, including senior indebtedness, or other financial obligations we may incur
will not be limited.
Senior Debt Securities would be issued under
a senior indenture and subordinated Debt Securities would be issued under a subordinated indenture. The senior indenture and subordinated
indenture are referred to individually in this prospectus as the “indenture”, and collectively as the “indentures.”
We will file the indentures as an exhibit to a Form 6-K or as an amendment to the registration statement of which this prospectus is
a part and which are incorporated by reference into this prospectus.
The particular terms of a series of Debt Securities
will be described in a prospectus supplement relating to such series of Debt Securities. The indentures will be subject to and
governed by the Trust Indenture Act of 1939, as amended. Unless otherwise stated in the applicable prospectus supplement, we will not
be limited in the amount of Debt Securities that we may issue, and neither the senior Debt Securities nor the subordinated Debt Securities
will be secured by any of our property or assets. Thus, by owning Debt Securities, you will be one of our unsecured creditors.
The following is a description of the material
features, terms and provisions of Debt Securities that we may offer. The following summary does not purport to be complete and is subject
to, and is qualified in its entirety by reference to, the indentures. The indentures, and any supplemental indentures, will contain the
full legal text of the matters described in this section of the prospectus and their terms may vary from the description set forth herein.
Because this section is a summary, it does not describe every aspect of the Debt Securities or any applicable indentures or supplemental
indenture. Your rights will be defined by the terms of any applicable indenture or supplemental indenture, not the summary provided
herein. This summary is also subject to and qualified by reference to the description of the particular terms of a particular series
of Debt Securities described in the applicable prospectus supplement or supplements. You should carefully consider the actual provisions
of the indentures and any supplemental indentures.
The Debt Securities may be denominated and payable
in U.S. dollars. We may also issue Debt Securities, from time to time, with the principal amount, interest or other amounts payable on
any relevant payment date to be determined by reference to one or more currency exchange rates, securities or baskets of securities,
commodity prices, indices or any other financial, economic or other measure or instrument, including the occurrence or non-occurrence
of any event or circumstance. In addition, we may issue Debt Securities as part of any Units issued by us. All references in this prospectus
or any prospectus supplement to other amounts will include premiums, if any, other cash amounts payable under the applicable indenture,
and the delivery of securities or baskets of securities under the terms of the Debt Securities. Debt securities may bear interest at
a fixed rate, which may be zero, or a floating interest rate.
We are not obligated to issue all Debt Securities
of one series at the same time and, unless otherwise provided in the applicable prospectus supplement, we may reopen a series, without
the consent of the holders of the outstanding Debt Securities of that series, for the issuance of additional Debt Securities of that
series. Additional Debt Securities of a particular series will have the same terms and conditions as outstanding Debt Securities of such
series, except for the issue date and, in some cases, the public offering price and the first interest payment date, and will be consolidated
with, and form a single series with, such outstanding Debt Securities; provided, however, that if such additional Debt Securities are
not fungible with the outstanding Debt Securities of such series for U.S. federal income tax purposes, the additional Debt Securities
will have a separate CUSIP number.
If we denominate the purchase price of any of
the Debt Securities in a foreign currency or currencies, or if the principal of and any premium and interest on any series of Debt Securities
is payable in a foreign currency or currencies, we will provide you with information on the restrictions, elections, general tax considerations,
specific terms and other information with respect to that issue of Debt Securities and such foreign currency or currencies in the applicable
prospectus supplement.
The prospectus supplement will set forth, among
other things:
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the title of Debt Securities; |
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the price or prices (expressed as a percentage of the principal amount) at which
we will sell the Debt Securities; |
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whether the Debt Securities will be senior Debt Securities or subordinated Debt
Securities, and if they are subordinated Debt Securities, the terms of the subordination; |
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any limit on the aggregate principal amount of the Debt Securities and the right,
if any, to extend such date or dates; |
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the date or dates on which we will pay the principal on the Debt Securities; |
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the rate or rates (which may be fixed or variable) per annum or the method used
to determine the rate or rates (including any commodity, commodity index, stock exchange index or financial index) at which the Debt
Securities will bear interest, the date or dates from which interest will accrue, the date or dates on which interest will commence
and be payable and any regular record date for the interest payable on any interest payment date; |
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the right, if any, to extend the interest periods and the duration of that extension; |
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the place or places where principal of, and premium and interest on, the Debt
Securities will be payable; |
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the terms and conditions upon which we may redeem the Debt Securities; |
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any obligation we have to redeem or purchase the Debt Securities pursuant to
any sinking fund or analogous provisions or at the option of a holder of Debt Securities; |
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the dates on which and the price or prices at which we will repurchase Debt
Securities at the option of the holders of Debt Securities and other detailed terms and provisions of these repurchase obligations; |
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the denominations in which the Debt Securities will be issued, if other than
minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof; |
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whether the Debt Securities will be issued in the form of certificated Debt
Securities or global Debt Securities; |
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the portion of principal amount of the Debt Securities payable upon declaration
of acceleration of the maturity date, if other than the principal amount; |
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the designation of the currency or currencies in which payment of principal
of, and premium and interest on, the Debt Securities will be made if other than U.S. dollars; |
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any provisions relating to any security provided for the Debt Securities; |
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any addition to or change in the events of default described in this prospectus
or in the indenture with respect to the Debt Securities and any change in the acceleration provisions described in this prospectus
or in the indenture with respect to the Debt Securities; |
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any addition to or change in the covenants described in this prospectus or in
the indenture with respect to the Debt Securities; |
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any other terms of the Debt Securities, which may modify or delete any provision
of the indenture as it applies to that series; |
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if and as applicable, the terms and conditions of any right to exchange for
or convert Debt Securities of the series into shares of our common shares or other securities or another person; and |
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any depositaries, interest rate calculation agents, exchange rate calculation
agents or other agents with respect to the Debt Securities. |
The foregoing is not intended to be an exclusive
list of the terms that may be applicable to any offered Debt Securities.
We may issue Debt Securities that provide for
an amount less than their stated principal amount to be due and payable upon declaration of acceleration of their maturity pursuant to
the terms of the indenture. We will provide you with information on the federal income tax considerations and other special considerations
applicable to any of these Debt Securities in the applicable prospectus supplement. The issuance of Debt Securities is subject to our
articles and notice of articles, the BCBCA, and the prior approval of the board of directors and, if applicable, shareholders at a general
meeting.
Exchange and Transfer
Debt Securities may be transferred or exchanged
at the office of the registrar or co-registrar designated by us.
We will not impose a service charge for any transfer
or exchange, but we may require holders to pay any tax or other governmental charges associated with any transfer or exchange.
In the event of any potential redemption of Debt
Securities of any series, we will not be required to:
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issue, register the transfer of, or exchange, any Debt Security of that series
during a period beginning at the opening of 15 business days before the day of sending of a notice of redemption and ending at the
close of business on the day such notice is sent; or |
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register the transfer of or, exchange any, Debt Security of that series selected,
called or being called for redemption, in whole or in part, except the unredeemed portion being redeemed in part. |
We may initially appoint the trustee as the registrar.
Any transfer agent, in addition to the registrar initially designated by us, will be named in the prospectus supplement. We may designate
additional transfer agents or change transfer agents or change the office of the transfer agent. However, we will be required to maintain
a transfer agent in each place of payment for the Debt Securities of each series.
Global Securities
The Debt Securities of any series may be represented,
in whole or in part, by one or more global securities. Each global security will:
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be registered in the name of a depositary that we will identify in a prospectus
supplement; |
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be deposited with the depositary or its nominee; and |
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bear any required legends. |
No global security may be exchanged in whole
or in part for Debt Securities registered in the name of any person other than the depositary or any nominee unless:
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the depositary has notified us that it is unwilling or unable to continue as depositary or has ceased
to be qualified to act as depositary, and in either case we fail to appoint a successor depositary registered as a clearing agency
under the Exchange Act within 90 days of such event; |
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we execute and deliver to the trustee an officer’s certificate to the effect that such global
securities shall be so exchangeable; or |
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an event of default with respect to the Debt Securities represented by such global securities shall
have occurred and be continuing. |
As long as the depositary, or its nominee, is
the registered owner of a global security, the depositary or nominee will be considered the sole owner and holder of the Debt Securities
represented by the global security for all purposes under the indenture. Except in the above limited circumstances, owners of beneficial
interests in a global security:
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will not be entitled to have the Debt Securities registered in their names; |
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will not be entitled to physical delivery of certificated Debt Securities; and |
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will not be considered to be holders of those Debt Securities under the indenture. |
Payments on a global security will be made to
the depositary or its nominee as the holder of the global security. Some jurisdictions have laws that require that certain purchasers
of securities take physical delivery of such securities in definitive form. These laws may impair the ability to transfer beneficial
interests in a global security.
Institutions that have accounts with the depositary
or its nominee are referred to as “participants.” Ownership of beneficial interests in a global security will be limited
to participants and to persons that may hold beneficial interests through participants. The depositary will credit, on its book-entry
registration and transfer system, the respective principal amounts of Debt Securities represented by the global security to the accounts
of its participants. Each person owning a beneficial interest in a global security must rely on the procedures of the depositary (and,
if such person is not a participant, on procedures of the participant through which such person owns its interest) to exercise any rights
of a holder under the indenture.
Ownership of beneficial interests in a global
security will be shown on and effected through records maintained by the depositary, with respect to participants’ interests, or
by any participant, with respect to interests of persons held by participants on their behalf. Payments, transfers and exchanges relating
to beneficial interests in a global security will be subject to policies and procedures of the depositary. The depositary policies and
procedures may change from time to time. Neither we nor the trustee will have any responsibility or liability for the depositary’s
or any participant’s records with respect to beneficial interests in a global security.
Payment and Paying Agent
The provisions of this subsection will apply
to the Debt Securities unless otherwise indicated in the prospectus supplement. Payment of interest on a Debt Security on any interest
payment date will be made to the person in whose name the Debt Security is registered at the close of business on the regular record
date. Payment on Debt Securities of a particular series will be payable at the office of a paying agent or paying agents designated by
us. However, at our option, we may pay interest by mailing a check to the record holder.
We may also name any other paying agents in the
prospectus supplement. We may designate additional paying agents, change paying agents or change the office of any paying agent. However,
we will be required to maintain a paying agent in each place of payment for the Debt Securities of a particular series.
All moneys paid by us to a paying agent for payment
on any Debt Security that remain unclaimed at the end of two years after such payment was due will be repaid to us. Thereafter, the holder
may look only to us for such payment.
Consolidation, Merger and Paying Agent
Except as otherwise set forth in the applicable
prospectus supplement, we may not consolidate with or merge into any other person, in a transaction in which we are not the surviving
corporation, or convey, transfer or lease our properties and assets substantially as an entirety to, any person, unless:
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the successor assumes our obligations on the Debt Securities and under the indenture
pursuant to a supplemental indenture or other agreements in form reasonably satisfactory to the trustee; |
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immediately after giving effect to the transaction and treating our obligations
in connection with or as a result of such transaction as having been incurred as of the time of such transaction, no default or event
of default shall have occurred and be continuing under the indenture; and |
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certain other conditions are met. |
Event of Default
Event of default means, with respect to any series
of Debt Securities, any of the following:
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default in the payment of any interest on any Debt Security of that series when
it becomes due and payable, and continuance of that default for a period of 90 days; |
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default in the payment of principal of, or premium on, any Debt Security of
that series when due and payable; |
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default in the performance or breach of any other covenant or warranty by us
in the indenture (other than a covenant or warranty that has been included in the indenture solely for the benefit of a series of
Debt Securities other than that series), which default continues uncured for a period of 90 days after we receive written notice
from the trustee or we and the trustee receive written notice from the holders of not less than a majority in aggregate principal
amount of the outstanding Debt Securities of that series as provided in the indenture; |
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certain events of bankruptcy, insolvency or reorganization of our Company; and |
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any other event of default provided with respect to Debt Securities of that
series that is described in the applicable prospectus supplement. |
No event of default with respect to a particular
series of Debt Securities (except as to certain events of bankruptcy, insolvency or reorganization) necessarily constitutes an event
of default with respect to any other series of Debt Securities. The occurrence of an event of default may constitute an event of default
under our bank credit agreements in existence from time to time. In addition, the occurrence of certain events of default or an acceleration
under the indenture may constitute an event of default under certain of our other indebtedness outstanding from time to time.
If an event of default (other than an event of
default resulting from certain events of bankruptcy, insolvency or reorganization) with respect to Debt Securities of any series at the
time outstanding occurs and is continuing, then the trustee or the holders of not less than 25% in aggregate principal amount of the
outstanding Debt Securities of that series may, by a notice in writing to us (and to the trustee if given by the holders), declare to
be due and payable immediately the principal (or, if the Debt Securities of that series are discount securities, that portion of the
principal amount as may be specified in the terms of that series) of, and accrued and unpaid interest, if any, on all Debt Securities
of that series. In the case of an event of default resulting from certain events of bankruptcy, insolvency or reorganization, the principal
(or such specified amount) of and accrued and unpaid interest, if any, on all outstanding Debt Securities will become and be immediately
due and payable without any declaration or other act on the part of the trustee or any holder of outstanding Debt Securities. At any
time after a declaration of acceleration with respect to Debt Securities of any series has been made, the holders of a majority in aggregate
principal amount of the outstanding Debt Securities of that series may rescind and annul the acceleration if all events of default, other
than the non-payment of accelerated principal and interest, if any, with respect to Debt Securities of that series, have been cured or
waived and all sums paid or advanced by the trustee and the reasonable compensation expenses and disbursements of the trustee and its
agents and counsel have been paid as provided in the indenture.
The indenture may provide that the trustee will
be under no obligation to exercise any of its rights or powers under the indenture at the request of any holder of outstanding Debt Securities,
unless the trustee receives indemnity satisfactory to it against any loss, liability or expense. Subject to certain rights of the trustee,
the holders of a majority in principal amount of the outstanding Debt Securities of any series will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the trustee or exercising any trust or power conferred on the
trustee with respect to the Debt Securities of that series.
No holder of any Debt Security of any series
will have any right to institute any proceeding, judicial or otherwise, with respect to the indenture or for the appointment of a receiver
or trustee, or for any remedy under the indenture, unless:
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that holder has previously given to the trustee written notice of a continuing
event of default with respect to Debt Securities of that series; and |
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the holders of at least 25% in aggregate principal amount of the outstanding
Debt Securities of that series have made written request, and offered indemnity satisfactory to the trustee, to the trustee to institute
the proceeding as trustee, and the trustee has not received from the holders of a majority in aggregate principal amount of the outstanding
Debt Securities of that series a direction inconsistent with that request and has failed to institute the proceeding within 60 days. |
Notwithstanding the foregoing, the holder of
any Debt Security will have an absolute and unconditional right to receive payment of the principal of, and premium and any interest
on, that Debt Security on or after the due dates expressed in that Debt Security and to institute suit for the enforcement of such payment.
The indenture may require us, within 120 days
after the end of our fiscal year, to furnish to the trustee a statement as to compliance with the indenture. The indenture may provide
that the trustee may withhold notice to the holders of Debt Securities of any series of any default or event of default (except in payment
on any Debt Securities of that series) with respect to Debt Securities of that series if it in good faith determines that withholding
notice is in the interest of the holders of those Debt Securities.
Modification and Waiver
We may amend or modify the indenture without
the consent of any holder of Debt Securities of the series affected by the modifications or amendments in order to:
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cure any ambiguity, defect or inconsistency, provided that the interests of the holders are not adversely
affected; |
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conform the text of the indenture or the Debt Securities to any corresponding provision of this “Description
of Debt Securities”, as evidenced by an officer’s certificate; |
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provide for the issuance of additional Debt Securities; |
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provide for the assumption of our obligations in the case of a merger or consolidation and our discharge
upon such assumption; |
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add covenants or make any change that would provide any additional rights or benefits to the holders
of the Debt Securities; |
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add guarantees with respect to the Debt Securities; |
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provide for uncertificated Debt Securities in addition to or in place of certificated Debt Securities; |
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secure the Debt Securities; |
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add or appoint a successor or separate trustee; |
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make any change that does not adversely affect the interests of any holder of Debt Securities; or |
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obtain or maintain the qualification of the indenture under the Trust Indenture Act of 1939, as amended. |
Other amendments and modifications of the indenture
or the Debt Securities issued may be made with the consent of the holders of at least a majority of the aggregate principal amount of
the outstanding Debt Securities of the affected series, and our compliance with any provision of the indenture with respect to the Debt
Securities may be waived by written notice to the trustee by the holders of a majority of the aggregate principal amount of the outstanding
Debt Securities of the affected series. However, no modification or amendment may, without the consent of the holder of each outstanding
Debt Security of the affected series:
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reduce the principal amount, any premium or change the fixed maturity of any
Debt Security or alter or waive any of the provisions with respect to the redemption or repurchase of the Debt Securities; |
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change the place of payment or currency in which principal, any premium or interest
is paid; |
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impair the right to institute suit for the enforcement of any payment on the
Debt Securities; |
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waive a payment default with respect to the Debt Securities; |
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reduce the interest rate or extend the time for payment of interest on the Debt
Securities; |
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make any change to the amendment and modification provisions in the indenture;
or |
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reduce the percentage in principal amount outstanding of Debt Securities, the
consent of the holders of which is required for any of the foregoing modifications or otherwise necessary to modify, supplement or
amend the indenture or to waive any past default. |
Except for certain specified provisions, the
holders of at least a majority in principal amount of the outstanding Debt Securities of an affected series may, on behalf of the holders
of all Debt Securities of such series, waive our compliance with provisions of the indenture. The holders of a majority in aggregate
principal amount of the outstanding Debt Securities of such series may, on behalf of the holders of all the Debt Securities of such series,
waive any past default under the indenture with respect to such Debt Securities and its consequences, except a default in the payment
of the principal of, or premium or any interest on, any Debt Security or in respect of a covenant or provision that cannot be modified
or amended without the consent of all of the holders of the outstanding Debt Securities of the affected series; provided, however, that
the holders of a majority in aggregate principal amount of the outstanding Debt Securities of such series may rescind and annul an acceleration
and its consequences, including any related payment default that resulted from the acceleration.
Defeasance of Debt Securities and Certain
Covenants in Certain Circumstances
Legal Defeasance. The indenture may provide
that, in certain circumstances, we may be discharged from any and all obligations in respect of the Debt Securities of any series (except
for certain obligations to register the transfer or exchange of Debt Securities, to replace stolen, lost or mutilated Debt Securities,
and to maintain paying agencies and certain provisions relating to the treatment of funds held by paying agents). We will be so discharged
upon the deposit with the trustee, in trust, of money and/or U.S. government obligations that, through the payment of interest and principal
in accordance with their terms, will provide money in an amount sufficient in the opinion of a nationally recognized firm of independent
public accountants to pay and discharge each installment of principal, premium and interest in accordance with the terms of the indenture
and the Debt Securities of that series.
This discharge may occur only if, among other
things, we have delivered to the trustee an opinion of counsel stating that we have received from, or there has been published by, the
U.S. Internal Revenue Service a ruling or, since the date of execution of the indenture, there has been a change in the applicable U.S.
federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the beneficial owners of
the Debt Securities of the applicable series will not recognize income, gain or loss for U.S. federal income tax purposes as a result
of the deposit, defeasance and discharge and will be subject to U.S. federal income tax on the same amounts and in the same manner and
at the same times as would have been the case if the deposit, defeasance and discharge had not occurred.
Defeasance of Certain Covenants. The indenture
may provide that, upon compliance with certain conditions, we may omit to comply with certain covenants set forth in the indenture, and
any omission to comply with those covenants will not constitute a default or an event of default with respect to the Debt Securities
of the applicable series, or covenant defeasance.
The conditions include:
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depositing with the trustee money and/or U.S. government obligations that, through
the payment of interest and principal in accordance with their terms, will provide money in an amount sufficient in the opinion of
a nationally recognized firm of independent public accountants to pay and discharge each installment of principal of, premium and
interest in accordance with the terms of the indenture and the Debt Securities of the applicable series; and |
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delivering to the trustee an opinion of counsel to the effect that the beneficial
owners of the Debt Securities of the applicable series will not recognize income, gain or loss for U.S. federal income tax purposes
as a result of the deposit and related covenant defeasance and will be subject to U.S. federal income tax on the same amounts and
in the same manner and at the same times as would have been the case if the deposit and related covenant defeasance had not occurred. |
Conversion and Exchange Rights
If specified in the applicable prospectus supplement,
the Debt Securities of a series may be convertible into or exchangeable for common shares or other securities of us or another entity.
We will describe in the applicable prospectus supplement, among other things, any required shareholder approvals for the conversion and
issuance of shares, the conversion or exchange rate or price and any adjustments thereto, the conversion or exchange period or periods,
provisions as to whether conversion or exchange will be mandatory, at our option or at the option of the holders of that series of Debt
Securities, and provisions affecting conversion or exchange in the event of the redemption of that series of Debt Securities.
Governing Law
The indenture and the Debt Securities, and any
claim, controversy or dispute arising under or related to the indenture or the Debt Securities, will be governed by and construed in
accordance with the laws of the state of New York.
DESCRIPTION
OF UNITS
We may issue Units comprising one or more securities
described in this prospectus in any combination. The following description sets forth certain general terms and provisions of the Units
that we may offer pursuant to this prospectus. The particular terms of the Units and the extent, if any, to which the general terms and
provisions may apply to the Units so offered will be described in the applicable prospectus supplement. The issuance of Units is subject
to our articles and notice of articles, the BCBCA, and the prior approval of the board of directors and shareholders at a general meeting.
We will incorporate by reference from reports
that we file with the Commission, the form of unit agreement that describes the terms of the series of Units we are offering, and any
supplemental agreements, before the issuance of the related series of Units. The following summaries of material terms and provisions
of the Units are subject to, and qualified in their entirety by reference to, all the provisions of the unit agreement and any supplemental
agreements applicable to a particular series of Units. We urge you to read the applicable prospectus supplements related to the particular
series of Units that we may offer under this prospectus, as well as any related free writing prospectuses and the complete unit agreement
and any supplemental agreements that contain the terms of the Units.
Each Unit will be issued so that the holder of
the Unit is also the holder of each security included in the Unit. Thus, the Unit will have the rights and obligations of a holder of
each included security. Units will be issued pursuant to the terms of a unit agreement, which may provide that the securities included
in the Unit may not be held or transferred separately at any time or at any time before a specified date. A copy of the forms of the
unit agreement and the unit certificate relating to any particular issue of Units will be filed with the Commission each time we issue
Units, and you should read those documents for provisions that may be important to you.
The prospectus supplement relating to any particular
issuance of Units will describe the terms of those Units, including, to the extent applicable, the following:
| ● | the designation
and terms of the Units and the securities comprising the Units, including whether and under
what circumstances those securities may be held or transferred separately; |
| ● | any provision
for the issuance, payment, settlement, transfer or exchange of the Units or of the securities
comprising the Units; |
| ● | any provision
of the governing unit agreement that different from those described below; and |
| ● | whether the Units
will be issued in fully registered or global form. |
The provisions described in this section, as
well as those set forth in any prospectus supplement or as described under “Description of common shares”, “Description
of Warrants”, “Description of Rights”, “Description of Purchase Contracts” and “Description of Debt
Securities” will apply to each Unit, as applicable, and to any common share, Warrant, Right, Purchase Contract or Debt Security,
included in each Unit, as applicable.
COMPARISON OF BRITISH COLUMBIA
AND DELAWARE CORPORATE LAW
The Company is a corporation governed by the
BCBCA. The BCBCA differs in some material respects from the laws generally applicable to Delaware corporations under the Delaware General
Corporation Law (the “DGCL”). Below is a summary of certain of those material differences. This summary is qualified in its
entirety by reference to the DGCL, the BCBCA, and the Company’s articles and notice of articles.
| |
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Delaware |
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British
Columbia (Canada) |
| Stockholder/ Shareholder Approval of Business Combinations;
Fundamental Changes |
|
Under
the DGCL, certain fundamental changes, such as amendments to the certificate of incorporation,
a merger, consolidation, sale, lease, exchange or other disposition of all or substantially
all of the property of a corporation not in the usual and regular course of the corporation's
business, or a dissolution of the corporation, are generally required to be approved by the
affirmative vote of the holders of a majority of the outstanding stock present in person
or represented by proxy and entitled to vote on the matter, unless a corporation's certificate
of incorporation or the bylaws require a higher percentage.
However, generally under the DGCL, stockholder
approval is not required if the number of shares of common stock, including securities convertible into common stock, of a corporation
issued in a merger does not exceed 20% of its stock outstanding immediately prior to the effective date of the merger. In certain
situations, the approval of a business combination may require approval by a certain number of the holders of a class or series of
shares. In addition, Section 251(h) of the DGCL provides that stockholders of a constituent corporation need not vote to approve
a merger if: (i) the merger agreement permits or requires the merger to be effected under Section 251(h) and provides that the merger
shall be effected as soon as practicable following the tender offer or exchange offer, (ii) a corporation consummates a tender or
exchange offer for any and all of the outstanding stock of such constituent corporation that would otherwise be entitled to vote
to approve the merger, (iii) immediately following the consummation of the offer, the stock accepted for purchase or exchanges plus
the stock owned by the consummating corporation equals at least the percentage of stock that would be required to adopt the agreement
of merger under the DGCL, (iv) the corporation consummating the offer merges with or into such constituent corporation and (v) each
outstanding share of each class or series of stock of the constituent corporation that was the subject of and not irrevocably accepted
for purchase or exchange in the offer is to be converted in the merger into, or the right to receive, the same consideration to be
paid for the shares of such class or series of stock of the constituent corporation irrevocably purchased or exchanged in such offer.
The DGCL does not contain a procedure comparable
to a plan of arrangement under BCBCA. |
|
Under
the BCBCA and the Company's articles, certain company alterations, such as changes to authorized
share structure, continuances, into or out of province, certain amalgamations, sales, leases
or other dispositions of all or substantially all of the undertaking of a company (other
than in the ordinary course of business) liquidations, dissolutions, and certain arrangements
are required to be approved by ordinary or special resolution as applicable.
An ordinary resolution is a resolution passed
at a shareholders’ meeting by a simple majority of the votes cast by shareholders, in person or by proxy, that carry the right
to vote on the resolution.
A special resolution is a resolution passed
at a shareholders’ meeting by a two-thirds majority of the votes cast by shareholders, in person or by proxy, that carry the
right to vote on the resolution.
Holders of multiple voting shares and subordinate
voting shares vote together at all meetings of shareholders except meetings at which only holders of a particular class are entitled
to vote.
Under the BCBCA, an action that prejudices
or interferes with a right or special right attached to issued shares of a class or series of shares must be approved by a special
separate resolution of the holders of the class or series of shares being affected. Under the BCBCA, arrangements are permitted and
a company may make any proposal it considers appropriate "despite any other provision" of the BCBCA. In general, a plan
of arrangement is approved by a company's board of directors and then is submitted to a court for approval. It is customary for a
company in such circumstances to apply to a court initially for an interim order governing various procedural matters prior to calling
any security holder meeting to consider the proposed arrangement. Plans of arrangement involving shareholders must be approved by
a special resolution of shareholders, including holders of shares not normally entitled to vote.
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Delaware |
|
British Columbia (Canada) |
| |
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|
|
The court
may, in respect of an arrangement proposed with persons other than shareholders and creditors, require
that those persons approve the arrangement in the manner and to the extent required by the court.
The court determines, among other things, to whom notice shall be given and whether, and in what manner,
approval of any person is to be obtained and also determines whether any shareholders may dissent
from the proposed arrangement and receive payment of the fair value of their shares. Following compliance
with the procedural steps contemplated in any such interim order (including as to obtaining security
holder approval), the court would conduct a final hearing, which would, among other things, assess
the fairness of the arrangement and approve or reject the proposed arrangement.
The BCBCA does not contain a provision comparable
to Section 251(h) of the DGCL. |
| |
|
|
|
|
| Special Vote Required for Combinations with Interested Stockholders/ Shareholders |
|
Unless a Delaware corporation's certificate of incorporation provides that it elects not to be governed
by Section 203 of the DGCL, a Delaware corporation may not engage in a business combination with an interested stockholder for a
period of three years after the time of the transaction in which the person became an interested stockholder, unless (i) the board
of directors of the corporation, prior to the time of the transaction in which the person became an interested stockholder, approves
either the business combination or the transaction in which the stockholder becomes an interested stockholder; (ii) upon consummation
of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the transaction commenced (excluding shares owned by directors
and officers of the corporation and shares held in certain types of employee stock plans); or (iii) the board of directors and the
holders of at least two-thirds of the outstanding voting stock not owned by the interested stockholder approve the business combination
on or after the time of the transaction in which the person became an interested stockholder. For purposes of Section 203, the DGCL,
subject to specified exceptions, generally defines an interested stockholder to include any person who, together with that person's
affiliates or associates, (i) owns 15% or more of the outstanding voting stock of the corporation (including any rights to acquire
stock pursuant to an option, warrant, agreement, arrangement or understanding, or upon the exercise of conversion or exchange rights,
and stock with respect to which the person has voting rights only), or (ii) is an affiliate or associate of the corporation and owned
15% or more of the outstanding voting stock of the corporation at any time within the previous three years. |
|
The BCBCA
does not contain a provision comparable to Section 203 of the DGCL with respect to business combinations. |
| |
|
Delaware |
|
British Columbia (Canada) |
| Appraisal Rights; Rights to Dissent |
|
Under the DGCL, a stockholder of a corporation participating in some types of major corporate transactions
may, under varying circumstances, be entitled to appraisal rights pursuant to which the stockholder may receive cash in the amount
of the fair market value of his or her shares in lieu of the consideration he or she would otherwise receive in the transaction.
For example, a stockholder is entitled to appraisal rights in the case of a merger or consolidation if the shareholder is required
to accept in exchange for the shares anything other than: (i) shares of stock of the corporation surviving or resulting from the
merger or consolidation, or depository receipts in respect thereof; (ii) shares of any other corporation, or depository receipts
in respect thereof, that on the effective date of the merger or consolidation will be either listed on a national securities exchange
or held of record by more than 2,000 shareholders; (iii) cash instead of fractional shares of the corporation or fractional depository
receipts of the corporation; or (iv) any combination of the foregoing |
|
The BCBCA provides that shareholders of a company are entitled to exercise dissent rights in respect
of certain matters and to be paid the fair value of their shares in connection therewith. The dissent right is applicable where the
company resolves to (i) alter its articles to alter the restrictions on the powers of the company or on the business it is permitted
to carry on; (ii) approve certain amalgamations; (iii) approve an arrangement, where the terms of the arrangement or court orders
relating thereto permit dissent; (iv) sell, lease or otherwise dispose of all or substantially all of its undertaking; or (v) continue
the company into another jurisdiction. Dissent may also be permitted if authorized by resolution. A court may also make an order
permitting a shareholder to dissent in certain circumstances. |
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| Compulsory Acquisition |
|
Under the DGCL, a merger in which one corporation owns, prior to the merger, 90% or more of each
class of stock of a second corporation may be completed without the vote of the second corporation's board of directors or shareholders. |
|
The BCBCA provides that if, within four months after the making of an offer to acquire shares, or
any class of shares, of a company, the offer is accepted by the holders of not less than 90% of the shares (other than the shares
held by the offeror or an affiliate of the offeror) of any class of shares to which the offer relates, the offeror is entitled, upon
giving proper notice within five months after the date of the offer, to acquire (on the same terms on which the offeror acquired
shares from those holders of shares who accepted the offer) the shares held by those holders of shares of that class who did not
accept the offer. Offerees may apply to the court, within two months of receiving notice, and the court may set a different price
or terms of payment and may make any consequential orders or directions as it considers appropriate. |
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| Stockholder/ Shareholder Consent to Action Without Meeting |
|
Under the DGCL, unless otherwise provided in a corporation's certificate of incorporation, any action
that can be taken at a meeting of the stockholders may be taken without a meeting if written consent to the action is signed by the
holders of outstanding stock having not less than the minimum number of votes necessary to authorize or take the action at a meeting
of the stockholders. |
|
Although it is not customary for public companies to do so, under the BCBCA, shareholder action without
a meeting may be taken by a consent resolution of shareholders provided that it satisfies the thresholds for approval in a company's
articles, the BCBCA and the regulations thereunder. A consent resolution is as valid and effective as if it was a resolution passed
at a meeting of shareholders. |
| |
|
Delaware |
|
British Columbia (Canada) |
| Special Meetings of Stockholders/ Shareholders |
|
Under the DGCL, a special meeting of shareholders may be called by the board of directors or by such
persons authorized in the certificate of incorporation or the bylaw |
|
Under the BCBCA, the holders of not less than 5% of the issued shares of a company that carry the
right to vote at a general meeting may requisition that the directors call a meeting of shareholders for the purpose of transacting
any business that may be transacted at a general meeting. Upon receiving a requisition that complies with the technical requirements
set out in the BCBCA, the directors must, subject to certain limited exceptions, call a meeting of shareholders to be held not more
than four months after receiving the requisition. If the directors do not call such a meeting within 21 days after receiving the
requisition, the requisitioning shareholders or any of them holding in aggregate not less than 2.5% of the issued shares of the company
that carry the right to vote at general meetings may call the meeting. |
| |
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|
|
| Distributions and Dividends; Repurchases and Redemptions |
|
Under the DGCL, subject to any restrictions
contained in the certificate of incorporation, a corporation may pay dividends out of its capital surplus or, if there is no
surplus, out of net profits for the fiscal year in which the dividend is declared or the preceding fiscal year, as long as the
amount of capital of the corporation following the declaration and payment of the dividend is not less than the aggregate amount
of the capital represented by issued and outstanding shares having a preference upon the distribution of assets. Surplus is defined
in the DGCL as the excess of the net assets over capital, as such capital may be adjusted by the board.
A Delaware corporation may purchase or redeem
shares of any class for cash or other property except when its capital is impaired or would be impaired by the purchase or redemption.
A corporation may, however, purchase or redeem out of capital shares that are entitled, upon any distribution of its assets, to a
preference over another class or series of its shares or, if no shares entitled to a preference are outstanding, any of its shares
if such shares will be retired and the capital reduced. |
|
Under the BCBCA, unless its charter or
an enactment provides otherwise, a company may pay a dividend in money or other property (including by issuing shares or warrants
by way of dividend) unless there are reasonable grounds for believing that the company is insolvent, or the payment of the dividend
would render the company insolvent. The BCBCA provides that no special rights or restrictions attached to a series of any class
of shares confer on the series a priority in respect of dividends or return of capital over any other series of shares of the
same class.
Under the BCBCA, the purchase or other acquisition
by a company of its shares is generally subject to solvency tests similar to those applicable to the payment of dividends (as set
out above). The Company is permitted, under its articles, to acquire any of its shares, subject to the special rights and restrictions
attached to such class or series of shares and the approval of its board of directors.
Under the BCBCA, subject to solvency tests
similar to those applicable to the payment of dividends (as set out above), a company may redeem, on the terms and in the manner
provided in its articles, any of its shares that has a right of redemption attached to it. |
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|
Delaware |
|
British Columbia (Canada) |
| Vacancies on Board of Directors |
|
Under the DGCL, a vacancy or a newly created directorship may be filled by a majority of the directors
then in office, although less than a quorum, or by the sole remaining director, unless otherwise provided in the certificate of incorporation
or bylaws. Any newly elected director usually holds office for the remainder of the full term expiring at the annual meeting of stockholders
at which the term of the class of directors to which the newly elected director has been elected expires. |
|
Under the BCBCA and the Company's articles,
a vacancy among the directors created by the removal of a director may be filled by the shareholders at the meeting at which
the director is removed or, if not filled by the shareholders at such meeting, by the shareholders or by the remaining directors.
In the case of a casual vacancy, the remaining directors may fill the vacancy. Under the BCBCA, directors may increase the size
of the board of directors by one third of the number of current directors.
Under the BCBCA and the Company's articles,
if as a result of one or more vacancies, the number of directors in office falls below the number required for a quorum, the remaining
directors may appoint as directors the number of individuals that, when added to the number of remaining directors, will constitute
a quorum and/or call a shareholders' meeting to fill any or all vacancies among directors and to conduct such other business that
may be dealt with at that meeting, but must not take any other action until a quorum is obtained. |
| |
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| Removal of Directors; Terms of Directors |
|
Under the DGCL, except in the case of a corporation with a classified board or with cumulative voting,
any director or the entire board may be removed, with or without cause, by the holders of a majority of the shares entitled to vote
at an election of directors. If a Delaware corporation has a classified board, unless its certificate of incorporation provides
otherwise, any director or the entire board may only be removed by stockholders for cause. |
|
The Company's articles allow for the removal of a director by special resolution of the shareholders. |
| |
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| Inspection of Books and Records |
|
Under the DGCL, any holder of record of stock or a person who is the beneficial owner of shares of
such stock held either in a voting trust or by a nominee on behalf of such person has the right during usual business hours to inspect
the corporation's books and records for a proper purpose |
|
Under the BCBCA, directors and shareholders
may, without charge, inspect certain of the records of a company. Former shareholders and directors may also inspect certain
of the records, free of charge, but only those records pertaining to the times that they were shareholders or directors.
Public companies must allow all persons to
inspect certain records of the company free of charge. |
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|
Delaware |
|
British Columbia (Canada) |
| Amendment of Governing Documents |
|
Under the DGCL, a certificate of incorporation
may be amended if: (i) the board of directors adopts a resolution setting forth the proposed amendment, declares the advisability
of the amendment and directs that it be submitted to a vote at a meeting of shareholders; provided that, unless required by the
certificate of incorporation, no meeting or vote is required to adopt an amendment for certain specified changes; and (ii) the
holders of a majority of the outstanding shares of stock entitled to vote on the matter approve the amendment, unless the certificate
of incorporation requires the vote of a greater number of shares.
If a class vote on the amendment is required
by the DGCL, a majority of the outstanding stock of the class is required, unless a greater proportion is specified in the certificate
of incorporation or by other provisions of the DGCL.
Under the DGCL, the board of directors may
amend a corporation's bylaws if so authorized in the certificate of incorporation. The shareholders of a Delaware corporation also
have the power to amend bylaws. |
|
Under the BCBCA, a company may amend
its articles or notice of articles by (i) the type of resolution specified in the BCBCA, (ii) if the BCBCA does not specify a
type of resolution, then by the type specified in the company's articles, or (iii) if the company's articles do not specify a
type of resolution, then by special resolution. The BCBCA permits many substantive changes to a company's articles (such as a
change in the company's authorized share structure or a change in the special rights or restrictions that may be attached to
a certain class or series of shares) to be changed by the resolution specified in that company's articles.
Our articles provide that certain changes
to the Company's share structure and any creation or alteration of special rights and restrictions attached to a series or class
of shares be done by way of ordinary resolution. However, if a right or special right attached to a class or series of shares would
be prejudiced or interfered with by such an alteration, the BCBCA requires that holders of such class or series of shares must approve
the alteration by a special separate resolution of those shareholders. |
|
|
Delaware |
|
British Columbia (Canada) |
| Indemnification of Directors and Officers |
|
Under the
DGCL, subject to specified limitations in the case of derivative suits brought by a corporation's
stockholders in its name, a corporation may indemnify any person who is made a party to any action,
suit or proceeding on account of being a director, officer, employee or agent of the corporation
(or was serving at the request of the corporation in such capacity for another corporation, partnership,
joint venture, trust or other enterprise) against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him or her in connection
with the action, suit or proceeding, provided that there is a determination that: (i) the individual
acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests
of the corporation; and (ii) in a criminal action or proceeding, the individual had no reasonable
cause to believe his or her conduct was unlawful.
Without court approval, however, no indemnification
may be made in respect of any derivative action in which an individual is adjudged liable to the corporation, except to the extent
the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication
but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity.
The DGCL requires indemnification of directors
and officers for expenses (including attorneys' fees) actually and reasonably relating to a successful defense on the merits or otherwise
of a derivative or third-party action. Under the DGCL, a corporation may advance expenses to any director or officer relating to
the defense of any proceeding upon the receipt of an undertaking by or on behalf of the director or officer to repay such amount
if it shall ultimately be determined that such person is not entitled to be indemnified. |
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Under the
BCBCA, a company may indemnify: (i) a current or former director or officer of that company; or (ii)
a current or former director or officer of another corporation if, at the time such individual held
such office, the corporation was an affiliate of the company, or if such individual held such office
at the company's request against all costs, charges and expenses, including an amount paid to settle
an action or satisfy a judgment, reasonably incurred by him or her in respect of any civil, criminal,
administrative or other legal proceeding or investigative action (whether current, threatened, pending
or completed) in which he or she is involved because of that person's position as an indemnifiable
person, unless: (i) the individual did not act honestly and in good faith with a view to the best
interests of such company or the other entity, as the case may be; or (ii) in the case of a proceeding
other than a civil proceeding, the individual did not have reasonable grounds for believing that
the individual's conduct was lawful. A company cannot indemnify an indemnifiable person if it is
prohibited from doing so under its articles. In addition, a company must not indemnify an indemnifiable
person in proceedings brought against the indemnifiable person by or on behalf of the company or
an associated company. A company may pay, as they are incurred in advance of the final disposition
of an eligible proceeding, the expenses actually and reasonably incurred by an indemnifiable person
in respect of that proceeding only if the indemnifiable person has provided an undertaking that,
if it is ultimately determined that the payment of expenses was prohibited, the indemnifiable person
will repay any amounts advanced. Subject to the aforementioned prohibitions on indemnification, a
company must, after the final disposition of an eligible proceeding, pay the expenses actually and
reasonably incurred by an indemnifiable person in respect of such eligible proceeding if such indemnifiable
person has not been reimbursed for such expenses, and was wholly successful, on the merits or otherwise,
in the outcome of such eligible proceeding or was substantially successful on the merits in the outcome
of such eligible proceeding. On application from an indemnifiable person, a court may make any order
the court considers appropriate in respect of an eligible proceeding, including the indemnification
of penalties imposed or expenses incurred in any such proceedings and the enforcement of an indemnification
agreement.
As permitted by the BCBCA, the Company's
articles require it to indemnify its directors, officers, former directors or officers (and such individual's respective heirs and
legal representatives) and permit the Company to indemnify any person to the extent permitted by the BCBCA. |
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Delaware |
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British Columbia (Canada) |
| Limited Liability of Directors |
|
The DGCL permits the adoption of a provision in a corporation's certificate of incorporation limiting
or eliminating the monetary liability of a director to a corporation or its shareholders by reason of a director's breach of the
director's fiduciary duties, except for (i) any breach the duty of loyalty to the corporation or its shareholders; (ii) any act or
omission not in good faith or involving intentional misconduct or a known violation of law; (iii) any breach in which the director
obtains an improper personal benefit from the corporation; or (iv) the unlawful payment of a dividend or the unlawful approval a
stock repurchase. |
|
Under the BCBCA, a director or officer
of a company must (i) act honestly and in good faith with a view to the best interests of the company; (ii) exercise the care,
diligence and skill that a reasonably prudent individual would exercise in comparable circumstances; (iii) act in accordance
with the BCBCA and the regulations thereunder; and (iv) subject to (i) to (iii), act in accordance with the articles of the company.
These statutory duties are in addition to duties under common law and equity.
No provision in a contract or the articles
of a company may relieve a director or officer of a company from the above duties.
Under the BCBCA, a director is not liable
for certain acts if the director has otherwise complied with his or her duties and relied, in good faith, on (i) financial statements
of the company represented to the director by an officer of the company or in a written report of the auditor of the company to fairly
reflect the financial position of the company, (ii) a written report of a lawyer, accountant, engineer, appraiser or other person
whose profession lends credibility to a statement made by that person, (iii) a statement of fact represented to the director by an
officer of the company to be correct, or (iv) any record, information or representation that the court considers provides reasonable
grounds for the actions of the director, whether or not that record was forged, fraudulently made or inaccurate or that information
or representation was fraudulently made or inaccurate. Further, a director is not liable if the director did not know and could not
reasonably have known that the act done by the director or authorized by the resolution voted for or consented to by the director
was contrary to the BCBCA. |
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Delaware |
|
British Columbia (Canada) |
| Stockholder/ Shareholder Lawsuits |
|
Under the DGCL, a stockholder may bring a derivative action on behalf of the corporation to enforce
the rights of the corporation; provided, however, that under Delaware case law, the plaintiff generally must be a stockholder not
only at the time of the transaction that is the subject of the suit, but also throughout the duration of the derivative suit. Delaware
law also requires that the derivative plaintiff make a demand on the directors of the corporation to assert the derivative claim
before the suit may be prosecuted by the derivative plaintiff, unless such demand would be futile. An individual also may commence
a class action suit on behalf of himself or herself and other similarly situated stockholders where the requirements for maintaining
a class action have been met. |
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Under the BCBCA, a shareholder (including
a beneficial shareholder) or director of a company and any person who, in the discretion of the court, is an appropriate person
to make an application to court to prosecute or defend an action on behalf of a company (a derivative action) may, with judicial
leave: (i) bring an action in the name and on behalf of the company to enforce a right, duty or obligation owed to the company
that could be enforced by the company itself or to obtain damages for any breach of such right, duty or obligation or (ii) defend,
in the name and on behalf of the company, a legal proceeding brought against the company.
Under the BCBCA, the court may grant leave
if: (i) the complainant has made reasonable efforts to cause the directors of the company to prosecute or defend the action; (ii)
notice of the application for leave has been given to the company and any other person that the court may order; (iii) the complainant
is acting in good faith; and (iv) it appears to the court to be in the interests of the company for the action to be prosecuted or
defended.
Under the BCBCA, upon the final disposition
of a derivative action, the court may make any order it determines to be appropriate. In addition, under the BCBCA, a court may order
a company to pay the complainant's interim costs, including legal fees and disbursements. However, the complainant may be held accountable
for the costs on final disposition of the action. |
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| Oppression Remedy |
|
Although the DGCL imposes upon directors and officers fiduciary duties of loyalty (i.e., a duty to
act in a manner believed to be in the best interest of the corporation and its stockholders) and care, the DGCL does not provide
for a remedy for a breach of fiduciary duties that is comparable to the BCBCA's oppression remedy. |
|
The BCBCA's oppression remedy enables
a court to make an order (interim or final) to rectify the matters complained of if the court is satisfied upon application by
a shareholder (as defined below) that the affairs of the company are being conducted or that the powers of the directors have
been exercised in a manner that is oppressive, or that some action of the company or shareholders has been or is threatened to
be taken which is unfairly prejudicial, in each case to one or more shareholders. The applicant must be one of the persons being
oppressed or prejudiced and the application must be brought in a timely manner. A "shareholder" for the purposes of
the oppression remedy includes legal and beneficial owners of shares as well as any other person whom the court considers appropriate.
The oppression remedy provides the court
with extremely broad and flexible jurisdiction to intervene in corporate affairs to protect shareholders. |
|
|
Delaware |
|
British Columbia (Canada) |
| Advance Notification Requirements for Proposals of Stockholders/Shareholders |
|
Delaware corporations typically have
provisions in their bylaws, often referred to as "advance notice bylaws”, that require a stockholder proposing a nominee
for election to the board of directors or other proposals at an annual or special meeting of the stockholders to provide notice
of any such proposals to the corporation in advance of the meeting for any such proposal to be brought before the meeting of
the stockholders. In addition, advance notice bylaws frequently require the stockholder nominating a person for election to the
board of directors to provide information about the nominee, such as his or her age, address, employment and beneficial ownership
of shares of the corporation's capital stock. The stockholder may also be required to disclose information about the stockholder,
including, among other things, his or her name, share ownership and agreement, arrangement or understanding with respect to such
nomination.
For other proposals, the proposing stockholder
is often required by the bylaws to provide a description of the proposal and any other information relating to such stockholder or
beneficial owner, if any, on whose behalf that proposal is being made, required to be disclosed in a proxy statement or other filings
required to be made in connection with the solicitation of proxies for the proposal and pursuant to and in accordance with the Exchange
Act and the rules and regulations promulgated thereunder. |
|
Under the BCBCA, qualified shareholders
holding at least one percent (1%) of the Company's issued voting shares or whose shares have a fair market value in excess of
$2,000 in the aggregate may make proposals for matters to be considered at the annual general meeting of shareholders. Such proposals
must be sent to the Company in advance of any proposed meeting by delivering a timely written notice in proper form to the Company's
registered office in accordance with the requirements of the BCBCA. The notice must include information on the business the shareholder
intends to bring before the meeting. To be a qualified shareholder, a shareholder must currently be and have been a registered
or beneficial owner of at least one share of the company for at least two years before the date of signing the proposal.
If the proposal and a written statement in
support of the proposal (if any) are submitted at least three months before the anniversary date of the previous annual meeting and
the proposal and written statement (if any) meet other specified requirements, then the company must either set out the proposal,
including the names and mailing addresses of the submitting person and supporters and the written statement (if any), in the proxy
circular of the company or attach the proposal and written statement thereto.
In certain circumstances, the company may
refuse to process a proposal. |
TAX
The material tax consequences of any offering
of securities will be described in the applicable prospectus supplement.
PLAN OF DISTRIBUTION
The securities being offered by this prospectus
may be sold:
| |
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to or through one or more underwriters on a firm commitment or agency basis; |
| |
● |
through put or call option transactions relating to the securities; |
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● |
through broker-dealers; |
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● |
directly to purchasers, through a specific bidding or auction process, on a negotiated basis
or otherwise; |
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● |
through any other method permitted pursuant to applicable law; or |
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● |
through a combination of any such methods of sale. |
At any time a particular offer of the securities
covered by this prospectus is made, a revised prospectus or prospectus supplement, if required, will be distributed which will set forth
the aggregate amount of securities covered by this prospectus being offered and the terms of the offering, including the name or names
of any underwriters, dealers, brokers or agents, any discounts, commissions, concessions and other items constituting compensation from
us and any discounts, commissions or concessions allowed or reallowed or paid to dealers. Such prospectus supplement, and, if necessary,
a post-effective amendment to the registration statement of which this prospectus is a part, will be filed with the Commission to reflect
the disclosure of additional information with respect to the distribution of the securities covered by this prospectus. In order to comply
with the securities laws of certain states, if applicable, the securities sold under this prospectus may only be sold through registered
or licensed broker-dealers. In addition, in some states the securities may not be sold unless they have been registered or qualified
for sale in the applicable state or an exemption from registration or qualification requirements is available and is complied with.
The distribution of securities may be effected
from time to time in one or more transactions, including block transactions and transactions on the Nasdaq Capital Market or any other
organized market where the securities may be traded. The securities may be sold at a fixed price or prices, which may be changed, or
at market prices prevailing at the time of sale, at prices relating to the prevailing market prices or at negotiated prices. The consideration
may be cash or another form negotiated by the parties. Agents, underwriters or broker-dealers may be paid compensation for offering and
selling the securities. That compensation may be in the form of discounts, concessions or commissions to be received from us or from
the purchasers of the securities or in the form of securities such as common shares or warrants. Any dealers and agents participating
in the distribution of the securities may be deemed to be underwriters, and compensation received by them on resale of the securities
may be deemed to be underwriting discounts. If any such dealers or agents were deemed to be underwriters, they may be subject to statutory
liabilities under the Securities Act.
We may directly solicit offers to purchase the
securities being offered by this prospectus and may also engage in “at-the-market” offerings as defined in Rule 415 of the
Securities Act. We may also designate agents to solicit offers to purchase the securities from time to time. We will name in a prospectus
supplement any underwriter or agent involved in the offer or sale of the securities.
Agents may from time to time solicit offers to
purchase the securities. If required, we will name in the applicable prospectus supplement any agent involved in the offer or sale of
the securities and set forth any compensation payable to the agent. Unless otherwise indicated in the prospectus supplement, any agent
will be acting on a best efforts basis for the period of its appointment. Any agent selling the securities covered by this prospectus
may be deemed to be an underwriter, as that term is defined in the Securities Act, of the securities.
If underwriters are used in a sale, securities
will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale, or under delayed delivery
contracts or other contractual commitments. Securities may be offered to the public either through underwriting syndicates represented
by one or more managing underwriters or directly by one or more firms acting as underwriters. If an underwriter or underwriters are used
in the sale of securities, an underwriting agreement will be executed with the underwriter or underwriters, as well as any other underwriter
or underwriters, with respect to a particular underwritten offering of securities, and will set forth the terms of the transactions,
including compensation of the underwriters and dealers and the public offering price, if applicable. The prospectus and prospectus supplement
will be used by the underwriters to resell the securities.
If a dealer is used in the sale of the securities,
we or an underwriter will sell the securities to the dealer, as principal. The dealer may then resell the securities to the public at
varying prices to be determined by the dealer at the time of resale. To the extent required, we will set forth in the prospectus supplement
the name of the dealer and the terms of the transactions.
We may directly solicit offers to purchase the
securities and may make sales of securities directly to institutional investors or others. These persons may be deemed to be underwriters
within the meaning of the Securities Act with respect to any resale of the securities. To the extent required, the prospectus supplement
will describe the terms of any such sales, including the terms of any bidding or auction process, if used.
Agents, underwriters and dealers may be entitled
under agreements which may be entered into with us to indemnification by us against specified liabilities, including liabilities incurred
under the Securities Act, or to contribution by us to payments they may be required to make in respect of such liabilities. If required,
the prospectus supplement will describe the terms and conditions of the indemnification or contribution. Some of the agents, underwriters
or dealers, or their affiliates may be customers of, engage in transactions with or perform services for us or our subsidiaries.
Any person participating in the distribution
of securities registered under the registration statement that includes this prospectus will be subject to applicable provisions of the
Exchange Act and the applicable Commission rules and regulations, including, among others, Regulation M, which may limit the timing of
purchases and sales of any of our securities by that person. Furthermore, Regulation M may restrict the ability of any person engaged
in the distribution of our securities to engage in market-making activities with respect to our securities. These restrictions may affect
the marketability of our securities and the ability of any person or entity to engage in market-making activities with respect to our
securities.
Certain persons participating in an offering
may engage in over-allotment, stabilizing transactions, short-covering transactions, penalty bids and other transactions that stabilize,
maintain or otherwise affect the price of the offered securities. These activities may maintain the price of the offered securities at
levels above those that might otherwise prevail in the open market, including by entering stabilizing bids, effecting syndicate covering
transactions or imposing penalty bids, each of which is described below.
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A stabilizing bid means the placing of any bid, or the effecting of any purchase, for the
purpose of pegging, fixing or maintaining the price of a security. |
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● |
A syndicate covering transaction means the placing of any bid on behalf of the underwriting syndicate
or the effecting of any purchase to reduce a short position created in connection with the offering. |
| |
● |
A penalty bid means an arrangement that permits the managing underwriter to reclaim a selling
concession from a syndicate member in connection with the offering when offered securities originally sold by the syndicate member
are purchased in syndicate covering transactions. |
These transactions may be effected on an exchange
or automated quotation system, if the securities are listed on that exchange or admitted for trading on that automated quotation system,
or in the over-the-counter market or otherwise.
If so indicated in the applicable prospectus
supplement, we will authorize agents, underwriters or dealers to solicit offers from certain types of institutions to purchase offered
securities from us at the public offering price set forth in such prospectus supplement pursuant to delayed delivery contracts providing
for payment and delivery on a specified date in the future. Such contracts will be subject only to those conditions set forth in the
prospectus supplement and the prospectus supplement will set forth the commission payable for solicitation of such contracts.
In addition, common shares may be issued upon
conversion of or in exchange for Debt Securities or other securities.
Any underwriters to whom offered securities are
sold for public offering and sale may make a market in such offered securities, but such underwriters will not be obligated to do so
and may discontinue any market making at any time without notice. The offered securities may or may not be listed on a national securities
exchange. No assurance can be given that there will be a market for the offered securities.
Any securities that qualify for sale pursuant
to Rule 144 or Regulation S under the Securities Act, may be sold under Rule 144 or Regulation S rather than pursuant to this prospectus.
To the extent that we make sales to or through
one or more underwriters or agents in at-the-market offerings, we will do so pursuant to the terms of a distribution agreement between
us and the underwriters or agents. If we engage in at-the-market sales pursuant to a distribution agreement, we will sell our common
shares to or through one or more underwriters or agents, which may act on an agency basis or on a principal basis. During the term of
any such agreement, we may sell common shares on a daily basis in exchange transactions or otherwise as we agree with the underwriters
or agents. The distribution agreement will provide that any common shares sold will be sold at prices related to the then prevailing
market prices for our common shares. Therefore, exact figures regarding proceeds that will be raised or commissions to be paid cannot
be determined at this time and will be described in a prospectus supplement. Pursuant to the terms of the distribution agreement, we
also may agree to sell, and the relevant underwriters or agents may agree to solicit offers to purchase, blocks of our common shares
or Warrants. The terms of each such distribution agreement will be set forth in more detail in a prospectus supplement to this prospectus.
In connection with offerings made through underwriters
or agents, we may enter into agreements with such underwriters or agents pursuant to which we receive our outstanding securities in consideration
for the securities being offered to the public for cash. In connection with these arrangements, the underwriters or agents may also sell
securities covered by this prospectus to hedge their positions in these outstanding securities, including in short sale transactions.
If so, the underwriters or agents may use the securities received from us under these arrangements to close out any related open borrowings
of securities.
We may enter into derivative transactions with
third parties or sell securities not covered by this prospectus to third parties in privately negotiated transactions. If the applicable
prospectus supplement indicates, in connection with those derivatives, such third parties (or affiliates of such third parties) may sell
securities covered by this prospectus and the applicable prospectus supplement, including in short sale transactions. If so, such third
parties (or affiliates of such third parties) may use securities pledged by us or borrowed from us or others to settle those sales or
to close out any related open borrowings of shares, and may use securities received from us in settlement of those derivatives to close
out any related open borrowings of shares. The third parties (or affiliates of such third parties) in such sale transactions will be
underwriters and, if not identified in this prospectus, will be identified in the applicable prospectus supplement (or a post-effective
amendment).
We may loan or pledge securities to a financial
institution or other third party that in turn may sell the securities using this prospectus. Such financial institution or third party
may transfer its short position to investors in our securities or in connection with a simultaneous offering of other securities offered
by this prospectus or in connection with a simultaneous offering of other securities offered by this prospectus.
LEGAL MATTERS
Certain legal matters with respect to Canadian
law and with respect to the validity of the offered securities under the law of British Columbia, Canada, will be passed upon for us
by Cassels Brock & Blackwell LLP. Certain legal matters with respect to New York law, the validity of the Debt Securities under New
York law, and U.S. federal securities law will be passed upon for us by Carmel, Milazzo & Feil LLP, New York, New York.
EXPERTS
No expert or counsel named in this prospectus
as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered
or upon other legal matters in connection with the registration or offering of the securities was employed on a contingency basis or
had, or is to receive, in connection with the offering, a substantial interest, directly or indirectly, in the Company or its subsidiaries.
Nor was any such person connected with the Company or any of its subsidiaries as a promoter, managing or principal underwriter, voting
trustee, director, officer or employee.
The consolidated financial statements for the
years ended December 31, 2021, 2020 and 2019 appearing in our Annual Reports on Form 20-F will been so included in reliance on the report
of our accountants, Davidson & Company LLP, an independent registered public accounting firm, given on the authority of said firm
as experts in auditing and accounting, and is incorporated herein by reference in reliance upon such report given on the authority of
such firm as experts in accounting and auditing.
ENFORCEMENT OF CIVIL LIABILITIES
UNDER U.S. SECURITIES LAWS
We are organized under the laws of British Columbia,
Canada. Service of process upon us and upon certain of our directors and officers and the experts named in this prospectus, who reside
outside the U.S., may be difficult to obtain within the U.S. Furthermore, because a substantial amount of our assets and certain of our
directors and officers are located outside the U.S., any judgment obtained in the U.S. against us or any of our directors and officers
may not be collectible within the U.S.
We have also been advised by Cassels Brock &
Blackwell LLP, our Canadian legal advisor, that there is doubt as to the enforceability, in original actions in Canadian courts, of liabilities
based on the U.S. federal securities laws or “blue sky” laws of any state within the United States and as to the enforceability
in Canadian courts of judgments of U.S. courts obtained in actions based on the civil liability provisions of the U.S. federal securities
laws or any such state securities or blue sky laws. Therefore, it may not be possible to enforce those judgments against us, certain
of our directors and officers, the experts named in this prospectus.
INDEMNIFICATION FOR SECURITIES
ACT LIABILITIES
Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have
been informed that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable.
INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE
We file annual and special reports and other
information with the Commission (File Number 001-39557). These filings contain important information which does not appear in this prospectus.
The Commission allows us to “incorporate by reference” information into this prospectus, which means that we can disclose
important information to you by referring you to other documents which we have filed or will file with the Commission. The information
incorporated by reference is considered to be part of this prospectus, and information in documents that we file later with the Commission
will automatically update and supersede information in this prospectus. We incorporate by reference into this prospectus the documents
listed below and any future filings made by us with the Commission under Section 13(a), 13(c) 15(d) of the Exchange Act, except
for information “furnished” to the Commission that is not deemed filed and not incorporated by reference into this prospectus
(unless otherwise indicated below), until the termination of the offering of securities described in the applicable prospectus supplement:
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our Annual Report on Form
20-F for the fiscal year ended on December 31, 2021, filed with the Commission on April 28, 2022 (the “Form 20-F”); |
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● |
our Current Reports on Form 6-K furnished to the Commission on April
29, 2022, May 3, 2022, May
17, 2022, May 26, 2022,
May 31, 2022, May
31, 2022, June 7, 2022
and June 27, 2022 and the
“Selected Q1 Unaudited Financial Summary” portion of Exhibit
99.1 of our Current Report on Form 6-K furnished to the Commission on April 29, 2022; |
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the description of our securities registered under Section 12 of the Exchange Act contained
in the Form 8-A12B,
as filed with the Commission on September 24, 2020, including any amendment or report filed for the purpose of updating such description;
and |
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● |
any future filings made with the Commission under Section 13(a), 13(c) or 15(d) of the Exchange Act. |
In addition, any reports on Form 6-K submitted
to the Commission by the registrant pursuant to the Exchange Act after the date of the initial registration statement and prior to effectiveness
of the registration statement that we specifically identify in such forms as being incorporated by reference into the registration statement
of which this prospectus forms a part and all subsequent Annual Reports on Form 20-F filed after the effective date of this registration
statement and prior to the termination of this offering and any reports on Form 6-K subsequently submitted to the Commission or portions
thereof that we specifically identify in such forms as being incorporated by reference into the registration statement of which this
prospectus forms a part, shall be considered to be incorporated into this prospectus by reference and shall be considered a part of this
prospectus from the date of filing or submission of such documents.
You should rely only on the information contained
or incorporated by reference in this prospectus and any accompanying prospectus supplement. We have not authorized any other person to
provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it.
We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus and any accompanying prospectus supplement as well as the information we previously filed
with the Commission and incorporated by reference, is accurate as of the dates on the front cover of those documents only. Our business,
financial condition and results of operations and prospects may have changed since those dates. Certain statements in and portions of
this prospectus update and replace information in the above listed documents incorporated by reference. Likewise, statements in or portions
of a future document incorporated by reference in this prospectus may update and replace statements in and portions of this prospectus
or the above listed documents.
We will provide you without charge, upon your
written or oral request, a copy of any of the documents incorporated by reference in this prospectus, other than exhibits to such documents
which are not specifically incorporated by reference into such documents. Please direct your written or telephone requests to Siyata
Mobile Inc., Attn: Chief Financial Officer, 1001 Lenoir St Suite A-414, Montreal, QC H4C 2Z6 Canada. You may also obtain information
about us by visiting our website at https://www.siyatamobile.com. The information
contained on or accessible through our website is not incorporated by reference and is not part of this prospectus.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the Commission a registration
statement on Form F-3 under the Securities Act of 1933, as amended, with respect to the securities offered by this prospectus. The full
registration statement may be obtained from the Commission or us, as provided below. Forms of the documents establishing the terms of
the offered securities are or may be filed as exhibits to the registration statement of which this prospectus forms a part. Statements
in this prospectus or any prospectus supplement about these documents are summaries, and each statement is qualified in all respects
by reference to the document to which it refers. You should refer to the actual documents for a more complete description of the relevant
matters. You may inspect a copy of the registration statement at the Commission’s website, as provided below.
We are subject to the reporting requirements
of the Securities Exchange Act of 1934, as amended (“Exchange Act”) that are applicable to a foreign private issuer. In accordance
with the Exchange Act, we file reports and other information with the Commission, including Annual Reports on Form 20-F and reports on
Form 6-K. The Commission maintains an Internet site that contains reports and other information regarding issuers, such as us, that file
electronically with the Commission (http://www.sec.gov).
As a foreign private issuer, we are exempt under
the Exchange Act from, among other things, the rules prescribing the furnishing and content of proxy statements, and our officers, directors
and principal shareholders are exempt from the “short-swing profits” reporting and liability provisions contained in Section 16
of the Exchange Act and related Exchange Act rules. In addition, we are not required under the Exchange Act to file periodic reports
and financial statements with the Commission as frequently or as promptly as U.S. companies whose securities are registered under the
Exchange Act.
SIYATA MOBILE INC.
Up to 17,400,000 Common Shares
and/or
Up to 17,400,00 Pre-Funded Warrants
PROSPECTUS SUPPLEMENT
Maxim Group LLC
October 10, 2022
Siyata Mobile (NASDAQ:SYTA)
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